Ownership of a Football Club

What are the requirements for owning a football club?

Football is the biggest sport in England in terms of fan base but also in terms of commercial value meaning that it is an extremely attractive business enterprise for many wealthy businessmen. The top flight of football in England – the FA Premier League – has attracted huge amounts of investment in recent years with much of this being from overseas. One of the major problems with the ownership of football clubs has been the lack of transparency in the ownership and deals that are made etc. As a consequence of this since 2004 a test has been introduced in English football which all owners and directors must pass.

This is called the fit and proper test.

Strict Requirements

Since the introduction of the fit and proper test it has ensured that the ownership requirements for football clubs in England are the strictest of any industry throughout the country. The tests are deemed to go beyond any requirement of company law.

This is due to the previous requirements being the same as they were for any other company in England and Wales, therefore being governed by UK company law.

Prior to 2004 there was no test at all in relation to the ownership of a football club. Since 2004, however, there have still been many problems in relation to the ownership rules as for example one Premier League football club has had a total of 4 owners during one season leading to financial difficulties and eventual administration.

The Fit and Proper Test

One of the initial problems with the application of a fit and proper test for English football is that due to different bodies existing in the running and organisation of English football has led to different test being applied across different leagues.

Structure of English Football

The structure of English football is as follows:

  • The Football Association Premier League governs the Barclays Premier League

  • The Football League governs the Coca Cola Championship, League One and League Two

  • The Football Association governs the Blue Square Premier League and the lower leagues

The FA Premier League, the Football League and the FA all have different versions of the fit and proper test due to the FA Premier League strengthening theirs while the others did not.

The Test 

One aspect which applies across all the different above bodies is that the fit and proper test must be passed by all directors of a football club and any owners who own a share of 30% or more.

Elements of the Test

There may be slight differences in the tests adopted by the different governing bodies; however, all fit and proper tests include the following elements:

Individuals will be disqualified from acting as directors or becoming an owner if they:

  • Are prohibited by law from being a director

  • Are involved or have the power to be involved in another football club

  • Have unspent criminal convictions

  • Are bankrupt

  • Have incurred administration twice as a director of the same or different football clubs

Inconsistencies  

What are the differences between the different tests?

The tests from the above bodies differ in relation to the following elements:

  • The types of criminal convictions

  • A ban by another sporting body

  • The application of the test

  • The timing of the test

The types of criminal convictions

The tests established by the FA Premier League and the Football League prevent individuals from becoming directors or owners if they have unspent criminal convictions which relate to crimes of dishonesty or for a crime which resulted in an unsuspended sentence of twelve months or more imprisonment.

On the other hand the test applied by the Football Association only prevents individuals from becoming directors or owners if they have unspent criminal convictions which relate to crimes of dishonesty.

As a consequence this means that individuals convicted of criminal acts such as murder or rape do not fall foul of the fit and proper test and can take over or become directors of football clubs. This is extremely problematic considering the fact that football clubs are deemed to represent the local community especially when concerned with the lower and amateur leagues represented by the Football Association. 

Ban by another Sporting Body

If an individual has been banned by a Sports Governing Body from any sport in relation to the administration of sport they will be deemed to fall foul of the fit and proper test for both by the Football League and Football Association. This requirement, however, is not a requirement under the fit and proper test established by the FA Premier League.

As a consequence of this an individual who may have been given a life ban from involvement in another sport will still be able to take control of a Premier League club.

The application of the test

Since the fit and proper test has been brought into the Premier League and Football League in 2004 it has applied to all instances prior to its inception when dealing with matters of administration. For example if a potential owner or director has been a director of a club which has gone into administration twice then he fill fail the fit and proper test regardless if one or both of these instances of administration were before the test was introduced. 

The Football Association rules however, do not apply to instances of administration which occurred prior to the 1 February 2005. Therefore if an individual has been involved in two instances of administration with one happening before 2005 he would be deemed fit and proper under the FA’s test but not for the Premier League or Football League.

The Timing of the Test

When the test takes place also varies according to which body is applying the test. For example under the FA Premier League fit and proper test the test will be conducted prior to a takeover of a club being approved whereas under the Football Association and Football League fit and proper test will be undertaken once the takeover has happened.

This is a major problem as if a new owner of a football club is deemed to have failed the fit and proper test following the takeover the club would be thrown into financial turmoil as a new owner would be required immediately.

Possible Reform

Many believe that due to the above inconsistencies and despite the test for football being the most stringent for any UK industry that the test should be reformed to make it even stricter. There is, however, feeling that if this were to be the case then the new test would face challenge under European Union Law.

The first step, however, may be for the different bodies governing the different leagues in England to align the tests thus reducing the inconsistencies.