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The English Football League (“EFL”)

The EFL is a company, the Football League Limited, and just like every other company registered in England and Wales is subject to the Companies Act 2006. Pursuant to section 18 of the Companies Act 2006, the EFL is required to have an articles of association, which are written rules for the organisation and running of a company. The EFL’s Articles of Association (“the Articles”) are available in the EFL Handbook (if you have a copy) or alternatively can be accessed through Companies House.

The Articles set out, amongst other things, the organisation of the EFL, including the role of the board of the EFL (“the EFL Board”) and the operation of EFL general meetings, certain financial operations of the EFL, and the application of the Regulations of the League (“the Regulations”). Those aforementioned parts of the Articles and certain sections of the Regulations shall be explained in turn.

Organisation

It should be noted that the clubs of the leagues of the EFL (known as ‘Member Clubs’) are the shareholders of the EFL, with each of the 72 member clubs of the EFL holding one share (see article 3.2 of the Articles) and those shares being held by the member clubs’ company entities, e.g. Leyton Orient Football Club Limited (see articles 3.2 and 4.2 of the Articles).

The EFL Board and general meetings

The EFL Board must consist of at least three directors and a maximum of ten directors (see article 15.2 of the Articles). Those directors will include:

  • An independent chairperson appointed by the EFL Board (see articles 15.3.2 and 17.1 of the Articles);

  • Up to two independent non-executive directors appointed by the EFL Board (see articles 15.3.3 and 17.1 of the Articles); and

  • Up to six club directors appointed by the EFL at a general meeting following nomination by the EFL’s three divisions (see articles 15.3.1 and 16 of the Articles).

Nominations for the club directors are apportioned between the EFL’s three divisions as follows (see article 16.1 of the Articles):

  • The Championship is entitled to nominate three directors;

  • League 1 is entitled to nominate two directors; and

  • League 2 is entitled to nominate one director.

The EFL Board also has a discretion to appoint a chief executive officer but there is no procedure in the Articles for any such appointment (see article 15.4 of the Articles).

The EFL Board currently consists of ten directors, including a chief executive officer.

It should also be noted that Article 24 of the Articles provides the procedure for the EFL’s appointment of individuals to the FA Council, the FA Board and the Professional Game Board (see article 24 and Football Law’s overview of the FA).

The powers of the EFL Board (see article 28.1-28.2 of the Articles) are, generally, to manage the business of the EFL and to use all of the EFL’s powers in doing so, save where such powers require the votes of the member clubs at a general meeting, such as any amendment to the Regulations (see article 13.3 of the Articles).

The EFL Board also has the power to and is responsible for:

  • Convening meetings of the EFL Board when required (see article 30.1 of the Articles);

  • Arranging annual general meetings and extraordinary general meetings of the EFL (see article 7 of the Articles);

  • Proposing changes to the Regulations (see article 13.1 of the Articles); and

  • Delegating its powers to committees that consist of one or more of the directors that make up the EFL Board and other persons of its choosing (see articles 30.9-30.12 of the Articles).

When matters at an EFL Board meeting require a vote, the EFL Board is quorate when there are at least six directors present (see article 30.4 of the Articles). Each director has one vote and a simple majority (i.e., more than 50%) of the votes are required for a matter to be decided (see articles 30.2).

As noted, the EFL Board can convene a general meeting of the EFL (i.e., a meeting of its member clubs) that can take place at any time but as a minimum the EFL Board is required to convene one annual general meeting (see article 7 of the Articles). The directors that make up the EFL Board are entitled to attend and speak at any general meeting (see article 9.16 of the Articles), and the chairperson of the EFL Board is the chairperson of every general meeting (see article 9.9 of the Articles).

General meetings are held to discuss any business of the EFL and, where necessary, hold votes on matters requiring the members’ support, such as amendments to the Regulations or the Articles, or appointment of the Chairperson or other independent non-executive directors of the EFL Board (see article 17.4 of the Articles).

Where matters at a general meeting require a vote, every member club present at the general meeting by their appointed representatives shall have one vote (see articles 10.10-10.11 and 12 of the Articles). If the vote is by a show of hands, which is the standard position (see article 10.1 of the Articles), then proxy votes are not allowed (see article 10.10 of the Articles). However, if a poll has been requested then members are permitted to vote by proxy (see articles 10.1, 10.7, 10.11 and 11 of the Articles). Save when dealing with amendments to the Regulations (see below), article 10.2 of the Articles states that, in respect of a vote by a show of hands, the chairperson can declare that ‘a resolution has been passed or has been passed unanimously or has been passed by a particular majority’. If the votes are equal, whether on a show of hands or by poll, then the chairperson has the deciding vote (see article 10.9 of the Articles).

It should be noted that although member clubs ‘must attend’ board meetings (see article 12.4 of the Articles), the Articles do not provide a quorum requirement for votes at general meetings.

The Articles – finance

Article 35.1 of the Articles provides for the EFL’s maintenance of a Pool Account, which is an account where all of the EFL’s income is paid into. Such income will include EFL’s television broadcast income and sponsorships. Further, the EFL Board may require member clubs to make payments into the Pool Account to finance the business and activities of EFL (see article 35.4 of the Articles). In any event, member clubs are required to pay into the Pool Account gate levies that the EFL imposes on its member clubs (see article 36 of the Articles). Such gate levies require the home club of a league match to pay to the EFL 3% of its net gate receipts for such matches, and also for member clubs to pay to the EFL 3% of its net proceeds of the sales of season tickets in respect of each season.

Further, payments are also made from the Pool Account, such as sums required to carry on EFL’s business and activities and to discharge its debts and obligations, and also for the sums payable to member clubs, such as television broadcast distributions and prize money (see articles 37-41 of the Articles).

The details of sums payable to member clubs are provided in articles 39-41 of the Articles. Sums up to £33m in any season are allocated to each league of the EFL in the following amounts: the Championship receives 59.6%, League 1 receives 23.9% and League 2 receives 16.5% (see article 39.1.1 of the Articles). Any sums in excess of £33m and up to £67m relating to an increase in net television income in any season are allocated to each league of the EFL in the following amounts: the Championship receives 80%, League 1 receives 12% and League 2 receives 8% (see article 39.1.2(a) of the Articles). Finally, any sums in excess of £33m and over £67m relating to an increase in net television income in any season are allocated to each league of the EFL in the following amounts: the Championship receives 90%, League 1 receives 6% and League 2 receives 4% (see article 39.1.2(a) of the Articles). The balance of any excess (i.e., over £33m but not relating to net television income) is allocated equally between each league of the EFL (see article 39.1.2(b) of the Articles). (The figures referred to in this paragraph have been subject to RPI increases, but the exact increases are not ascertainable from the Articles.)

Those sums paid from the Pool Account to each league of the EFL are then paid to the leagues’ respective member clubs, and such further payments (see article 39.4 of the Articles) include:

  • A television facility fee, which is set by the EFL Board and is to account for the cost member clubs incur for providing facilities for the broadcasting of football matches. In the 2019/20 season, for example, an EFL source indicated that a televised league match in the Championship saw each team receive £75,000.

  • A basic award, which according to the Articles, is £626,000 for each member club of the Championship, £300,000 for each member club of League 1 and £210,000 for each member club of League 2 (see article 40 of the Articles). However, an EFL source indicated that for the 2019/20 season, the basic award was £2.9m for each member club of the Championship, £881,000 for each member club of League 1 and £607,000 for each member club of League 2.

  • A ladder payment, which is merit-based and comes from the balance of each leagues’ share of the Pool Account after payment of television facility fees and basic awards (see article 41 of the Articles). The member club finishing as champions of a league of the EFL will receive a share of the ladder payment equivalent to the number of member clubs in that league, the bottom member club of a league will receive one share of the ladder payment, and the intermediate member clubs of a league will receive a number of shares of the ladder payment that corresponds to their league position. It is understood that usually a ladder payment is not made as available funds are consumed by the basic award.

The Regulations

Article 13.1 of the Articles states that the EFL Board has the power to propose regulations relating to the activities of, amongst others, the EFL’s leagues, the member clubs and registered players of member clubs. As a result, the Regulations were adopted (see article 13.2 of the Articles). The Regulations can be amended from time to time but only by:

  • A vote at a general meeting;

  • With a majority (i.e., more than 50%) of the votes from all member clubs present; and

  • Also with a majority of the votes from the member clubs present that are in the Championship (see article 13.3 of the Articles and regulation 2 of the Regulations).

  • (Article 13A.4.6 imposed a quorum requirement for such votes until 30 June 2022 but it is unknown whether that deadline has been extended.)

The Regulations are voluminous and cover, amongst other things

  • The operation of the leagues of the EFL (see Section 3 of the Regulations);

  • EFL entering into commercial agreements, including for sponsorship and the broadcasting of league matches (see Section 7 of the Regulations);

  • The EFL’s investigatory and disciplinary proceedings (see Section 8 of the Regulations);

  • The EFL’s use of arbitration for disputes (see section 9 of the Regulations); (v) the EFL’s Financial Fair Play Regulations (see Appendix 5 of the Regulations); and

  • The EFL’s owners’ and directors’ test (see Appendix 3 of the Regulations).

For the purposes of this overview, summary details are given of the regulations and, where applicable the procedures, found in the following sections of the Regulations: Section 3 – The League; Section 7 – Broadcasting and Sponsorship; Section 8 – Investigatory and Disciplinary Proceedings; and Section 9 – Arbitration.

The Regulations – Section 3 – the League

Section 3 of the Regulations provides, amongst other things:

  • That the EFL and its member clubs agree to be bound by the Regulations, the Articles of Association, the Rules of the FA and the Laws of the Game (see regulation 3.1 of the Regulations);

  • That not more than 72 clubs shall compete in the three leagues of the EFL (see regulation 5.1 of the Regulations);

  • That at the end of each season the EFL will accept into membership the three clubs finishing in the lowest three places in The FA Premier League (see regulations 7.8 and 10.1.1(a) of the Regulations);

  • That the number of clubs to be promoted and relegated between The FA Premier League and the Championship shall be determined by agreement between The FA Premier League and the Championship (see regulation 10.1.1(c) of the Regulations); and

  • Details of the sporting sanctions that can be imposed on a member club when it is subject to an insolvency event (see regulation 12.3 of the Regulations; see also articles 4.7.4 and 4.7.5 and the EFL’s Insolvency Policy generally).

The Regulations – Section 7 – Broadcasting and Sponsorship

Section 7 of the Regulations deals with, amongst other things, the EFL entering contracts for the broadcasting of matches and sponsorship of the EFL.

The EFL has a Commercial Committee that consists of the EFL’s chief executive, three representatives of the Championship one representative of League 1 and one representative of League 2 (see regulations 79.6-79.7 of the Regulations).

The Commercial Committee negotiates all the EFL’s commercial contracts relating to, amongst other things, broadcasting rights and title sponsorship of the Championship, which are then subject to the formal approval of the EFL Board (see regulation 79.12 of the Regulations).

It should be noted that the EFL Board has the power to enter the EFL into any commercial contract considered to be in the best interests of the EFL and the member clubs, except where such a contract represents more than 25% of the projected income of EFL over the period of the contract (see regulation 79.2 of the Regulations). Contracts of that size require a majority of votes from all member clubs and, at the same time, a majority of votes from member clubs that are in the Championship.

The Regulations – Section 8 – Investigatory and Disciplinary Proceedings

Section 8 of the Regulations sets out the EFL’s power to initiate and prosecute disciplinary proceedings against any person for misconduct, which includes breaches of the Regulations or the Articles, and breach of an order, requirement, direction or instruction of the League (see regulations 1 and 84.1-84.2 of the Regulations).

The EFL has the power to investigate suspected or alleged misconduct by any member club, its players or officials (i.e., a club’s employees other than a player).

The EFL’s powers for dealing with any suspected or alleged misconduct include (see regulation 85.1 of the Regulations):

  • Imposing a fixed penalty (see regulation 88 of the of the Articles;

  • Referring the matter to a Disciplinary Commission (see below) (see regulations 90 to 94 of the Regulations;

  • Referring the matter to the FA (see regulation 89);

  • Where the matter involves the EFL’s financial regulations (which include its Financial Fair Play Regulations), referring the matter to the newly created Club Financial Reporting Panel (see Appendix 6 of the Regulations); or

  • Entering agreed decisions with a member club, player of official which provides for a sanction or other measure being imposed on the member club, player of official (see regulation 86 of the Regulations). An agreed decision can be a useful tool that avoids the need for burdensome and protracted disciplinary proceedings in circumstances where a club, player or official accepts that they have committed an act of misconduct.

If a matter is referred to a Disciplinary Commission, the Disciplinary Commission will consists of a chairperson, who is either a qualified solicitor or barrister or a member of the Chartered Institute of Arbitrators, and two suitably qualified and independent individuals appointed by Sport Resolutions (see regulation 91.3 of the Regulations). However, there is scope for the Disciplinary Commission to be made up of the chairperson sitting alone (see regulation 91.3.2(b) of the Regulations).

Regulations 92-94 and Appendix 2 – Procedural Rules of the Regulations provide for the procedure of disciplinary proceedings before a Disciplinary Commission. Notably, a Disciplinary Commission’s powers when deciding on disciplinary proceedings (see regulation 93 of the Regulations) include (i) ordering a payment of compensation; (ii) suspension of membership from the EFL; (iii) a deduction of points; and (iv) an embargo on a member club’s registration of players.

A final decision of the Disciplinary Commission can be appealed against by the parties to the disciplinary proceedings and such an appeal is known as a ‘Disciplinary Appeal’ which will be heard by the League Arbitration Panel (see regulation 95.1 of the Regulations). Regulations 95.2-95.7 and Section 9 – Arbitration of the Regulations govern the procedure of a disciplinary appeal before a League Arbitration Panel.

It should be noted that EFL’s powers and procedures for dealing with misconduct are not to be confused with The FA’sdisciplinary powers and procedures for dealing with misconduct as defined in rule E1 of the Rules of the FA. They are separate, as is identifiable by the two following points. Firstly, breaches of the Laws of the Game are dealt with by The FA (see rule E1.1 and G1 of the Rules of The FA). Secondly, while other types of misconduct as defined in rule E1.2-E1.6 of the Rules of The FA may also amount to a breach of the Rules, rule G3 of the Rules of The FA explains that such misconduct is ordinarily dealt with by The FA unless otherwise agreed:

‘Facts or matters giving rise to alleged Misconduct under Rule E1(b) to (f) inclusive, which also give rise to an alleged breach of the rules and/or regulations of… the EFL, may be dealt with by [The FA] under the Rules and regulations of [The FA], unless [The FA] and… the EFL… agree that [the EFL] shall act’.

The Regulations – Section 9 - Arbitration

Section 9 of the Regulations provides that membership of the EFL shall constitute an agreement between the EFL and its member clubs and between each member club to submit to arbitration all disputes between them (see regulation 96.1 of the Regulations). Such disputes include but are not limited to:

  • Disputes arising from decisions of the EFL Board;

  • Disputes arising from decisions of a disciplinary commission (as explained above); and

  • Subject to some exceptions, disputes between clubs (see regulations 96.2 of the Regulations).

The rules governing the commencement, procedures and the League Arbitration Panel’s powers in dealing with any such arbitration are found in regulations 97-104 and Appendix 2 – Procedural Rules of the Regulations. Subject to the limited exceptions referred to in regulation 104 of the Regulations, a decision of a League Arbitration Panel is final and cannot be challenged or appealed.

It is worth noting that when the League Arbitration Panel is dealing with a dispute arising from a decision of the EFL Board, the League Arbitration Panel sits as a review body exercising a supervisory jurisdiction to challenge the validity of the EFL Board’s decision (see regulation 96.4 of the Regulations).

Comparatively, when the League Arbitration Panel is dealing with a disciplinary appeal, the disciplinary appeal can take the form of either (see regulation 96.5 of the Regulations):

  • Where required to do justice, a rehearing, and the League Arbitration Panel will hear all the matters and evidence again and is not bound by the Disciplinary Commission’s decision being appealed;

  • In all other cases, a consideration of whether the decision of the Disciplinary Commission was made in error; or

  • In the case of an appeal against sanction only, the grounds are that the original sanction was too severe or too lenient having regard to the circumstances of the case.

28 July 2022

Thomas Horton