Football regulator given power to block Premier League stadium sales

The government is preparing to give the independent regulator powers to prevent Premier League clubs from selling their stadiums to related or third-party companies.

In June the Premier League attempted to close the loophole which enables clubs to use one-off profits from the sale of property to escape profitability and sustainability rules charges but failed to get the support of enough clubs. Eleven of the 20 clubs voted in favour of the league’s proposal at their AGM last summer, three votes short of the two-thirds majority required to secure a change in the rulebook.

Stadium sales to related companies are prohibited by the EFL and the government will empower the regulator to impose similar restrictions in the top flight. Under proposals set to feature in the football governance bill – which covers the top five divisions in English men’s football – any club wanting to sell their stadium would need approval from the independent regulator. Sources with knowledge of the draft legislation being prepared at the Department for Culture Media and Sport (DMCS) told the Guardian such requests would be granted only if the club could demonstrate it was in their best long-term interests, and had the backing of their fans.

The government is determined to use the bill to protect clubs and their grounds as community assets. Other measures will include safeguards against clubs seeking to move location.

Aston Villa sold Villa Park to a company controlled by their owners, Nassef Sawiris and Wes Edens, for £56.7m four years ago, without which the club, then in the Championship, would almost certainly have been charged by the EFL with a financial fair play breach. Sheffield Wednesday, Derby and Reading also sold their grounds in recent years to get round the EFL’s FFP regulations.

Last year, Chelsea sold two hotels at Stamford Bridge to a sister company for PSR reasons. The government’s plans would be restricted to the sale of stadiums.

DCMS officials are in the final stages of preparing the latest iteration of the bill, which was introduced to parliament by the previous government in April but failed to reach the statute book before the general election. The new bill is expected to include significant differences, with many Labour MP’s pushing for the independent regulator to have powers to determine the level of parachute payments. The culture secretary, Lisa Nandy, is believed to be sympathetic to including them in the terms of reference of the Whole Game Review the independent regulator will be tasked with undertaking.

The bill will give the regulator backstop powers to impose a financial settlement between the Premier League and the EFL, whose talks are deadlocked. In March, the top-flight clubs put the negotiations over additional funding on hold to focus on agreeing their new financial regulations.

The Premier League’s need for further rule changes after the arbitration judgment on Manchester City’s legal challenge this month has made the likelihood of agreeing a so-called new deal for football with the EFL seem even more remote.

DCMS declined to comment.