Introduction
In recent years, numerous football clubs have folded due to financial mismanagement and questionable spending; Bury FC and Macclesfield Town FC are two that immediately come to mind. There has also been growing concern regarding the suitability of potential and incumbent owners and officers of clubs.
In response to these issues and following a fan-led review in 2022, the UK Government has reintroduced The Football Governance Bill (The Bill). The Bill is expected to come into force in 2025, provided there are no further setbacks in its progress through the legislature.
The Bill will establish the Independent Football Regulator (IFR), which will oversee the top five tiers of English football (from the Premier League to The National League).
The IFR aims to “protect and promote the sustainability of English football”. Lisa Nandy, Culture Secretary, said the new Bill would seek “to properly redress the balance, putting fans back at the heart of the game, taking on rogue owners and crucially helping to put clubs up and down the country on a sound financial footing”.
The Bill sets out the IFR’s three primary objectives (s. 6 of the Bill):
Under the Bill, the IFR will have the power to:
This article will focus on the new powers that the IFR will possess and the criminal and regulatory consequences for clubs and individuals who fail to comply.
The IFR’s ability to test the suitability of owners and officers
Perhaps one of the most striking new powers that the IFR will possess is the power to test the suitability of incumbent and prospective owners and officers of clubs.
The test will have three elements:
Prospective club owners and officers will be required to notify the IFR of their intention to purchase a club or take up the role of officer (s. 27). The IFR will then determine whether they pass the tests before determining whether they are suitable (s. 28 & 29).
Current owners will not automatically be tested, but the IFR will have the authority to test and remove incumbents if they are deemed unsuitable. Furthermore, incumbent owners and officers must notify the IFR where there has been a “material change of circumstances which is relevant to whether the individual is suitable to be an owner” or officer of a club (s. 33).
It will be interesting to see how the fitness test and source of wealth test are applied in practice. Without straying too far into the realms of speculation, it remains unclear what might render someone unsuitable in the eyes of the IFR… possibly a criminal conviction, a negative civil finding, being subjected to international sanctions… who knows!
The IFR will be able to scrutinise proposed financial plans and intervene where there are concerns about a club’s ability to meet its financial obligations. Plainly, this requirement has been established to prevent a recurrence of the circumstances Bury FC encountered in 2019.
Disqualification and Removal of Owners and Officers
If the IFR concludes that an individual is unsuitable to become an owner or officer, it will make a disqualification order disqualifying them from holding that position (s. 38). If the IFR determines that a current owner or officer is no longer suitable they will be required to take all reasonable steps to cease to be an owner or officer by a specific date (s. 39). If they do not take steps or remain in position beyond the specified time period, the IFR will make an ownership removal order (s. 43). These orders may include the appointment of trustees to take over the running of a club (s. 43(3)-(7)).
Enforcement and Sanctions
The IFR will have far-reaching and, at this stage, somewhat vague powers to require relevant individuals to provide information to the IFR when it considers that the information is necessary for the purpose of exercising the IFR’s functions (s. 64(1)). Presumably, this means that individuals and clubs may be required to provide information regarding financial viability or planning, as well as information relevant to the suitability of their potential or current owners or officers.
The IFR has the power to conduct investigations where it has reasonable grounds for suspecting that there has been an infringement of the Bill (Schedule 7).
Although the Government’s fact sheet states that the IFR’s default approach should be cooperative in nature, it will have the authority to sanction those who fail to comply with its requirements for information, including imposing financial penalties of up to 10% of a club’s revenue, which for a club like Manchester City FC, could be close to £100M.
A new criminal offence
The Bill also proposes a new criminal offence. It will be an offence for someone to intentionally or recklessly destroy information requested by the IFR, provide false information to the IFR, or obstruct an officer of the IFR acting in the exercise of their duty. A person convicted will be liable to a fine or imprisonment for up to 2 years (s. 77).
Review of decisions
The Bill introduces two distinct review mechanisms for decisions made by the IFR: an internal review process and a direct route to the Competition Appeal Tribunal (CAT). Certain decisions, most notably disqualification orders, can be appealed directly to the CAT. Other decisions, such as ownership removal orders, may only be appealed to the CAT after having undergone an internal review.
An intriguing element of the framework is the broad range of parties who can appeal via the CAT. Rather than being restricted solely to the directly affected party (such as the prospective or current owner or officer), any individual or entity with a “sufficient interest” in a decision that is reviewable by the CAT under the legislation may seek an appeal (s. 83(1)).
While the Bill does not define “sufficient interest,” it could potentially open the door for a wide array of stakeholders—from the Premier League and the EFL to financial backers, lenders, and even hedge funds—to challenge decisions regarding the suitability of club owners.
This broad right of challenge indicates a substantial change in the resolution of ownership disputes in English football, although its practical implications are yet to be determined.
Power of the IFR to disclose to HMRC, SFO and others
Information collected by the IFR in the exercise of its functions may be disclosed to HMRC, the Serious Fraud Office, the National Crime Agency, and the Financial Conduct Authority, among others, for the purpose of facilitating the exercise of that person’s function (s. 85(1)).
Given the broad scope of the IFR’s investigatory powers—which allow it to require any information considered necessary for its functions and enforce compliance through sanctions—potential owners or officers looking to conceal questionable financial practices from the scrutiny of tax or criminal authorities may be discouraged from investing in English football.
This measure could help prevent setbacks for clubs arising from owner misconduct, such as the situation faced by Portsmouth FC in 2011, when the club was bought by a company owned by Vladimir Antonov. It later emerged that Mr Antonov had been arrested in London and found to have committed offences elsewhere in Europe. The company went into administration, which ultimately led to Portsmouth FC experiencing financial difficulties, resulting in a ten-point deduction and relegation from the Championship.
Other IFR Powers of Interest
Other notable powers that are particularly relevant to supporters include:
Conclusion
It will be interesting to see what, if any, amendments are suggested to the current Bill when it is debated in the House of Commons and whether any of the above powers are watered down.
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