In November 2021, the UK government commissioned Conservative MP Tracey Crouch to lead the formation of a fan-led review on football. This review was consequently publicised and whilst it largely centred around the themes of transfer tax and the support of the overarching pyramid structure, it has now led to the introduction of an independent regulator to govern football in the UK.
As confirmed in the King's speech on 7 November 2023, “legislation will be brought forward to safeguard the future of football clubs for the benefit of communities and fans”. In addition, part of this development is also likely to include the strengthening of the current owner's and directors' test. Of course, this all stems from a hollow shell of uncertainty surrounding the financial status and liquidity of football clubs, many of which have entered into administration or liquidation in recent years.
The government highlights the Premier League's worldwide success in attracting more viewers and higher revenues than any of its international rivals in the 2021-22 season. The league's aggregate revenue was approximately £5.5 billion compared to a an estimated £2.8 billion for Spain's LaLiga.
Clubs however, are consistently losing money and relying on external funding, such as elongated sponsorship and endorsement deals, along with international tours, with their debt levels rising.
For example, since the beginning of the century, 19 out of 23 Premier League seasons resulted in combined pre-tax losses for all those clubs. Across the Premier League and second division Championship, net debt increased to £4.4 billion at the end of 2022.
The Independent Regulator for Football (IREF) will have the authority to effectively intervene in addressing cash flow, liquidity and other systemic issues within clubs, many of which remain financially vulnerable following the global pandemic.
The regulator may also be key in having substantial control over licensing regimes under which football clubs in England and Wales will be expected to operate. This will include:
- Powers to monitor and enforce compliance with requirements in financial regulation;
- Corporate governance;
- Club ownership (owners’ and directors’ tests);
- Fan engagement and club heritage protection; and
- Approved competitions.
The news has been welcomed by key figures in the beautiful game, including Chairperson of the English Football League, Rick Parry and the Chief Executive of Fair Game, Niall Cooper.
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