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Bad owners could be forced to sell clubs by new English football regulator
The proposed regulator for English football will have the power to strip bad owners of their right to run a club and to force them to sell up their holdings, as the scope of its abilities – and limitations – came into focus at the start of a long-awaited legislative process.
On Tuesday the government published the football governance bill that has taken two years of consultation to achieve and provoked internecine dispute between football’s stakeholder groups. Although there is now clarity around the regulator’s mission and its proposed approach, much of the detail is still to be decided and potentially amended by MPs.
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According to the bill, the key responsibilities of the English independent football regulator (IFR) are to “operate a licensing regime, and to monitor and enforce compliance with requirements on financial regulation, club ownership and directors, fan engagement and club heritage protection”.
The licensing regime is the central means through which the IFR will look to assess the financial health of clubs and their commitment to the other requirements within the regulator’s mandate. Financial checks will be made in part through a live assessment of a club’s finances and its ability to “demonstrate sound basic financial practices”.
In the first instance these licences will be provisional, running for three years, with the regulator undertaking to work with clubs to ensure they hit minimum criteria. After this period a permanent licence would be granted but could, as an ultimate sanction, be withdrawn in the event of what is described as “persistent and wilful non-compliance”.
On the test applied to owners and directors, the regulator will look to work in three stages. The first will be a traditional assessment of “integrity, honesty [and] financial soundness”, with directors also expected to prove their competency.
The second stage will allow for “enhanced due diligence” of the source of a potential owner’s money to stop the use of “illicit” money to buy stakes in clubs.
The third stage would require the submission of a business plan that lays out how an owner would seek to run their club sustainably.
These tests would be applied to all potential owners and directors before they could take up their role. Existing owners and directors would require testing as part of the licensing process, and could also be tested if there were concerns they may breach the regulator’s conditions. In the event that test was failed, the regulator would have the ultimate power to force an owner to sell up or “force divestment”, while also having the ability to ban individuals for life.
On fan engagement and club heritage, clubs will be required to consult fans on a regular basis, but not obliged to act on their concerns. Clubs would, however, be expected to get the consent of supporters before changing aspects deemed to be essential to their heritage, such as the crest or colours. Any plan to sell a home ground must be approved by the regulator.
Much of the specifics of the regulator’s targets and criteria remain to be determined – including the crucial measures, such as cost controls, by which clubs would be expected to ensure their financial sustainability. The bill also acknowledges the possibility that the framework under which any regulator operates could be affected by changes within the football industry, such as a drop in or move away from broadcast revenues, or the inability of clubs to source ready credit.
Rick Parry, the EFL chair, who has been the strongest voice within English football for the creation of the regulator, said the publication of the bill was a “big, big day” and said it was right that the regulator had the scope to determine its own targets and criteria.
“I’ve always felt it’s a little like the gambling act of 2005 when they set up the gambling commission: it sets out the principles under which the regulator will operate but gives the regulator quite a lot of scope and discussion to make some detailed decisions,” he said.
“We don’t have a problem with that, because it is after all an independent regulator; [it would not be] appropriate to keep going back to parliament to take operational decisions. Clearly life is going to be different, but we don’t have a problem with better regulation.”
