Inderpreet Kaur Bedi, Principal and Governance & Secretariat Lead at Barnett Waddingham
While the bill has received widespread support, its success will depend on balancing robust regulation with the commercial realities of the sport. Here's a closer look at the key areas of reform and what they could mean for the future of football.
Financial sustainability and oversight
Since the Premier League’s inception in 1992, 64 clubs have fallen into administration — a stark reminder of the financial instability plaguing the sport. Despite generating a staggering £5.8 billion in revenue in 2023/24, the football ecosystem remains alarmingly fragile.
"Fundamental governance problems within football have resulted in numerous cases of excessive and reckless risk-taking and financial mismanagement. The new bill aims to improve standards of governance and financial resilience."
Inderpreet Kaur Bedi, Principal and Governance & Secretariat Lead, BW
The new bill tackles this head-on, empowering the IFR to review controversial parachute payments. These payments, designed to cushion the financial blow for relegated clubs, have long been criticised for distorting competition within the English Football League (EFL). With the IFR now equipped to mediate revenue distribution disputes, the aim is to foster a more balanced and sustainable football pyramid.
Moreover, the IFR will assess the financial health of clubs and implement suitability tests for prospective owners, reducing the risk of reckless investment and financial mismanagement. By creating a more stable financial foundation, these measures could help clubs better serve their communities and secure their long-term futures.
Governance code and compliance
Clubs will be required to adopt a new Football Club Governance Code, which introduces stricter standards for financial planning, corporate governance, and Equality, Diversity, and Inclusion (EDI) initiatives. To operate, clubs must obtain an IFR license by meeting these enhanced governance requirements.
The regulator’s discretionary powers also enable it to impose tailored conditions on clubs facing financial or operational difficulties. This bespoke approach underscores the IFR’s commitment to addressing systemic issues while recognising the unique challenges faced by individual clubs.
Mandatory fan engagement
For years, fans have voiced concerns about being sidelined in critical club decisions. The Football Governance Bill mandates a new standard of fan engagement, requiring clubs to consult with supporters on key matters such as ticket prices, crests, colours, and stadium relocations. These measures aim to preserve the heritage of clubs and ensure fans remain at the heart of the game.
Additionally, clubs entering administration will now have a duty to keep fans informed about the process, reinforcing transparency and accountability in times of crisis. Clubs will only be granted an operating license if the IFR's fan engagement threshold is met.
The new Owners’ and Officers’ Test
One of the bill’s most significant reforms is the enhanced Owners’ and Officers’ Test. Designed to address issues of financial and ethical mismanagement, this test sets stricter criteria for potential owners and senior officers.
With the IFR empowered to veto unsuitable candidates, the aim is to protect clubs from irresponsible leadership and ensure they are managed in a manner that prioritises long-term stability.
Striking the right balance
While the Football Governance Bill has been widely praised, it has not been without its critics. The Premier League has raised concerns about its potential impact on investment and competitiveness, while UEFA general secretary Theodore Theodoridis has warned against the risk of regulatory overreach.
However, the government has emphasised the principle of bespoke regulation, aiming for a flexible and proportionate approach that prioritises collaboration over intervention. Striking this balance will be crucial to the bill’s success, ensuring it delivers meaningful reform without stifling the commercial growth of the game.
Preparing for change
With cross-party support, the Football Governance Bill is expected to pass swiftly through Parliament. Clubs and leagues should act now to prepare for the new regime, ensuring they meet the licensing conditions and governance standards required by the IFR.
At Barnett Waddingham, we understand the complexities of this evolving regulatory landscape. Our experts are here to help clubs navigate these changes, offering tailored advice on compliance, risk management, and financial sustainability.
Together, we can foster a culture of transparency and accountability that strengthens the integrity of the game and secures a prosperous future for clubs and their communities.
|
