Blog Sports Law 15th Oct 2021

From the ODT to OMG: Reaction to and an analysis of the recent takeover of Newcastle United FC

“What’s the difference between a multimillionaire new club owner and human rights?

 

Only some people get them…”

 

Introduction

That observation was but one pithy analysis of many. Such observations were duly doing the rounds on the Internet and social media, following the recent £305 million Saudi Arabian backed PIF sovereign wealth fund takeover of Newcastle United.

Given the previous high-profile collapse of a deal between the parties back in April 2020, following 4 months of wrangling and scrutiny, many were surprised at its resurrection over a year later – with exactly the same people involved and, what looked like at least, on almost exactly the same terms.

On that previous occasion despite much rumour and conjecture, the deal collapsed before the Premier League had formally opined as to whether the proposed purchaser satisfied the much maligned “Owners’ and Directors’ Test “ (ODT).

Despite this, it was well publicised that the Premier League were troubled about the relationship, potential alignment and arguable significant overlap between the prospective purchasers (PIF) and the Saudi Arabian government. There were also allied concerns regarding the potential implication of the Saudi state in the piracy of Premier League broadcasting rights in the Middle East. Following a WTO ruling, FIFA and UEFA had heavily criticised Saudi Arabia for ostensibly supporting a pirate service that illegally streamed football matches.

In a wider sense, there was and still is much controversy and debate surrounding Saudi Arabia’s human rights record, with the spectre of “sportwashing” raised by many commentators and indeed by numerous Human Rights organisations, including notably Amnesty International.

Following the collapse of the previous takeover, Amanda Staveley, a key player both then and now in the deal, stated on record that she had thought the ODT process would only take about five weeks – in the event, the process was still ongoing at the time of the failure of the previous deal. This meant that instead, up until that point, it had taken about 4 months.

Given the entirely opaque nature of the process nobody really knows definitively why that was the case, or indeed which (if any) of the above concerns were seriously taxing the decision-makers. Newcastle owner Mike Ashley had also initiated legal proceedings against the Premier League earlier this year, accusing the league of acting inappropriately in rejecting the previous takeover bid.

The fact that the recent takeover bid has now been sanctioned and approved by the Premier League puts an end to those legal proceedings. It has also again brought the ODT into sharp focus.

The Owners’ and Directors’ Test

The history of the ODT is fairly well known. It is the successor to the “Fit and Proper Persons Test” introduced back in 2004. Broadly, it sought to import an objective test that would be owners and directors had to overcome to own or become a director of a football club. Some of the concepts were imported or transposed directly from the legal duties placed upon directors pursuant to various company law statutes e.g. the Company Directors Disqualification Act 1986.

The current version of the ODT appears at section F, pages 129 -136 of the not insignificant 339 page Premier League Handbook 2020/21, available online as a digital resource:

https://resources.premierleague.com/premierleague/document/2021/09/23/986cb70a-d9dc-4f98-9012-7fd292da4467/PL_2021_22_Handbook_DIGITAL_23.09.pdf

In essence, the Handbook sets out as part of the ODT a number of matters described as “Disqualifying Events” which disqualify a person from acting as a director or owner for the purposes of the rules.

As well as the usual criteria one would perhaps expect e.g. ownership or a stake in another club, bankruptcy, parallel disqualification under the CDDA 1986, or suspension/strike off by another professional regulator, for present purposes it is important to note Rules F.1.7 and F.1.8 regarding criminal matters:

F.1.7. he/she has a Conviction (which is not a Spent Conviction) imposed by a court of the United Kingdom or a competent court of foreign jurisdiction:

F.1.7.1.           in respect of which an unsuspended sentence of at least 12 months’ imprisonment was imposed;

F.1.7.2.           in respect of any offence involving any act which could reasonably be considered to be dishonest (and, for the avoidance of doubt, irrespective of the actual sentence imposed);

F.1.7.3.           in respect of an offence set out in Appendix 1 (Schedule of Offences) or a directly analogous offence in a foreign jurisdiction (and, for the avoidance of doubt, irrespective of the actual sentence imposed);

F.1.8. in the reasonable opinion of the Board, he/she has engaged in conduct outside  the United Kingdom that would constitute an offence of the sort described in Rules F.1.7.2 or F.1.7.3, if such conduct had taken place in the United Kingdom, whether or not such conduct resulted in a Conviction;

Appendix One includes only the offences of:

  • Dishonestly receiving a programme broadcast from within the UK with intent to avoid payment
  • Admitting spectators to watch a football match at unlicensed premises
  • Persons subject to a banning order
  • Ticket touting

Discussion

In terms of the Premier League’s alleged disquiet last year with the previous takeover, quite which part of the ODT that potential arrangement was said to offend against is still manifestly unclear. The only sensible conclusion can be that it related to the alleged involvement of the Saudi state in the above outlined piracy issues, which although not resulting in a conviction, may have engaged Rule F.1.8 when read together with Appendix One.

Various outlets also reported that the removal of a ban on sports network ‘beIN’ in Saudi Arabia, a ban which had supposedly perpetuated the piracy issues outlined above, removed further significant barriers to the takeover.

Some have also suggested that the incidental but not insignificant consequence of the Premier League avoiding messy legal action instigated by Mike Ashley would also have not been lost on the decision-makers. This aspect, as well as the prominence of the Premier League’s own commercial rights issue as a central factor within the decision making process itself, has led to renewed calls for an independent regulator to be established.

What does seem clear is that in the absence of any domestic or foreign ‘conviction’ as against any individual or indeed state entity, involved in the most recent takeover, the Premier League considers that rule F.1.7 does not apply in any meaningful sense to the new owners, either individually or collectively.

In that regard at least, the Premier League was effectively able to ignore the furore and consternation surrounding Saudi Arabia’s human rights record. This included (according to US reporting in the Washington Post) the firm conclusion apparently reached by the CIA in November 2018, that Crown Prince Mohammed bin Salman ordered the murder of journalist Jamal Khashoggi in Istanbul in 2018. The same Crown Prince is of course chairman of the PIF – the fund approved to take over Newcastle United.

Conclusion

In terms of where the above matters leave the fitness for purpose of the ODT test, especially in light of recent events, that debate will not go away any time soon.

It seems somewhat curious to many that an individual or entity can be disqualified from ownership due to alleged involvement in the infringement of the Premier League’s intellectual property and broadcasting rights – but not for alleged involvement in heinous human rights’ abuses or even state-sponsored murder.

The Premier League approved the takeover after apparently receiving “legally binding assurances” that the Saudi state would not control the club. The full details of those assurances have not been revealed, nor has there been any analysis as to whether and how in fact they are legally binding, or indeed in what jurisdiction. The silence with respect to the other matters raised was, for some, deafening.

No doubt questions surrounding the interpretation and practical application of the ODT will continue to be raised. Many of the difficulties of the ODT perhaps arise from the fact that its relatively narrow scope was principally designed to deal with matters of individual dishonesty and financial impropriety.

It was also designed and evolved, in a more general sense, to stop a repeat of a number of unsavoury events that had occurred in the 80s and 90s e.g. unscrupulous individuals taking over football clubs, mismanaging them and stripping their assets.

In that regard however, as presently formulated, the ODT is perhaps ill-equipped for the modern age. In a joined-up, global community, a whole range of wider financial, commercial, moral and even political concerns can all be inextricably linked. Further, they can all have a bearing on whether, as the term is more generally understood, an entity or person is truly fit or proper to own or run a football club.

It is arguable that a proper, reformulated test, fit for purpose and properly reflecting the legitimate and genuine concerns of a democratic, compassionate and civilised society, is essential to maintain the integrity of the beautiful game.

 

Michael Rawlinson


 


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