Sheffield Wednesday administration puts focus on new IFR rules

Trevor Watkins and David Thorneloe of Pinsent Masons were commenting after the club filed for administration on 24 October. Administrators will now operate the companies behind the club and its stadium, Hillsborough. A 12-point points deduction has been imposed on Sheffield Wednesday. The club sits bottom of the table in the Championship on minus six points.

Sheffield Wednesday last recorded a profit in 2016-17. In recent times the club has been beset by financial difficulties. This came to a head earlier this year when players at the club were not paid on time. This led, in the summer, to the imposition of transfer embargoes by the English Football League (EFL). Former club owner Dejphon Chansiri was also charged by the EFL of causing the club to be in breach of league rules. With the matter now being referred to an independent commission, an additional points deduction could also be imposed on the club.

Sheffield Wednesday is the latest professional football club in England to enter administration, following on from other examples like Leeds United, Portsmouth, Derby County, Bolton Wanderers and Bury. In Bury’s case, the club was liquidated in 2020, ending more than 130 years of club history. This is despite the existence of financial regulations and other controls – such as ‘fit and proper owner’ tests – designed to ensure the responsible running of clubs.

While current regulations in force in English football have been set by the footballing authorities, a new regulatory regime – overseen by an independent regulator – is starting to take shape. The Football Governance Act 2025 came into force during the summer, providing for the establishment of the Independent Football Regulator (IFR).

The IFR’s main objective is to ensure the financial stability and sustainability of English football, ensuring that clubs have sound corporate and financial governance in place. In total, 116 clubs across the Premier League (PL), the Championship, and divisions one and two of the EFL, as well as the National League, are subject to its oversight. Safeguarding ‘the heritage of English football’ is also a statutory objective of the IFR.

The detailed rules and requirements for the new regulatory regime will be set out by the IFR. The regulator, which is still to be fully established, has already been consulting on different aspects of the new regulatory framework that will operate – including in relation to a new owners, directors, and senior executives (ODSE) regime .

Under its plans, the IFR will oversee a new IFR approval process for club owners in English football and there will revised and strengthened rules and requirements for club owners and directors to comply with – including a new suitability test for owners regarding their financial soundness and whether they have sufficient financial resources.

Thorneloe, an expert in public law, said: “The IFR’s statements to date make clear it intends to intervene early where clubs show the first signs of financial difficulties in future, long before the clubs may need to consider entering administration. This starts with the scrutiny of owners and their financial plans through the ODSE regime and continues with regular engagement through the licensing requirements it sets.”

“The IFR can be expected to place binding restrictions on clubs living beyond their means – it may even step in with its own experts to run a club in financial distress or force the sale of the club to a new owner,” he added.

Watkins led a fan buy-out of AFC Bournemouth in 1997, when the club faced bankruptcy, and went on to become club chairman and a divisional director to the EFL board. He said: “The troubles facing Sheffield Wednesday – one of the oldest surviving professional football clubs in England, having been founded in 1867 – should serve as the starkest of prompts to club owners and directors, as well as prospective new investors and funders, to familiarise themselves with the details of the IFR’s proposed new rules and prepare to comply with the new processes and requirements. With an interventionist approach, it is of paramount importance to ensure that all steps are taken – before the regulator does.”

The IFR’s consultation on its proposals for the new ODSE regime closed on 6 October. The regulator is expected to confirm the new rules and associated guidance in the months ahead.