The Independent Football Regulator ('IFR') has unveiled the draft terms of reference (the 'ToR') for its "State of the Game" report (the 'Report'), which will be the first independent, in-depth analysis of men's professional football in England. 

The purpose of the Report, which the IFR has a statutory obligation to produce, will be to inform its policies and priorities. In particular its conclusions will be reflected in the design of the licence conditions and the Football Club Corporate Governance Code, as well as in risk-based assessments of clubs and, no doubt, enforcement. So, it is significant.

Background

After years of headlines about football club collapses and financial mismanagement, the call for better governance, along with protecting club heritage and listening to fans, has never been louder. Now that the IFR is operational, it's ushering in a new chapter English football, beginning with a wide‑ranging review of the state of the men's game.

The Report will focus on matters tied to the Football Governance Act 2025 (the 'FGA'), the landmark law which established the IFR and that addresses important matters such as financial sustainability and protecting club heritage. It does not cover other fan concerns, such as ticket pricing or the use of Video Assistant Referees (VAR). 

Using its statutory information gathering powers, the IFR will examine how money flows across the football pyramid and assess the financial health and governance of clubs. This will include an analysis of a club's broadcast income, player wage bills, ownership structures, financial distributions, and academy investment. The findings will be set out in a single Report, offering a clear picture of the state of the game that will "then inform the IFR's overall regulatory approach in relation to club financial soundness, systematic financial resilience and heritage".

Below, we outline the headline points.

What can we expect the Report to cover?

The IFR's draft ToR set out an ambitious review of the financial health and resilience of English football, as wide-ranging as previously signalled.

• It will take a closer look at how the football industry makes and spends money and how the wider football economy works. That means examining club revenues, costs and owner funding, the role of competition organisers, spending on players, the role of fans, why owners and others invest in the game, and how sporting competition and international competitiveness shape decisions.
• It will also probe the financial soundness of clubs by looking at their business models, cash flow and solvency, and whether governance and risk controls actually work.
• The regulator will also assess the systemic risks and structural issues in English football, focusing in on how money flows through player transfers and broadcast deals, how clubs use debt financing, who is investing, how clubs' finances are connected, and how vulnerable the game is to wider economic shocks.
• It will also take a fresh look at how revenue is shared across the football pyramid, including solidarity payments, the much-debated parachute payments (i.e. extra money given to relegated clubs that supposedly gives club owners the confidence to invest), the 'cliff‑edges' between and within leagues, and funding across the wider ecosystem, including women's teams, academies, community projects and grassroots football.
• The IFR will also review how clubs listen to fans and their approaches to corporate governance, Equality, Diversity and Inclusion, and community outreach.
• Finally, the Report will look ahead to emerging opportunities and risks, so that any recommendations keep pace with the fast-moving landscape.

What do we think?

Addressing all the topics that the ToR envisage the Report covering will be a substantial undertaking. The IFR's available resources are not yet clear, so the depth and quality of its analysis may vary across topic areas. Outcomes will also depend on each club's willingness to share documents and internal information. This requires transparency from ownership and management, and it will be crucial for the IFR to demonstrate that it will safeguard clubs' confidential information and not disclose it to other clubs. Although the IFR has broad information gathering powers under the FGA (and an extensive toolkit of sanctions to encourage cooperation), and although clubs will want to be seen to cooperate, it is easy to foresee the IFR facing challenges in trying to leave no stone unturned.

Big questions also remain about how the IFR will actually carry out parts of its review of the football landscape. Take its plan to examine the role and motivation of club owners. How do you meaningfully assess someone's motivations? Will prospective owners be asked to submit an application setting out their intentions and long-term strategy? Will existing owners have to justify to the IFR, by letter, written statement, or even an interview, why they own their club?

The picture becomes even more complicated when ownership is shared. Many clubs have multiple investors with different-sized stakes, from private equity-led consortiums to celebrities buying-in. Are they primarily seeking a financial return, trying to create a hit TV show, or are they lifelong supporters who see their club as part of the community? 

On owner funding, the ToR focuses on the capital owners are expected to inject into clubs but says little about how owners may extract funds from them. That omission is material, as patterns of extraction can themselves trigger failure or financial mismanagement. For example, previous issues have included clubs granting loans to owners' other, unrelated companies - sometimes without repayment. Will the IFR's scope expressly cover such transactions and the risk of non‑repayment? It would therefore be helpful for the Report to address both cash inflows and outflows across the football ecosystem.

On financial soundness/systemic resilience, the IFR will consider the role of debt and financing across English football as a whole, and for individual clubs its review will include an analysis of debt and equity (including the role of owner and commercial debt). Hopefully the IFR will draw together its work on these separate strands in such a way that any corresponding requirements imposed on clubs both achieve fairness across English football and are not unduly restrictive of individual clubs' financing models. 

What's next?

A consultation is now open on the draft ToR, as required by section 10 of the FGA, to gather views on what the Report should cover. Clubs, investors and fans have until 17 February to comment on the proposed scope. 

The IFR plans to publish a draft later this year, with the final Report due in 2027.