Premier League clubs have voted against related-party transactions, but there’s no moral high ground to be found in this brewing argument.
The reaction of both the Premier League and its 19 other member clubs to the takeover of Newcastle United by the Saudi Arabian Public Investment Fund (PIF) has been unusual, to say the least. The speed with which the deal was waved through after the dismissal of concerns over the piracy of the product in the Middle East was surprising, and the reaction to this by the division’s other clubs has been considerably more vociferous than anything we’ve seen before in relation to the takeover of a club.
This feeling of ill-will seems to be reaching some sort of critical mass, exacerbated by the vote taken by Premier League clubs to ban precisely the sort of sponsorship deal which is designed to circumvent regulations relating to Financial Fair Play. It has been reported that Lee Charnley, the managing director of Newcastle United, represented the club at the emergency meeting, making an impassioned claim that such regulations were anti-competitive. This doesn’t seem to have made much difference to the voting, which resulted in 18 clubs voting through the measures, with one club (believed to be Manchester City) abstaining and one voting against.
A schism has certainly opened up between the league as an executive body and the league as a collection of clubs. There was considerable unhappiness at the fact the clubs were not consulted about the decision to allow this takeover, and it remains a decision shrouded in mystery. The Premier League announced that agreement had been reached that the PIF were a separate entity from the Saudi Arabian government, but they’ve thus far refused to confirm how they managed to reach this conclusion from a legal perspective, while their claims regarding the importance of confidentiality have rung a little hollow considering attempts to move the game’s governance and finances towards a greater degree of transparency.
It is fair to ask how, by definition, a sovereign wealth fund even could be considered separate from the government, especially when in this case Mohammed bin Salman, the Crown Prince of Saudi Arabia, is its chair, while a board member of the state oil company Saudi Aramco will act as a non-executive chairman of Newcastle United. It is very easy to set up different limited companies, but everybody with a cursory knowledge of company law knows this sort of mechanism is a pretty thin fig leaf, so far as this sort of separation is concerned. When the holding company that owned Southampton went into administration in April 2009, for example, the club hoped to avoid a points deduction, only for the Football League to find them “inextricably linked as one economic entity” and apply the points deduction anyway, effectively relegating the club into League One.
The growing sense of anger about it all hasn’t been helped by the opacity of the Premier League’s communications on the matter. If this is all above board and not merely a matter of the Premier League caving in under the theat of a legal argument that they might not be able to win (or might not be able to afford to fight), then why won’t they show their workings? The league has claimed that it has “received legally binding assurances that the Kingdom of Saudi Arabia will not control Newcastle United”. Well, okay. So what are they?
The reaction of Premier League clubs to all of this has been visceral, to say the least. Last week, all 19 other Premier League clubs demanded a meeting, at which their unhappiness at the deal being waved through was made plain. Indeed, it was so plain that it might be considered that the jobs of CEO Richard Masters and chairman Gary Hoffman may now be at risk. The vote on related party transactions was the outcome of that meeting. The new rule, which will temporarily ban commercial arrangements that involve pre-existing business relationships, will only be in place for a month, but there is clearly a will among many other clubs for this to become a permanent rule.
There are obvious issues with this vote having taken place at this time. Normally, such a sweeping rule change would be expected to be considered at the League’s AGM during the summer, and the decision to hold it now and push it straight through looks far from ideal. Furthermore, arguments over Manchester City’s sponsorship deals have been rumbling on for more than a decade, and it seems fair to call out that the other clubs, despite some claims regarding ‘reputational damage’ to the League, seem to be acting pretty much in their own naked self-interest. When a club near the bottom of a league suddenly finds itself awash with money, the impact will likely be felt by every club above them in the table, even those who might ‘only’ lose a couple of million pounds in prize money by finishing a place lower in the table than they might otherwise have done.
Whether Premier League clubs are acting in an ‘anti-competitive’ way is hardly for anybody who isn’t a judge to decide, while the idea of anybody in this entire conversation being able to take any form of moral high ground seems laughable. The word ‘cartel’ is thrown around very liberally these days, but when we consider that the very reason for the formation of the Premier League was to keep all of their television money for themselves, it’s plausible to argue that the entire league has been a form of cartel for the last three decades.
None of this will make very much difference in the short term anyway, of course. After all, it’s hardly as though Newcastle can spend very much money on players before the start of next year. But the panicked reaction of other Premier League clubs to Newcastle’s new-found largesse is a reminder of how wild west capitalism has been not just permitted but encouraged throughout the league’s first 30 years. Regardless of how you feel about the Newcastle takeover, there is something nauseating about people using a cloak of morality to mask their own naked self-interest. Sometimes, there is simply no moral highground to be claimed. There are no ‘good guys’, here.