Football M&A regulatory due diligence: what prospective buyers should be looking at in light of new regulations
A quality of earnings report tells a buyer whether the numbers are real. A legal due diligence report tells a buyer whether the contracts hold up and the litigation history is disclosed. Neither tells a buyer whether the target club would survive an IFR owner suitability determination, whether its governance evidence would satisfy the corporate governance condition, whether its ownership structure creates a beneficial ownership problem under AMLR, or whether its squad cost ratio is quietly heading toward a UEFA significant breach. That gap, not a rounding error in an existing workstream but a missing one, is what this article addresses.
Football is facing a new regulatory era, and M&A deal teams need specialist oversight
Financial services M&A has long recognised that acquiring a regulated entity requires a distinct diligence discipline alongside the financial, legal, tax and commercial workstreams ordinarily included in a transaction. Football is moving towards a similarly layered model. In England, a person generally cannot become an owner or officer of a regulated club unless the Independent Football Regulator has made the required suitability determination. The IFR regime sits alongside the applicable rules of The FA, the Premier League, the EFL or the relevant competition organiser. UEFA’s club licensing, financial sustainability and competition-integrity rules may also be relevant to an English acquisition where the target participates in, or could qualify for, UEFA competition. For EU-based clubs and football agents, Regulation (EU) 2024/1624 will add a further anti-money laundering layer from 10 July 2029, subject to the limited exemptions available to certain professional football clubs.
Deal teams built around a conventional financial-and-legal diligence model are likely not fully equipped to test any of this properly. That is not a criticism of accountants or lawyers; it reflects the genuine scope of what those two disciplines are actually built to do, which this article sets out precisely below, because we think any comparison worth making should be grounded in what those workstreams genuinely cover, not a caricature of them.
A quality of earnings report tells you whether the numbers are real. It does not tell you whether the club would survive an IFR owner suitability determination.
The financial services precedent this follows directly
Regulatory due diligence is not a new discipline invented for football. It is a well-established, specialist workstream in financial services and fintech M&A, recognised in the market as requiring specialist regulatory expertise outside of a typical core deal team, distinct from the generalist legal advisers running the rest of the transaction. The reason it exists as its own discipline is instructive, and it maps directly onto football.
Industry commentary on financial-sector M&A has identified a specific, recurring failure mode: deal teams focused heavily on commercials and business operations, where financial crime due diligence ends up limited to regulatory permissions and licensing -- confirming that a licence exists, rather than assessing whether the underlying compliance programme it depends on would actually survive supervisory scrutiny. Where genuine regulatory due diligence is done properly in this sector, it goes considerably further: examining whether an AML programme has real, documented policies and procedures, whether a designated compliance officer function actually operates as intended, whether customer due diligence processes are genuinely applied, whether staff are trained, and whether the programme has ever been independently audited -- typically requiring ongoing dialogue with the target's own compliance function, not a one-off document review.
Why financial due diligence does not, and was never designed to, cover this
Financial due diligence, whether delivered as a formal quality of earnings report or a broader financial DD exercise, is built around a specific and well-established set of workstreams: quality of earnings and revenue recognition (consistently the largest single component of the exercise), working capital analysis, cash flow and liquidity assessment, balance sheet review, customer and revenue concentration, tax exposure, debt and contingent liabilities, and internal controls, typically assessed against three to five years of historical financial statements.
None of this reaches forward into regulatory risk. A quality of earnings report can confirm a club's revenue is real and its EBITDA is properly normalised without ever testing whether the club's squad cost ratio is drifting toward a UEFA significant breach, whether its ownership structure would satisfy AMLR's beneficial ownership tests, or whether the individuals behind the acquiring entity would clear the IFR's source of wealth test. These are not financial questions in the sense financial DD is built to answer. They are regulatory questions requiring a different analytical framework entirely.
Why legal due diligence gets close, but does not close the gap either
Legal due diligence is the workstream most likely to be assumed to cover this ground, and it is worth being precise about why it does not, in its conventional form. Standard legal DD for an M&A transaction comprises eight recognised workstreams: corporate organisation, material contracts, litigation, employment, intellectual property, regulatory and compliance, tax, and privacy and data security.
The "regulatory and compliance" workstream within that standard scope is real, but it is typically built to answer a narrower question than the one a football transaction actually raises. The depth of the regulatory and compliance workstream within legal due diligence varies materially between transactions and advisers. At its narrowest, it may focus on whether the target holds the required licences, permissions and filings, whether they are in good standing and whether any breaches or investigations have been disclosed. A specialist sports-regulatory review goes further by testing how the relevant requirements operate in practice: whether the club’s governance arrangements and supporting evidence are capable of satisfying the IFR’s corporate governance condition, whether the acquisition structure creates owner-suitability or multi-club ownership concerns, whether relevant customer and beneficial ownership information will support AMLR compliance, and whether the club’s financial trajectory creates exposure under UEFA or domestic competition rules.
Those questions require sector-specific regulatory knowledge -- an understanding of what the IFR, UEFA and AMLR each substantively expect, not just which documents a target is required to hold -- that sits outside the conventional scope of a generalist M&A legal team, in exactly the same way it sits outside a generalist legal team's scope in a bank or fintech acquisition.
This is not a gap in how well lawyers do their jobs. It reflects an honest scoping question: conventional legal DD was built for a world in which football clubs were not regulated entities in this sense at all. That world no longer exists.
The distinction in one sentence
Financial and legal due diligence establish the target’s financial position, legal rights, obligations and disclosed compliance history. Specialist regulatory due diligence complements those workstreams by testing how the acquisition structure, the club’s operating arrangements and its underlying evidence would stand up against the applicable IFR, domestic competition, UEFA and AMLR requirements.
The regulatory due diligence an English football club acquisition needs: IFR, domestic competition and UEFA considerations
For any acquisition of, or significant investment in, a club regulated by the Independent Football Regulator, regulatory due diligence needs to test the transaction against four distinct pillars of exposure.
Prospective owner and officer suitability under the ODSE regime
A proposed owner or officer must generally obtain the required IFR determination before assuming the relevant role. The assessment is not identical for owners and officers. Both are assessed against the applicable individual fitness criteria, including honesty and integrity and, where relevant, competence and financial soundness. A prospective owner is also subject to ownership-specific scrutiny, including the source of wealth connected with the acquisition, the sufficiency of the financial resources available to support the club and the proposed plans for operating and funding it. Regulatory due diligence should therefore map the complete ownership and control structure, identify every person who may constitute an owner or officer, and test the proposed funding and governance arrangements before signing or, at the latest, before the transaction becomes unconditional.
The club’s licence position, financial plan and prospective owner’s business plan
Due diligence should establish whether the club has applied for or obtained a provisional or full operating licence, the conditions attached to that licence, the financial information and plans supplied to the IFR, and whether any material change has occurred since those submissions. Separately, the prospective owner must be prepared to explain how the club will be operated, the estimated costs of doing so, how those costs will be funded and the source of that funding. The buyer’s acquisition model should therefore be reconciled with the club’s existing regulatory submissions and any licence conditions before completion.
The corporate governance condition and the quality of the target's actual evidence
As covered in Lagom's own guidance on this condition, the IFR assesses governance on the quality of what a board can evidence -- documented decision-making, real delegation, an actual record of risk escalation -- not on the existence of a policy document. Regulatory DD needs to test the target's governance evidence against this standard directly.
Regulatory history, information requirements and enforcement exposure
Due diligence should identify any current or historical IFR information notice, expert reporter appointment, investigation, compliance order, sanction, undertaking or other material regulatory engagement, together with any unresolved matter that could lead to further supervisory or enforcement action. These are matters a buyer should understand before completion rather than discover afterwards.
Domestic football rules and change-of-control requirements
The IFR regime does not replace the rules administered by The FA, the Premier League, the EFL or other relevant competition organisers. Depending on the club and transaction, diligence may need to cover the applicable Owners’ and Directors’ Test, acquisition-of-control notifications and approvals, restrictions on acquisition leverage, financial rules, director and ownership disclosures, third-party interests, dual interests and any conditions attached to league membership. The transaction timetable must account for each relevant process rather than treating IFR clearance as the only football-specific gateway.
For institutional investors, private equity firms and leaders in MCO groups, these requirements affect far more than regulatory clearance at completion. Fund and acquisition structures, source-of-wealth evidence, shareholder funding, transaction timetables, portfolio governance and eventual exit planning may all need to accommodate the IFR regime. For a more detailed analysis, read our guide to what IFR licensing means for institutional investors and private equity firms holding or acquiring English football clubs.
UEFA and EU-specific regulatory due diligence: financial sustainability, competition integrity and AMLR
For a club competing in, or likely to qualify for, UEFA competition, and for any transaction touching an EU-based club, agent or investor, regulatory due diligence needs to reach two further, distinct bodies of exposure.
UEFA financial sustainability exposure
For a club subject, or reasonably expected to become subject, to UEFA monitoring, diligence should examine its current and projected squad cost ratio, football earnings position, overdue payables, any CFCB disciplinary measure or settlement agreement and any restriction affecting the registration of players for UEFA competition. The squad cost rule limits the ratio to 70%. A breach may be categorised as significant under Annex L by reference to both the extent of the excess and the club’s breach history, so 90% should not be described as a universal “significant breach threshold”. These exposures generally attach to the club or its ability to participate in UEFA competition and can therefore affect the asset acquired, even though the buyer does not technically assume every regulatory liability in a legal sense.
UEFA competition integrity and multi-club ownership
Where the buyer, its investors or connected persons hold interests in other clubs, the analysis must also test UEFA’s competition-integrity rules. These rules restrict a club, individual or legal entity from exercising prohibited control or influence over more than one club participating in UEFA club competitions. A conflict can affect which club is admitted to a UEFA competition and may require governance, ownership or operational changes by the relevant UEFA deadline. For multi-club investors, this can be a transaction-structuring issue rather than a post-completion compliance exercise.
AMLR scope and the Article 5 exemption position
Regulation (EU) 2024/1624 applies to professional football clubs in relation to specified transactions involving investors, sponsors, football agents or other intermediaries, and player transfers, and applies separately to football agents. These provisions apply from 10 July 2029. Member States may exempt some professional clubs in full or in part following an appropriate risk assessment. Clubs outside the highest division may be exempted where they present a proven low risk. A highest-division club may only benefit from the relevant exemption where it presents a proven low risk and its total annual turnover did not exceed €5 million, or the equivalent in national currency, in each of the two preceding calendar years. Diligence should therefore confirm the target’s division, turnover, national implementing position and actual exemption status rather than assuming that an exemption will be available. For an in-scope club, the review should assess its enterprise-wide risk assessment, internal policies and controls, allocation of compliance responsibilities, customer due diligence and beneficial ownership procedures, suspicious transaction reporting arrangements, record keeping, staff training and controls relevant to the transactions for which the club is an obliged entity.
What a genuinely useful regulatory due diligence exercise actually produces
The output of a properly scoped regulatory DD exercise is not a document checklist confirming what exists. It is a genuine risk assessment answering a specific question for the buyer: given what we now know, does this transaction proceed as structured, does it need to be restructured, does the price need to reflect a regulatory exposure, remediation cost, restriction or contingent liability affecting the target, or does something need to be resolved before completion rather than after it? That requires the same kind of direct, ongoing engagement with the target's own governance and compliance function that genuine regulatory DD in financial services requires -- not a one-off review of whatever documents happen to be in the data room.
It also requires findings to be genuinely actionable for the rest of the deal team, not delivered in isolation. A regulatory risk identified during diligence should translate into an appropriate transaction response. Depending on the issue, that may include a representation or warranty, a specific indemnity, a covenant, a condition precedent, a completion deliverable, regulatory cooperation obligations, an escrow or retention, a price adjustment, a restructuring step or, in a sufficiently serious case, a decision not to proceed. The regulatory workstream should therefore be integrated with the legal, financial and commercial workstreams throughout the transaction. Regulatory due diligence that is not built to connect with the rest of the transaction's legal architecture is analysis without consequence.
For the detail behind each of the pillars above, see Lagom's existing guidance on IFR licensing and the corporate governance condition, the UEFA financial sustainability series, and the AMLR content cluster covering beneficial ownership, the Article 5 exemption and the compliance officer requirement.
Financial and legal diligence answer whether the deal is sound. Regulatory diligence answers whether it survives the regulator.
Lagom Sports Compliance is the UK's specialist governance, risk, compliance and anti-financial crime consultancy built exclusively for professional football. We work alongside a buyer’s financial, legal, tax and commercial advisers to deliver a specialist football-regulatory due diligence workstream. Depending on the target and transaction, this may cover the IFR and ODSE regimes, applicable FA, Premier League, EFL or other domestic competition rules, UEFA licensing, financial sustainability and multi-club ownership requirements, and the future application of AMLR to EU clubs and football agents. Our findings are structured so that the wider deal team can translate them into transaction conditions, contractual protections, valuation decisions and post-completion remediation.
If you are evaluating, structuring or about to sign a football club transaction in the UK or EU, book a scoping call and we will talk through exactly what a regulatory due diligence exercise would cover for your specific transaction.