Clubs may need to hold £40m in cash to satisfy Independent Football Regulator
Clubs could be required to hold more than £40m in liquid assets in order to be granted a licence to continue competing by the Independent Football Regulator (IFR). Those deemed higher risk will be asked to demonstrate cash reserves equivalent to five months of operating losses, which for some clubs would run into the tens [...]
The Independent Football Regulator (IFR) is considering imposing a requirement for football clubs to hold over £40 million in liquid assets to maintain their licence to compete. This proposal is part of the regulator's broader plan to reduce the financial risk faced by clubs and make them more resilient to sudden shocks. The IFR's draft State of the Game report revealed that 94% of professional clubs were operating at a loss, and one-third were dependent on owner contributions for survival.
IFR CEO Richard Monks emphasized the urgency of taking action in light of the financial challenges faced by clubs. Clubs seeking a licence would have three years to establish their cash reserves, with stricter requirements for those deemed higher risk. In the Premier League, where clubs typically have a more stable financial position, the regulations are expected to be less severe.
However, all clubs will be assessed individually. For clubs in the lower divisions, holding liquid assets equal to their monthly wage bill would be the minimum requirement. Higher-risk clubs would need to hold cash reserves equivalent to five months of operating losses, which could amount to more than £40 million for some teams.
To meet the requirements, two-thirds of clubs' liquid assets must be in cash, Gilts, US Treasuries, or money market funds, while up to a third can be in transfer receivables.
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