Football Governance: The new Football Governance Bill explained

What it means for the top five male tiers of English football…

In February 2023 following a fan-led review into the beautiful game in 2022, the government announced plans for a football regulator. This year, a new Football Governance Bill has been proposed which will see an independent football regulator (IFR) for the top five tiers of male football in England established. 

What is the football governance bill?

The Football Governance Bill is being sponsored by the department for Culture, media and sport. 

In simple terms, it will establish an independent regulator for the top five tiers of men’s football in England to try and make the leagues/clubs more sustainable. So that situations such as the one back in 2019, when longstanding EFL club Bury was thrown out of the football league and went into administration, won’t ever happen again.

In a Written Statement on 19 March 2024, Stuart Andrew, Parliamentary Under-Secretary of State at the Department for Culture, Media and Sport (DCMS) said: “The regulator’s primary purpose would be to ensure that English football is sustainable and resilient for the benefit of fans and the local communities football clubs serve”.

According to the bill, the regulator would ensure English football is sustainable and resilient by following the principles below:

• Operating a licensing system, where all clubs in the top five tiers of the men’s game would need a licence to operate.
• Establishing a new, strengthened owners’ and directors’ test to make sure a club’s custodians were suitable and to protect fans from irresponsible owners. 
• Setting a minimum standard of fan engagement and requiring clubs to comply with new FA rules on club heritage.
• Requiring clubs to seek regulator pre-approval for any sale or relocation of their stadium. 
• Preventing clubs from joining breakaway leagues that did not have the support of fans or that threatened the heritage or sustainability of English football.
• Having a backstop power to intervene in the distribution of broadcast revenue if the leagues failed to reach an agreement.
• Establishing a compulsory “Football Club Corporate Governance Code”.

Background to the bill

Taken directly from the House of Commons library website, the bill has been set up due to the longstanding concerns involved in the men’s football pyramid, these include:

• The financial sustainability of the game.
• The ownership of clubs.
• The lack of fan involvement in the running of clubs.
• The impact of the COVID-19 pandemic on the game.
• The proposed (yet abandoned) setup of the breakaway European Super League.

Back in June 2023 in a Football Supporters Association survey, where almost 10,000 fans shared their thoughts on the state of football ahead of the upcoming season, almost nine in ten (88.2%) agreed that an independent regulator was needed for football in England.

Similarly in a poll of nearly 11,000 fans conducted by the Daily Mail in March 2022, 85% of them supported the introduction of an IFR as well.

Fans are set to be given more of an influence in their clubs decisions

The following three points of the bill:

• Establishing a new, strengthened owners’ and directors’ test to make sure a club’s custodians were suitable and to protect fans from irresponsible owners. 
• Setting a minimum standard of fan engagement and requiring clubs to comply with new FA rules on club heritage.
• Preventing clubs from joining breakaway leagues that did not have the support of fans or that threatened the heritage or sustainability of English football.

Certainly suggests a lean towards the idea that fans in England will be given more of a say in how their beloved club is run. Prime Minister Rishi Sunak said: “The bill is a historic moment for football fans, it will make sure their voices are front and centre.”

From looking at the ideas and principles proposed in the bill it seems like the English football pyramid is going down a similar route to the ‘50+1’ rule which is in place in the German Bundesliga. 

The ‘50+1’ rule refers to the need for members of a club to hold 50 percent, plus one more vote, of voting rights – i.e. a majority. It means that clubs – and, by extension, the fans – have the ultimate say in how they are run, not an outside influence or investor. Under the German Football League rules, any club that gives outside investors the greatest say in how a club is run, is not allowed to take part in the top flight or second division.

Owners and directors, IFR powers overview

Over the last few years, we’ve seen multi-million/billionaire owners take over many clubs worldwide. 

The most notable one was when the Saudi-led consortium PIF (Public Investment Fund) bought Newcastle United for around £300 million from Mike Ashley back in 2021. 

The IFR will have the power to determine the suitability of prospective new and, under certain circumstances, incumbent owners and directors of regulated clubs. It will determine the suitability of all prospective new owners and all prospective new directors by following a test that comprises of three key elements:

1. A fitness test (owners and directors) to assess an individual’s integrity, honesty, financial soundness, and, in the case of directors, competence, to ensure they are a suitable custodian to run or own a football club.
2. A source of wealth test (owners) to mitigate against the risk of illicit finance in football and ensure the financial sustainability of clubs and the pyramid.
3. To ensure the financial sustainability of clubs, prospective owners must have sufficient financial resources.

If the IFR determines that an owner or director is not suitable for their role at a club, they will be removed. The IFR will also be given certain enforcement powers to protect clubs from harm the unsuitable owner or director might cause, and to ultimately remove them. These powers include:

1. Removal directions: The IFR must direct an unsuitable owner to take all reasonable steps so that they are no longer an owner or director by a specified date.
2. Ownership removal orders: In certain circumstances, the IFR may make an order to ensure that an unsuitable owner is removed by a specified date.
3. Disqualification orders: The IFR may disqualify a person from being an owner or director of any regulated club for a specified or indefinite period.
4. Directions relating to unsuitable owners and directors: The IFR may prohibit an unsuitable owner or director from carrying out certain activities or exercising certain rights at the relevant club.

Despite the bill giving the IFR the power to remove owners if they are deemed unsuitable or harmful to a club, there are (at least not yet) no restrictions on clubs having state owners from countries with such poorhuman rights beliefs.

John Hird, a member of Newcastle fan group ‘NUFC Fans Against Sportswashing’ (NUFCFAS) said: “The bill is a small step forward but doesn’t go anywhere near far enough in the opinion of many fans.”

“Nation-state ownership of our football clubs, if allowed to continue, will ruin the game. The parliamentary white paper, “A sustainable future – reforming club football governance” doesn’t address the issues of state ownership and human rights.

“The football owners’ and directors’ test has to include a respecting human rights clause and another prohibiting ownership of clubs by states.

“State ownership of clubs brings closer the prospect of multi-club ownership ramifications for competitive integrity; the financially destabilising impact; and the use of clubs as branding vehicles for abusive states.”

What Hird is referring to here is the idea of ‘Sportwashing’, this is basically when a country with a reputation tarnished by wrongdoing tries to improve itself by investing huge amounts of money into sports. Saudi Arabia is one of the most well-known countries doing this at the moment.

Hird added: “We at NUFCFAS are very concerned nation states taking over out football clubs, and an increasing number of fans believe that the stability of the game is not possible with nation state involvement,

“Therefore, we do wish this bill was introduced before our current owners came in at Newcastle, but as I said before, it needs more teeth included such as banning nation-states and especially human rights abusing regimes from owning our football clubs otherwise this bill means very little.

“The whole idea of state ownership brings in the question of the geographical rivalries between the states which own some of our clubs. We don’t want our clubs to compete in a league where tensions between foreign states has the potential to overshadow the competition.”

What stage is the bill at now?

The Bill has currently had two reads in the House of Commons and the committee stage is now pending. There is still a long way to go before it’s fully passed though as it’s got to go through the House of Lords, and the final stages which includes receiving a Royal Assent.

Therefore, it could be a while before this IFR is introduced into the English Football Pyramid and a lot of the proposed principles and ideas of the bill could change as it progresses through each stage. However, one thing is for sure, fans will certainly have more of an influence and more of a say in how their club is run going forward. But in terms of the owners and directors element, the IFR may face some challenges…

Hird concluded: “We urge MPs to support a further tightening up of the PL owners’ and directors’ test which would specifically draw a red line prohibiting and phasing out nation-state ownership of our football clubs.”