08/10/2009 : Football League Blog : Unmasking The Real Owners Behind Football Clubs

8 October 2009 : Unmasking The Real Owners Behind Football Clubs

Football League Chairman Lord Mawhinney plans to discuss the regulation of club ownership at a Football League Board meeting today. Although there was talk of the need to address this issue in Mawhinney's speech at the Leaders In Football Conference on Wednesday, the question of how to provide solutions to the problem were not considered in that speech.

Mawhinney has told BBC Five Live though that this will come up today at the league's board meeting today, and although he is careful to stress that the rule will be a generic one not aimed at any particular club, the national media have immediately highlighted cases involving Notts County, Leeds United and Queens Park Rangers. The QPR case is a bit of a red herring and concerns one of their shareholder's suitability to remain in that capacity, which is a little different from the Leeds and Notts County cases.

The league want to "know who the beneficial owners are" of each of their Member Clubs. This is linked in with the existing Fit and Proper Persons Test which carries a set of criteria where individuals are barred from having more than a 30 percent ownership of a Football Club if they have an unspent criminal conviction involving dishonesty, or who have run a football club into administration twice. It is also linked to the overall integrity of the game, where individuals are prevented from having financial interests in more than one football club.

The issue is that many clubs now are not owned directly by individuals. Yeovil Town are no exception to this, with Huish Park Stadium Partnership Ltd holding over 90 percent of the allocated shareholding. A football club's holding company could in turn be also owned by another company, and so on. Whilst searches on directorships and shareholdings for UK registered companies are relatively simple, they become more complex in the case of overseas investment, which is where the likes of Leeds United and Notts County are causing so much interest.

Both clubs, so far, have refused to name who their ultimate beneficial owners are - i.e. the individuals that sit at the top of the tree of companies that have put up the money to buy their football clubs. Notts County are owned by Munto Finance. They in turn are owned by Qadbak Investments who are a Middle-Eastern Consortium. The question of exactly who owns Qadbak is a little more vague, with certain people having been named, and then others subsequently issuing denials that they are any part of this consortium.

Leeds United are owned by the Forward Sports Fund, which is registered in the Cayman Islands. Leeds Chairman Ken Bates had initially said that he and his financial advisor Patrick Murrin co-owned the only shares in Forward but has since admitted that this was "an error on my part" and that in fact he doesn't have any shares in Forward.

Exactly how a businessman can make such an "error" isn't clear - this isn't a case of someone thinking that they'd bought a pint of milk from the supermarket and then getting home and then realising they hadn't. This is a case of someone thinking they owned a company which owns a whole Football Club and then realising "oops, actually I don't own Leeds United after all". Obviously, an easy mistake to make. The ownership of the Forward Sports Fund is therefore now entirely unknown, and therefore the registration of the club's owners with the Football League was presumably submitted with incorrect information.

Why does this matter? Firstly, the integrity of the game has to be upheld. If it turned out - for example - that the owners of the Forward Sports Fund were also the owners of Yeovil Town, where would that leave us if Leeds came to Huish Park desperately needing three points for promotion, whilst the Glovers sat in mid-table safety? Meanwhile on the following week, Yeovil face Charlton Athletic, and Leeds loan out Jermaine Beckford to the Glovers.

Secondly, the Football League (and in turn the Football Association) have a duty to act as the regulators and guardians of the game and thus to protect supporters from having their clubs run by unsuitable individuals. For every club that falls into administration, or one that is found to be run by crooks or charlatans, the reputation of the game suffers. And the supporters of that club suffer. Whilst Football Clubs have to be allowed to operate without too much regulation, the league do have a moral duty to ensure that the chances of a convicted fraudster getting hold of a football club are minimised.

If the Football League don't know who the ultimate owners of a Football Club are, then it stands to reason that they also are unable to apply their Fit and Proper Person Test. They are also unable to hold any proof of ownership or investigate any potential for a conflict of interests.

Mawhinney has told the BBC that he has no problem with overseas investment as such, but believes that such investors should be reminded that the Football League is a Private Members Club with its own constitution and rules:

"The law of the land complicates issues because people are allowed to put their money offshore and in many places that accords them anonymity that makes scrutiny very difficult. You don't defy the law of the land - if people want to do that, they can do it but If you want to place your money offshore and you want to have the anonymity then don't come and ask if you can play in my league because I think all of our clubs should know basically the structure of the clubs they are playing against."

The purpose of today's Football League Board Meeting will be to determine just how far the Board are entitled to go in their pursuit of getting club owners to reveal themselves. The Premier League insist that any person holding more than 10 percent in their clubs must publically reveal their identity - something that may prove interesting if Leeds harbour ambitions to re-enter the top flight. Mawhinney currently is willing to accept that such information is kept confidential between the holding company and the League, but insists that the issue of ownership must be put on the table now:

"It's our Football League and, if we decide we want to know certain information before we allow people play in our league, I think we are probably entitled to do that but I have been taking some serious legal advice on this subject. I am confident I can make a case to my colleagues, then it is up to them. I have been extremely careful in my remarks not to speak about specific clubs. I'm talking about a policy decision, a general principle. Having given this a lot of thought in recent weeks, I am comfortable in my position on this matter."

Exactly why a club's owners feel the need for secrecy over their identity or their motives is not altogether clear. Whilst not every club owner wants to be cast into the limelight, holding a scarf aloft in press photos, or butting in on proceedings down on the training ground, it is healthy for their identity and their motives to be out in the open. When you create a culture of secrecy, or hide behind your true identity, it creates mistrust and sends out the hounds chasing a scent, trying to find the mystery that lurks within. It fuels the rumourmill and it creates misinformation. Hence it's difficult to understand how it can be good for business, for supporter-club relationships and for that club's general standing in the game. There is a little bit of Yeovil Town in the above in recent years, although thankfully nothing on the scale of Leeds or County.

You only have to look at the way the national press are hounding Notts County, and the general cynicism over Ken Bates' role at Leeds United to see the effect that it has upon those clubs. If County had revealed their investors on Day One, then the media circus would have long since left town, but because it creates intrigue and because it creates headlines it stays with them. Notts County's Chief Executive Peter Trembling has complained this week that the "unprecedented backlash they've had from certain sections of the media has been quite scandalous". But haven't they brought that backlash upon themselves?

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