UEFA’s Relaxation of the Multi-Club Ownership Rules

One of the most well-known examples is the City Football Group (CFG). CFG is owned by Abu Dhabi United Group (ADUG) (77%), the China Media Capital (CMC) Consortium (13%), and Silver Lake (10%). CFG is a company that invests in football-related businesses in major cities around the world, including football clubs, academies, technical support and marketing companies.[1] CFG has ownership in 10 football clubs around the globe, with Manchester City as their crown jewel. By having investments in multiple football clubs, they mitigate the risk in their investments, extend their geographic footprint and create a legal ecosystem in which their clubs can cooperate.

However, this model also raises several concerns, particularly regarding the integrity of competitions. Conflicts of interest can arise, especially when clubs owned by the same entity compete in the same tournament.

Regulatory bodies in football, including UEFA, FIFA, and national federations, have implemented rules to strike a balance between mitigating integrity risks and fostering sustainable development within the sport. In this regard, the UEFA rules regarding multi-club ownership will be scrutinized, with particular attention to the new changes that came into effect on 1 May 2024.

Legal Framework

Before diving into the changes and the new regulations that entered into force on 1 May 2024, it is useful to take a look at the pre-existing regulations and what rules were already included.

Multi-club ownership was already being regulated by the UEFA Club Licensing and Financial Sustainability Regulations, widely recognized as the successor of the UEFA Financial Fair Play Regulation. The main aspect covered by Financial Sustainability, relating to club ownership, is the disclosure of ownership details as stated in Article 78.[2]

The main reason for this is to create a great overview of the club ownership information which can be tested against the UEFA competitions rules. UEFA’s competition regulations stated in Article 5 that teams under the control of an investor or group that controls another qualified team could not compete in the same European competition and they were replaced by the next team from their domestic competition. The body in charge of this topic is the UEFA’s Club Financial Control Body (CFCB).

Further rules were laid down in Article 5 of the regulations of each UEFA club competition, like the Regulations of the UEFA Champions League. Before the changes were implemented this year, the main idea was that, as Article 5 stated, no club being controlled by another club may participate in a UEFA club competition. This entails that if two clubs are controlled by the same owner, one of them could not play in any UEFA club competition even though it was not the same competition.

However, the real issue of course is what control means. In Article 5 they seem to take a broad definition as it is prohibited for a club to:

• “hold a majority of the shareholders’ voting rights;
• have the right to appoint or remove a majority of the members of the administrative, management or supervisory body of the club;
• • be a shareholder and alone controlling a majority of the shareholders’ voting rights pursuant to an agreement entered into with other shareholders of the club; or
  • be able to exercise by any means a decisive influence in the decision-making of the club”.[3]

If two clubs, involved in multi-club ownership, fail to meet these requirements, only one of them is allowed to enter any UEFA club competition, based on the following criteria (applicable in descending order):

• “the club which qualifies on sporting merit for the most prestigious UEFA club competition (i.e., in descending order: UEFA Champions League, UEFA Europa League or UEFA Europa Conference League);
• the club which was ranked highest in the domestic championship giving access to the relevant UEFA club competition;
• the club whose association is ranked highest in the access list (see Annex A).”[4]

Due to the organizational structure of the international football pyramid, the regulations of UEFA have a trickle-down effect on the rules and regulations of national associations. As a result of the UEFA rules on multi-club ownership, many national associations have prohibited this practice, with the aim of protecting sporting integrity. This has caused investors interested in buying football clubs to diversify their investments into clubs from different countries, creating international football organizations such as the CFG.

The growing prevalence of multi-club ownership is compelling UEFA to introduce additional safeguards aimed at fostering the advancement of football. This phenomenon calls for supplementary measures to encourage investments while maintaining the principles of fair play. Consequently, this has resulted in the implementation of new regulations designed to address the needs and interests of all stakeholders involved.

Developments

This leads us to the relevant changes to UEFA’s competition regulations, which can be found in Articles 5.04 and 5.05 of the regulations for the concerned UEFA competition and come into force on 1 May 2024.[5]

Article 5.04 stipulates that a club, upon being excluded from one competition, may nevertheless be permitted entry into another UEFA club competition, subject to the hierarchical order of these competitions—namely, the UEFA Europa League or the UEFA Conference League—as applicable to the entitlements of the relevant national association.[6]

Article 5.05 further clarifies that the multi-club ownership rules and requirements do not apply if the clubs do not participate in the same competition.[7]

The UEFA’s primary objective in overseeing European football is to promote its development while ensuring fair play and competitiveness across all levels. The proposed change to the Champions League format, which would expand the number of teams from 32 to 36, aims to include more clubs and boost the tournament’s inclusivity and international appeal. Nonetheless, this expansion poses challenges, such as maintaining match integrity and managing club competitions effectively. To address these issues, the new format eliminates the possibility for teams to transfer from the Champions League to the Europa League after the group stage. This adjustment helps reduce the risk of clubs with the same ownership competing against each other in UEFA competitions, despite the increased number of participants.

The main reason behind the changes comes down to the need for a more lenient approach towards multi-club ownership. In the regulatory discourse, it is imperative to consider the balance between maintaining competitive integrity and fostering an environment where strategic club alliances can thrive. The new rules will make it possible to further support the development of European club football while still protecting the integrity of the game.

Case studies

In practice, this will clear the pathway for multiple clubs to compete on a European level.  Beginning with the 2024-25 season, clubs that share ownership and were previously prohibited from participating in the same UEFA club competition will now be permitted to compete in distinct UEFA competitions. Important to note is that once teams are qualified for the main draw it will not be possible anymore to get access to another European tournament by finishing third in the group stage. Here we will dive into some examples that could be influenced by these new rules.

First of all, there are Manchester United and OGC Nice, both controlled by Sir James Ratcliffe and his company INEOS. While Nice sits currently 5th in the French League 1 giving the right to a Europa League ticket, Manchester United is still in the race for the 6th place, which provides qualification for the UEFA Conference League. With the new rules in place, both clubs will be allowed to participate in their European competition.

However, a different scenario will be applicable between Manchester City and Girona FC. If Manchester City and Girona FC, both owned by the CFG, qualify for the UEFA Champions League, the rules set by UEFA concerning clubs under common ownership would apply. According to UEFA’s regulations, clubs that share ownership are not allowed to participate in the same European club competition. This is to ensure the integrity of the competition, avoiding any potential conflicts of interest.

In such a scenario, UEFA’s Club Financial Control Body would review the situation. The great question will be if it can be argued that CFG will have “control” over both clubs, based on the requirements of Article 5 of the Regulations of the UEFA Champions League. The phrasing and interpretation of this regulation have undergone scrutiny, particularly illustrated by the case involving RB Leipzig and FC Red Bull Salzburg, both of which are affiliated with the Red Bull energy drink conglomerate. This situation arose when both teams qualified for the Champions League in 2017. Initially, UEFA decided that only Red Bull Salzburg was eligible to participate, subsequently reversing this determination. Reports indicate that both clubs presented evidence to UEFA demonstrating that they had implemented modifications in their administrative structures, thereby mitigating any purported “control or influence” over one another. Following these adjustments, Leipzig and Salzburg encountered each other during the group stages of the 2018-19 Europa League.

However, the detail of the ownership is a crucial factor, with CFG retaining a non-majority (sub-50%) stake in Girona, which is not a point of contention for UEFA. The governing body’s rules state that the same owner cannot have “control or influence” over more than one club, which has thus far been interpreted as a stake equal to or above 50%. Therefore, it is still likely that both teams will be allowed to play in the Champions League.

If it is argued that CFG has control over Girona, the outcome will be different. Typically, the club with the higher national ranking would be allowed to compete in the Champions League, while the other might be moved to a different competition, such as the UEFA Europa League.

In practice, UEFA will open proceedings against them through their Club Financial Control Body (CFCB) and that will give them another chance to prove they do comply with the rules. Measures can be adopted to ensure that rules are obliged including a significant reduction of the investors’ shareholding in one of the clubs, or transfer of the effective control and decision-making of one of the clubs to an independent party, restrictions in the ability to provide financing to more than one club, no representation on the board of directors or capacity to appoint new directors of more than one club and no ability to participate in key decisions at both clubs.

Conclusion

In recent years, the landscape of mergers and acquisitions (M&A) within the realm of European football has become increasingly prominent. This trend underscores the evolving dynamics of club ownership and the strategic consolidation of resources that could significantly impact the development of the sport. Given the surge in such transactions, there arises a necessity to reassess the regulatory framework governing multi-club ownership. The existing rules, primarily designed to maintain competition integrity and prevent conflicts of interest, may require adjustments to adapt to the evolving nature of club management and ownership structures.

Therefore, as of 1 May 2024, UEFA has implemented a modernization of the multi-club ownership clauses in their regulations for UEFA club competitions. The revised regulations now permit clubs with common ownership to participate simultaneously in European club competitions, provided they are not competing in the same tournament. This modification in the rules addresses previous concerns about potential conflicts of interest, allowing for a broader participation across different UEFA competitions while still maintaining competitive integrity within each individual event.

However, this flexible regulatory approach towards multi-club ownership must be carefully weighed against the overarching principles of fairness and integrity that govern European football. It is a delicate balance that UEFA must navigate as it seeks to expand and enhance the competitive landscape of European club football under the new Champions League format. This analysis suggests that the implemented reevaluation of multi-club ownership rules will align with the long-term objectives of fostering a more dynamic and financially sustainable football ecosystem in Europe.

If you have any inquiries arising from this blog, please don’t hesitate to reach out to the sports law team at Vissers Legal.

Kjell Klomp
Legal advisor

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[1]     City Football Group, ‘Our Story’ (City football, 2019) <https://www.cityfootballgroup.com/our-story/> accessed 7 May 2024.

[2]    UEFA Club Licensing and Financial Sustainability Regulations 2023, Article 78.

[3]    E.g. Regulations of the UEFA Champions League 2023-2024, Article 5.01(a).

[4]    E.g. Regulations of the UEFA Champions League 2023-2024, Article 5.01(c).

[5]    E.g. Regulations of the UEFA Champions League 2024-2025, Article 5.04 and Article 5.05.

[6]    Regulations of the UEFA Champions League 2024-2025, Article 5.04.

[7]    Regulations of the UEFA Champions League 2024-2025, Article 5.05.