Football clubs face new era of regulatory scrutiny

• Football clubs, officers and owners face stringent new requirements
• Clubs could face costs of up to £35 million to ensure compliance
• Concerns that new regulation could influence investment decisions
  
  

Global law firm Norton Rose Fulbright has today launched the sixth edition of its annual report ‘Keeping Possession: Ownership trends in English Premier League football’.

This report examines the far-reaching impact of the UK Football Governance Bill (the Bill) on club ownership, including the Independent Football Regulator (IFR)’s broad remit and the new licensing and compliance conditions. It also looks at the football sector’s ongoing challenges with the Premier League’s Profit and Sustainability Rules (PSR).

The UK Football Governance Bill

The UK Football Governance Bill which MPs voted to pass on July 8, 2025, marks a huge shift in the regulation of English football. The Bill aims to enhance financial resilience, promote fan engagement and ensure the integrity of club ownership. A central feature of the Bill is the introduction of the IFR, a new regulatory body for the sport, with broad powers over clubs in the top five tiers of men’s English football (comprising 116 football teams).

While the Bill encompasses various aspects of governance, one of its most impactful provisions is the suitability testing of owners and officers of clubs within its scope. The Bill introduces stringent new measures - including a fitness test and a source of wealth test - for the IFR to use to assess the suitability of prospective new owners and officers, as well as incumbent ones in certain circumstances.

Once the Bill is fully enacted all regulated clubs will also need to comply with a new licensing regime, overseen by the IFR, in order to compete in their respective competitions. There are two types of operating licence: “provisional” and “full”.

What does this mean for investors?

On the one hand, ensuring clubs are well-governed and financially stable should create a more secure environment for investment, reducing the risk of financial failures and protecting the heritage of clubs. The financial sustainability promoted by the Bill could also enhance the profitability of regulated clubs, resulting in increased investment.

On the other, the stricter regulatory framework could disincentivise investment in the game. The government’s impact assessment estimated a total ‘familiarisation cost’ to regulated clubs of £0.4 million - £1.2 million, dwarfed by a further ‘compliance cost’ of £17.9 million - £35.8 million. Furthermore, the suitability checks will mean a thorough examination of potential investors’ financial history and business dealings. Any lack of transparency regarding financial interests or sources of wealth, questionable financial practices or associations with entities under investigation, or insufficient evidence of financial ability to sustain the regulated club is likely to raise red flags with the IFR.

The increased regulatory and financial burden, combined with the additional risk to investors of criminal or civil sanctions, public censure or information sharing with regulatory bodies, could therefore fetter investment into regulated clubs and divert it towards other European leagues without the same level of regulation. The Premier League has expressed concerns that the Bill’s “rigid banking-style regulation” 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”.

The impact of PSR and other financial rules on ownership

Over the past 12 months, a significant number of Premier League clubs have been charged with breaches of PSR in various forms. It is therefore perhaps not surprising that several clubs have raised concerns about the rules, which they claim have also prevented them from signing players during the January transfer window.

Despite the increased focus on - and often resistance to - PSR and other financial restrictions by owners, Norton Rose Fulbright’s report last year predicted that PSR could lead to higher valuations for football clubs going forward as they gradually become more profitable. It could be argued that PSR is having the intended impact and has helped to “level the playing field”, allowing clubs from outside the traditional “big six” to compete. For instance, the likes of Brighton, West Ham and Nottingham Forest have qualified for European competition in the past few years, which will inevitably increase the valuations of these and other similarly sized clubs.

Stephen Rigby, who leads Norton Rose Fulbright’s sports law practice, said:

“The introduction of the IFR in the UK government’s Football Governance Bill represents the most significant reform of the English football sector in recent memory. Its impact on both club ownership and operation is likely to be substantial and wide-reaching, influencing each club’s corporate strategy, expenditure, ownership model, and investment into both personnel and projects such as infrastructure and facilities.”

“We anticipate that comprehensive regulation and the further development of existing directives such as PSR will play a pivotal role in the pursuit of financial sustainability across the English football pyramid, provided that the sector remains sufficiently attractive to external investment.”

Regulatory partner Matthew Gregory said:

“The UK Football Governance Bill signals a seismic shift in how English football is regulated. Whilst the introduction of the IFR is a step toward greater transparency and financial resilience, the breadth of the proposed compliance regime is likely to be a significant adjustment for many clubs and investors alike. For example, the new governance requirements on clubs will need careful planning and their impacts on club structures should not be overlooked. Of course, the focus of most clubs will be on the licensing requirement given its significance, as well as on the regulator’s powers to intervene in their operations and in respect of dispute settlement - particularly as regards parachute payments.”

“The enhanced suitability tests and licensing requirements are likely to raise the bar for ownership standards but they also introduce new layers of complexity and cost with potentially significant consequences for investment and transactions. For investors, this means navigating a more rigorous regulatory landscape, where reputational and financial scrutiny will be the norm. The challenge will be to strike a balance between safeguarding the integrity of the game and maintaining the commercial dynamism that has made English football a global success story.”

Norton Rose Fulbright’s lawyers have long-standing experience in the global sports sector and have advised clients on sports-related transactions throughout Europe, North America, Asia, Australia and South Africa, covering football, rugby, Formula 1, NFL, cricket, ice hockey, tennis and horse racing. The firm advises on all aspects of sports law and is particularly strong in the areas of acquisition and disposal of sports franchises, negotiation of sponsorship deals, stadium financings and investigations.