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Football takeover via the ‘fit and proper person’ test

News within the football industry last week was dominated by Newcastle United’s reportedly £300 million takeover by Saudi Arabia’s Public Investment Fund (PIF) which is a state-savings account for Saudi Arabia’s government with the money mainly coming from oil and gas revenues.

Whilst the majority of Newcastle’s fans rejoiced at the news that their boyhood club finally has a new owner with plenty of cash to splash, the takeover news did not go down well for some, most notably the big-spending Premier League clubs as well as those concerned with the human rights track record of the Saudi Arabian government. 

Club legend Alan Shearer went on record to say that Newcastle United can “dare to hope again”.

The Football Association Premier League (more commonly referred to as the Premier League) is a major sporting and entertainment business having a global audience with its combined members generating billions worth of revenue on an annual basis.

As a result of this, the Premier League serves as a great attraction to wealthy businesses/businessman interested in the possibility of taking over (and running) a club competing in the Premier League with an eye on making a healthy return on their investment.

Besides Newcastle United, other well-established football teams have been taken over in the past, amongst them Chelsea FC (Roman Abramovich in 2003) and Manchester City FC (Abu Dhabi United Group in 2008).

Prior to a prospective owner/officer being able to take over or involve themselves in a football club competing in any domestic competition in England, they must first ensure to pass what today is referred to as the ‘fit and proper person’ test.

The aim of this test is to meet standards greater than that required under law which as a result seek to protect the reputation and image of the game, the club concerned as well as the interests of all stakeholders involved in the club.

Despite the test itself and the conditions that must be met in order to pass such test giving the impression that it involves a rigorous process, for some the test itself is not deemed fit for purpose.

Under Section F of the Premier League rules, persons seeking to control, manage or own a football club competing in the Premier League must be able to demonstrate that they are not subject to a ‘Disqualifying Event’, which event broadly falls into two sub-categories; (i) offences or requirements under the law of the land and (ii) football specific requirements.

Whilst the first category broadly refers to ordinary law-based disqualifications (mainly criminal and non-criminal), the latter category concerns grounds for disqualification which are based purely on football-related matters.

These include inter allia either being directly or indirectly involved in the affairs of another club, or having been previously involved in a club that became insolvent, or being previously involved in a club that was expelled from a domestic football league.

It also includes being found guilty of breaching the rules relating to football betting or bribery offences or failure to provide all relevant information or providing false, misleading or inaccurate information in connection with the assessment of their compliance with the test.

Since the test is objective in nature, most individuals would appear not to struggle too much to pass such ‘fit and proper’ test.

As a matter of fact, very few individuals have failed the test since its inception and as a result found themselves being prohibited from being an officer or owner of a football club.

With the PIF becoming the latest entity to pass such test despite stern reservations from some quarters on their background, many deem the test as not being rigorous enough, leading to what would appear to be unsuitable individuals/entities passing such test and in some cases bringing football clubs to the brink of ruin, such as Portsmouth and Leeds United in the past.

Despite the Premier League reviewing the test’s criteria from time to time, some feel that not enough is being done to reflect today’s world and its realities.

Revenue generated by clubs competing in the Premier League is expected to continue to flourish over the years to come, with more commercial opportunities being available to those who in one way or another are involved in the running of a club competing in the Premier League.

Running a football club does not come cheaply. Owners who invest significantly in their respective teams expect handsome returns or else will simply abandon ship and most likely leave the club concerned scrambling to simply stay afloat.

The Premier League needs to continue working hard behind the scenes to ensure that the fit and proper test continues to adopt to the modern times of the game, both in terms of the attractiveness to prospective and current owners as well as the threats that the game is faced with.

When facing possible takeovers, those concerned with accepting a takeover deal need to rigorously scrutinise the proposed takeover, seeing beyond the monetary figures and ensure that football clubs are run in a diligent manner for the enjoyment of all concerned.

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