The Secretary of State for Culture, Media and Sport has recently presented a new White Paper on reforming club football governance in England which aims to improve the resilience and sustainability of football clubs up and down the country (the “Proposals”).  The Proposals are motivated by a government desire for oversight and to mitigate against the risk of future breakaway leagues.  Whilst any major changes are likely to be years down the line, key stakeholders should be aware of how the Proposals may change the footballing landscape in England.  This short article will identify the key Proposals and inform stakeholders on how they can best prepare themselves for what is to come.

1. The introduction of an independent regulator

The Government intends to introduce a new independent regulator (the “Regulator”) to govern various aspects of the top five tiers of English football.  The Regulator’s purpose will be to ensure the continued resilience and sustainability of football clubs.  To help the Regulator in its quest to achieve this, it will have three primary aims overarching everything that it does, namely: “club sustainability, systemic sustainability, and cultural heritage”.

Most football fans will be aware of the financial problems that the likes of Bury and Derby County have faced in recent years, so on the face of it, a regulator that has sustainability as its primary focus should be a welcome proposal for supporters.

Under the Proposals, those clubs who wish to play in the top five leagues of English football will need to be licenced.  Whilst the licence conditions are yet to be fully finalised, the Proposals suggest clubs should have “appropriate resources” and “fit and proper custodians” in place before a licence is granted. The licence conditions will likely not cause major issues for the majority of clubs.  The likelihood is that there would be a period where temporary licences were granted allowing clubs a certain timeframe to adhere to licence conditions in full. 

One potential challenge for the Regulator to manage is the overlap between the powers it will have and those possessed by the likes of UEFA and the FA.  The White Paper insists the Regulator will focus on cooperation and consultation between the various regulatory authorities, but it remains to be seen how this will work in practice.  

2. The new owners’ and directors’ test

A prospective purchaser of a football club will not only be looking at having to ensure any club they buy meets the new licencing requirements, but under the Proposals, owners will be subject to testing requirements.

These testing requirements will come under three broad elements, namely:

• a fitness and propriety test;
• enhanced due diligence around the source of wealth a prospective owner is intending to use to both purchase and finance the club; and
• a requirement for robust financial plans should the prospective owner be successful in their purchase.

This will be welcome news for a variety of stakeholders – primarily supporters, those who are club employees, and sponsors, with greater protection to prevent financial hardship.  In relation to sponsorship more generally, we would encourage readers to review our previous blog on points to consider in negotiating a sponsorship agreement here. 

The focus on sanctioning individual owners is a contrast from the current situation operated by the leagues which tends to punish clubs for misconduct and only bring charges against individuals in exceptional circumstances.

3. Break-away competitions

To be granted a licence to compete, the Proposals would require clubs to agree to only compete in competitions approved by the Regulator.  As it stands, this will include all existing domestic and European competitions.  Should clubs wish to join another competition, it must meet a number of criteria such as “be fair and meritocratic” and “not duly undermine the sustainability of English football’s existing leagues and competitions”.  The White Paper expressly calls out the European Super League project as an example of the type of competition which licenced clubs would be prevented from joining. 

In practice, the Regulator could block clubs from competing in domestic competitions or there could be the potential of imposing financial as well as sporting sanctions should a club wish to join another competition that falls foul of the Proposals.

4. New corporate governance code

The Proposals include a new ‘Football Club Corporate Governance Code’ (the “Code”) to be established and operated by the Regulator.

Whilst the Code has not yet been published, the White Paper does detail certain principles which clubs will have to adhere to, with the aim of ensuring owners do not pursue self-interest when making governance-related decisions or operate a club in a way which foregoes any concern for long-term strategy and sustainability.  Such principles include “a clear, appropriate governance structure with a properly constituted board that makes decisions collectively” and ensuring clubs adhere to a commitment to “recruit and engage people with appropriate skills, knowledge, experience and independence to further the club’s goals”.

5. Protection of club heritage 

The Proposals afford the Regulator with power to protect a club from its owners taking decisions which would substantially affect or change matters linked with ‘club heritage’.  This could be anything from changes to the club crest, to a proposed stadium move.  The paper proposes that if a club wishes to make such changes, it must show that “a majority of fans” are in favour of the change. 

The next steps?  The UK Government is currently consulting with key stakeholders during the first half of this year to iron out any issues and thereafter, the Proposals will receive legislative attention when “parliamentary time allows”.  This clearly opens the possibility that a potential change of administration (following the UK election which is likely to take place towards the end of 2024) could impact both the form and timescale of the Proposals.

For more insights into football-related topics, please see DLA Piper’s blog MSE Today.