The White Paper on football governance explained
The new White Paper on football governance seems to bring an end, at least partially, to the self-regulation of one of the most popular sports in England. While many details still remain unclear, the extensive scope of changes that include the creation of an independent regulatory body, the introduction of a licensing system, and the fight against breakaway leagues give rise to numerous concerns and questions.
The White Paper - background
The new regulations on football governance were in talks for a long time, with the first promise to consult the fans on the issue being included in the Government’s 2019 manifesto. The government considered 10 recommendations gathered during the 2021 fan-led review (led by Tracey Crouch) and decided to implement them in the White Paper published on 23rd February 2023. Some of the reasons for a significant change in football included the unsatisfactory money flows down the pyramid from the Premier League, the financial failings of many English clubs and the need to prevent the rise of breakaway leagues with particular concerns over the Super League. The Premier League has not been fully on board with the governmental plan arguing that they “recognise and accept the case for reform” but that the new regulator is not necessary, and all the improvements can be introduced under the already existing self-regulating system.
The first significant change that the government intends to bring to the football environment is the introduction of a new independent regulatory body for English football clubs - The Independent Regulator of English Football (IREF). The three main points of focus set for the regulator are club sustainability, systematic stability, and cultural heritage. Among other activities, IREF will evaluate the industry’s finances at the macro level, and act if the distribution of revenue across the leagues was not sufficiently balanced. The advocates of the view that self-regulation has been working best for football raise concerns over taking part of the responsibilities from the Football Association and Premier League and leaving them for the jurisdiction of the new regulator. The question also emerges as to the competence of the governmentally created body, which will face the challenge of not only making football sustainable as a business but also keeping in mind the specifics of the sport and its unique needs that were previously protected and understood by the self-governing mechanism. David Sullivan (the co-owner of West Ham) sceptical as to the governmental competencies argues that “the government are terrible at running everything - look at the mess the country is in”. Many share his opinion lacking the trust in the government’s capability and seeing the state-led body as an unsuitable authority to perform the reforms in football. It should not be undermined that such change creates a unique precedent as it will make England the first major nation to make football a government-industry.
One of the most important tasks of the new regulator will be to operate the licensing system under which English clubs (from the Premier League to the National League - top 5 tiers of the game) would be banned from operating as professional football clubs without the license. The legislation sets out the requirements for the license to be obtained as follows:
Appropriate resources - the clubs are expected to possess appropriate financial and non-financial resources to meet the committed spending and any foreseeable risks.
Fit and Proper Custodians (more on this aspect in the paragraph on ‘Owners and Directors’).
Fan Interests (more on this aspect in the paragraph on ‘Greater Fan Representation’).
Approved competitions (more on this aspect in the paragraph on ‘Breakaway Leagues’).
The licensing system is set to prevent unsustainable management which in recent years led to many financial troubles, for example, the collapse of Bury and Macclesfield. On that note, the independent regulator would work directly with a club at risk of insolvency to help stabilise its position and minimise the risk. The authorities will also adopt a proportionate approach considering the circumstances such as league, club size, and riskiness instead of applying a ‘one size fits all’ strategy. The practical question arises if the regulators would ever use the harsh and highly controversial penalty for breaching the license requirements consisting of banning the club from competing on the national level. Moreover, even though the White Paper recognises the need for an appeal process to the decisions of the regulator the structure and details of such a process are yet to be confirmed. The question also remains how the financial penalties for non-compliance with the licensing protocol would aid clubs already struggling to meet their financial obligations.
Furthermore, the new regulator will establish a ‘Football Club Corporate Governance Code’ to be followed by all clubs. The application of the code will be examined with reports submitted by the clubs to increase transparency and accountability in football. The proposed Football Code focuses mainly on (1) Adequate governance structure, (2) People working in the institutions (who should possess appropriate skills, knowledge, experience, and goals), (3) Communication (focusing on accountability and transparency), (4) Standard and Conduct (in relation to integrity, and seeking constant improvement) and (5) Policies and Processes (ensuring compliance with the law, including the rules included in the White Paper).
The most criticism of the governance code concerns the recommendations of the Fan-Led Review left outside of the scope of changes included in the White Paper. On such crucial matters of our times as women’s football, player welfare and equality, diversity and inclusion the government promises, rather vaguely, that “the review is in progress”, “the industry continues to push for progress, but some key gaps remain” and that “the government will continue to support reform in this space”. Specific objectives recognised in ‘Part 5: Non-Regulatory Reforms’, but failed to be implemented in the current plans, include regulation of women’s football, improving women’s access to sport, assessing the potential growth of the women’s game, support mechanisms for players (especially in academies), and transparent EDI goals and requirements. Finally, the legislator did not recognise a need for a proper structure of penalising those acting in a racist or discriminatory form.
Owners and Directors
Other actors directly affected by proposed law are the owners and directors of football clubs. The main reasoning behind replacing the currently existing Owners’ and Directors’ Test is the need to avoid further examples of unsuitable and incompetent custodians causing or failing to resolve issues at clubs that harm not only the clubs as businesses but also the players, fans, and general stability of the league. Under the new system, strong due diligence looking, among others, into the sources of wealth behind the investments in football will be followed by a requirement for specific financial planning. A new ‘Fit and proper persons’ Test will also include ‘integrity’ and ‘real time’ financial checks.
Strict control over ownership and directorship of the clubs might create an opportunity for implementation of the human rights checks proposed by Amnesty International in light of the Saudi-led takeover of Newcastle, the Qatari bid for Manchester United and the discussions surrounding the World Cup happening in Qatar. It is however not clear as of right now if such considerations were taken into account. The possibility of implementing the human rights perspective in the new act and adopting this ethical governance idea could be beneficial for the sports actors and constitute a positive development as long as the regulator is willing to listen to the proposals. MP Tracey Crouch expressed a belief that under such tests the Newcastle takeover might not have been stopped but certainly would have been “stress-tested more” and carried out in a more transparent manner.
Greater fan representation
The legislation did not fail to recognise the position of football fans who have been sharing the feeling of not being listened to in regard to clubs' governance, especially the decisions directly linked to the club’s identity such as the change of badge or stadium’s name. The plan for ‘putting fans back at the heart’ of the sport will be done with the help of ‘shadow boards’ appointed at clubs as the representation of the supporters’ voice. The new rules restrict the owners also from moves such as changing team colours, badges, or stadium names without acquiring the consent of the fanbase. On the same note, clubs will need to ask for the regulator’s approval before making a decision on selling or relocating the club’s home stadium. Prime Minister Rishi Sunak believes that these provisions will help to “protect the rich heritage and traditions of our much-loved clubs and safeguard the beautiful game for future generations”. Similar solutions have been already invented in clubs such as Brentford where by adopting the ‘Golden Share’ model the fans have been given veto power to certain crucial decisions.
Lastly, but by no means less controversially, the White Paper also covers the topic of breakaway leagues perceived as a possible harm to the domestic game. Under the new rules, clubs will only be able to compete in the competition forms approved by the regulators, giving them the power to stop new competitions and as a result protect the current market position held by the Premier League. Such regulations seem to be a direct response to the idea of the creation of the Super League and the possibility of another development of this kind in the future. The UK government has already voiced their disapproval of the Super League when Boris Johnson promised the fans groups that the government would use “a legislative bomb” to stop British clubs from joining the new competition. The criteria expected to be applied by the regulator in order to approve new competitions include the requirement of the competition to be fair and meritocratic as well as not standing in a position to undermine the sustainability of the existing structure of English football. Before giving a new competition a ‘green light’, the authorities will also consult the fans and the Football Association.
All the regulations presented in this article led to concerns among current owners and regulators at the possibility of overregulation which might slow down the development of English football. Such possibility concerns especially the Premier League, which needs to balance the need of internal stability with the desire to be as competitive as possible on the European stage. The time will also reveal whether the government will succeed in equipping the new regulator with enough competence, resources, and knowledge on the industry. However, as broad as the scope of changes might sound it does not bring an ultimate end to the self-regulation of English football as the FA and Premier League will remain significant and decisive, primarily in non-financial matters. The regulator will not act in the areas of, for example, on-pitch rules of the game or ticketing. It also cannot be expressed enough how regulating football must be about more than financial stability. Matters such as diversity and inclusion, mental health, data protection, and sustainability should be in the heart of the reforms whether introduced by self-regulating bodies or the state regulator.