Ownership of football clubs and the integrity of the competition
A key aspect of the sporting world is to protect the integrity of the competition. If there is not a fair competition in the sporting context, this overshadows the sporting contest. It is therefore felt that if two football clubs are playing in the same competition and are owned by the same person or business this could diminish the integrity of the competition.
Football Association Premier League rules v UEFA Rules
Under the rules of the FA Premier League and those of UEFA (the European Governing Body of football), it is prohibited for the owners or directors of a football club to have the power to influence the management of another club. However, there are disparities between the two sets of rules.
FA Premier League rules
Under the FA Premier League rules, an owner of a football club or a director of a football club must adhere to the ‘fit and proper test’ and must sign a declaration that they comply with this test. The fit and proper test applies to all directors and individuals holding more than a 30% shareholding. Anyone who owns more than this shareholding in a FA Premier League football club would fall outside the remit of the fit and proper test and would be unable to own another club.
UEFA’s ‘Integrity of the UEFA Club competitions: Independence of clubs’ rule was adopted in 1998 and became effective for the 2000/1 season. This states that no two clubs or more participating in a UEFA club competition may be directly or indirectly controlled by the same entity or managed by the same person.
Having an interest in another football club is defined as meaning:
- the majority of the shareholders’ voting rights in another club in the same UEFA club competition;
- the right to appoint or remove a majority of the directors in another club in the same UEFA club competition;
- the majority of the shareholders’ voting rights (through a shareholders’ agreement) in another club in the same UEFA club competition.
In 2000, ENIC – an investment company with stakes in six European football clubs – lodged a complaint with the European Commission against this rule, claiming that it distorts competition by preventing and restricting investment in European clubs. The Commission, however, rejected ENIC’s claim, stating that the rule can be justified by the need to guarantee the integrity of the competitions.
What are the potential issues between the two sets of rules?
Following the initial implementation of the UEFA rules, the Court of Arbitration for Sport (CAS) ruled that any shareholding of 50.1% or more would potentially breach the UEFA rules. This still leaves a clear disparity between the UEFA and FA Premier League rules: the PL rules define control as having a shareholding of 30% or more, whereas under the UEFA rules, it would be possible for someone to have a 100% shareholding in one club and a 49% shareholding in another club competing in the same competition.
The CAS decision, however, saw UEFA add a further stipulation to its Integrity Rule which prohibited a company or person from having an interest in a club when it has the ability to exercise a ‘decisive influence’ in the decision-making of another club in the same UEFA club competition. It was hoped that this would alleviate the fear that a company or person can have a 100% shareholding in one club, and a large but minority share in another club in the same UEFA competition, which could still allow them to exercise a decisive influence.
Can an owner of a football club have interests in other sporting teams?
A potential owner of a football club will be able to own or have a controlling interest in other forms of business or sporting teams so long as there is not a conflict of interest. For example, the Glazer family at one point wholly owned Manchester United FC while at the same time owning an NFL team in the US. This is allowed as there is clearly no conflict of interest between the two.