English football is gearing up for a major rule change in how it handles its finances. The debate over the rules of the game is not just limited to the fans; soon, elected politicians will be discussing new regulations that will govern the sport in England.
The UK government recently announced a new bill aimed at securing the future of football clubs for the benefit of communities and fans. The proposed legislation includes the establishment of an independent football regulator to address financial issues within the sport. This move is in response to the need to protect club heritage, uphold the voice of fans, and prevent breakaway competitions, such as the failed attempt to form a European Super League by six Premier League clubs in 2021.
The fan-led review of English football, published in November 2021, recommended the creation of an independent football regulator to address the financial instability that many clubs are facing. Without intervention, football at various levels is at risk of financial collapse, especially in the Championship, where the pursuit of promotion to the lucrative Premier League has led to risky financial behaviour.
The financial vulnerability of English football clubs has become a cause for concern, with many clubs experiencing financial losses both before and after the pandemic. This issue has been particularly pronounced in the Championship, where the drive to secure promotion to the Premier League has led to risky financial decisions.
The collapse of Bury FC in 2019 serves as a poignant example of the potential disastrous outcomes of weak finances. The club, which had been a member of the English Football League for 125 years, was expelled due to its inability to pay its bills. This event had a ripple effect on the local community, resulting in businesses losing customers and people losing jobs. The proposed independent regulator aims to prevent similar incidents from occurring in the top five tiers of men’s football in England.
While the exact structure of the independent regulator is yet to be determined, the idea has garnered significant support from the football world. Fans, the EFL, and research all indicate that the introduction of an independent regulator could address issues where the market has failed its customers, in this case, the fans and local communities.
However, not everyone is in favour of the proposed changes. The Premier League has expressed objections, citing concerns that increased financial reporting and monitoring requirements may deter future investors. Research suggests that heavy regulation can lead to inefficiency and reduced resources, supporting the Premier League’s concerns.
Despite these objections, the momentum for change in the financial landscape of football is growing. Uefa has updated its regulations to limit squad costs to 70% of income for all clubs participating in European competitions. Additionally, governance changes have already been implemented in English football, including rules to protect team strip colours and club crests, a code of governance with board member term limits, and targets for diversity and inclusion.
The aim of these changes is to bolster the resilience of the sport and prevent the collapse of clubs that have been integral to their communities for decades. Football fans across the leagues are hopeful that these measures will be successful.