Manchester City, the Independent Football Regulator (IFR) and the Limits of D&O Cover

The widely publicised Manchester City FC ruling on breaches of Premier League financial rules highlights an important insurance coverage question for football clubs and their directors: when financial governance comes under scrutiny of a regulator (including the newly created IFR), whose liabilities and legal costs can insurance actually cover? The answer depends on the distinction between a club’s own exposure and potential claims against individual directors and officers (D&Os). As football’s regulatory framework develops, understanding that distinction is becoming increasingly important for sports industry policyholders.

Separating corporate liability from directors’ exposure

An independent Disciplinary Commission found Manchester City guilty of charges relating to serious breaches of the Premier League’s financial rules between the 2009/10 and 2017/18 seasons. Manchester City are appealing the ruling, and sanctions will be addressed at a separate hearing. Pending appeal and the imposition of sanctions, it remains to be seen what the wider consequences of the findings might be.

According to the published overview of its decision, the Commission concluded that the Club:

• submitted annual accounts that did not provide a true and fair view of its financial position;
• entered into commercial arrangements that “disguised” shareholder funding as sponsorship income and gave a misleading impression to regulators and auditors that its commercial revenues were far greater than they actually were; and
• breached its duties to co-operate with the Premier League in connection with its investigation. 

In the context of considering the application of D&O insurance, these are findings against the Club, and do not, by themselves, establish personal liability on the part of any individual director. However, the Commission found that certain arrangements were operated with the knowledge and approval of particular individuals, that the club’s auditors remained unaware of the disguised funding scheme, and that some of the Club’s factual witnesses gave evidence they knew to be untrue. Those findings may prompt scrutiny of individuals, with the inevitable questions raised over the potential availability of D&O cover for the individuals involved.

The wider game 

The IFR’s Owners, Directors and Senior Executives regime requires new directors, senior executives and other key decision-makers to be approved (by the regulator) before taking up their role (within 90 days, extendable to 150) and, in a significant shift from the approach which has typically been taken at league-level, also provides for the IFR to assess existing owners, directors and senior executives where it has suitability concerns, with clubs, owners and senior managers required to notify the regulator of material changes such as criminal proceedings or regulatory action. Whether an IFR assessment of a director or senior manager would engage D&O cover will depend on how each D&O policy defines a “Claim” or “Investigation” and the protection available for former directors or officers.

Clubs should examine their D&O cover

D&O insurance is primarily designed to protect insureds by providing cover for legal fees and other liabilities incurred in connection with specified claims arising from management responsibilities, typically for the following:

1. protection for directors against losses they must meet personally where the club does not indemnify them; 
2. reimbursement to the club for amounts it pays to indemnify its directors; and 
3. cover for the club’s own liability in certain circumstances. 

Where, as would be common, all three elements of cover share a single policy limit, claims against the club may also reduce the cover available to individual directors. Equally, a claim against a director may engage D&O cover even where it is unavailable to the club itself. Whether cover responds depends on the identity of the insured, the nature of the claim, the relevant policy period and the wording of the applicable insuring clause.

Clubs should therefore avoid treating their insurance programme as a single source of recovery for every consequence of a regulatory investigation or disciplinary process. Corporate defence costs, individual directors’ defence costs and liabilities arising from third-party claims may need to be considered separately.

Why defence-cost wording matters

The availability of insurance is crucial when allegations are first made and/or an investigation is initiated. A director may need legal representation independent of the club during an investigation, even before any formal finding has been made. The cost of defending regulatory proceedings can be substantial, as the scale of the Manchester City proceedings illustrates, and the ability to access funds to obtain legal advice quickly may be as important as the ultimate question of indemnity.

Policyholders should examine how their policies define a “Claim” and whether formal regulatory investigations, interviews or requests for information qualify. Investigation-cost extensions may be sub-limited, and notification requirements can affect cover. Defence costs often form part of the overall limit, so funding one director's defence may reduce the cover available to others. Where a director faces both covered and excluded allegations, such as negligence and dishonesty, costs may later need to be allocated between them. 

Defence-cost advancement provisions, exclusions for fraud or dishonesty, and clauses addressing the conduct of one insured person may also prove decisive. The High Court’s decision in Liberty Managing Agency Ltd & Ors v Chedid & Anor [2026] EWHC 2354 (Comm) illustrates this point. Here, D&O insurers sought to avoid cover for former officers facing unproven criminal bribery charges. The Court held, on the specific policy wording, insurers could not avoid the policy for alleged fraudulent misrepresentation or non-disclosure unless and until the fraud was established by a final decision of a court, tribunal or regulator or by a formal written admission. While not establishing a universal rule, the decision shows how policy wording can determine whether an insured can continue to access defence funding. 

For D&O policyholders, this reinforces the importance of reviewing conduct exclusions, avoidance provisions, final-adjudication requirements and defence-cost advancement. 

Practical steps for policyholders

The Manchester City ruling, and the IFR’s wider powers, demonstrate why clubs and their officeholders need to understand the scope and limitations of their insurance protection. 

Clubs and their directors should review their insurance arrangements with particular attention to:

• Who is insured and whether cover applies to the club, individual directors, senior executives or other relevant entities.
• What triggers cover and the definitions of claims and investigations, and any specific extensions for regulatory costs.
• When defence costs are funded and what might restrict recovery. 

The objective should be to identify gaps between the risks they face and the cover they have purchased before regulatory scrutiny turns into a costly dispute.

This post was co-authored by Matthew Phillips, Peter Hardy, Thomas Morgan and Brodie Edmead.