Premier League clubs ban state sponsorship

Oct 22, 2021

Premier League clubs ban state sponsorship Image

The other Premier League clubs have bandied together to stop newly enriched Newcastle United from signing lucrative new sponsorship deals, at least temporarily.

At an emergency meeting of all 20 clubs, it was decided by an overwhelming majority to vote through legislation, temporarily banning commercial arrangements that supersede existing business relationships.

Eighteen clubs voted for the motion, with only Newcastle opposed to it. Manchester City chose to abstain.

Newcastle made it clear that they consider the decision to be anti-competitive, and claimed that they had legal advice that the vote was illegal.

While the latest measure is temporary and is only in force for the next month, many Premier League clubs, fearful of Newcastle's spending power and its ability to distort the market, want to make it permanent. A working party has been set up to examine options.

Many of Newcastle’s rivals are still unhappy that the sale of the club to a consortium, financed 80% by the Saudi PIF (Public Investment Fund) was approved in the first place.

They argue that the PIF is in effect the Saudi state, who would fail the 'true and proper' ownership requirement for owners of Premier League clubs because of the country’s human rights record.

Mohammed bin Salman, the Crown Prince of Saudi Arabia, is listed as the chairman of the PIF. But the League, in its deliberations, was satisfied that the state itself would have no dealings with the football club.

Under current financial fair play (FFP) rules, clubs are allowed to make maximum losses of GBP 105 million over a rolling three-year time horizon.

One way round this stipulation is through artificially inflated commercial deals which help boost club revenues.

Manchester City, owned by the Abu Dhabi United Group, have been accused of indulging in such practices. One example was the deal that saw Etihad Airways, the carrier owned by the Abu Dhabi government, sponsor them.

Even some clubs that have baulked at the FFP rules in the past are now in favour of them when it comes to suing them to derail the high-speed Newcastle express.