How to Own Football Clubs: The Intricacies of Club and Multi-Club Ownership
7th October 2021 was an exciting day for Newcastle United. After over a year of negotiations and obstacles, the club’s ownership was taken over by a Saudi Arabian public investment fund. The saga sparked debates throughout the world of football and divided opinions. Owning a football club is an important responsibility; owners have a large influence in manager appointments, transfers and other significant decisions for a club and are able to have shares in more than one.
There are several rules and regulations surrounding football club ownership and multi-club ownership. In this blog I will analyse how these regulations are implemented and explain their importance in protecting the integrity of football.
The Importance of Regulations
The governing bodies of football have a duty to protect the integrity of football as a competitive sport. Upholding the core values and principles of competition is vital, and regulating club ownership is imperative for doing so.
In a world where a multi-billionaire could own majority stakes in several football clubs, inevitably the integrity of competition will be undermined, especially if the clubs compete in the same competition. This was the case in 2000 when ENIC, an investment company, had shares in six European football clubs including 42% of AEK Athens and 96% of Slavia Prague who were both in the European cup competition. This was prohibited under UEFA club ownership laws and ENIC took legal action, claiming that the regulations restricted investment into football. However, their appeals were rejected on the grounds that the regulations were in place to guarantee integrity and fair competition.
What would have happened if, for example, there were no rules preventing ENIC from owning more than one club and Athens and Prague were drawn in the same group? The impact could go even further and one of the clubs may have been needing a victory against the other for qualification whilst the game had no consequences for the other team. In this situation, ENIC, who have decision-making influence over both clubs could ensure that the club that was able to qualify would win. This undermines the core principles of competitiveness in football and in sport and demonstrates why there is a need for rules that regulate club ownership and prevent instances like this.
The Current Situation
In 1998, UEFA implemented the Integrity of UEFA Club Competitions legislation. The key clause within this was that no two clubs can be directly or indirectly controlled by the same entity or person to the point where they have ‘decisive influence’. National football associations and governing bodies use the ‘interest in another club’ guidelines outlined by UEFA in order to adapt and stipulate their own national rules around multi-club ownership.
Interest in another club is defined by three main points; having majority voting rights in two or more clubs, having the right to appoint or remove board members and authoritative figures in two or more clubs, such as a manager or sporting director and finally, owning shares in two or more clubs competing in the same competition. These guidelines aim to prevent and prohibit a conflict of interest, potential corruption or undermining of the core values of the sport and competition and increase transparency.
Most governing bodies and football associations ensure that potential club owners are inspected and investigated to determine whether they are prohibited from buying the club due to interest in other clubs. For the English FA, there is also a ‘fit and proper person’ test that has been used since its creation in 2004 to assess prospective club owners. The fit and proper person test looks at criminal records, financial situations and other relevant information but it also accounts for any shares that the interested buyer might have in other football clubs. The FA has banned multi-club ownership of over 30% in a second club.
The Royal Spanish Football Association (RFEF) and the English FA have the strictest regulations for multi-club ownership. However, there is considerable disparity in the regulations around club ownership in different national associations. For example, the UEFA laws allow 100% ownership in one club and up to 50.1% in a second club after the Court of Arbitration for Sport (CAS) implemented the 50.1% rule. The Premier League only allows for 30% in a second club. There are differences throughout global football and localized regulations means that countries and football clubs are operating under varying regulations which is problematic. If an independent regulator such as FIFA created a set of laws regarding club ownership that are enforced globally then discrepancies and disputes would be avoided or at least mitigated.
The City Group and Other Multi-club Owners
An interesting case to think about when discussing football club ownership is the Abu Dhabi United consortium, better known as The City Group, and Sheikh Mansour who have majority ownership in 10 football clubs globally, all of which have been legal. Their biggest team is Manchester City, but they have expanded their portfolio to New York, Melbourne, Japan, Uruguay, Belgium, China, India and extends as far as ES Troyes in the French second division. They have interest and stakes in the biggest key football markets in the world and have been very successful. The teams exchange players and play friendlies against each other but they avoid conflicts of interest and therefore the multi-club portfolio is permissible under regulations.
The City Group isn’t the only multi-club investor into football. The energy drink company, Red Bull, currently owns four football clubs globally, RB Salzburg (Austria), RB Leipzig (Germany), New York Red Bulls (US) and RB Bragantino (Brazil). The company has a major influence in each club which extends as far as naming rights on the clubs’ stadiums; Salzburg, Leipzig and New York play at the Red Bull Arena.
Below is a list of the most well-known multi-club owners in the world of football:
- The Pozzo family own Watford and Udinese and sold Granada (Spain) in 2016.
- Atletico HoldCo are the owners of Atletico Madrid and purchased Atletico San Luis who often loan players from their parent Spanish club. They previously owned Atletico de Kolkata in the Indian Super League.
- The King Power group acquired Leicester City in 2010 and then further invested into Oh-Leuven (Belgium) in 2017.
The prevalence of multi-club ownership in football seems commonplace and widely accepted, However, all of these examples will have been scrutinized to ensure that no unethical conflict of interest or undermining of the principles of competition occurs.
The Benefits of Multi-Club Ownership
There are three main reasons why multi-club ownership is an attractive option for those that are fortunate enough to be able to afford it. The major advantage is that the owners have such an influence over these clubs that they can avoid big transfer fees. This occurs by ‘parking’ players at their feeder clubs before signing them for small amounts. For example, Red Bull Salzburg are a feeder club for RB Leipzig and also use a pilot club in the Austrian league for young, developing players before they are able to play at the highest level.
Loans are also made easier by having stakes in different clubs. This is a popular system at Manchester City who loan young or unproven players to Girona to develop their skills before moving back to Manchester without any obstacle or negotiating difficulties.
Another benefit of having control of the financial situation at several clubs is that players can be paid from different club accounts to avoid financial fair play infringements. However, football governing bodies have recognised this as a potential shortfall of FFP regulations and are trying to create legislation that prevents this.
Owning a football club is often a dream for individuals or companies that are wealthy enough to be able to afford one. It is also an exciting and popular business venture. However, it is clear that problems can arise if prospective club owners are not thoroughly assessed or if they have interest and influence in another club.
The most important element of regulating football club and multi-club ownership is that the integrity of competition and the core values and principles of football are upheld and guaranteed. This does not mean that multi-club ownership is completely eradicated as a possibility, but it ensures that it is done in a fair and non-conflicting way, such as with the City Football Group.