When an investment group or individual agrees to buy a stake in a Premier League club, approval from the club’s board or existing owners may not be the only hurdle. Depending on the size and structure of the investment, the Premier League can also have an approval and regulatory role before the transaction is completed.
The key factors include how much of the club is being purchased, whether the investment gives the buyer control or significant influence, and whether new individuals will become directors of the club.
Does the Premier League Have to Approve New Owners?
Yes, when a transaction results in a new person or group acquiring control of a Premier League club, Premier League approval is required.
Under Premier League rules, the threshold for determining control was reduced from 30% to 25% in 2023. This means an investor acquiring 25% or more of a club can trigger the league’s ownership approval process.
Prospective owners and directors may be required to pass the Premier League’s Owners’ and Directors’ Test (OADT) before assuming their roles.
The test is designed to determine whether an individual or entity is eligible to own or exercise control over a Premier League club.
What Happens if an Investor Buys Less Than 25%?
Buying less than 25% of a Premier League club does not necessarily mean the transaction is completely outside the league’s regulatory framework.
The Premier League can consider more than simply the percentage of shares purchased.
For example, the league may consider whether an investor receives:
- Board representation
- Significant voting rights
- Special governance rights
- The ability to influence major club decisions
- Other rights that could amount to control or significant influence
Directors appointed as part of an investment can also be subject to Premier League requirements.
As a result, the structure of the investment can be just as important as the percentage of shares being purchased.
Does the Club’s Board Have to Approve the Investment?
The club itself also has an important role.
A proposed sale must comply with the club’s corporate structure, articles of association, shareholder agreements and any contractual restrictions governing the transfer of shares.
Depending on those arrangements, approval could be required from the club’s board, existing shareholders or controlling owners.
That process, however, is separate from any approval or regulatory review required by the Premier League.
In other words, an investment being approved internally by the club does not necessarily mean the transaction has automatically been cleared by the Premier League.
What Is the Premier League Owners’ and Directors’ Test?
The Owners’ and Directors’ Test is the Premier League’s process for determining whether prospective club owners and directors meet the league’s eligibility requirements.
The test examines a range of criteria established under Premier League rules.
A potential owner or director can face disqualification based on circumstances covered by the league’s regulations, including certain criminal convictions, sporting bans, insolvency events and other prohibited conditions.
The Premier League has strengthened its ownership rules several times as investment in English football clubs has grown increasingly complex.
Manchester United’s Sir Jim Ratcliffe Deal Is an Example
Sir Jim Ratcliffe’s investment in Manchester United provides a recent example of how the process can work.
Ratcliffe’s INEOS initially agreed to acquire a 25% stake in Manchester United, but agreeing to the transaction with the club’s existing ownership was not the final regulatory step.
The Premier League Board subsequently approved Ratcliffe’s acquisition following completion of the Owners’ and Directors’ Test, with the decision also ratified through the league’s oversight process.
The deal demonstrated that purchasing a significant minority stake in a Premier League club can still require league approval even when the investor is not buying 100% of the team.
Can Someone Buy a Premier League Club Without League Approval?
A buyer cannot simply purchase control of a Premier League club based solely on an agreement with the club’s owners.
For transactions involving control, the prospective owner must satisfy the Premier League’s regulatory requirements before the acquisition can proceed as intended.
The process generally involves two separate considerations: the commercial transaction between the buyer and existing ownership, and the Premier League’s regulatory approval process.
Additional UK corporate, competition or regulatory requirements could also apply depending on the structure and size of the transaction.
Bottom Line
When a group buys a stake in a Premier League club, approval from the club’s board or owners may not be enough.
An acquisition of 25% or more can trigger the Premier League’s control and ownership approval requirements, including the Owners’ and Directors’ Test.
For investments below 25%, the situation can be more nuanced. The Premier League may still need to consider the transaction depending on board appointments, voting rights, governance arrangements and the level of influence the investor receives.
Therefore, when reports emerge that an investment group has “agreed to buy a stake” in a Premier League club, that does not necessarily mean the transaction is complete. Premier League regulatory clearance may still be one of the steps required before the new investors can formally take their place at the club.