Football Governance Bill
18th March 2024
A new regulator is to be established by the UK government to oversee the elite men’s football game. A Football Governance Bill has been tabled to establish a new Independent Football Regulator (IFR) as a new public body with operational independence and accountability.
The move has been a long time coming and is a result of dysfunction within the game. While the top-tier English Premier League is one of the planet’s most popular and commercially successful sporting competitions, over 60 clubs throughout the English league system have gone bust since it was established in 1992. The financial power of the Premier League is widely seen to have distorted competition and driven unsustainable business practices as clubs scramble to be one of its elite 20 members at all costs.
Elsewhere, an owners and directors test applied to those wishing to purchase clubs throughout the 92-member league system and below has failed to prevent a succession of dubious owners buying clubs and running them into the ground.
Calls for reform, and even full-blown reviews of the game, have got nowhere for years, but the catalyst for this historic change was the attempt in April 2021 by six of the Premier League’s leading clubs to break away and join a European Super League.
That would have wrecked the entire English game, and the huge backlash persuaded the government to set up a wide-ranging review chaired by MP Tracey Crouch. Crouch ensured a wide range of voices were consulted, and deserves much credit for driving a process which brought all of those voices together into a single proposal for reform. That call was first set out in a White Paper, A Sustainable Future – Reforming Football Club Governance and after extensive further consultation the bill was tabled this week.
Events in recent months persuaded the government to press ahead with the bill. In what seemed to be a bungled attempt to prove it could regulate itself, the Premier League fined two of its member clubs, Everton and Nottingham Forest, for breaches of spending rules. While the clubs had indeed breached the rules they themselves voted for, the way the cases were handled did more to prove the League was not capable of regulating itself effectively.
The final straw looks to have been the failure to agree a financial redistribution deal with the lower leagues after 10 of the 20 Premier League clubs voted against a settlement the government had been urging the game to conclude.
The Bill runs to 130 pages, and is currently being pored over by all sides of the game. It’s a historic move to regulate a game that is not just a business, but a business with deep roots in the nation’s psyche. Both the country’s main political parties support it, which means a fast passage into law is likely even in the current challenging political times. A second reading is expected within four weeks, and work is already underway to establish a shadow regulator’s office and to appoint a regulator so work can begin as soon as Royal assent is granted.
As Tracey Crouch has pointed out, regulation has not prevented businesses in a number of industries being very successful.
Here is a top-line summary of the main points.
Three objectives
The IFR will have three primary objectives:
to protect and promote the financial sustainability of individual clubs;
to protect and promote the financial resilience of English football as a whole;
to safeguard the traditional features of English football that matter most to fans and communities.
The IFR will not be legally permitted to act outside these objectives, and every action it takes must advance one or more of those objectives. It also has a duty to consider a number of secondary outcomes that are not its direct responsibility. These are:
sporting competition;
the competitiveness of regulated clubs;
investment into English football.
Seven “regulatory principles”
Seven “regulatory principles” are set out in the Bill, a move intended to recognise the unique nature of the football industry. They are:
efficient and expedient - using its resources in the most time and cost-effective way;
participative - proactively coordinating, cooperating, and constructively engaging with clubs, individuals at clubs, and competition organisers;
proportionate - any requirement or restriction imposed on a person should be proportionate to the benefits which are expected to result from that requirement or restriction;
football context-specific - acting in a way that recognises the specific context of association football and the fact that clubs are already subject to rules, restrictions and burdens by virtue of their membership of competitions;
tailored but consistent - applying regulation consistently, while still ensuring requirements are appropriately tailored to a club’s specific circumstances;
senior management responsibility - where appropriate, recognising that the individuals responsible for making decisions at a club (senior managers, other directors, and owners) ;should be accountable for the actions of the club and its compliance with regulatory requirements;
transparent - acting as transparently as reasonably practicable.
Licence to operate
Regulation will be carried out through a licencing system, with every club in the top five tiers of the men’s game required to obtain a licence in order to operate. The IFR’s powers, as set out in the Bill, will be:
Introducing and enforcing statutory, strengthened owners’ and directors’ tests to ensure a club’s custodians are suitable and protect fans from irresponsible owners.
Enhancing financial regulation to improve the financial resilience of clubs across the football pyramid, ensuring that clubs take sensible financial decisions and risks are mitigated so they do not jeopardise the club’s future.
Placing fan engagement requirements on clubs and requiring clubs to comply with heritage protections.
Requiring clubs to seek approval if they propose a sale or relocation of their home ground.
Preventing English clubs from joining breakaway or unlicensed leagues.
Introducing a backstop power to intervene in the distribution of broadcast revenue where necessary (subject to certain thresholds being met).
Establishing a ‘Football Club Corporate Governance Code’.
The IFR will prepare and publish, within three years of becoming operational and then every three years thereafter, a State of the Game report that will offer “a broad assessment of the financial health, market structure and economic issues in the football industry”.
It will also publish “detailed and practical guidance on its regulatory regime, to support industry understanding and compliance”. And it will submit an annual report to the Secretary of State on its activities every year, which will be available for the public to see.
The approach of the IFR is to be “proportionate and adaptive”, and it will take a “participative approach” to regulation, taking an “advocacy-first approach to enforcement wherever possible”.
The Bill has been welcomed by the English Football League, which runs the four tiers below the Premier League, fan organisations, many individual clubs and politicians of all parties.
7th November 2023
The King’s Speech today to Parliament confirmed the Fan-Led Review ambition to create a statutory Independent Regulator for English football. This is an incredible achievement and reflects persistent work by the FSA, WHUST and other supporter colleagues working with government to give a legal basis to the aim of “putting fans at the heart of football”.
The King announced that “legislation will be brought forward to safeguard the future of football clubs for the benefit of communities and fans”. The Football Governance Bill will establish a new independent regulator for English football to address issue of financial stability and ensure fans’ voices are listened to. The Regulator will operate a licencing system, where all clubs in the top five tiers of the men’s English football pyramid will need a licence to operate as professional football clubs. The Regulator will have legal powers to monitor and enforce compliance with requirements in financial regulation; corporate governance; club ownership (Owners’ and Directors’ test); fan engagement and club heritage protection; and approved competitions (ie no European Super Leagues!).
The Bill will set a minimum standard for fan engagement, which clubs will need to meet. Clubs will have a legal requirement to engage fans. They will not get a licence to operate if they don’t meet this requirement.
The Trust celebrates the announcement. It represents years and years of struggle and sadly reflects the avoidable pain experienced supporters of mismanaged owners and directors. By any standard it is a fantastic achievement for fans. But there’s still much more to do.
The next stage is a Parliamentary debate “on the King’s Speech”. The lead government department will be busy drafting the Bill. Timescales will be dictated by Parliamentary Business planners, but it likely the Bill will be formally introduced early in the New Year. This First Reading is just that, a reading out of the Bill’s Title but with no debate. At that point the Bill will be published and available for all read and consider.
There will then be a Second Reading where the general purpose and intent of the Bill will be outlined by the government and subsequently debated. There is a vote at the close of Second Reading to decide whether the Bill should go forward to Committee Stage. Following agreement by the House, the Government and Opposition will agree the composition for the MPs who will consider the draft legislation, line by line, at what is called its Committee Stage. During this time, the Bill Committee will meet regularly to consider the draft detail in the Bill and consider and vote on any Opposition or Government Amendments (proposed changes).
Report Stage follows. This takes place back in the main floor of whichever House Introduced the Bill. Amendments to the Bill can be considered at Report Stage. Third Reading is another general discussion. In Commons Third Readings no Amendments are permitted. The Bill would then be passed to the House of Lords to consider because both Houses of Parliament must agree on the Bill before it can become an Act. The Lord’s can make Amendments to the Bill. The Bill then passes back to the Commons to consider any Lord’s amendments and whether they can agree them. There can be some toing and froing at this stage although that is unlikely with the Football Governance Bill. In any event, it is ultimately for the Commons to make law so their view will prevail in the event its not possible to agree.
A Bill that has been passed by both Houses becomes law once it has been given Royal Assent by the King. It is likely that the provisions in our Bill, the setting up and commencing operations of a Regulator will actually start some-time after Royal Assent.
Timescales are very difficult to predict. It is possible we could see publication and Introduction of the Bill in January 2024. We might then see First and Second Reading during February. Committee Stage perhaps from mid-March to mid-June/July. Report and Third Reading perhaps June/July. Then Parliament adjourns for its’ Summer Recess. We might perhaps see Lord’s Stage September/October. And maybe Royal Assent November. The New Regulator might start to become operational from perhaps January 2025 onwards.
In the meantime, we continue to push for a Shadow Regulator to prepare the path for the real thing. It’s encouraging to see that the government have advertised to fill the post of Chief Operating Officer for the Regulator. And we remain keen to press for change to the Bill so that it can include the Fan-Led Review recommendation for Trusts to hold a Golden Share as protection for club heritage items. We will also continue to work on influencing the detailed regulations which will shape the way the Regulator works and where the Trust has a particular interest in ensuring that the standards for fan engagement are ambitious, meaningful and have bite.
23rd February 2023
Published Government White Paper:
A sustainable future - reforming club football governance
The Government today published a white paper which sets out the government’s comprehensive plan to introduce an independent regulator for professional clubs in the English football pyramid.
Following the Fan-Led Review of Football Governance, this white paper sets out the government’s plans to deliver an independent regulator to ensure the long-term sustainability of the English football pyramid.
This includes the legislative framework for regulation, with the primary strategic purpose to ensure that English football is sustainable and resilient, for the benefit of fans and local communities. The white paper also sets out government’s broader non-legislative reform measures, to drive industry action in areas outside of the regulator’s remit and ensure the ongoing development of both the men’s and women’s games, at elite and grassroots levels.
The white paper proposes establishing, in law, a new licensing system for football clubs operating in the top 5 tiers of the English football pyramid, overseen by an independent regulator. Football clubs will be required to comply with licence conditions which seek to ensure club sustainability and the overall stability of the English football pyramid, and to protect the cultural heritage of football clubs for their fans.
The Regulator will implement a minimum standard of fan engagement.
Fans are the most important stakeholder for any football club, and both parties benefit from their involvement in the long-term decision-making process at a club. The Regulator will ensure clubs have a framework in place to regularly meet a representative group of fans to discuss key matters at the club, and other issues of interest to supporters (including club heritage).
The Regulator will also add, and reinforce existing, protections around club heritage.
The Regulator will require clubs to comply with the Football Association (FA) on its new rules for club heritage, which will give fans a veto over changes to the badge and home shirt colours, in addition to the strong existing protections for club names. The Regulator will also require clubs to seek its approval for any sale or relocation of the club’s stadium.
The government will use this white paper as the basis for targeted engagement to consult with key stakeholders as we develop legislation.
24th November 2021
The Published Review
The Fan-led Review can be accessed here on the Government website.
Key recommendations of the Review include:
Ø The Government should create a new Independent Regulator for English Football (IREF) established by an Act of Parliament and based upon specialist business regulation adapted to the football industry.
Ø IREF should operate a licensing system for professional men’s football.
Ø To ensure the financial sustainability of the professional game, IREF should oversee financial regulation in football. This should be based upon prudential regulation in other industries, recognizing that football is obviously sport but also now big business.
Ø New owners’ and directors’ tests for clubs should be established by IREF and these will replace the three existing tests to ensure that only good custodians and qualified directors can run these vitally important community and cultural assets.
Ø As every club’s most important stakeholder, supporters should be properly consulted by their clubs in taking key decisions by means of a Shadow Board. Effective supporter engagement should be a license condition and overseen by IREF. At West Ham, the Independent Supporters’ Committee – of which WHUST is a member – could develop into the Shadow Board envisaged in the Fan Led Review.
Ø There should be additional protections for key items of club heritage through a “Golden Share” requiring supporter consent and overseen by IREF. Key items of club heritage would include the location of the stadium, club badge, club colours and the club name.
Protecting Heritage Assets
The Report recommends:
Football clubs are a vital part of their local communities, in recognition of this there should be additional protection for key items of club heritage.
It should be a licence condition that all licenced clubs should include within their articles of association a Golden Share requiring democratic consent to proposed actions relating to identified heritage items. Each Golden Share right should have circumstances in which it will not apply.
The consent of the holder of the Golden Share should be required for the sale of the club stadium, relocation outside of the local area which is not a temporary part of a redevelopment, joining a new competition that is not approved by FIFA, UEFA and the FA and/or leaving a competition in which it currently plays, club badge, first team home colours, and club playing name.
The proposed key general characteristics of this Golden Share are:
It shall not have any financial value or be capable of being transferred or otherwise disposed of other than to an alternative supporters body that also meets the required criteria
As it is not intended to convey ownership rights, it shall carry no rights to receive notice of or attend at a general meeting of the club or any rights to vote on any ordinary or special company resolution
The rights attaching to the special share shall not be capable of variation other than with the consent in writing of the holder of the share and the independent regulator
14th June 2021
Our Presentation to the Fan-led Review
WHUISA (the predecessor of WHUST) was approached by the FSA and asked to be one of the Premier League groups to present evidence to Tracey Crouch and her panel towards the fan-led review. The Premier League representatives gave their evidence on the 14th June 2021.
WHUISA was asked to present evidence around the value of a ‘golden share’ in ensuring how the cultural heritage and history of a club, in our case West Ham United, would be protected.
Our Chair, Sue Watson, spoke about the history of a football club and how the cultural heritage develops from that, leading into the impact of this on supporters of all generations. She described how a culture grows out of the shared stories, the memories, the rituals, songs, and the home stadium itself. However, she emphasized that the most important aspect of the cultural heritage are the supporters – while owners and shareholders come and go, supporter loyalty remains consistent.
We argued for the introduction of a golden share as it would ensure that the best aspects of a well-run business become part of how the Club relates to its supporters. Decisions arising from business plans, whether stadium moves, training facilities and badges, would be made with those who are the most emotionally invested in their clubs.
Finally, Sue gave a passionate and emotive description of the impact on her that followed the move from the Boleyn Ground to the London Stadium. From a deeply personal perspective, she described how moving to the new ground has decimated the culture of West Ham fans who must pick up the pieces and attempt to fit new memories into that heritage.
You can listen to Sue’s presentation (6 1/2 minutes)
19th April 2021
THE FAN LED REVIEW OF FOOTBALL GOVERNANCE
This Independent Review, announced by Culture Secretary Oliver Dowden on 19 April 2021, is a comprehensive examination of the English football system with the aim of exploring ways of improving the governance, ownership and financial sustainability of clubs in the football pyramid, building on the strengths and benefits that our great game already provides the nation.
What is it?
The Fan Led Review of Football Governance was the result of three points of crisis in our national game. The first was the collapse of Bury FC. A club founded in 1885, which had existed through countless economic cycles, several wars and 26 different Prime Ministers ceased to exist in 2018-19 with a devastating impact on the local economy and leaving behind a devastated fan base and community. This led to the commitment in the 2019 Conservative Party manifesto to ‘set up a fan-led review of football governance…’.
The next crisis was COVID-19. For the first time since the Second World War, club football was brought to a complete halt, threatening the continued existence of many professional football clubs. The pandemic and its effects laid bare the fragile nature of the finances of many clubs, as well as the structural challenges of the existing domestic football authorities.
The final crisis was the attempt to set up a European Super League in April 2021. This new competition would have involved six English clubs as founding members, protected from relegation. It was a threat to the entire English football pyramid and led to an unprecedented outpouring of protests from fans, commentators, clubs and government. As a result, the Secretary of State for Digital, Culture, Media and Sport (DCMS) announced to Parliament on 19 April 2021:
“…it’s clearer than ever that we need a proper examination of the long-term future of football. To many fans in this country, the game is now almost unrecognisable from a few decades ago. Season after season, year after year, football fans demonstrate unwavering loyalty and passion by sticking by their clubs. But their loyalty is being abused by a small number of individuals who wield an incredible amount of power and influence.
If the past year has taught us anything, it’s that football is nothing without its fans. These owners should remember that they are only temporary custodians of their clubs, and they forget fans at their peril”.
The terms of reference for Fan Led Review of Football Governance were issued on 22 April 2021. These charged the Review with the aim to ‘explore ways of improving the governance, ownership and financial sustainability of clubs in English football, building on the strengths of the football pyramid.’