The new Independent Football Regulator must foster collaboration between leagues and ‘tackle’ financial inequality

With the Football Governance Bill now about to progress from the Lords to the Commons, LCP is calling for three key areas to be prioritised to ensure the Independent Football Regulator (IFR) delivers meaningful change for men’s clubs, their fans, and the wider football community.

In today’s published paper, LCP’s sports analytics and advisory experts argue that the Regulator must be ready to separate themselves from previous failed regulatory attempts, effectively collaborate within an already crowded regulatory landscape, and address financial disparities between leagues.

Our experts recognise that financial unsustainability has been a common thread throughout the football pyramid for decades. The team’s most recent analysis showed that 85% of men’s clubs in the top four divisions were loss-making, with lower-league club losses worsening most dramatically in the 2022-23 season. Additionally, 17 of the 92 clubs disclosed a ‘material uncertainty’ regarding whether they could continue operating for another 12 months.

LCP is urging for the following considerations to be taken on:

1. The Regulator must work closely with stakeholders across the industry, with a particular focus on the Football Association.

The IFR is entering a space already occupied by several regulatory bodies, including the Football Association (FA), Federation Internationale de Football Association (FIFA) and the Union of European Football Associations (UEFA). Many of the problems in football governance come from self-interested regulations set by these organisations. To be effective, the Regulator must challenge this culture and work collaboratively with other governing bodies, including the leagues themselves, the Premier League, the English Football League (EFL) and the National League.

The Regulator must also work closely with the FA to guide its reform and build a modern football governance structure. The focus should be on improving and strengthening the FA, not sidelining it. To support this, the Regulator should offer the FA a seat on its board.

2. The financial gaps between leagues must be addressed, with parachute payments a key consideration.

The introduction of the IFR offers a chance to rethink how revenue is distributed across the football pyramid. Despite serving fewer clubs, the Premier League has a domestic broadcast deal worth around 9 times per annum that of the EFL. This imbalance has led to a “famine at a feast”, attracting greater investment to the top tier while leaving lower-league clubs struggling.

The current parachute payment system, designed to help relegated clubs, has only served to deepen these inequalities. As a result, clubs outside the Premier League often take financial risks in pursuit of promotion. As such, in this gambling culture even the cautious can get dragged to the table.

Including parachute payments in broader financial reforms is a positive step. However, this alone will not be enough to reduce these divisions. The Regulator (working with the Premier League and the EFL) may have to use a range of financial levers and regulations to facilitate the changes that are needed.

3. The IFR must break away from past regulatory failures.

Previous attempts to regulate the industry have failed for two core reasons. The first is a lukewarm approach to introducing regulation from football’s authorities, and the second is a culture of “delegated self-regulation,” where, in the absence of an accountable governing body, constituent leagues have self-regulated in a way that serves only their own members.

This new regulation must be different from previous attempts. It should offer holistic solutions for clubs and other organisations across the football pyramid.

Aaryaman Banerji, Head of Football Governance at LCP, commented: “The introduction of the Football Governance Bill and the subsequent creation of the Independent Football Regulator mark a crucial moment for English football. This is a unique opportunity to set a new standard for fairness and sustainability—but only if the Regulator is fully empowered to tackle the crucial issues and prepared to work collaboratively with existing bodies.”

Bart Huby, Head of Sport Analytics and Advisory at LCP, added: “The new licensing rules mean that clubs will need to prove they meet key standards in finance, operations, governance, and fan engagement. While this will require some extra effort and cost, we also see it as an opportunity for clubs to strengthen the way they operate. Improving governance and fan engagement, for example, could be a win-win — benefiting clubs and fans.

“LCP will be offering a service to help clubs at all levels to assess how prepared they are for these new requirements. Our support will cover looking at basic compliance with the regulations, and we’ll also highlight areas where we believe that going beyond the minimum requirements could make clubs more effective.

“As the Bill continues to progress through Parliament, we are keen to engage with stakeholders to help ensure the licensing requirements and processes for clubs are both practical and beneficial - and provide the Regulator with the information it needs to carry out its job of improving governance and financial stability in the men’s game.”