A new independent football regulator will have “targeted powers” to step in and resolve how money flows from the Premier League down the pyramid, and to stop clubs from joining breakaway leagues.

The Government will publish its White Paper on football governance today, and has now confirmed it will act on a recommendation from the 2021 fan-led review of football to create a regulator.

The body’s main purpose would be to oversee a licensing system to ensure clubs are run sustainably, following the collapse of Bury and Macclesfield in recent years.

However, the regulator will also be able to step in and force arbitration if the Premier League, the EFL and the Football Association are unable to reach a new settlement on how top-flight finances support the game at lower levels.

Sheffield, England, 15th February 2023. Paul Heckingbottom manager of Sheffield Utd during the Sky Bet Championship match at Bramall Lane, Sheffield. Picture credit should read: Simon Bellis / Sportimage

Discussions between the bodies are ongoing. The EFL’s chairman, Rick Parry, is looking to secure 25 per cent of all pooled broadcast revenues in a new settlement, alongside the introduction of two to one merit-based payments in the Premier League and Championship and the abolition of parachute payments in a bid to reduce what he sees as the “cliff edge” between the first and second tiers.

The Government is confident the regulator’s powers will be balanced in such a way that it will not diminish the competitiveness and strength of the Premier League, which in financial terms is streets ahead of even the other ‘Big Four’ leagues in Europe.

The licensing system will enshrine a power of veto for fans on club heritage matters, preventing owners from changing a club’s name, stadium, badge or kit without supporter input, and powers to block clubs from joining new competitions which do not meet predetermined criteria, in consultation with the FA and fans.

Prime Minister Rishi Sunak said: “Since its inception over 165 years ago, English football has been bringing people together, providing a source of pride for communities and inspiration to millions of fans across the country.

“Yet despite the success of the sport both at home and abroad, we know that there are real challenges which threaten the stability of clubs both big and small.

“These bold new plans will put fans back at the heart of football, protect the rich heritage and traditions of our much-loved clubs and safeguard the beautiful game for future generations.”

Football regulator to sort how money flows down from Premier League