Premier League ownership report reveals trends shaping the future of the game

Global law firm Norton Rose Fulbright has today launched its fifth annual report ‘Keeping Possession: Ownership trends in English Premier League football’.

The 2024 report examines how the new profit and sustainability rule (PSR), the owners’ and directors’ test, and new governance structures, including for the Women’s Super League (WSL), could shape the future of the game.

The impact of PSR on ownership

The PSR ensures that Premier League clubs can have made a loss of no greater than £105 million across the previous three seasons.

The Premier League is enforcing PSR breaches as evidenced by significant points deductions in its attempt to promote financial sustainability of clubs, particularly when one considers that a club suffering an “Event of Insolvency” (as such term is defined in the Premier League Rules) would only result in a nine point deduction under Premier League Rule E.37. 

The increasing focus on financial sustainability within football, coupled with the severity of the punishments being handed out by the Premier League for lack of compliance, will undoubtedly have an impact on the ownership landscape within Premier League.

Given the restrictions imposed and the fact that new owners no longer have unfettered power to spend their money improving the playing squad, there may be a reduction in “trophy asset” ownership across the Premier League and more commercial buyers entering the playing field.

Despite the criticism from some Premier League club owners, it could lead to even higher valuations for clubs as seen across other sports which have increased the focus on profitability of its participants.

Governance structure and independence of the women’s game

The implementation of a new governance structure at the top of the women’s game in the UK marks a key milestone.

In November 2023, the Football Association (FA) announced that all WSL and Women’s Championship (WC) clubs had unanimously agreed to proceed with the formation of a new independent organisation, known as NewCo, to govern women’s professional football in place of the FA.

The FA's formal handover to NewCo, which has been temporarily re-named Women's Professional Leagues Limited (WPLL), was announced on August 15, 2024.

Critically, the WPLL, an independent company, will run two leagues with very few independent clubs – every team that competed in the WSL this season is owned by the same person/entity that controls a men’s Premier League or English Football League (EFL) side and in the WC, only three teams operate truly independently.

If independent ownership is the aim for any such clubs, the relevant stakeholders will need to think outside the box to overcome difficult commercial issues, including, for example, branding. An understanding of the applicable regulations, not least the Premier League’s own rules, will also be vital to carving out independence for women’s club sides.

Impact of the application of owner’s and director’s test

Under Premier League Rule F.35, any approval of a change of “Control” by the Premier League is subject to review by Independent Oversight Panel (IOP). The IOP is tasked with considering whether the Premier League’s decision was reasonable in all of the circumstances based on the material available at the relevant time and the members of the IOP are appointed by the chair and must be independent of the clubs and the Premier League.

The changes to this test also included the introduction of the “Acquisition Leverage Test”, which essentially prohibits fully leveraged buyouts of football clubs. Proposed owners will not be approved by the Premier League if the ratio of “Acquisition Debt” to “Acquisition Equity” (as such terms are defined by the Premier League Rules) exceeds 65 per cent.

Additionally, the due diligence conducted on potential buyers has generally also increased.

This increased scrutiny on incoming owners by the Premier League, coupled with the new rules and imminent introduction of a regulator, is likely to further reduce the pool of potential owners of Premier League football clubs.

Stephen Rigby, who leads Norton Rose Fulbright’s sports law practice, commented:

“Investment and ownership trends in English Premier League football have changed dramatically over the last decade. The introduction of new rules by the EPL has helped shape these trends as well as shape the growth trajectory for women's football. The proposed introduction of an independent UK regulator will impact all aspects of the business of the football. It will be intriguing to see what requirements the regulator will set for the next generation of owners.”

Norton Rose Fulbright has been producing ‘Keeping possession’ since May 2020. Its lawyers have long-standing experience in the global sports sector and have advised clients on sports-related transactions throughout Europe, North America, Asia, Australia and South Africa, covering football, rugby, Formula 1, NFL, cricket, ice hockey, tennis and horse racing. The firm advises on all aspects of sports law and is particularly strong in the areas of acquisition and disposal of sports franchises, negotiation of sponsorship deals, stadium financings and investigations

Read Norton Rose Fulbright’s insights on business of sport: https://insidesportslaw.com/.