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  • Writer's pictureMark O'Neill

FOOTBALL GOVERNANCE BILL 2024 - OWNERS & DIRECTORS TEST


Source: https://www.gov.uk/government/news/historic-football-governance-bill-introduced-in-parliament

The government recently announced its long-awaited bill to introduce an Independent Regulator for English Football (IFR). It proposes to take a much more independent approach to the regulation of the professional game in England and will cover all clubs in the Premier League, English Football League, and National League (Regulated Clubs). An important part of the Bill proposes to introduce what it says is a more detailed and strengthened test to help filter out and prevent undesirable owners from owning a Regulated Club. Although the proposed test by the IFR is a significant improvement on the current regulatory mish-mash, there are areas of concern that require further attention. This blogpost will take a look at the newly proposed test, and outline my thoughts on it.


Disqualification Criteria - Fitness and Propriety

The Bill appears to significantly broaden the range of criminal offences that may be taken into account when assessing a prospective owner’s fitness and propriety. This is covered under the definition of ‘serious criminal conduct’, which provides a list of offences defined as serious criminal offences under


The Bill appears to significantly broaden the range of criminal offences that may be taken into account when assessing a prospective owner’s fitness and propriety. This is covered under the definition of ‘serious criminal conduct’, which provides a list of offences defined as serious criminal offences under Schedule 1 Part 1 of the Serious Crime Act 2007. This now includes offences such as organised crime, drug trafficking, people trafficking, slavery, terrorism, firearms offences, prostitution and child sexual exploitation, armed robbery, money laundering, fraud, tax fraud, bribery, counterfeiting, computer hacking, IP infringement (including broadcast piracy), and crimes against the environment. This last category covers things such as causing ecological harm to protected species of animal, unauthorised disposal of harmful waste, the buying and selling of endangered species, and interestingly, fishing with prohibited implements (I would love to see an owner prohibited because he/she was once caught fishing with a spear!). The assessment also includes whether an individual is subject to sanctions by the UK government.


This is a substantial expansion of the existing criteria which often only covered dishonesty-based offences, but in more recent years have covered violent and sexual offences. The IFR may also make a negative finding, based on the balance of probabilities, a much lower standard than the criminal courts, if an applicant conducts these sorts of acts overseas even if they are not convicted for them. This has the potential to create a curious situation where a person charged and acquitted by an English court could be in a better situation than someone not charged in a different jurisdiction.


The criteria also include some standard exclusions such as being subject to regulatory proceedings anywhere in the world, and interestingly, whether an applicant owner or officer has been a party to proceedings in any court or tribunal including civil or family courts. What this is in practice means is not totally clear, and implies that if someone is sued or sues someone else, then that could be used to disqualify them.


The absence of an explicit reference to human rights is also disappointing and hints at an attempt to impose political considerations into the process, especially through the requirement for the IFR to take UK foreign and trade policy into account when making an assessment of an aspiring owner or officer’s fitness and propriety. This also potentially raises questions as to compliance with the FIFA Statutes, particularly Article 15(c) which prohibits political interference in the governance of the game. 


This assessment also goes to the issue of nation-state ownership, while this is referenced, the aforementioned provisions do not allow the IFR to determine whether to disqualify a new owner or officer solely for this reason, but it may play a factor in doing so. This is a compromise position but should be more explicit in prohibiting nation-state ownership due to the political and diplomatic risks which have been evidenced by the war in Ukraine and the impact that had on Chelsea following the imposition of sanctions on Roman Abramovich by the UK government.


Disqualification Criteria - Financial Soundness

As the assessment of an aspiring club owner or officer is a two-part test, the IFR must also assess the financial soundness of the applicant owner. This includes looking at whether they have the funds to operate the club, and whether those funds have not come from serious criminal conduct. This is likely to involve a comprehensive review of an applicant’s business interests and where their wealth came from. The Premier League currently undertake this assessment through enhanced due diligence checks undertaken by bodies such as the Financial Conduct Authority and the National Crime Agency, and the assumption is that this practice will continue and may apply to all clubs that will fall under the remit of the IFR, as it is often the clubs at the lower end of the football pyramid that are at the greatest risk of unsuitable owners.


Additionally, the new test includes the standard criteria relating to bankruptcy or insolvency, namely that any applicant must not have been subject to bankruptcy or insolvency proceedings of any kind. There are significant differences between the new test and the test in use by the various regulatory bodies. The current version of the Premier League’s and the English Football League’s Owners and Directors Test requires that any applicant must not have been subject to two or more bankruptcy events; whereas the Bill removes any minimum number of events. This is important, as the chaotic purchase of Bury AFC by Steve Dale in 2018/19 revealed that he had allegedly had 43 corporate insolvency events prior to his acquisition of the club, and is an indication as to the business competency of the new owner.


Human Rights 

Fails to make any direct mentions of human rights, but implied references through the requirement of the IFR to consider the UK government’s trade and foreign policy objectives, which may have crossover into considerations on nation-state ownership, particularly in countries such as China, UAE, Africa, and other parts of Asia where owners are likely to have state backing and may be connected to human rights abuses.


State Ownership 

The direct reference to requiring the IFR to take into account the UK government’s trade and foreign policy objectives has a double-edged effect in that it could allow the IFR to disqualify a prospective owner from a country in which the UK government does not have good diplomatic relations with, but also wave through those owners which the UK government maintains good relationships with such as Saudi Arabia. 


Section 37(7) also prevents the IFR from making a determination as to fitness only on the grounds of connection to a nation-state. This explicitly brings political considerations into the assessment of fitness and proprietary and further uses English football as a political tool.


Current Owners vs New Owners 

The Bill treats ‘new’ and existing owners very differently. Whereas any new owner or officer is automatically assessed under various criteria for assessing fitness, propriety and financial soundness; the IFR has no obligation to do the same for existing owners, and may only make a determination on an existing or incumbent owner if something comes to light to cause the IFR to doubt that they may no longer be eligible.


This creates a two-tiered system where existing owners and officers benefit from an assumption of fitness and propriety until they present a reason to the contrary. Additionally, the Bill also says that any affirmative determination on suitability lasts until an owner or officer of a club ceases to be an owner or officer, or if the IFR determines otherwise. This implies that there is no requirement for ongoing assessment and the IFR will only act if something comes to light to cast aspersions on an owner or officer's suitability. This appears to be reminiscent of the current laissez-faire approach and a cause for concern. 


Primarily, incumbent owners and officers should be treated the same as new owners and officers and should have to undergo a mandatory assessment upon the initial granting of a club operating licence. The proposed test also suggests that this fitness and propriety assessment is a one-off assessment, and is not monitored on an ongoing basis unless they are presented with a reason to look again either by the club or individual. While reviewing this on an annual basis may be somewhat cumbersome, a re-assessment every three years appears reasonable. 


Transparency 

The Bill also provides the power for the IFR to publish any notices that it issues concerning the prohibition or removal of incumbent or applicant owners, but before any publication gives the relevant owner or officer 14 days to make representations regarding any order, after which the IFR may decide whether or not to continue with the publication of the order. These notices are required to detail the reasons for the decision, and the decision itself. 


There is no definitive indication whether they will follow or expand the current Premier League model of maintaining a public register of Directors and publishing an annual report on the Owners and Directors Test, but it is important in the interests of transparency that they do so to maintain confidence in the process from the wider public. 


Conclusion

There is much to like about the Bill and the new test it proposes for Owners and Directors of Regulated Clubs. I welcome the broadened category of criminal offences that will prohibit someone from owning a club, and the strengthened financial checks should do much to weed out owners who lack the ability to fund the club on a long-term basis such as Steve Dale at Bury, and potentially 777 Partners at Everton.


However, the requirement for the IFR to take into account the trade and foreign policy of the UK government is a significant concern and further brings politics and diplomacy into the game and allows the government the ability to use the game as a political tool of its foreign policy. The purchase of English football clubs by such entities with close, if not symbiotic, relationships with the type of nation states mentioned above presents opportunities for such states to engage in what is colloquially known as ‘sportswashing’, meaning using the ownership of such prestigious assets as a method of improving the image of the country in question.


English football clubs are historically viewed as community assets and should not be used as pawns in the foreign policy states, which further creates a significant reputational risk for the clubs, and by extension English football as a whole. Such an obvious risk necessitates that nation-states should be excluded from owning clubs from now on, and existing nation-state ownership being phased out. This would help to preserve a club’s important role as a figurehead of their local community and be above the fray of politics and foreign policy.






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