The proposed powers of the English Independent Football Regulator (IFR) would allow the new body access to real-time financial information from inside clubs, conduct enhanced due diligence on the financial resources of new owners and force unsuitable owners to divest their holdings should they fail key tests.
A fuller picture of the scope and power of a regulator has begun to take shape after the UK government published the Football Governance Bill ahead of its first reading in parliament on Tuesday. While there is clarity around high-level ambitions, much of the detail is still to be decided and potentially amended by MPs.
According to the bill, the IFR’s key responsibilities 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”.
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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 After this period a permanent licence would be granted but could, as an ultimate sanction, be withdrawn in the event of what is described as “persistent and wilful non-compliance”.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 owners 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 licencing process, and could also be tested if there were concerns they might 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 with fans on a regular basis, but not necessarily obliged to act on their concerns. Clubs would, however, be expected to get the consent of supporters before changing aspects of the club deemed to be essential to their heritage, such as the club crest or colours. Any plan to sell a club’s home ground must also 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 future 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.
The chair of the EFL, Rick Parry, 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 gambing commision: 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.” – Guardian
