End of trophy asset ownership?

Many commentators have also suggested that sanctions imposed on Roman Abramovich may be a watershed moment for the future of ownership of Premier League football clubs. This led to the unprecedented situation whereby Chelsea were, at least for a period, unable to sell further match tickets as a result of its owner’s identity and the subsequent sale of Chelsea came only months after the Newcastle United takeover, which had led to reported opposition from the other 19 Premier League clubs and public disapproval in some parts. The reported opposition to the takeover from the other 19 Premier League clubs is interesting in the context of the fallout from the British Open, particularly surrounding the participation of those golfers who have signed up to LIV Golf, which is also funded by the Public Investment Fund of Saudi Arabia. This investment will be a story that will continue to be analysed by all commentators in both the golfing and footballing worlds. Indeed, these takeovers, together with the failed attempts to form the European Super League, has led to an increased focus on who should be allowed to own UK football clubs as well as a review of the current owners’ and directors’ test.

The owners’ and directors’ test is set out in the Premier League Rules and essentially outlines certain requirements that would prohibit an individual from becoming an owner or director of a Premier League club. Under Rule F.24.1, if any person is attempting to acquire Control (as defined within the Premier League Rules) of a Premier League club, the club and/or such person shall, in advance of the proposed acquisition, submit a completed declaration (in the form set out in Form 4 of the Premier League Rules) to the board of directors of the Premier League.  

At the time of writing, the owners’ and directors’ test is under review by the Premier League, with the league’s chief executive, Richard Masters, commenting at the Financial Times Business of Sport Summit that “the owners’ and directors’ test has been under a lot of scrutiny over the past 12 months and we’re looking at it again” and that the league are specifically “looking to see if more tests need to be added, if we need to be more transparent and whether those decisions should be approved by an independent body”. Indeed, one of the most widely-reported suggested changes to the owners’ and directors’ test is the introduction of a human rights consideration to the test. A government organised fan-led review also called for an enhanced owners’ and directors’ test and suggested that the test should assess an individual’s integrity or whether “the proposed owner or director is of good character such that they should be allowed to be the custodian of an important community asset”.  

Perhaps the most far reaching reform, however, is the establishment of an independent regulator in football. In April of this year, the UK government announced that an independent regulator would be put in place, with the power to sanction clubs in English football who break financial and other rules. The identity and form of the regulator has not yet been confirmed, although it has been reported that it will be tasked with applying an enhanced owners’ and directors’ test. The review also advised that the test should “contain an element of ongoing monitoring and, in the case of owners re-testing on three yearly intervals”.

How this would work in practice, however, is currently unclear – would an owner who failed the test three years after having acquired a club be forced to sell? And at what price? Indeed, the Premier League responded to the announcement stating that whilst it “recognises and accepts the case for reform”, it maintains that “it is not necessary for there to be a statutory-backed regulator”. There have also been reports that the clubs themselves may be opposed to regulation that could further limit the already small number of people who could potentially acquire a Premier League football club. Selling a football club is difficult and current club owners will be concerned that an independent regulator will make it even harder for them to sell. 

No direct timeline for implementing these changes has been announced but the government have said that a white paper will be published over the summer. What is clear, however, is that more attention is being paid to who can, and should be able to, own Premier League football clubs and how football clubs should be governed.

There were even reports that the acquisition documents relating to the Chelsea takeover could include clauses which would prevent the new owners from paying dividends or management fees for a certain period of time. This again demonstrates the unique nature of owning a football club in comparison with other assets and suggests that the management of football clubs will be subject to further scrutiny in the near future.