Any lingering hopes the Premier League might have had of diluting the powers of English football’s proposed independent regulator have been dashed by the news the government is resuming the process to create the role on Thursday.
The last Conservative government was forced to shelve its plan to introduce a regulator when it ran out of time to pass the legislation following former prime minister Rishi Sunak’s decision to call a snap general election in July.
Having backed the idea while in opposition, it was no surprise that Keir Starmer’s Labour government would try to bring the Football Governance Bill back to parliament as soon as possible. The only questions were whether it would be the same bill or a revised bill, and, if it was the latter, whether it would grant the regulator more or less power than the Conservatives planned.
Now we know — the new bill, which will start its passage into law with a first reading in the House of Lords, is considerably stronger, much to the delight of the English Football League and the frustration of the Premier League.
Here, we will explain the main differences between the bills, what impact those differences will have and how the game has reacted to the news.
But first, let us rewind to 2021 and explain how we got to this landmark moment in English football history.
What sparked calls for independent regulation?
In 2019, Bury, two-time winners of the FA Cup, became the first team to be expelled from the English Football League for financial problems in almost three decades. One year later, Macclesfield Town got relegated from League Two in financial disarray and promptly went bankrupt.
By that time, English football was in the grips of a wider panic caused by the pandemic, with many predicting that Bury and Macclesfield would not be the last to go to the wall.
And then, in April 2021, the Premier League’s six richest teams shocked fans up and down the land by trying to join a closed, midweek European Super League that would give them an enormous, guaranteed economic advantage over every other team in the country.
That plan collapsed within three days but the widespread anger caused by this breakaway attempt persuaded the then-prime minister Boris Johnson to back calls for a root-and-branch review of how the game is run and distributes its revenue.
Within weeks, former sports minister Tracey Crouch was given the responsibility of leading a fan-led review of the game’s governance. Aided by an expert panel, Crouch completed the review by the end of the year, with her key recommendation being the creation of an independent regulator.
Over the next two and a half years, the Conservative government, which was often distracted by its own crises, consulted widely, before eventually introducing a bill in March of this year.
That bill was progressing smoothly through the two houses of parliament before Sunak decided to go to the polls earlier than expected.
This meant Starmer’s new government would have to start all over again, causing some to wonder if it would be a priority for him and Labour after 14 years out of office.
Those concerns grew over the summer and into September as news emerged of the concerted lobbying effort the Premier League was making, mainly by inviting Starmer and other new ministers to private boxes at sporting events and concerts.
It seems those efforts backfired as the government has come back with a significantly stronger bill than Sunak’s.
What the differences between the bills?
The most significant in terms of the EFL and Premier League is the decision to let the regulator look at all elements of football’s financial distribution mechanisms, including the most controversial one, the parachute payments that relegated clubs receive.
This relates to the regulator’s greatest single lever, the so-called “backstop” power to intervene if the game fails to come up with a fairer distribution mechanism than the one created by the original breakaway league, the Premier League, in 1992.
That was when the top 22 clubs, later reduced to 20, split from the Football League so they could keep more of the game’s burgeoning media rights income for themselves.
It was a move that helped create the world’s most successful domestic football league — something which was by no means guaranteed or even predicted at the time — but also led to huge gaps opening up in what had previously been a relatively compact pyramid.
In the first bill, parachute payments, which make up more than 70 per cent of the total amount the Premier League shares with the EFL, were specifically “carved out” of the regulator’s remit.
That is no longer the case, although they will only be assessed if the regulator “considers them to be of systemic risk to financial sustainability”, and it is very unlikely that the regulator would want to scrap them entirely, as the bill says clubs must “continue to be protected from the risks that come with regulation”.
Even so, that is a significant defeat for the Premier League, which desperately fought to keep them out of scope, and a huge win for the EFL, which has blamed parachute payments for forcing Championship clubs to choose between competing and sustainability.
The second change will be far less controversial, as its inclusion was one of the most contentious elements of the original bill, and that is the removal of the requirement on the regulator to “consider government foreign and trade policy when approving club takeovers”.
There was always some confusion over this clause, as some saw it as an attempt to prevent more state-backed takeovers of clubs, and others as a means to force them through, if they suited the government’s wider interests.
However, the sentence very clearly compromised the regulator’s independence, which was flagged up by UEFA in a letter it wrote to the Football Association this summer, which included a threat – albeit a vague one – to suspend England and English clubs from international competitions on the grounds of government interference in football.
With that line removed, that very unlikely risk is removed, as well, and the regulator’s independence is bolstered.
The other changes can be grouped together, as they are all strengthening of provisions and language in the first bill about fan engagement, the protection of club heritage and improving Equality, Diversity and Inclusion (EDI) in the game.
For example, the regulator will now be able to compel clubs to democratically elect fan representatives with whom the club must engage on issues like ticket prices and stadium relocation plans. And on EDI, clubs will be required to publish what actions they are taking to meet improved corporate governance standards.
Apart from these three main areas, the bills are largely identical.
The regulator’s main role will be to oversee a licensing regime that is intended to ensure improved financial sustainability and better decision-making. The regulator will also take responsibility for vetting new owners and investors.
But perhaps its most important job will be the conducting of regular “state of the game” reports that look at the game’s financial health. The first of these will be done within 18 months of the regulator getting up and running, and it will form the basis of any “backstop” intervention it might have to make if the Premier League, EFL and National League cannot come to an agreement themselves.
What has the government said about the new bill?
“English football is one of our greatest exports and a source of national pride which this government wants to see thrive for generations to come,” said Culture Secretary Lisa Nandy.
“But for too long, financial instability has meant loyal fans and whole communities have risked losing their cherished clubs as a result of mismanagement and reckless spending.
“This bill seeks 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.”
An MP for Wigan, Nandy has personal experience of what happens when a club runs into financial problems, as Wigan Athletic were threatened with the same fate as Bury and Macclesfield in 2020.
Sports Minister Stephanie Peacock said: “Football would be nothing without its fans and this strengthened bill will deliver an independent regulator that puts them firmly back at the centre of the game.
“From protecting club heritage such as shirt colours and badges that mean so much to so many of us, to requiring clubs to consult fans on changes to ticket prices, the regulator will make the game the best it can be.”
How has football reacted?
The EFL could hardly hide its delight, with its chairman Rick Parry warmly welcoming the bill and thanking Nandy for the “genuine commitment and openness” she has shown towards his clubs.
“It has been our long-held view that there is a requirement for independent regulation, and we believe the bill has been framed in a way that will enable the new regulator to protect and achieve the sustainability of clubs across the entire football pyramid,” said Parry.
He welcomed the decision to prioritise the state of the game report, bolster the sections on fan engagement and EDI.
He also sounded a conciliatory note to the Premier League, saying: “We have always been clear throughout this process that our intention is not to harm or hinder the strength of the Premier League, and the value which it generates for the wider pyramid, including the EFL and our competitions.
“Rather, this is about creating a framework for a sustainable and competitive pyramid which fosters sporting jeopardy without financial catastrophe, underpinned by better regulation and fairer redistribution.”
The Premier League, on the other hand, found it hard to hide its disappointment about the decision to bring parachute payments into the regulator’s remit.
“The Premier League recognises that key elements of the bill can help make the English game stronger, including the principles of strengthened fan engagement, protecting club heritage, preventing breakaway leagues and encouraging responsible ownership,” it said.
“However, we remain concerned about the regulatory framework. Specifically, we believe rigid banking-style regulation, and the regulator’s unprecedented and untested powers to intervene in the distribution of the Premier League’s revenues, could have a negative impact on the league’s continued competitiveness, clubs’ investment in world-class talent and, above all, the aspiration that drives our global appeal and growth.”
Its statement concluded by reminding the government that it is distributing a “world-leading” £1.6billion, or 16 per cent of its central income, across a three-year period to the EFL, National League clubs, grassroots football, the women’s game and various football-related charities.
And it noted that revisions to the bill “do not automatically include parachute payments within the backstop mechanism”, as the regulator will need to show that are “contributing to issues around financial sustainability and stability”.
The EFL, however, would point to facts such as last season’s parachute payments to five recently relegated clubs equalling £233million, three times as much as the 67 other EFL teams received in total.
Parachute payments are now more than eight times bigger than they were in 2010, while average wage bills in the EFL have only doubled since then, giving relegated clubs a growing competitive advantage. For the last six seasons, two of the three clubs promoted to the Premier League have been helped by parachute payments.
Has anyone else commented?
Crouch, who originally recommended the creation of an independent regulator, said: “The protections in the new bill reflect the Fan-Led Review’s recommendations that supporters should be placed back at the heart of the game and will have a genuine say on things like ticketing and club heritage.”
Kevin Miles, the chief executive of the Football Supporters Association, agreed, saying: “The regulator has the potential to protect our historic community clubs and stop them being run into the ground by bad owners, rebalance the game’s finances, protect heritage, give supporters a bigger say and block any domestic clubs from joining a breakaway European Super League. The FSA wholeheartedly backs its creation.”
Former Manchester United and England star Gary Neville, now a leading media pundit and co-owner of League Two’s Salford City, is another fan.
“Football is too important to be left solely in the hands of individual owners to design its future,” he said.
“We’ve seen the inequality across the game grow but now independent regulation can act as a catalyst to create a thriving and sustainable game for future generations.”
Sanjay Bhandari, the chairman of anti-discrimination charity Kick it Out, welcomed the news that the bill’s EDI provisions had been bolstered.
“Football rightly celebrates and makes promises about its ability to unite and represent communities,” said Bhandari. “Now it needs to be more transparent and accountable for those promises.”
Niall Couper, the chief executive of Fair Game, a lobby group that represents more than 30 EFL and National League clubs, also greeted the changes in the bill.
“However, the big concern remains fair financial flow – the financial divide between divisions has been growing over the last 20 years,” said Couper.
“The pressure to overspend to climb the pyramid has reached epidemic levels – 58 per cent of our top 92 clubs are technically insolvent.
“If the bill is to deliver financial sustainability for the football pyramid then the regulator must have powers to set parameters around what any deal must deliver, and that should include closing the gaps between divisions and rewarding well-run clubs.”
What happens next?
For bills to become laws, they must go through at least three readings in each of the UK government’s two chambers – the House of Commons and House of Lords – and also a committee stage, where a representative group of MPs goes through the bill on a line-by-line basis.
Any amendments are then agreed by both chambers, before a final text is approved and voted on. With Labour commanding a huge majority in the House of Commons, this will be a formality.
A bill that has been approved by both houses is then given royal assent. This is when it becomes an act, with it taking full legal effect very soon after.
If all goes to plan, the bill will receive royal assent by May of next year, with the regulator up and running within days. In fact, a shadow regulatory team is already in place and the recruitment process for a full-time chair will resume on Friday.
(Adam Davy/PA Images via Getty Images)
