Government intervention is about to make buying a football club much harder.
The landscape of buying a football club was drastically redefined in 2003 when Roman Abramovich bought Chelsea Football Club for a reported £120 million. The oligarch’s era ended in 2022 when US businessman Todd Boehly and other investors from the private equity firm Clearlake Capital bought the same club from Abramovich after he was sanctioned, for a reported £4.25 billion.
Another British footballing institution is now up for grabs for ultra-high net worths. Manchester United’s sale has been under the spotlight ever since the Glazer family expressed interest in putting the club on the market in November 2022. It is rumoured that the club will be up for grabs for around £4.2 billion.
Only two bids have been shared publicly since the February ‘soft’ deadline. First, the former prime minister of Qatar, Sheikh Jassim Bin Hamad Al Thani, and a group of Qatari investors communicated their will to invest, and second Sir Jim Ratcliffe, the Manchester-based billionaire, backed by his company Ineos.
With the introduction of a Government White Paper which includes new stricter rules about club ownership, the process is bound to become more difficult. Directions such as preventing English clubs from participating in external competitions like the European Super League and a new version of the owners’ and directors’ test to protect both clubs and fans are just some of the points made by the paper.
So, how do you buy a football club?
Before reaching for your chequebook, we’ve outlined four boxes that prospective owners must tick:
- Sound financial structuring – a new industry regulator will be tasked with ensuring the financial sustainability of any new ownership structures.
- Influence – The right people will be required to push the deal over the line.
- A suitable record – Prospective owners must first win the crowd
- ‘Integrity’ – a new government test will determine the suitability of candidates
Money and influence
While money is the driving force behind any deal, the new rules from the whitepaper are placing a greater onus on sound financial planning. An independent report published in April, 2022, criticised ‘the widespread culture of clubs operating unsustainable financial practices, placing the pursuit of success over sound financial management.’
To combat this, a new independent regulator has been given the power to exercise financial oversight of clubs, including information gathering, investigation and enforcement powers. How these rules will work in practice remains to be seen, but the government whitepaper is now pushing for increased transparency amongst club owners.
It isn’t all about money, however. Who you know is equally important when looking to secure your own football club. The success of the Boehly-Clearlake bid, for instance, relied in-part on the influence of former Chancellor George Osborne (a season ticket holder at Chelsea) who was brought in as an advisor.
Keeping a clean sheet
Foreign buyers underestimated fans’ influence at their peril. Despite reaching the final shortlist, the Rickets Family Investment Group pulled out of their Chelsea bid after supporter groups criticised racist comments made by Joe Ricketts in the past. That said, widespread criticism of human rights abuses committed by Saudi Arabia failed to stop the Saudi Public Investment Fund from snapping up an 80% share of Newcastle United in October, 2021.
The Newcastle deal led multiple organisations, including Amnesty International, to question the suitability of the Premier League’s Owners and Directors test. According to the Premier League handbook, the test requires applicants to have no history of ‘criminal convictions for a wide range of offences, a ban by a sporting or professional body, or breaches of certain key football regulations, such as match-fixing.’
A fan-led review published at the end of 2021 determined that the ‘test has failed to stop many owners who are not “fit and proper,” It’s a disaster of a system.’
The new ‘integrity’ test
In April 2022, the Department for Digital, Culture, Media & Sport announced that the new regulator will be tasked with applying a new and ‘enhanced Owners and Directors Test’, both ahead of an acquisition of a club and on an ongoing basis. This will include a new “integrity test” for all owners and executives, and enhanced due diligence – including sources of funding – upon an acquisition.’ How these tests will apply to existing directors is not yet clear, but it is likely to make buying a football club a lot harder.
Even having passed these tests, an acquisition can still be derailed by circumstances surrounding the sale. This nearly happened to the Boehly-Clearlake bid when the British government raised concerns that the sale may allow Abramovich to recoup the £1.5bn he loaned to Chelsea through a jersey-based holding company, Camberley International Investments.
Abramovich’s acquisition of Chelsea in 2003 marked a new era in Premier League football. Nineteen years later, that era came to a close. Government intervention and the creation of a new market regulator suggest that buying a football club is about to become a lot harder.
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