Newcastle takeover: 18 Premier League clubs back one-month ban on sponsorship on related parties

Newcastle ownership fear Premier League clubs will soon target them in upcoming meetings

The Premier League is set for a bitter battle amongst leading clubs next month, ostensibly over the Saudi takeover at Newcastle United but which may yet also embroil Manchester City and Everton, as a raft of clubs seek to outlaw sponsorship deals from friendly businesses associated with competitor clubs.

Newcastle director Amanda Staveley is expected to attend the shareholders meeting next month to respond in person to Monday’s emergency Premier League meeting, which was a heated and feisty affair leading to vote being taken for a one-month moratorium of any club concluding sponsorship deals with so-called related parties.

Monday’s meeting was called to discuss the Newcastle takeover by the Saudi sovereign wealth fund, the Public Investment Fund and the vote on the moratorium was proposed by Crystal Palace owner Steve Parish. 

Newcastle ownership fear Premier League clubs will soon target them in upcoming meetings

Amanda Staveley will attend the Premier League shareholders' meeting next month

Amanda Staveley will attend the Premier League shareholders’ meeting next month 

It was seemingly sparked by the fear that Newcastle will immediately announce huge sponsorship deals with Saudi-backed companies and threaten other clubs. Eighteen clubs backed the move, with Manchester City abstaining and Newcastle voting against.

A working committee is now being appointed to tighten up the current rules to make it much more difficult for the likes of Newcastle and City, who have relied extensively on sponsors from Abu Dhabi, though its legality was challenged in Monday’s meeting by Newcastle’s out-going managing director Lee Charnley.

It is likely that the committee will study the suggestions of Project Big Picture, which proposed that related-party sponsorship deals were limited to £50m and that the rules be tightened up. It has been suggested by sources close to the talks that the Premier League will establish a permanent independent body to assess fair value for all new deals, to prevent Newcastle claiming their shirt sponsors, currently estimated to be worth £5m a year, is suddenly worth £25m.

Yet sources at the club have pointed out that any future sponsorship deals would be pricing in the expected success of the club two or three years down the line and so will inevitably be worth more than current deals. 

However, a rule change would mean it would be harder to Newcastle to repeat the deal Paris St Germain established with the Qatar Tourism Authority, in 2012, said to be worth more than €215m a year, which was signed a year after their takeover by Qatar Sports Investment. That a deal which came under scrutiny under UEFA’s fair play rules.

Newcastle's new owners have promised to invest into the future of the city

Newcastle’s new owners have promised to invest into the future of the city

Given that such rules won’t be ready for next month’s Premier League shareholders meetings, it is expected that the moratorium on related-party transaction will be extended. Newcastle’s new owners are firmly of the view that such a move would be akin to a cartel and as such illegal. Charnley read out a statement making that case at Monday’s meeting, which prompted Parish to speak up on the issue and propose a vote.

It seems Newcastle’s pre-emptive move to block any new rules, which had been in discussion for some time, backfired, in that it precipitated the vote and was perceived as a threat by many clubs, who united to introduce the moratorium. The new Newcastle owners believe that the majority of clubs will come round to the view that Saudi investment in Newcastle will boost the Premier League’s value. Any future rule chance thoygh would need 14 clubs to support it and it may be that over time more clubs come to side with Newcastle and Manchester City.

The new rules, touted by some as Financial Fair Play 2.0, after the apparent failure of first draft of FFP rules introduced by UEFA in 2009, would also be designed to examine deals similar to Everton’s naming rights deal with USM Holdings.

USM was founded by Russian billionaire Alisher Usmanov, estimated to be worth £17billion, and its chairman is Farhad Moshiri, a long-term business partner who owns 77 per cent of Everton. The training ground deal is estimated to be worth £20m and there is a further £30m deal with USM to have an option on the naming rights for the new as yet unbuilt stadium at Bramley Moore Dock. Usmanov and Moshiri have had a close business relationship and were shareholders at Arsenal together before Moshiri bought his stake in Everton.

Other clubs owners wishing to sell in the near future may also ultimately may not wish to limit investment opportunities, as it would decrease the value of the club. However, it is clear that the shockwaves from the Saudi takeover of Newcastle have caused Premier League tensions to come to a head.

There is fierce criticism from some clubs over what is perceived as lack of leadership from Premier League. Clubs who feel they have a legitimate interest in all the pertinent issues raised by the takeover, from human rights to financial fair play, were only informed at the last minute, after 24 hours of speculation that the protracted deal, first mooted four years ago, was back on.  

Newcastle were taken over by the Saudi sovereign wealth fund earlier this month

Newcastle were taken over by the Saudi sovereign wealth fund earlier this month

Leeds’ managing director Angus Kinnear used the club’s match programme to voice his concerns over financial rules among the Premier League sides.

He wrote: ‘Simultaneously, there is an opportunity for all clubs to participate in a long overdue review of the rules that ensure the financial and commercial fair play that are central to keeping our league competitive and attractive.

‘After the bitter schisms within the league caused by Project Big Picture and the European Super League we have at least an issue which unites at least 18 clubs.’

The Premier League has pointed out that takeover deals are necessarily confidential and the board is mandated by the shareholders [the 20 Premier League clubs] to make decisions.

The speed at which the political landscape shifted, in the Saudi state suddenly allowing Qatar based beIN SPORTS, the Premier League’s official partner, to broadcast again in the kingdom, which was a key sticking point given that illegal Premier League streams were rife and apparently tolerated in Saudi Arabia, took many parties by surprise.

Historically, the clubs most-critical of related-party transactions have been Liverpool and Arsenal, though it is understood that since the collapse of the Superleague and the opprobrium it drew, they have necessarily taken a back seat in Monday’s discussion.

The Premier League itself is still pursuing a Financial Fair Play case against Manchester City. Leaked emails suggested the club inflated its income by disguising grants from Shiekh Mansour as commercial deal with friendly Abu Dhabi companies in 2011. Manchester City have denied they broke the rules and the Court of Arbitration for Sport overturned a two-year ban from the Champions League competitions imposed on City by UEFA’s Club Financial Control Body, ruling that the allegation could not be satisfactorily proven or were timed barred.

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