IFR’s draft State of the Game Report: key findings and supervisory implications

On 13 October, the Independent Football Regulator (IFR) published its draft State of the game (the Report). Describing itself as “the most comprehensive financial analysis of the English football industry ever undertaken”, the central message of the Report is clear: English club football can be both “the richest, best and most deeply competitive in the world while also standing on the edge of financial disaster.” The Report is based upon club financial data, club ownership and transaction data and league financial information obtained using the IFR’s statutory information gathering powers.

For clubs, the Report is about more than the headline figures. It provides clear indications as to how the IFR is likely to supervise them in the months and years ahead. Findings of the IFR that many Clubs would not meet its requirement to maintain ‘Appropriate Financial Resources’ should be reviewed and considered by Clubs, to support their future decision-making to deliver an overall profile which is capable of meeting and maintaining licence conditions.

The Report outlines the measures used by the IFR in considering financial soundness, key risks the IFR is likely to identify, and the steps clubs will need to take before full licensing in May 2030. The IFR is consulting on the draft, with comments due by 8 December 2026. While the Report sets out a six-point action plan for football, much of the IFR’s response remains conditional; this is a notable gap, as investors will want certainty as to the IFR’s appetite for intervention.

Key findings

Some of the key findings of the Report are:

1. Widespread and growing losses

In 2025/26, 94% of clubs across the top five English leagues were loss-making, in terms of profit before tax. Average losses reached around 59% and more than 65% of revenues in the Championship and League One respectively. In the Premier League, average losses per club more than doubled from £20 million in 2021/22 to £44 million in 2025/26.

2. Heavy reliance on external funding

Due to growing losses, clubs are required to rely on external funding, including owner funding, loans and other forms of financing. On average, for every £1 of revenue, clubs required external financing of 33p in the Premier League, 57p in the Championship, and 72p in League One. Around two thirds of clubs said they could not survive for more than 90 days without new owner funding, and 29% said they could not survive for more than 30 days.

3. Lack of contingency planning

Clubs are particularly exposed if an owner becomes unwilling or unable to continue providing finance, especially as many EFL and National League clubs have limited access to alternative sources of financing. In total, 76 clubs reported having no funding contingency plan.

4. Solvency issues

More than 60% of EFL and National League clubs, and 20% of Premier League clubs, have liabilities exceeding the book value of their assets.

5. Debt is ever-increasing

Across English football, debt rose from about £2.8 billion in 2020/21 to £4.1 billion in 2024/25, and is forecast to reach £5.1 billion by 2026/27. Premier League clubs account for around 75% of total debt. Relegation covenants are prevalent among Premier League clubs: 60% have at least one debt facility containing a relegation covenant, which could amplify the financial impact of relegation by increasing repayment obligations or borrowing costs, or imposing additional restrictions, as club revenues fall.

6. Transfer debt and financing create a systemic risk

In 2025/26, English clubs reported £4.8 billion of transfer payables and £1.5 billion of transfer receivables, resulting in net transfer debt of approximately £3.4 billion. High net transfer debt and increasing use of factoring create future financial pressures. In a concentrated transfer market, changes in lenders’ risk appetite, lending strategies or exposure limits could reduce the availability of transfer financing and create short-term liquidity pressures for some clubs.

What this means for the IFR’s supervision of clubs

The Report accepts that there “is no single, simple solution that will reduce financial risk without undermining the fundamentals that drive the financial success of the English game.” However, the IFR has concluded that English football is not self-sufficient and faces systemic vulnerability if economic factors worsen or investor appetite slows.

The IFR’s assessment of financial soundness at Clubs is a core function. Importantly, the Report adapts conventional financial analysis to football’s particular business model, recognising for example that owners are not purely motivated by financial returns, that player registrations are not fully reflected on balance sheets and can only be sold during transfer windows, and that shareholder “soft loans” operate differently from commercial debt. The assessment considers three areas: liquidity, solvency and financial distress.

Liquidity

The IFR found that liquidity measures were the strongest predictors of financial distress; and consequently Clubs can expect it to be a leading factor in financial soundness assessments. Notably, the IFR’s licensing guidance does not treat players as liquid assets, given the limited ability to realise value outside transfer windows. The Report found that, in respect of liquidity and solvency, many football clubs would not currently meet the requirements under the Football Governance Act 2025 (FGA) to hold “Appropriate Financial Resources”.

Solvency

Even after accounting for squad market values, 46% of EFL clubs would have negative equity. Separately, 97% of EFL and National League clubs generate negative EBITDA, and 27% of EFL and National League clubs have combined financial and transfer debt exceeding the estimated value of the business. The Report observes that the latter may reduce owners’ economic incentive to keep funding. The IFR is likely to look not merely at whether an owner can continue funding, but also at whether they are willing to.

Financial distress

The IFR identifies a common pathway to distress: a shock (an owner withdrawing funding, or a significant fall in revenue such as on relegation) acting on vulnerabilities. At least 20 clubs have faced financial distress since 2018/19. The Report concludes that identifying risk requires “comprehensive and ongoing assessment of individual clubs”, including governance and owner suitability. Reliance on owner funding, poor underlying financial health and inadequate contingency planning leave many clubs vulnerable to financial distress.

What will the IFR look for?

Clubs should expect closer scrutiny of their business models. Based on the Report, the IFR is likely to focus on: liquidity; the frequency of owner funding, with 67 clubs receiving six or more injections in a year; whether contingency plans and downside forecasts exist; and trends, not just snapshots, as rising debt and falling external financing were associated with a higher risk of distress. For loss-making, owner-dependent clubs, the question will be whether the owner has the resources, and the incentive, to sustain the club’s model. This links closely to the IFR’s ongoing assessment of owner suitability under the FGA’s Owners, Directors and Senior Executives regime.

The gap: IFR remedies

While the Report is detailed on its diagnosis of the failings of English football, the IFR have held back on actions it may take in light of its findings. Language is largely conditional and the IFR has recognised the risk posed to investment: “persistent and increasing losses could make investment in English football less attractive.” Investors were wary of regulatory intervention: 81% of investors interviewed by the IFR disagreed with implementing liquidity requirements. Investors suggested that liquidity requirements would not address the medium-term risk of funding being withdrawn from a non-self sustaining business model. On the other hand, all 32 investors who expressed a view considered robust owner and director testing important. Clubs that use the time before the 2027/28 season to understand their position on the IFR’s measures, and to put credible contingency planning and compliant governance arrangements in place, will be best placed to agree action plans on their own terms.

There is some certainty as to what comes next for in-scope Clubs: the IFR has set out fixed points in its timetable:

• action plans setting out how each club will meet the “Appropriate Financial Resources” requirement, to be agreed before the start of the 2027/28 season;
• three stress tests with mitigating action plans by May 2028;
• the first annual risk assessment in Spring 2028; and
• full licensing by May 2030.

Clubs should be preparing now for engagement with the IFR on their financial resources and wider governance requirements. Our Sports Regulatory practice is able to support Clubs in meeting the IFR’s expectations around effective governance; suitability requirements of Owners, Directors and Senior Executives and broader compliance-related obligations which support the new regulatory framework.