A decisive vote on Monday evening saw the vast majority of Premier League clubs vote to block top-flight teams from signing sponsorship deals with their owners’ businesses and brands.
It’s a move taken in deliberate opposition to Newcastle United, the newly-rich outfit who were reportedly planning to unveil a new commercial partnership with their Saudi overlords.
The details of the vote have been made public, with 18 of the 20 clubs voting to block owners from sponsoring their own side, Manchester City – sponsored by friend of a friend Etihad – abstaining and Newcastle, surprise surprise, voting to allow such commercial deals to be struck.
For now, the vote has resulted in a temporary blocking order, rather than a complete ban. That block will last for one month, with club owners given more time to debate the issue and see if a more permanent solution needs to be implemented.
For Newcastle, it means that brands that are partnered with the Public Investment Fund (PIF), which now owns 80% of the club, will not be allowed to sponsor the club unless other owners ratify it. Such companies include Facebook, Boeing, Uber and Live Nation, and they could all have potentially had their logo on the front of the Magpies’ next new kit.
One of the issues at play is that such sponsorship deals are seen as a way of circumnavigating Financial Fair Play rules. When a club accrues huge losses through transfer fees and player wages, they can ask their commercial partners to sign new deals on inflated terms – thus passing FFP requirements. It’s a move that many suspect Manchester City made at the time they were being investigated for potential breaches.
The Newcastle takeover has angered many Premier League club owners, who believe they are no longer operating on a level playing field. The PIF, which is considered separate to the Saudi state and aristocracy, still has access to a rumoured £300 billion fortune – ten times that of the next richest, Manchester City’s Sheikh Mansour.
The Premier League has said that they have received ‘legally binding assurances’ that the Saudi state will not have any role to play in running the club, although of course the Crown Price of Saudi Arabia – Mohammed bin Salman – is the chairman of PIF. Go figure.
Cooking the Books
The ‘manipulation’ of sponsorship income was an accusation that led Manchester City into hot water.
As you may know, clubs under UEFA’s remit are only allowed to make losses of up to £105 million over a three-year rolling timeframe.
When you’ve splashed out millions on new players and wages, it can be hard to make the accounts add up – and so clubs that are directly linked to their owners’ companies may take advantage of reporting excessive sponsorship deals to counter FFP.
Manchester City’s Sheikh Mansour is a member of the royal family in Abu Dhabi. Etihad is the official airline of Abu Dhabi. Etihad sponsor Manchester City’s shirt, stadium and training ground.
In the end, City were somehow able to argue their way out of the situation, and the original two-year ban they were hit with from continental competition was subsequently overturned by the Court of Arbitration for Sport.
It should be said that the Premier League’s investigation into possible breaches is still ongoing, and the results of last night’s vote confirm that top-flight clubs do not want Newcastle taking advantage of what might be called the ‘Etihad loophole.’