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English football on ‘edge of financial disaster’, warns game’s new regulator

Widening losses and rising debts leave most of country’s clubs in perilous position despite Premier League’s riches

English football “stands on the edge of financial disaster”, the game’s independent regulator has warned, as widening losses and rising debts leave clubs dangerously reliant on funding from their owners.

While the English professional game generated annual revenue of about £9bn last year, 94 per cent of teams lost money, according to the Independent Football Regulator’s debut State of the Game report, published on Tuesday. In the Premier League, annual pre-tax losses have more than doubled since 2022 to an average of £44mn. 

The Premier League generates more revenues than any other football league in the world, its leading clubs are bought and sold for billions of dollars and top players sign multimillion-pound contracts, but its riches contrast starkly with the situation further down the English football pyramid.

Almost two-thirds of the clubs outside the top division had liabilities exceeding their assets, making them “technically insolvent”, the regulator said. More than a quarter of clubs would not survive for a single month without additional shareholder funding.

The report “demonstrates how it is possible for English club football to simultaneously be the richest, best and most deeply competitive in the world while also standing on the edge of financial disaster”, IFR chair David Kogan and chief executive Richard Monks wrote.

In response to questions from journalists about the guilty verdict handed down last month to Premier League leaders Manchester City, Kogan stressed the “absolute” independence of the regulator and threatened to quit if the body faced any political interference.

“Our independence is absolute, and my independence, personally, is absolute,” Kogan said at a press conference in Manchester. “Any form of political interference in the way we operate is going to result in my resigning from this role. And I stand by that completely.”

Manchester City was found guilty by an independent commission of artificially inflating its financial position by more than £900mn over almost a decade. The club has appealed against the verdict.

English football has attracted a wave of investment in recent years, much of it from the US. Between the 2020/21 season and 2024/25, more than 78 transactions took place worth in excess of £7bn combined, the IFR found. Yet returns have so far been poor.

Since 2020/21, investors across the top five leagues of English football had lost 41 per cent of their original investment, the IFR estimated. In the same period, the FTSE 100 index had returned 36 per cent. 

Kogan said that clubs were trading on the basis that “the roulette wheel for new owners is always there”, but that further cost rises or a drop in media income would challenge that assumption and leave clubs exposed.

The IFR pointed to several potential risks facing the game in the near future, including increased uncertainty around the strength of the broadcast market as the media industry consolidates.

The build-up of £3.4bn of net transfer debt in the system had also left clubs facing “substantial future net cash outflows” that would need to be funded. 

Lisa Nandy, secretary of state for culture, media and sport, said football fans had for years “lived with the anxiety of knowing their club could be one bad owner or poor month away from ruin”.

“This report doesn’t just validate that anxiety, it has blown the doors off the game with the most stark uncovering of the state of football club finances in England today.”  

The IFR said that the current model of financial distribution across the game needed reform, suggesting more money should flow from the Premier League to smaller clubs, but not in a way that encouraged “imprudent spending” on players. It also called on clubs to keep more cash on hand, and for leagues and owners to work together to reduce losses.

Kogan was appointed last year as chair of English football’s new football regulator, which aims to “protect and promote” the sustainability of the national game.

It would be foolish to think the Wall Street giants can’t outrun the threat of AI

Earlier this year, investors furiously sold stocks in software companies for fear that, despite seemingly solid financial results, the value of their future businesses was in dire jeopardy. A more subtle version of this is happening to the biggest US banks. Not only have their shares fallen of late, but investors are acting as if their bottom lines will never grow again.

Third-quarter earnings so far suggest Wall Street is doing just fine. JPMorgan on Tuesday reported earnings up 6 per cent in the third quarter. Goldman Sachs and Citigroup posted profit growth of 29 per cent and 17 per cent, respectively. Boisterous equity trading helped all three, making up for a more pedestrian —  shrinking, at Goldman and JPMorgan — haul from fixed-income desks.

All the big banks are pretty optimistic about what’s coming, too, even if things may not get as riotous as they did earlier in the year. Goldman chief David Solomon acknowledged in a call to analysts that while June was “top decile” for trading and dealmaking, his bankers were still having a “top quartile” moment.

Judging by share prices, investors are implying this is as good as it gets. Consider a simplistic, back-of-envelope exercise: take JPMorgan’s forecast earnings of $68bn for this year, according to LSEG, and divide it by the bank’s cost of equity — RBC reckons 8 per cent is the sector’s average. That formula should give the value of the bank’s shares if its income never grows again.

The result, $850bn, is not far below where JPMorgan’s market capitalisation is today. It’s a similar story at Goldman and Citi, whose $260bn and $220bn market capitalisations are also just a whisker above what they would be worth if their earnings never budged from here on in.

True, they are still being helped by some market oddities. But as with software stocks, AI may be to blame for the gloom. JPMorgan’s Jamie Dimon and his peers fielded questions from analysts on Tuesday about whether personal finance agents will leave banks scrambling to retain deposits, and whether fintechs will gnaw away at their core businesses.

It’s not an idle fear. AI agents could indeed make deposits more expensive to attract and retain, which on its own would be a drain on profit. Even Goldman, while not a traditional bank, faces plenty of new digital challenges, from decentralised finance and tokenised assets to prediction markets.

But it would be foolish to think the Wall Street giants can’t outrun this threat. After all, they have two things in their favour: the trust of their customers, thanks in part to heavy regulation, and experience of past credit cycles. Back to the simplified analysis, if earnings grew at 2 per cent from now on, still less than global GDP growth, the banks would be worth at least a third more than today.

Keeping fintechs and agents at bay will admittedly require more spending. JPMorgan finance chief Jeremy Barnum reckons his bank roughly spends $700mn a year on AI, but that will surely rise. And the benefits are hard to quantify. Reason, perhaps, to worry about near-term profit expansion — but over the longer term, it would be unwise to assume Wall Street’s growth days are over.

Intesa increased the cash component of its cash-and-stock offer to a total of€3.8 billion, up from €3 billion

Banca Monte dei Paschi BMPS 1.36%increase; up pointing triangle di Siena questioned Intesa Sanpaolo’s ISP 1.11%increase; up pointing triangle sweetened takeover bid after the suitor warned it could pull out if its target’s shareholders back alternative deals later this month.

Following an extraordinary board meeting Monday, Monte dei Paschi said the premium from Intesa’s bid remains below the average seen in comparable offers in the Italian banking sector.

Italy’s Intesa said Oct. 3 that it would increase the cash component of its cash-and-stock offer by 0.25 euros for each Monte dei Paschi share to a total of 3.8 billion euros ($4.24 billion), compared with 3 billion euros previously.

When added to the equity component of the bid, it would take the total offer value to 31.4 billion euros, based on Intesa’s share price at the time it launched the offer in June. Intesa’s original offer was valued at 30.6 billion euros.

On Monday, Monte dei Paschi’s board said the Intesa proposal still means its shareholders would be exposed to Intesa’s performance, as the proposed consideration remains mostly composed of shares.

Intesa’s offer prompted Monte dei Paschi—widely considered to be the world’s oldest bank still in operation—to launch in August its own takeover proposals for peers Banco BPM and Banca Generali, valued together at nearly $40 billion, in a bid to fend off its suitor.

Shareholders in Monte dei Paschi are scheduled to vote on the BPM and Banca Generali bids later this month. Intesa said it would pull its offer if Monte dei Paschi shareholders back the rival deals.

Monte dei Paschi said Intesa had asked its shareholders to abandon its alternative plan without any certainty that the proposed merger would unfold as expected.

“The board of directors and management will continue to act in the interests of the bank and all its shareholders by assessing and pursuing any initiative appropriate to protect and maximize the value of their investment,” Monte dei Paschi said.

Intesa didn’t immediately respond to a request for comment.

US regulators ask about agentic AI safeguards, people say

Concerns grow among supervisors after spate of recent incidents

Europeans urge banks to examine recovery plans, people say

NEW YORK/LONDON, Oct 13 (Reuters) - Banking regulators are stepping up efforts to contain growing AI risks, six people familiar with the matter said, with some pointing to the potential for cyberattacks on banks or rogue agents undermining global financial stability.

The regulatory scrutiny, fresh details ​of which are reported here for the first time, reflects growing recognition that advances in frontier AI may require costly investments in cyber recovery, greater attention to dependencies on external technology ‌providers and in some jurisdictions more formal regulatory guidance, sources said.

Three top regulators in the United States, including the Federal Reserve, are quizzing banks about their use of advanced artificial intelligence models, two of the people told Reuters, which adds to prior scrutiny.

Questions include whether they deploy Chinese-developed technology, use AI agents in cyber defence and can control increasingly autonomous systems, three of the people said.

In Europe, supervisors including the Bank of England and the European Central Bank are pressing banks to improve recovery plans, concerned that rapid advances in ​AI could cause serious harm and disruption in financial markets sooner than previously feared, three people with knowledge of their thinking said.

A senior executive at a large European bank said they too are worried about ​potentially major damage to banking and financial markets "within six months".

The debate over AI oversight has intensified amid warnings from the industry after recent incidents, with JPMorgan (JPM.N), opens new tab CEO Jamie ⁠Dimon urging corporate leaders to join a US-focused industry group to address AI risks, Reuters reported.

US cybersecurity company CrowdStrike said this month a person in China likely used a Chinese-developed AI agent and Anthropic's Claude Code in a hack ​on South Korean banks. Rogue AI agents developed by OpenAI were meanwhile involved in a breach of AI platform Hugging Face, Reuters reported.

Anthropic researchers have warned that increasingly powerful AI systems could eventually escape human control and even pose an ​existential threat, prompting calls for stricter regulation.

Banks are competing to adopt agentic AI, which can accomplish tasks with minimal human supervision, while also grappling with the challenges of new models including IT weaknesses flagged by Anthropic's Mythos tool.

"The adoption of AI is often outpacing the ability to put the controls in place," said Michael Woodbridge, London-based cybersecurity partner at Grant Thornton.

US CONCERNS AIM AT AGENTIC AI

The US regulatory inquiries centre on how banks use agentic AI in areas such as cybersecurity, focusing on whether AI agents are being used to identify, ​prioritize and respond to threats.

Questions from the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation and the Fed focus on what limits are placed on systems, how their actions are monitored and approved ​and whether banks can clearly track and audit AI agent decisions, two of the people said.

They are also asking what safeguards exist to prevent agents from exceeding their authority, whether humans remain involved in key decisions and how banks can shut down ‌autonomous systems.

The OCC, ⁠the Fed and the FDIC declined to comment.

Through their questions, regulators are probing more specific issues tied to advanced AI models, including the use of autonomous AI agents, foreign-developed models and new cyber risks, the three people with knowledge of their thinking said.

The written and verbal inquiries to large, mid-size and smaller banks show regulators are focusing on vulnerabilities from banks' use of AI and their preparedness to act, they added.

Regulators are still gathering information and are not yet being prescriptive about what lenders should be doing, they said.

EUROPEANS WORRY ABOUT RECOVERY

Supervisors in Britain are separately encouraging the largest banks to examine so-called bare metal recovery plans, two of the people familiar with their thinking said. These ​systems are entirely independent from a bank's main tech ​set-up and can kick in if primary operating systems ⁠are compromised.

Building and maintaining such state-of-the-art recovery is expensive, however, the people said.

Rather than introduce new requirements, UK authorities intend to work collaboratively with industry, they added.

The BoE declined to comment.

The ECB in July gave lenders an end-October deadline to produce plans to counter AI-enabled cyber threats, including improved back-up and recovery.

Asked about its strategy for regulating AI, the ​ECB referred to its July letter as well as a June speech by board member Frank Elderson who stressed the need to create a sense of urgency, ​not alarm, about the threats.

The ⁠need for supervisory action has taken on added urgency after European banks and regulators expressed frustration at getting limited access to Mythos this year, amid concerns US banks will be given first sight to test frontier models.

Like their US counterparts, UK supervisors are also asking banks to use frontier AI to identify vulnerabilities and accelerate patching, two people said, with one adding that lenders were so far doing a good job.

The third person said euro zone banks were also being asked to map ⁠how AI is ​being used across their businesses and third-party providers, to understand key dependencies and ensure they can switch off and restart systems in a ​controlled manner.

Significant gaps remained at some firms, they added.

"To protect against attacks, rapid recovery matters as much as prevention," said Sukand Ramachandran, managing director and Senior Partner at BCG.

Without separately-held clean, secure copies of critical data, "a serious attack could lock customers out of their accounts and disrupt ​payments across the wider economy", Ramachandran told Reuters.