Last week the newly created Independent Football Regulator released its inaugural ‘State of the Game’ report.

The report is the first of its kind: a detailed examination of the structures and finances of the English football pyramid.

It makes for grim reading for those involved in the English game.

The IFR found that more than 60% of clubs in the English Football League and National League are technically insolvent; these clubs survive only because their owners are willing to underwrite losses, and pay the bills necessary to keep the lights on.

The danger is that, if owners decide they are no longer able or willing to provide funding, clubs will very quickly face insolvency. This is exactly the situation Sheffield Wednesday found themselves in last year, when former owner Dejphon Chansiri stopped providing the cash required to maintain the club.

One of England’s most historic football institutions was forced into administration, and only survived liquidation thanks to new ownership being found through the administration process.

The depth of financial insecurity chronicled by the new regulator is staggering. Seventeen clubs were identified as being loss-making even before they paid their players – meaning that even if their players were paid nothing, the club would still lose money.

The issues in English football are abundantly clear from the IFR’s report. But the solution is not so obvious.

In its report the IFR sets out a six-point plan, including reform of revenue distribution across the pyramid. Every club must agree a plan with the regulator setting out how it will hold ‘Appropriate Financial Resources’ by May 2030, and stress test its finances against relegation, a fall in revenue and the loss of owner funding.

These are sensible measures. Yet there are reasons to be sceptical that they will work.

The first is that the incentive to gamble is deeply rooted in the structure of English football. Promotion to the Premier League increases non-parachute payment Championship club revenues by, on average, 376%. The easiest way for Championship owners to increase their club revenues is simple – achieve promotion. The data is very clear that the easiest way to achieve promotion is to spend more on player wages. There is an argument therefore that, for a Championship owner, spending beyond your means is not reckless; it is the strategy most likely to pay off.

Reforming distribution could make this worse. Given the deep-rooted incentive for clubs to spend their way to success, more money flowing into the EFL may simply be spent on players, a danger the IFR itself acknowledges.

The second reason for scepticism is enforcement. What will the IFR actually do to clubs that fail to comply?

The IFR cannot deduct points or impose transfer embargoes. Its principal tools are fines of up to 10% of a club’s revenue, public censure and, in extreme cases, suspending or revoking a club’s licence.

The average League One club lost more than 65% of its revenue in 2025/26. Fining such a club 10% of its revenue does not make it more stable. It makes it less so. And the fine would almost inevitably be paid by the same owner the club already depends on.

Revoking a licence is the nuclear option, but it is also self-defeating. A club without a licence cannot play, and therefore cannot benefit from the revenues which come from matchdays. It is difficult to imagine the regulator pulling the plug on a historic club when doing so would deliver precisely the outcome it was created to prevent.

The regulator’s most credible lever is the evaluation of owners: testing whether they can fund their club’s model. But that too has limits. Make ownership too onerous and some owners may simply stop writing cheques or refuse to get involved in the first place.

Of course, none of this means the IFR is destined to fail. Its greatest asset may not be its sanctions, but its information. For the first time, a single body can see the finances of every club in the top five tiers. Spotting the next Bury or Derby before an owner walks away may prove far more valuable than any fine. Many owners also want the help: 17 of the 18 EFL owners interviewed supported tougher cost controls.

Regardless, the report makes one thing clear: the problem in English football is not a lack of rules, but a set of incentives that reward those willing to break them. A regulator can require clubs to write plans and run stress tests. What it cannot easily do is persuade an owner that the gamble of promotion is not worth taking, when its own figures show that – for the winners at least – it is.