Out-Law News 2 min. read

Element of subjectivity should be built into football club owners test, says expert

Football authorities should give themselves far more flexibility when assessing whether individuals are suitable people to become owners or directors at football clubs, an expert has said.

Sports law specialist Trevor Watkins of Pinsent Masons, the law firm behind Out-Law.com, said that the existing test that the Football League in England applies is too inflexible and that changes were needed for the good of the game.

"Currently a very simple set of criteria need to be met alongside a demonstration of a sustainable business plan and accessible resources," Watkins said. "What is not provided for is any subjective assessment. Football governing bodies should be able to consider all facts they believe are material to determine whether prospective new owners or directors of football clubs are suitable for the role. This requires the rules to permit an element of subjectivity in the decision making process."

Currently the Football League can step in and prevent prospective or existing owners or directors at member clubs from holding such a position where the individuals concerned are subject to a 'disqualifying condition'.

The body has a defined list of disqualifying conditions that apply. The list covers cases where individuals have overseen insolvency events on two separate occasions previously within football, or where individuals have been found guilty of certain offences, such as corruption or perverting the course of justice.

However, Watkins said that the "yes/no nature" of this test may not account for "intangible aspects" that may be relevant to a decision as to the suitability of prospective new owners to the role.

The expert said that football governing bodies have an obligation to ensure that owners act as guardians of clubs, most of which have existed for more than a century. Whilst the League will assess the business plans of prospective new owners to ensure those plans are viable and do not place clubs at financial risk, the resources available to the League in making such analysis are necessarily limited.

Watkins said that the current "black and white" rules are probably borne out of this fact and an inherent fear of litigation if a reasoned decision reached by a governing body were to be challenged. However, he said if the rules were to be "limited by necessity" then there ought to be "an element of subjectivity" to them so that they are sufficiently flexible to allow football authorities to "preserve the integrity of the game".

In his view, a robust ownership policy, in line with that introduced in most US professional sports leagues, is one that will be reflected by the level and value of commercial rights deals secured.

"Ongoing sagas and debates over ownership without strong leadership and an armoury of resource to deal with the detailed investigations needed lead to a loss of standing which in turn affects commercial rights values,” he added.

Watkins admitted that introducing subjectivity into the decision making process could create the potential for representatives of member clubs of the Football League that sit on the board of the organisation to "influence ownership decisions in a way that could have adverse effect on competition".

However, he said that the creation of "robust, independent ownership decision making body", separate from both the Football League and Football Association, would help mitigate against the risk of any perceived self-interest influencing decisions.

"In many cases, a decision not to approve an application tantamount to certifying new owners could be the factor that pushes a club into administration if no other option exists," Watkins said. "That in itself leads to a consideration of whether a body such as the Football League would ever then step in to oversee the running and management of a club as we have seen with the NBA."

Watkins was commenting as Italian Massimo Cellino met with the Football League to discuss his proposed takeover of Leeds United. Cellino has agreed a deal to buy a 75% in Leeds with the current owners of the club, subject to the Football League's approval.

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