The Football Governance Act 2025 introduces a fundamental regulatory overhaul of football, particularly affecting the financing structures of clubs across the top five tiers. For legal professionals advising lenders or clubs, the Act demands a new approach to credit risk, covenant drafting, enforcement, and regulatory compliance.
At its core, the Act establishes an Independent Football Regulator (IFR) with statutory duties to promote financial soundness, resilience, and protect football heritage. The IFR introduces a mandatory licensing system: clubs must hold either a provisional or full licence to compete in key competitions such as the Premier League, EFL, and National League. These licences are conditional on ongoing compliance with financial, governance, and fan engagement standards.
Why does this matter in finance?
Licence suspension or revocation would prevent match participation which could severely reduce match-day income, broadcast revenue, and sponsorships! This could impair a club's ability to service debt. Licence status must be treated as a core credit risk factor and this should be reflected in loan documentation, with a new category introduced of ‘regulatory default’.
What is a Regulatory Default?
In traditional debt financing, an event of default (EoD) is usually triggered by objective financial conditions such as missed payments, insolvency, breach of financial covenants or unauthorised changes in ownership. These are generally clear-cut, quantifiable, and governed by the loan agreement.
However, under the Football Governance Act 2025, a new category of default emerges: the regulatory default. A regulatory default occurs when a football club fails to meet obligations imposed by the IFR, even if the club is financially solvent and otherwise compliant with its debt obligations.
From a lender’s perspective, a regulatory default can materially affect a club’s ability to generate revenue and, in turn, service its debt. If a club loses its licence, it may be expelled from its league, which would instantly cut off broadcast income, matchday revenue, and sponsorship deals.If the IFR imposes operational restrictions, the club’s ability to fulfil commercial obligations (including debt servicing) may be impaired.
Drafting Implications for Lawyers
Lawyers advising lenders or clubs should consider the following:
The Act also introduces a stringent Owner, Director, and Senior Executive (ODSE) test, giving the IFR power to block unsuitable appointments or sales. Change-of-control clauses in loan agreements may now be subject to delays or denial by the regulator, frustrating enforcement rights or restructuring plans.
In insolvency scenarios, the IFR must now approve the appointment of administrators—a sharp deviation from the previous autonomy secured creditors had under the Insolvency Act 1986. Additionally, using stadium assets as security requires pre-approval—another key consideration for structuring financing.
Finally, the IFR may order broadcast revenue redistribution, potentially altering clubs’ cash flows and debt capacity. Lawyers should consider mechanisms like revenue floors or insurance-backed structures to mitigate this uncertainty.
Loc’s thoughts?
The Act creates a dual compliance regime which is both regulatory and contractual. Legal professionals must re-evaluate documentation, consider enforcement strategies, and undertake risk analysis to align with this new era of regulated football finance.