A strengthened Football Governance Bill will begin its second reading in the House of Lords on Wednesday, with parachute payments under the powers of the proposed independent football regulator expected to be one of the main topics debated.
The new Labour Government had confirmed in the King’s Speech it would revive the Bill, which is aimed to ensure a new football regulator is fully independent of both Government and industry, as well as to give fans a greater voice in the management of their clubs.
The Bill was first piloted by the previous Conservative administration and followed a fan-led review into the state of the modern game, which was spearheaded by Tory former minister Dame Tracey Crouch and completed in late 2021.
Labour’s new sports minister Stephanie Peacock has already said parachute payments, made by the Premier League to relegated clubs, will not be abolished by the regulator.
The Premier League believes the parachute payments are fundamental to giving those newly-promoted clubs the confidence to invest in their squads in order to be competitive in the top flight as they battle to stay up.
EFL chairman Rick Parry, though, feels they distort competition in the Championship and also encourage reckless behaviour among second-tier clubs who do not get the additional funding, which he said had risen to £233million by 2021.
Discussion between the leagues on a ‘New Deal’ for splitting television revenue have been on hold since March.
The EFL’s present distribution deal, which has been in place from 2019 by mutual agreement, sees every Championship club get £7.8m, League One clubs receive £1.4m and League Two £900,000.
While in its current form, the Bill appears to prevent the regulator reducing the size of parachute payments within any distribution order it makes, any improved settlement for the EFL could see them become a smaller percentage of the total amount distributed to lower division clubs.
However, the regulator’s backstop powers to ultimately impose a distribution order on the revenue split between the Premier League and EFL can only be triggered by one of the leagues, based on certain criteria being met.
The Premier League has already expressed concern at the regulator having “unprecedented and untested” powers to intervene in the distribution of top-flight revenue, feeling it could negatively impact the competition’s continued competitiveness as well as attracting world-class talent which could in turn then hit its global appeal.
Labour has removed a clause in the original Bill which said decisions on approving takeovers and directorships should have regard to the Government’s trade and foreign policy.
The regulator’s primary purpose remains to ensure clubs are financially sustainable and accountable to fans.
The Premier League is not opposed to the regulator, but is understood to be seeking to improve effectiveness within the legislation on what it feels are critical areas - including financial regulation and involvement in financial distributions as well as possible unintended consequences, such as harming growth and deterring investment or distorting competition.
There is still the possibility of the Bill being amended again on its passage through Parliament.
That continues on Wednesday in the House of Lord’s, where around 40 peers are scheduled to speak before decisions on any amendments being tabled, which could be on a range of issues, with the Bill then set to move to the Committee stage.
