Foreign investment in Football in the FA Premier League

Increased foreign investment in football

During the 1990’s when the FA Premier League first came into being there was a dramatic increase in the number of foreign players plying their trade in English football. As the amount of foreign players playing in England has increased to dramatic levels as has the amount of money in the game, the foreign money men are also wanting a piece of the action.

There has been some very high profile takeovers of the most successful football clubs such as Manchester United and Chelsea whereas in the last couple of season less well known or successful clubs are attracting the interest of big foreign spenders.

Is the ownership of a football club any different to the ownership of any other business?

At times sport holds a different position in the legal world to other industries through the concept of specificity. This means that due to the specific nature of sport in some cases slight breaches of the law can be allowed in order to maintain the nature of the sporting competition.

However, in the case of ownership of a football club this is treated the same as any other business transactions.

What involvement would a legal firm thus have in the takeover of a football club?

When a foreign takeover of a football club is mooted the following legal issues will come into play:

•       The fit and proper persons test
•       The existing structure of the club

The fit and proper persons test

In order for an individual to become an owner of a football club they must satisfy a test which is called the fit and proper persons test.

There are certain requirements which must be adhered to for an individual to be a fit and proper person, and in many cases the test for the FA Premier League is actually stricter than that for other industries.

A legal team may therefore be required to deal with certain aspects in relation to the fit and proper persons test.

The existing structure of the club

The ownership structures of football clubs playing in England can differ between privately owned companies and public limited companies (plc). Accordingly if a foreign investor wants to take over an English football club they will have to do this in accordance with the rules in relation to the existing structure of the club.

For example if the club is a privately owned company then they will simply have to have an appropriate offer accepted by the existing owners. However, if the club is a plc then there is a requirement that the new owner has a certain number of shares in place before they can take ownership of the club.

Accordingly legal advice may be required on behalf of the foreign investor as to how they can take over the club.

Are there any other issues that may have to be dealt with by the legal team of a foreign owner when in place?

In the case of one FA Premier League club the fact a foreign owner has come in and purchased the club has plunged the club into debt due to the large loans which were required to buy the club.

As a consequence this has left the supporters in a situation where they feel that the existence of the club may be at threat and feel that they are being exploited financially in order to recoup some of the debt.

Accordingly the legal team of the foreign investors may have to deal with the following legal issues:

•       Protests from the supporters
•       The potential safety of the owners
•       Potential loss of revenue
•       Potential offers from the club coming in from supporters groups