For the first time, a new independent regulator for the men’s elite game will be established in law to oversee the financial sustainability of the game and put fans back at the heart of how football is run.
The regulator will implement a new licensing system from the top flight down to the National League, requiring clubs to demonstrate sound financial business models and good corporate governance as part of an application process before being allowed to compete.
It will guarantee fans a greater say in the strategic running of their clubs and help protect clubs’ heritage to stop owners changing names, badges and home shirt colours without consulting fans. It will require clubs to seek regulator approval for any sale or relocation of the stadium, with fan engagement a major part of that process.
There will be new tests for owners and directors, ensuring good custodians of clubs, stronger due diligence on sources of wealth and a requirement for robust financial planning.
The regulator will have the power to prevent English clubs from joining new competitions that do not meet a predetermined criteria, in consultation with the FA and fans. That criteria could include measures to stop clubs participating in closed-shop breakaway competitions which harm the domestic game, such as the European Super League.
The English game remains one of the UK’s greatest cultural exports, with clubs and leagues around the world modelling themselves on its success. That is why the Government is today taking the necessary and targeted steps to ensure that continues for generations.
The move follows the Government’s 2019 manifesto commitment to deliver a fan-led review of football governance, in light of the failings at historic clubs such as Bury and Macclesfield Town which went out of business as a result of mismanagement. Those clubs are among 64 instances of a club being put into administration since 1992, when the Premier League was launched.
More recently, in 2021, plans for a breakaway European Super League by a select group of Premier League and other European elite clubs were shelved after widespread public condemnation and action from the Government and football authorities.
There continues to be serious financial risk in the leagues. Despite the global success of English football, the combined net debt of clubs in the Premier League and Championship had reached £5.9 billion by the end of the 2020/21 season.
In the same season, the Championship reported a wage-to-revenue ratio average of 125 per cent - meaning clubs were stretching themselves far beyond their means - and in recent months multiple clubs throughout the leagues have failed to meet their payroll. Derby County FC found itself on the brink of liquidation last year, and indications are that things continue to deteriorate across the leagues.
The Government launched a Fan-Led Review Of Football in 2021 and responded to it in April 2022.
Responding to the release of the Government White Paper, Hatters CEO Gary Sweet said: "As the Club that has experienced the greatest spread of positions in the pyramid over the last decade, we fully understand the importance of preserving the values of our beautiful game and care passionately about the protection of its heritage.
The EFL also released a statement, which reads: “The EFL has been clear that the English game needs a fundamental financial reset in order make the game sustainable so that all Clubs can continue to serve their supporters and communities long into the future.
“After an extensive period of consultation, the EFL is therefore pleased to note that the Government’s announcement regarding an Independent Regulator proposes to “oversee the financial sustainability of the game” and we welcome that a Regulator will have “targeted powers of last resort to intervene and facilitate an agreement as and when necessary”, should football be unable to find a funding agreement that safeguards the future of our pyramid for the long term.
“Going hand-in-hand with financial reform, the League is supportive of proposals relating to enhanced regulation and looks forward to consulting with Government on matters including Club Licensing, the Owners and Directors Test and heritage protection in the period ahead.
“A landmark moment for the future of our game, we now await to review the White Paper in its entirety and will consider our position in full. The Fan Led Review White Paper represents a once in a generation opportunity that must be seized to address the systemic issues that football has been unable to sort itself over the last 30 years.”
