In a statement to the House of Commons, Sports Minister Nigel Huddleston announced that the government has endorsed the 10 key strategic recommendations set out in its fan-led review of football governance, published by member of Parliament Tracey Crouch in November 2021, to improve financial sustainability and corporate governance in the national game, and place fans at the heart of decision-making.
The government says that the regulator will be backed by primary legislation to provide it with the statutory powers to license and sanction clubs as part of its remit to tackle the most pressing issues throughout the football pyramid.
The government has also published an independent study it commissioned highlighting the widespread culture of clubs operating unsustainable financial practices, placing the pursuit of success over sound financial management. This includes an over-reliance on owner funding, which can leave clubs dangerously exposed if owners decide to pull the plug on cash injections. Premier League and Championship clubs are now regularly exceeding the Union of European Football Associations' guidance on spending no more than 70% of club revenue on wages, leading to weak balance sheets across the industry that would be unacceptable in any other field.
The regulator will also be given the power to exercise financial oversight of clubs, including information gathering, investigation and enforcement powers. The fan-led review recommended looking at financial distribution, including solidarity payments. It is the government's view that this should be solved by the football authorities in the first instance. Further details on the government's preferred option, including on regulatory backstop powers, will be set out in the white paper.
The new independent regulator will also be tasked with applying an enhanced owners' and directors' test, both ahead of an acquisition of a club and on an ongoing basis. This will include a new "integrity test" for all owners and executives, and enhanced due diligence, including sources of funding, upon an acquisition. It will replace the current tests administered by the Premier League and English Football League.
Following a wave of feedback as part of the fan-led review, the government has also confirmed its support for the following recommendations:
- a greater role for fans in the day to day running of clubs – the government will now look at mechanisms including the option of a "shadow board";
- fan engagement on club heritage issues should receive greater regulatory oversight – to ensure fans have a bigger say on changes to their club stadia, logo, name and kit via a "golden share"; and
- stronger action to improve equality and diversity in club boardrooms throughout the football pyramid – this will be linked to the role of the regulator.
A white paper setting out full details on these measures and an indicative timetable for legislation is expected to be published in Summer 2022.
For further information on this topic please contact Paul Maalo at Wiggin by telephone (+44 1242 224 114) or email ([email protected]). The Wiggin website can be accessed at www.wiggin.co.uk.