Investing in the game: the impact of the Football Governance Bill and regulation in football

August 2025 | SPOTLIGHT | SECTOR ANALYSIS

Financier Worldwide Magazine

August 2025 Issue

The Football Governance Bill has been introduced to address longstanding concerns about the sustainability and resilience of English football. It establishes, for the first time, an Independent Football Regulator (IFR) together with a regulatory regime for English football. At the time of writing, the bill is in the committee stage of the legislative process and this article is based on that draft.

Clubs that find themselves within the new regulatory regime will be subject to financial and governance obligations as well as novel requirements relating to fan engagement and club heritage. Their senior managers and owners, prospective and incumbent, will face enhanced scrutiny from the IFR by virtue of suitability tests and reporting requirements.

These requirements will also have knock-on effects on potential investors of a club or on financial counterparties to a club, a lender for instance. The UK government’s impact assessment has estimated familiarisation costs to clubs of £400,000 to £1.2m, dwarfed by compliance costs of £17.9m to £35.8m. Indeed, clubs, their senior managers and owners need to familiarise themselves with a new regulatory framework and will need to navigate a critical new regulatory relationship with the IFR.

Scope and application: bringing football into the realm of regulation

The IFR will oversee a regulatory regime which governs England’s top five men’s leagues. All 116 clubs (regulated clubs) in those leagues will be subject to the regime. Notably, the women’s game is not currently within scope, but this may change in the future as the secretary of state has discretion to expand the competitions to which the regime applies.

The IFR and its powers

The IFR will have three core objectives: protecting and promoting the financial soundness and resilience of regulated clubs, protecting and promoting that of English football, and safeguarding the heritage of English football. The IFR will be given powerful regulatory tools to achieve its objectives.

Information sharing. The IFR will have the power to compel regulated clubs to provide information as well as the power to make disclosures to a number of regulatory bodies for the purposes of facilitating the exercise of their functions. This includes HM Revenue & Customs, the secretary of state, the Financial Conduct Authority (FCA), the National Crime Agency and the Serious Fraud Office.

Regulated clubs and their owners need to be mindful of these powers and should exercise caution before making disclosures that might be shared with other regulators. Financial services (FS) firms, particularly those authorised by the FCA, must be cautious when sharing information with regulated clubs in their capacity as financiers or counterparties. This information may be indirectly shared with the FCA or elsewhere. Regulated clubs will likely need to review their information sharing controls and update their risk assessments with regard to information classification.

Investigations and enforcement. The IFR can conduct investigations and apply a range of sanctions. A regulated club may, for example, be investigated for failing to notify the IFR of material changes in circumstances. If sanctioned, a regulated club can be fined up to 10 percent of its total revenue. In addition to the reputational damage and costs associated with the investigation and potential public censure, sanctions could pose significant credit risk.

Distributions of revenue. A competition organiser may apply to the IFR to enter into a mediation process concerning the distribution of revenue from another organiser. If resolution is not reached, the IFR may make an order as to how revenue should be distributed. This primarily concerns broadcasting revenues but may include other sources as specified by the secretary of state, including so-called ‘parachute payments’.

Uncertainty of final revenues which filter between leagues (and ultimately to regulated clubs) may make it more difficult to predict the profitability (and, therefore, creditworthiness) of regulated clubs.

Considerations for owners

Regulatory scrutiny. While the main competition organisers already have ‘fit and proper’ tests for owners and directors, the bill takes this further by introducing a suitability assessment. The IFR will determine the suitability of prospective new owners and officers of regulated clubs, as well as incumbent ones under certain circumstances.

For these purposes, ‘ownership’ includes individuals who hold, directly or indirectly, more than 25 percent of the shares or voting rights in the regulated club, or have the right, directly or indirectly, to appoint or remove an officer of the regulated club, or who have the right to exercise ‘significant influence’ or control over the activities of the regulated club.

Incumbent owners and officers are not automatically subject to suitability assessments but may be re-evaluated if the IFR has grounds for concern about their suitability. Owners and officers (and regulated clubs) are also obligated to notify the IFR of changes in circumstances relating to their suitability. Ongoing monitoring processes should be implemented to ensure they can withstand scrutiny from the IFR and comply with information requests.

The suitability assessment. This suitability assessment comprises of two tests. First, a fitness test. This assesses an individual’s integrity, honesty, financial soundness and competence (in the case of officers). It draws on similar ‘fit and proper persons’ tests used by regulators like the FCA. Individuals must also demonstrate compliance with other legal and regulatory standards. Among this, convictions of a criminal offence and being subject to criminal proceedings will be considered. Second, a source of wealth test. Prospective owners must demonstrate sufficient financial resources (of which none is connected to serious criminal conduct) and provide a detailed plan for operating the regulated club, including estimated costs and funding sources.

IFR powers against owners. Any lack of transparency regarding financial interests or sources of wealth, questionable financial practices and associations with entities under investigation or insufficient evidence of financial ability to sustain the regulated club is likely to raise red flags and may result in a negative determination by the IFR. For incumbent owners and officers, where deemed unsuitable, the IFR may ultimately require them to cease ownership or management of the regulated club. In more severe cases, an individual may be barred from owning or managing any regulated club and the regulated club itself might be subjected to sanctions. Notably, the IFR is required to publish its determinations in respect of both potential and incumbent owners and officers.

Investors will need to conduct a thorough examination of their commercial background and plans for sustaining the regulated club to ensure they are transparent, well-documented and aligned with the regulatory expectations set forth by the IFR. Failure to do so might incite financial penalties as well as reputational damage.

Considerations for clubs and competition organisers

The bill sets out the new licensing regime applicable to regulated clubs and competition organisers. Regulated clubs operating a team in specified competitions will need an operating licence, and may be sanctioned if they operate without one, including an injunction from the Competition Appeal Tribunal.

Obtaining a licence. First, a regulated club must apply for a provisional operating licence (becoming a ‘licensed club’ upon approval). The application must be accompanied by information and documentation, including a ‘strategic business plan’ documenting information such as the estimated costs of operation and source of funding. The licensed club may operate under this licence for a maximum of three years. Before the expiry of this period, the IFR will proactively assess the licensed club and, if it meets certain threshold requirements, it will be granted a full licence. Given the importance of obtaining a licence, regulated clubs will wish to ensure that they are properly prepared to meet these new requirements and to successfully navigate new regulatory processes.

For lenders and investors, this may be a positive step to enhance financial sustainability, transparency and accountability within the sport, thus creating a more secure environment for investment, reducing the risk of defaults and financial failures.

Duties on regulated clubs. The bill imposes a number of obligations on licensed clubs, with some of the key ones affecting regulated clubs, licensed or not. Many obligations will be familiar to those operating in other regulated sectors, particularly FS. For example, the new disclosure obligation, pursuant to which regulated clubs must notify the IFR if there is a change in circumstances which is material to the IFR’s functions, is similar in intent to principle 11 of the FCA’s ‘Principles for Businesses’, which is applicable to authorised FS firms.

Other obligations are more specific to the context of the sport. For example, regulated clubs cannot participate in competitions prohibited by the IFR. The IFR will specify prohibited competitions having regard to factors such as the meritocracy, fairness and openness of the competition.

Also, a regulated club must take reasonable steps to establish the support by a majority of its fans in England and Wales before relocating home ground or changing the crest, emblem or predominant home shirt colours or name.

Investors in regulated clubs will ultimately have less freedom to make decisions in respect of such clubs. New governance procedures may hinder the ability to make quick changes or to dispose of assets. Financial counterparties should have regard for these restrictions on changing aspects of the clubs’ heritage, in particular, potential complications in recovering securitised assets, such as stadia, and consider what alternative assets may be put forward as security by clubs.

Timings

The bill is expected to receive Royal Assent later this year. While its impact remains to be seen, it is clear at least that the bill introduces a stricter regulatory framework that clubs, their investors and financial counterparties need to take seriously and prepare for.

Matthew Gregory is a partner, Joshua Creutzberg is an associate and Simon Lovegrove is global director of financial services knowledge, innovation and product at Norton Rose Fulbright. Mr Gregory can be contacted on +44 (0)20 7444 2467 or by email: matthew.gregory@nortonrosefulbright.com. Mr Creutzberg can be contacted on +44 (0)20 7444 2558 or by email: joshua.creutzberg@nortonrosefulbright.com. Mr Lovegrove can be contacted on +44 (0)20 7444 3110 or by email: simon.lovegrove@nortonrosefulbright.com.

Matthew Gregory, Joshua Creutzberg and Simon Lovegrove

Norton Rose Fulbright