U.K. Law On English Football Reflects Failure To Learn From American Sports Law

Photo by Carl Recine/Getty Images

Getty Images

On July 21, 2025, the British Parliament passed the Football Governance Act which creates a government agency – the Independent Football Regulator (IFR) – for purposes of regulating English football. The IFR’s authority is broad and deep, including the authority to approve or disapprove of new club owners, control various club decisions on things such as relocation and branding, influence the distribution of certain league revenues, require fan engagement on certain matters, and to investigate, intervene, and discipline for any violations. The law is a remarkable intervention into the operation of private sports businesses and reflects a bewildering failure to learn from the legal structure and operations of American sports leagues.

The White Paper And The Free Market

The genesis of the law was a February 2023 report from the government’s Department for Culture, Media and Sport. The report was in response to two principal concerns: (1) a series of bankruptcies and near bankruptcies by English clubs; and (2) the proposed European Super League, which threatened to draw the best English clubs farther away from the traditional English football system in which clubs can be promoted and relegated through multiple levels. The report proposed a “Regulator” that would license and regulate the 116 clubs in the top five tiers of English football, including through close and regular inspection of owner and club financials.

The introduction of such a comprehensive government regulatory scheme merits scrutiny under free market principles, particularly in the lands of Adam Smith and Margaret Thatcher. It is generally accepted in classical liberal economic thinking that the state should only intervene where there has been a market failure, i.e., where the free market is unable to produce a socially desirable outcome. For example, governments regulate pollution and the environment because a world in which individual actors act in accordance with their best interests is unlikely to produce the clean air and water that we collectively desire.

Indeed, the government thought there had been a market failure in the world of English football. In the report, it argued that “[g]overnment intervention is needed” because “[t]he free market does not properly account for the full social value of clubs to their fans and communities, and industry self-regulation has remained inadequate despite countless opportunities to reform, and plenty of time to do so.” English football apparently is too important to let fail.

The Response And The Act

The government solicited feedback from all 116 football clubs, the leagues themselves, fan groups, and industry and legal experts. Then, on September 7, 2023, it published its response.

The government’s response reflected a sensitivity to the concerns of regulatory overreach. To that end, the government said that the Regulator would have three primary purposes: (1) club sustainability; (2) systemic sustainability; and (3) cultural heritage. Its three secondary duties would be (1) domestic competition; (2) international competitiveness; and (3) investment. On this last point, the government recognized “the concern that heavy-handed, overly interventionist regulation could deter investment” but pledged to adopt a flexible and sophisticated regularly framework that would “provide greater clarity and market certainty to investors into English football.”

As to its primary duties, the Regulator would establish four threshold conditions of a license for operating each club: (1) appropriate financial resources; (2) suitable owners; (3) fan interests; and (4) approved competitions. The conditions are meant to ensure that only individuals with “sufficient integrity, honesty, financial soundness, and competence” own and operate clubs. The Regulator would also “set a minimum standard for fan engagement” and be required to approve any sale or relocation of a club’s stadium. The Regulator would not, however, involve itself in “matters relating to sporting integrity or competition,” leaving those to the “existing football authorities.”

The Act passed generally reflects the government’s reports. The law provides the IFR broad authority and discretion to investigate prospective owners, including specifically their finances. Moreover, the IFR can direct the removal of owners it believes to be “not suitable.”

As to clubs, the law imposes various duties on them. Specifically, the law prohibits clubs from playing in prohibited competitions, a vaguely defined term that includes as a factor whether such a competition “harms, or would harm, the heritage of English football.” The law also prohibits clubs from disposing of any property interest in its home stadium and from changing its crest, colors or name without approval of the club’s fans.

Failure To Learn From America

The claim of a market failure should ring hollow to American sports professionals. One of the major reasons cited in the February 2023 report for the financial problems of English clubs was player salary costs – “unsustainable wage-to-revenue ratios” as described by the government. The clubs engaged in an arms race that many of them could not afford and which was financed either with debt or the cash of questionable characters. The government’s initial report was dismissive of salary caps, claiming that they “would not build resilience to shocks into clubs’ finances and operations.” However, neither of the lengthy government reports once mentioned American sports leagues or the fact that they have successfully implemented a range of salary cap or control schemes. Indeed, the Premier League floated a salary cap in May 2024, which has not come to fruition.

More specifically, the reports did not mention the way in which American sports have largely engaged in successful self-regulation: collective bargaining. American sports leagues are, in large part, governed by the terms of the collective bargaining agreements negotiated with their counterpart players unions. In these agreements, the clubs are able to create rules that restrict player salaries to levels which the clubs believe are affordable. While such rules would ordinarily be subject to scrutiny under antitrust (competition) law, generally speaking, when they are negotiated with a union they are protected by what is known as the “non-statutory labor exemption.” In exchange for these restrictions, the players generally get a guaranteed share of the leagues’ revenues and other benefits. As a result of this system, the clubs remain financially healthy and there is a shared purpose in increasing league revenues.

U.K. labor law, specifically the Trade Union and Labour Relations (Consolidation) Act 1992, enables much the same process, by protecting the right of workers to unionize and bargain collectively. Not surprisingly then, the Professional Footballers’ Association (PFA), the trade union for football players in England, said it had to be consulted about the proposed salary cap.

The Act’s control over owners and clubs also deviates substantially from American practices and is chilling to investment. In American leagues, the leagues themselves (and their lawyers) carefully investigate prospective owners and then regulate their conduct through league agreements and policies. Moreover, American sports teams have significantly expanded their business operations in recent years, including particularly through the development of new stadiums and surrounding property. The U.K. law substantially prohibits such entrepreneurship.

The law also imposes restraints on club intellectual property that are unimaginable (and perhaps unconstitutional) in America and which substantially preclude new or interesting brand ideas and their related monetization.

The Football Governance Act is only the latest instance in which European football seems to have taken a blind eye toward, or is belatedly learning from, American sports law. In October 2024, the Court of Justice of the European Union, the EU’s top court, ruled that certain of FIFA’s rules requiring compensation to be paid to a player’s former club when the player changes team violate EU law. The Court found that the rules unreasonably “impede the free movement of professional footballers” and unreasonably restrain cross-border competition. The decision was obvious to American sports lawyers, given that American courts reached the same conclusion as to similar restraints imposed by its sports leagues decades ago.

On the back of that victory, players recently filed a class action lawsuit against FIFA concerning its rules on player movement. Once again, these are issues that American sports leagues and their players litigated decades ago, before generally settling on collectively bargained solutions in the 1990s.

Seemingly for cultural reasons, the English football system does not operate according to collective bargaining agreements. The leagues’ failure to avail themselves of the laws available to them and to reach a private resolution with players has resulted in an unprecedented and unnecessary level of government involvement in their affairs. They would have done better to look across the Atlantic.