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  • Writer's pictureMark O'Neill

Nation-State Ownership: The Risks and Dangers


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

The Football Governance Bill, which is currently making its way through Parliament, is, on balance, a welcome step forward for the game in its attempts to become more sustainable. However, it does one major and fundamental flaw to it which threatens to undermine its whole credibility, and that is on the nation-state ownership of football clubs. In this blogpost, I will attempt to explain why this is a threat to the sustainability of the game in this country, and why the Independent Regulator (IFR) should prohibit it.


Nation-State Ownership Explained

At present, clubs such as Manchester City, Newcastle United, Sheffield United, and formerly Chelsea are currently owned by owners with close, or perceived close relations to nation-state governments. In one respect, nation-state ownership has the ability to be a more stable form of ownership due to the often-greater level of financial resources of nation-states, and their greater ability to write off losses. This can be seen by the investments made in Manchester City and Chelsea during the early stages of their ownership during the early to late 2000s, when those owners were able to write off huge losses. This shares similarities with the owner-benefactor ownership model in which clubs become dependent on the emotional and financial commitment of an individual or small group of investors.


However, in my opinion the contrary position is truer. It is not sustainable for a club to be owned by a state as the government could at any point change its attitude to them, for political or economic reasons. If these investors are so intricately connected with the government of a nation-state, it makes the club increasingly vulnerable to geopolitical developments.


This can be seen from the example of Chelsea when sanctions were imposed on Roman Abramovich following the war in Ukraine, due to his close ties to the Putin regime. These sanctions froze Abramovich’s overseas assets, which included Chelsea. Although Abramovich was not officially connected to the Russian state, he was sufficiently intricately connected to them due to the source of his wealth. They prevented him from funding the club to the extent that it had to get the permission of the UK government to open the club shop or sell tickets because to do so without permission would have meant that Chelsea would have been in breach of sanctions imposed by the UK government, as Abramovich would have been to have been financially benefitting from such activity.


A common thread that runs through the types of countries most commonly associated with these types of investments in professional sports, such as Qatar, Saudi Arabia, China, and Russia, are often accused of having poor records of respecting human rights, and as a result make investments into major sports such as football, golf, and athletics, in an attempt to improve the perception of their countries. This is a practice described as ‘sportswashing’. The most current example of this can be seen in the acquisition of Newcastle United by a consortium led by the Saud-Arabian sovereign wealth fund, the Public Investment Fund (“PIF”), taking an 80% stake in the club.


Despite fervent criticisms from human rights non-governmental organizations (NGOs) and Western media, labelling the deal as part of “Saudi Arabia’s soft power play” the contentious deal was approved. Amnesty International bluntly called it “sportswashing, plain and simple”.


The Newcastle United takeover exemplifies the issue of sportswashing, as the then-Prime Minister, Boris Johnson, and Lord Gerry Grimstone, the minister for investment in Johnson’s administration, were involved in pushing for its approval. Grimstone worked closely with key stakeholders, including Premier League chairman Gary Hoffman and Saudi representatives, even reaching out to Crown Prince Mohammed bin Salman’s office. This move was seen as crucial to the UK’s strategic and economic interests, despite official disavowals of government involvement. Despite clear instances of interference, FIFA did not impose any sanctions on the matter.


Football Governance Bill

In the Football Governance Bill, the relevant section which discusses the issue of nation-states is found in section 37(2), which states that "the IFR ‘must’ take into account the UK government's trade and foreign policy objectives when assessing as to the fitness and propriety of an owner". This could allow it to disqualify a prospective owner from a country with which the UK government does not have good diplomatic relations. But it could also waive through owners with which the UK government maintains good relationships, such as Saudi Arabia.


It further prevents IFR from making a determination as to fitness only on the grounds of connection to a nation-state. This further brings political considerations into the assessment of fitness and proprietary when considered alongside section 37(2). This effectively turns the IFR into an arm of the Foreign and Commonwealth Office performing diplomatic activity on behalf of the British government. As a result, this brings a strong possibility that if this were to stand, then this could arguably breach the FIFA Statutes on political interference, which brings the possibility of the English FA being suspended from FIFA-organised competitions.


The simplest measure would be to repeal section 37(2) in its entirety and replace it with a clause which would prohibit ownership of football clubs competing in English professional competitions by any person or entity employed by, or sufficiently closely associated with, any company owned or controlled, directly or indirectly, by a government entity, whether of the UK or any other jurisdiction.


Such rules are not unheard of and are already in operation in major sports leagues. In the USA, since 2022 the NFL currently has a rule prohibiting overseas investors from owning more than 20% of a team, and also prohibits sovereign wealth funds from owning teams. A similar provision could be implemented here which may be an alternative method of regulating nation-state influence on regulated clubs.


If Section 37(2) is not removed, there must be a transparent process from the IFR to understand what a ‘good relationship’ with a Nation-State within football entails. This process must include an assessment of that nation-state’s human rights record, notably its adherence to the rule of law, freedom of the press, and respect for LGBTQ rights.


Relationship to the FIFA Statutes

Firstly, Article 14.1(a) requires member associations have an obligation “to comply fully with the Statutes, regulations, directives and decisions of FIFA bodies at any time…”.


Together with Article 14.1(h)(i) which further states that member associations have an obligation “to manage their affairs independently and ensure that their own affairs are not influenced by any third parties …”


However, the most explicit reference to political interference comes at Article 15 which states:

“Member associations’ statutes must comply with the principles of good governance, and shall in particular contain, at a minimum, provisions relating to the following matters: (a) to be neutral in matters of politics and religion; (c) to be independent and avoid any form of political interference;”


The statutes of FIFA, as detailed above, clearly state their opposition to government involvement, placing a strong emphasis on the responsibility of member associations to comply with directives and maintain political neutrality. Notable examples, such as the suspension of the Nigerian Football Federation (“NFF”) in 2014 and the Kuwait Football Association (“KFA”) in 2015, demonstrate FIFA's dedication to maintaining regulatory autonomy. Despite these efforts, some critics express concerns about the possibility of oversight, particularly with regard to government ownership of football clubs through national wealth funds, which can lead to suspicions of sportswashing. This issue also extends to government involvement in major tournaments, raising questions about potential influence in the selection and acquisition process.


Conclusion

As per many issues in football, your perception of this issue can often be coloured depending on what club you support. Supporters of Manchester City and Newcastle United would argue strongly in favour of their owners, not just because of the on-pitch success they have brought to those clubs, but also the supporting improvements to the local communities through bringing employment and investment to those areas. But look past this, and the dangers associated with the issue of nation-state ownership are clear and present.


The primary threat is that the regulator will become a tool of the UK government to conduct foreign policy and will firmly root the game within the minefield of diplomatic relations. It also threatens the ability of the England team to compete in international competition. In essence, it threatens the very fabric of the game as it has the potential to destabilise clubs through forces which should threaten the very survival force of a club, such as was seen in the case of Chelsea. Football should be a release from the internecine and grubby world of politics, not doing its dirty work.

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