Why foreign billionaires can buy leading football clubs without fear of regulatory scrutiny but broadcasters cannot

Now that BSkyB has divested itself of its minority interests in all Premiership clubs save Leeds, it is interesting to recall that of the two main problems arising from BSkyB’s bid for Manchester United that were identified by the Monopolies Commission, only one related to broadcasting. This was the question of whether BSkyB’s ownership of Manchester United would increase the likelihood that it would win the auction for Premier League TV rights. (We now know of course that subject to anything that the EC Commission might do, BSkyB won the next auction anyway without having a material interest in any club.)

Other “public interest” concerns identified by the Commission that counted against the merger have not become moot but remain very pertinent; what is more, if valid, they are equally applicable to other potential purchasers of leading football clubs. These other public interest concerns are whether changes in control may increase inequality between clubs and might lead to the creation of a European Super League – contrary to the wishes of the fans and the governing bodies. In the face of a chorus of disapproval from supporters groups, the Commission found against BSkyB’s bid for Manchester United on both of these counts.

What scope is there for these public interest issues to be examined now by the regulatory authorities? The short answer is precious little. A Bank of England official is apparently constructing a “fit and proper person test” for ownership of football clubs. The difficulty of this test (when it finally emerges) will be applying it to new entrants and not (retrospectively) to incumbents.

More pertinently still, since the entry into force of the Enterprise Act on June 20, it will not be possible for the public interest issues identified in the Manchester United BSkyB merger to be investigated any more by the competition authorities. Only national security, freedom of expression and plurality of the media issues have so far achieved “gateway” status which allows Ministers to refer them to the Competition Commission. Unless new gateways are created by statutory instrument approved by Parliament, the Competition Commission will not have a say in examining the football public interest concerns identified in the BSkyB bid.

As broadcasters are likely to be even further deterred from bidding for clubs by the fact that some competition argument can usually be constructed to bring their proposed acquisitions before the Competition Commission (it is worth remembering in this connection that NTL’s proposed acquisition of a stake in Newcastle United was also referred for investigation), the market for corporate control of leading football clubs is both wide open to, and tilted in favour of, foreign billionaires.

If any further foreign interest in clubs, which is the subject of so much press speculation, should come to fruition, it will be interesting to see whether the Government uses its powers under the Enterprise Act to rush in a new gateway. Or whether it concludes that it is too late or that it doesn’t matter that much anyway.

Bulletins are for general guidance only. Legal advice should be sought before taking action in relation to specific matters. Where reference is made to Court decisions facts referred to are those reported as found by the Court. Please note that past bulletins included in the Archive have not been updated by any subsequent changes in statute or case law.