The UK government has confirmed plans to introduce an independent regulator to govern domestic soccer.
The move was signed off by prime minister Rishi Sunak, and the government will today (February 23) release its White Paper outlining the new legislation.
The regulator, who will be legislated for by the government but appointed by an independent panel, will be established in law “to oversee the financial sustainability of the game and put fans back at the heart of how football is run.”
In addition, the regulator will implement a new licensing system from the top-flight Premier League down to the fifth-tier National League, “requiring clubs to demonstrate sound financial business models and good corporate governance as part of an application process before being allowed to compete.”
Last April, the government – then under prime minister Boris Johnson – announced its intention to create legislation for an independent regulator to oversee English soccer after recommendations made in a government-commissioned, fan-led review of the domestic game carried out by former UK sports minister Tracy Crouch and concluded in late 2021.
This led to the government fully endorsing and accepting the idea of a regulator in principle, with the body having the power to sanction English clubs that break financial rules and regulations.
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The new legislation will include new tests for owners’ and directors, “ensuring good custodians of clubs, stronger due diligence on sources of wealth, and a requirement for robust financial planning.”
The regulator will introduce an "enhanced" test that will replace the current process implemented by the Premier League, second-tier English Football League, and the Football Association (FA) governing body.
The suitability of the Premier League's owners' and directors' test has been criticized in the past, most recently following the Saudi Arabian-backed takeover of Newcastle United.
Requirements that currently prohibit someone from becoming an owner or director of a Premier League club include criminal convictions, a ban by a sporting or professional body, or breaches of key football regulations such as match-fixing.
The regulator will also have the power to prevent English clubs from joining new competitions that do not meet predetermined criteria, in consultation with the FA and fans.
Those criteria could include measures to stop clubs from participating in closed-shop breakaway competitions “which harm the domestic game”, such as the failed European Super League project.
New sports minister Stuart Andrew said the government “is putting fans back at the center of football governance, and creating a stronger foundation for the continued growth and success of English football.”
Despite the success of English soccer, the government noted that “there continues to be serious financial risk in the leagues”, with the combined net debt of clubs in the Premier League and second-tier EFL Championship reaching £5.9 billion ($7.10 billion) by the end of the 2020-21 season.
The government said: “The Premier League remains the envy of club competitions around the world and the government remains fully behind its continued success.
“In order to secure the financial sustainability of clubs at all levels, a solution led by those running the leagues and their clubs is needed and remains the government’s preferred outcome.
“However, if the soccer bodies cannot reach an agreement, the regulator would have targeted powers of last resort to intervene and facilitate an agreement as and when necessary.”
In terms of financial distribution, the regulator will have the power to impose a new settlement, which effectively means it can force the Premier League to share more money across the pyramid.
EFL chairman Rick Parry is seeking a 25% share of pooled broadcast revenue with the Premier League, merit-based payments across all four divisions, and the abolition of 'parachute payments' to teams relegated from the top flight.
As part of its wide-ranging remit, the regulator will also ensure club directors demonstrate good basic financial practices, have appropriate financial resources and protect the core assets of the club; improve governance through the introduction of a Football Club Corporate Governance Code; and remain proportionate and adaptive in its approach with checks and balances embedded in its design.
The Premier League has often lobbied against the idea of a regulator and appeared to have got its wish when former prime minister Liz Truss put the plan on hold.
In a statement, the English top-tier said the league and its clubs “will now carefully consider the government’s plan for England to become the first major nation to make football a government-regulated industry.”
The league added: “It is vital that regulation does not damage the game fans love to watch in the deepest professional pyramid in the world, or its ability to attract investment and grow interest in our game.
“We will now work constructively with stakeholders to ensure that the proposed government regulator does not lead to any unintended consequences that could affect the Premier League’s position as the most-watched football league in the world, reduce its competitiveness, or put the unrivaled levels of funding we provide at risk.
“The Premier League has already taken action to address many issues raised in the Fan-Led Review and will work with government and parliamentarians on the next phase of the White Paper.
“We are committed to delivering a football-led solution to address key issues in the game – including financial distributions, financial controls, and the football calendar – together with the FA and the EFL.”
The legislation will give fans a greater say in the running of their clubs specifically and of the wider English game in general.
Fans will have the power to stop owners from changing names, badges, and home shirt colors without consultation. It will require clubs to seek regulator approval for any sale or relocation of the stadium, with fan engagement a major part of that process.
The proposals, which are likely to become law by 2024, will see a panel appointed to search for an appropriate individual to head the independent soccer regulator. This office will have directors and scores of members of staff overseeing the most contentious issues in the game.
Conrad Wiacek, head of sport analysis at GlobalData, commented: "The government's proposed regulator is set to become a defining battle in soccer governance in Europe and potentially have ramifications for the game globally. The stated aim is to oversee the financial sustainability of the game, and while many will have no issue with the basic tenets of the proposal, in essence making sure clubs live within their means and heading off ideas such as the proposed European Super League, many will have reservations about how this will be achieved.
"The current Premier League fit and proper persons test is really not fit for purpose, excluding a potential owner really only in the case of bankruptcy, so many will want to see the detail before passing judgment. Obviously, there is opposition within the game already but the likes of the Premier League and EFL have both acknowledged the need for a change in governance and many clubs will have to put much greater emphasis on commercial considerations or risk being excluded from competitions."
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