Changes To The Premier League’s Owners And Directors’ Test (‘OADT’) – Shareholders

At a glance

Further to our opinion article published last
month regarding the government’s White Paper, A Sustainable Future –
Reforming Club Football Governance, the Premier League has
announced that its OADT rules
have been tightened with immediate effect after they were
unanimously approved by Premier League clubs at a shareholders’
meeting. The Premier League will now consult with its clubs and
other stakeholders on a further, final package of reforms, to be
considered by clubs at the Premier League’s annual general
meeting in June 2023.

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

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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
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involving other sports (including cricket and rugby).

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