Changes to the Premier League’s Owners and Directors’ Test (‘OADT’)

Key points

The main changes announced are as follows:

1. Review – decisions taken by the Premier League Board will be subject to review by a new Independent Oversight Panel.
2. “Control” threshold – lowered to 25% from 30%.
3. Additional individuals caught by the OADT – will extend to a club’s CEO (if not already a director) and other “Relevant Signatories” (a new concept for individuals responsible for signing a range of key regulatory documents).
4. Disqualifying Events – new events have been added, and certain existing events have been broadened, including:(i) for sanctioned persons;
   (ii) for human rights abuses, based on Global Human Rights Sanctions Regulations 2020;
   (iii) extending the list of criminal offences to those involving violence, corruption, fraud, tax evasion and hate crimes; and
   (iv) broadening the scope of the insolvency provisions to enable action against persons involved in previous insolvencies in a wider range of circumstances.

   In addition, there is a new power for the Premier League to stop those who wish to become directors where they are under investigation for conduct that would result in a Disqualifying Event if proven.

5. Initial due diligence – there is now a published list of “Acquisition Materials” that must be provided to the Premier League.
6. Annual due diligence – additional due diligence will be undertaken on incumbent directors to ensure ongoing compliance with the OADT.
7. Transparency – the Premier League will be required to publicly disclose persons disqualified under the OADT and will create an annual report of compliance.

We have yet to see the revised Section F of the Premier League’s Handbook (and related definitions) or the changes that were approved at the shareholders’ meeting.

Commentary

These changes are the result of a “comprehensive review of the OADT, and consultation with clubs and a range of stakeholders”. However, they are, in reality, the result of increasing pressure from external stakeholders (including fans, the government and the media) and high-profile criticisms made in respect of recent owners approved by the Premier League – especially as a result of the ongoing US court case relating to LIV Golf which has cast doubt on the status of Saudi Arabia’s Public Investment Fund.  Only the other day, on 28 March 2023, the Premier League’s chief executive, Richard Masters, experienced a testing time with the Digital, Culture, Media and Sport select committee and was unable to provide meaningful responses to a number of seemingly simple questions put to him. This announcement, therefore, is meant to be a show of strength by the Premier League, as it tries re-assert a degree of control over those who own and operate clubs in the world’s richest football division.

But not everybody has welcomed the changes.

Tracey Crouch MP, who was the UK’s Sport Minister between 2017 and 2018, and chaired the fan-led review resulting in the government’s White Paper, said the changes were but “smoke and mirrors”. For fairness, it should be noted that Tracey Crouch and the Premier League do not necessarily see eye-to-eye: Tracey Crouch has been a key critic of the Premier League and called it out for not assisting the fan-led review or any stakeholder engagements relating to the same.  It is also no secret that the Premier League dislikes the government’s White Paper, which threatens to break the Premier League’s long-held monopoly.

Is should also be noted that Amnesty, while noting the nod to human rights, has said that “It’ll make little difference unless powerful individuals linked to serious human rights violations overseas are definitively barred from taking control of Premier League clubs and using them for state sportswashing.”

Given the ongoing proposed takeover of Manchester United, it is natural to consider whether any of the changes may impact upon this process. The feeling for now is that the changes will not, with one UK newspaper leading with a headline that “Man Utd bidder Sheikh Jassim set to bypass changes to Premier League ownership test” on account of him seeking the purchase the club in his personal capacity.

Looking at the changes announced, one might be forgiven for asking why they are only being added now. Why was the control threshold at 30% when many other regulators and professional bodies have for many years adopted lower thresholds of 25% (some as low as 10%)?  And why has the Premier League not previously sought to exclude persons on (serious) grounds of sanctions, fraud or tax evasion? In answer to the latter question, it is likely that the Premier League has taken such matters into account when making decisions, however, their express absence to-date from the OADT is baffling.

In a week when Tottenham’s managing director of football, Fabio Paratici, has had his ban in Italy extended worldwide by FIFA, it raises the question as to whether the concept of “Relevant Signatories” should be extended further still given the prominence of modern directors of football in the running of a football club.

In terms of the process, prescribing minimum information which the Premier League requires to undertake its checks is helpful. However, it remains to be seen what value an Independent Oversight Panel will add.

We think the undertaking of annual checks on directors is a good idea, even if one cannot readily reconcile “new checks” with the declarations that directors must submit to the Premier League before the start of each season. It is, however, disappointing that this does not extend to owners as well. The Premier League should have an ongoing duty and obligation to vet owners, as things can and do change after initial approval. The Premier League should be playing the role of guardian of its clubs, which are key communal assets with unique heritage values.

Will the English Football League follow suit?  We suspect they will in due course. We think their test should be aligned closely with that of the Premier League.

Our overall impression, at least for now, is that these changes merely have the quality of a sticking plaster. They do not go as far as the changes proposed – and arguably warranted – by the government’s White Paper (which, among other things, suggests criteria should be added relating to honesty and integrity, financial soundness, and competence and capability, and suggests that better checks on source of funds and source of wealth are required). It will be interesting to see which further changes the Premier League will put to its clubs at the annual general meeting in June 2023.

How we can help you

Memery Crystal has experience in football transactions. Among others, Memery Crystal has acted for the sellers of then Premier League club West Bromwich Albion and the buyer (subject to EFL approval) of a high-flying Championship club. Members of our team have also acted on a number of football club sales, acquisitions and minority investments in Premier League clubs, and on high-profile player transfers in England and around the world, prior to joining Memery Crystal.

Memery Crystal also advises on transactions involving other sports (including cricket and rugby).

Contact us

Should you have any questions, please contact one or more of the authors, or your usual Memery Crystal contact.

Authors

Christopher Allen, Partner, Corporate

Chris is an Arsenal fan and has many fond memories from his youth of cheering his then local team, Folkestone Invicta.

Andy Hughes, Senior Associate, Corporate

Andy is a season ticket holder at a Premier League club and regularly attends matches of the England men’s and women’s national teams, both home and abroad.

Disclaimer: We at Memery Crystal (and our parent company RBG Holdings plc) support and encourage free/independent thinking in relation to issues which are sometimes considered to be controversial subject matters.  However, the views and opinions of the authors do not necessarily reflect the opinions, views, practices and policies of either Memery Crystal or RBG Holdings plc.