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What Will the New Independent Regulator Mean for English Football?

02 Dec, 2024
What Will the New Independent Regulator Mean for English Football?

English football is at a crossroads. The amount of money being pumped into the top of the game has risen dramatically in recent years, while those at the bottom of the football pyramid have become increasingly squeezed. Fiscal mismanagement and overly risky bids to reach the promised land have left numerous EFL clubs in huge financial trouble, and concern amongst fans about the fairness and equality of the national game have grown significantly.

Consequently, there have been ongoing conversations about the need for an independent body to increase regulation in football and attempt to level the playing field. It looks as though the people pushing for reform will have their way, with the much-discussed Football Governance Bill currently passing through the House of Commons and the House of Lords.

Many people expect the bill to become part of UK law in 2025. But what exactly will an independent regulator do, and what are the wider ramifications for football? That's what we'll be exploring later in this article; but first, we're going to outline where this debate began in the first place.

When Did an Independent Regulator First Gain Widespread Support?

We can trace the fully-fledged campaign for a football regulator back to the spring of 2021, and the failed launch of the European Super League. When the owners of the Premier League's six richest clubs teamed up with several other uber-wealthy European sides to attempt to form an undemocratic breakaway league (which was roundly rejected by fans, broadcasters, players and coaches), it exposed the greed of the world's richest football clubs. It also showed that their huge global and commercial power meant the owners thought they were untouchable.

This moment had far-reaching implications, but one of the key consequences of the European Super League debacle was that football fans in the UK became increasingly persuaded that greater restrictions needed to be placed on the richest in order to protect the wider game.

This feeling was compounded by the numerous examples of lower-league clubs falling into administration and in some cases being kicked out of the league system altogether due to financial irregularities and reckless ownership. 

As a result, pressure for a regulator ramped up from 2021 onwards. However, something similar had been in the works for a while; the Conservative government elected in 2019 promised a 'Fan-led review' of English football in its manifesto, and this was conducted by the former Ministor for Sport Tracey Crouch in 2021. The review's findings were published in February 2023 and the major take-home was a recommendation for the introduction of an independent football regulator.

The Tories got the ball rolling with the first Football Governance Bill, but the election of a new Labour government in July 2024 has led to some adaptations to the bill being made. We'll go through the differences shortly, but first we're going to explain in basic terms what a new independent regulator will mean for English football.

What is the Purpose of an Independent Regulator?

Widespread support for an independent regulator arose out of a desire to level the playing field in English football, closing the gap between rich and poor and aiming to protect more vulnerable clubs from falling into administration or even folding due to financial mismanagement.

According to The Guardian, the primary role of the first Football Governance Bill introduced by the Conservatives was to keep clubs solvent, preventing the kind of devastating collapses seen at clubs like Bury and Macclesfield in recent years and ensuring that all clubs in the league system have enough money to operate sustainably. 

This remains the key goal of the legislation, with The Athletic's Matt Slater reporting that "the regulator's main role will be to oversee a licensing regime that is intended to ensure improved financial sustainability and better decision-making." The job remit for the role of Chair of the Regulator (recently advertised online with a £130,000 salary for the part-time role) states that the candidate must "understand the economic and social value of football" and "protect the cultural heritage of football clubs for their fans". 

On top of that, the regulator will assume responsibility for the vetting of new owners and investors, bypassing the Premier League's Owners and Directors Test, which has received plenty of criticism from football fans, campaigners and journalists in recent years. It's been said that the new regulator will have access to HMRC data and consultations with the National Crime Agency, allowing it to examine potential owners better than any previous system was able to.

When Tracey Crouch's original fan-led review identified the need for an independent regulator, there was a broad consensus amongst politicians that change needed to happen. However, chaos and division in the ruling Conservative Party during the last few years has delayed the progression of the bill, before the early calling of a general election in spring 2024 halted things entirely just as the bill looked set to pass through Parliament.

Thankfully for those campaigning for reform in football, within a fortnight of being elected, Labour got the Football Governance Bill back on the table. So how does the new bill differ from the last one?

How Has the New Labour Government Changed the Football Governance Bill?

There were concerns amongst some people that Labour would scale back the plans originally proposed by the Tories. These worries were largely related to the 'freebies' scandal that saw Prime Minister Keir Starmer and many of his team accepting expensive executive boxes for high-profile Premier League matches (over a third of the new Labour cabinet have received hospitality from a Premier League club in the last three years).

However, despite these concerns, the new government have gone even further in their implementation of the regulator than the Tories planned to.

While the first bill did not touch on parachute payments — meaning the distribution of a share of Premier League broadcasting revenue to relegated clubs, designed as a financial buffer following the drop — the second bill committed to looking at (and potentially revising) this key element of football's financial distribution system.

Apparently, if the regulator "considers [parachute payments] to be of systemic risk to financial sustainability" they will be able to make changes to the system, although they will not be allowed to scrap them entirely. Parachute payments have faced lots of criticism from EFL clubs who argue that they force Championship sides to choose between competing for promotion and being run sustainability, so many people will be pleased this area is being examined.

In case of disputes between the Premier League and the English Football League (EFL) relating to financial distribution, the regulator will also have the ability to settle the amount of money owed to the EFL by the English top flight.

Another key difference in the new bill is the removal of a requirement for the regulator to "consider government foreign and trade policy when approving club takeovers". As many people pointed out, this caveat essentially stopped the body being independent, instead creating a close alignment with the UK government. Labour recognised this and have scrapped that part of the legislation.

There's also additional content about fan representation; according to the new bill, the regulator will be able to compel clubs to democratically elect fan representatives, who can hold discussions with clubs on issues like ticket pricing and stadium relocation plans. 

The effects of the bill's implementation will be tracked using another of its key measures: regular "state of the game" reports looking into the financial health of English football, with the first report set to be conducted 18 months after the regulator's establishment. The ultimate, last resort measure the regulator can introduce is a "backstop" power to intervene if the game fails to come up with a fairer distribution model than the one the Premier League currently operates under. 

The Reaction to the New Bill

Culture Secretary Lisa Nandy, a keen supporter of greater regulation in football, has praised the new bill, saying "English football is one of our greatest exports and a source of national pride which this government wants to see thrive for generations to come… for too long, financial instability has meant loyal fans and whole communities have risked losing their cherished clubs as a result of mismanagement and reckless spending.

This bill seeks to properly redress the balance, putting fans back at the heart of the game, taking on rogue owners and crucially helping to put clubs up and down the country on a sound financial footing."

Due to the increased regulation facing the Premier League, it's not a huge surprise that representatives of the English top flight, as well as owners of some of its clubs, have criticised the new laws.

The EPL responded: "We remain concerned about the regulatory framework… we believe rigid banking-style regulation, and the regulators' unprecedented and untested powers to intervene in the distribution of the Premier League's revenues, could have a negative impact on the league's continued competitiveness, clubs' investment in world-class talent and, above all, the aspiration that drives our global appeal and growth."

The Premier League (and owners like West Ham's Karen Brady) have also pointed to the "world-leading" £1.6 billion (16% of central income) the English top tier distributes across a three-year period to the EFL, National League, grassroots football, the women's game, and charity activities.

The issue is, when distributed across this vast football pyramid, the investment is spread rather thinly, particularly when you consider that a huge chunk of the money is the £233 million dished out to a small handful of relegated clubs in parachute payments which can harm competition in the Championship.

The EFL have been positive about the reforms (after all, EFL clubs are set to gain from this legislation). The league system's chairman Rick Parry said "there is a requirement for independent regulation, and we believe the bill has been framed in a way that will enable the new regulator to protect and achieve the sustainability of clubs across the entire football pyramid."

Campaign group Fair Game UK have also supported the bill, will CEO Niall Couper saying "The pressure to overspend to climb the pyramid has reached epidemic levels - 58% of our top 92 clubs are technically insolvent… the regulator must have powers to set parameters around what any deal must deliver… that should include closing the gaps between divisions and rewarding well-run clubs."

If you'd like to find out more about how Fair Game are pushing to reward well-run clubs and shine a light on inequality in English football, check out our article on Fair Game's Best-Run Clubs In The UK report for 2024.