At a glance
Following the first article in our series discussing multi-club ownership ("MCO") in the world of football, in this second instalment, we will provide an update on Manchester City Football Club ("Manchester City") and Spanish club Girona Futbol Club, S.A.D ("Girona") and their ongoing case. We will also look at the latest developments with Manchester United Football Club ("Manchester United") and French club, OGC Nice ("Nice"), which are subject to the same ownership since INEOS' acquisition of 27.7% of Manchester United in February this year, and have both qualified for the same UEFA competition.
We will review which divestment option has been reportedly chosen by the owners of the Manchester clubs, as they seek to demonstrate that they have not breached Article 5 of UEFA's rules and that no such "control or influence" exists in more than one club qualifying in the same UEFA competition.
This article will also assess what options there are for the clubs using UEFA's "transitional rules", which are to last only for the 2024/25 season. The transitional rules are not long-term solutions for MCO clubs, however, and we understand that any changes to the constitution of the clubs will reportedly not be accepted by UEFA beyond next season. By offering temporary solutions, we anticipate that, behind-the-scenes, UEFA are preparing to tighten the MCO rules for the 2025/26 season, which in their current format, can be negotiated by MCO owners.
Update – Manchester City and Girona
In our first MCO article, we reported on the various outlets claiming that UEFA had presented The City Football Group ("CFG") with two divestment options, following the qualification of its clubs, Manchester City and Girona, into the 2024/25 UEFA Champions League and noted that CFG had until 3 June 2024 to respond to UEFA.
We suggested that CFG could be minded to select the first option, meaning CFG would transfer some of its shares in Girona to an independent blind trust. CFG can select the blind trust, which would be managed by a UEFA-appointed panel. Whilst we presented several reasons why CFG might select option one, the overriding reason is that it would allow CFG to retain legal and beneficial ownership in Girona, as well as receive the lucrative spoils of UEFA Champions League revenue.
It has now been reported across certain parts of the media that CFG will select the above option, however there is not yet official confirmation from either CFG or UEFA. We note that there is pressure for both parties to find a resolution before the 2024/25 UEFA Champions League group stage draw, which is expected to take place in August 2024.
If the reports of CFG selecting the blind trust option are true, it is likely that we will hear official confirmation from either UEFA or CFG once the legalities of the blind trust are formalised. We do not expect confirmation to be imminent with UEFA Euro 2024 currently taking place and due to finish on 14 July.
Furthermore, The Times have reported this week that three individuals of Girona with links to Manchester City have resigned from their positions as directors. This is an interesting development as it applies Article 5.01(c)(iv) of the UEFA rules, which prohibit an individual, or legal entity holding "control or influence" in more than one club in a UEFA competition, defined in this context "as being able to exercise by any means a decisive influence in the decision-making of the club." The influence of an officer, both in terms of management and overall decision-making, makes it extremely likely that this position will be captured by the definition, hence why CFG have been required to make changes to Girona's senior leadership, in addition to its shareholding in the Spanish club. We do, however, question the last-minute timing of this move, given that the UEFA rules have always made clear that an individual or legal entity cannot hold a "decisive influence" in more than one MCO club competing in an UEFA competition, with both Manchester City and Girona qualifying for the UEFA Champions League back in May. In any case, we expect this rule to remain in any revised MCO rules, as holding a senior position in two clubs will always represent a degree of "control or influence" in more than one club. We also anticipate that INEOS will be forced to make such changes, should any of its senior leadership be in a similar situation to the individuals at Manchester City and Girona.
Update – Restrictions on Player Transfers between MCO Clubs
In our first MCO article, we queried whether UEFA's rules will be updated to reflect player transfer dealings between MCO clubs, which might be understood to be a form of "co-operation and influence" between the clubs.
It has now been reported by The Athletic that UEFA will restrict player trading between MCO clubs: "Clubs subject to multi-club ownership tests will not be able to transfer any new players between each other during the season they are in the same competition or during the first transfer window immediately afterwards."1
It would appear that Manchester City may have moved early to avoid facing any issues with their acquisition of Sávio Moreira de Oliveira ("Sávio"). It was widely reported in February 2024 that Manchester City had agreed a deal to acquire Sávio from sister club, ES Troyes AC ("Troyes"). It is now speculated that the timing of this deal was to avoid the deal potentially being impacted by UEFA's MCO guidance (albeit Troyes are far from competing in the UEFA Champions League after being relegated from Ligue 2).
It has also been reported that the potential transfer of Nice defender, Jean-Clair Todibo to Manchester United, will be blocked under UEFA's new MCO rules. Manchester United's new majority owner Sir Jim Ratcliffe, who is discussed in further detail below, has criticised UEFA's restrictions on player transfers (and seemingly in the context of this deal) between MCO clubs by stating "they've [UEFA] said we can sell him to another Premiership [Premier League] club, but we can't sell to Manchester United...but that's not fair on the player and I don't see what that achieves."2
One of the known benefits of MCO is that it can offer a player a more direct route to a prestigious club, or league, so to a certain degree, we can sympathise with Jean-Clair Todibo if the transfer is blocked by UEFA. On the other hand, assuming Nice and Manchester United are likely to share scouting reports and a talent network, would the potential transfer have even arisen in the first place if the clubs were not connected?
Nonetheless, what Sir Jim does not acknowledge is that UEFA have implemented the transfer restrictions in accordance with the underlying objective of the MCO rules – to "ensure the integrity" of its UEFA competitions. Imposing stringent rules on player transfers between MCO clubs, mitigates against issues arising in UEFA's competitions, such as unfair competition and the inflation of transfer deals. Indeed, if MCO clubs were able to transfer and/or loan the best performing, or upcoming players between the sister clubs, it would undermine the fairness and competitiveness of the UEFA competitions.
In any case, Sir Jim's public criticisms of UEFA's rules display the growing tensions between clubs and governing bodies.
Manchester United and Nice
In February 2024, INEOS, a British multinational conglomerate led by Sir Jim Ratcliffe, purchased a 27.7% stake in Manchester United. INEOS is also the owner of Nice, which, along with Manchester United, has qualified for the 2024/25 UEFA Europa League.
INEOS is facing the same dilemma as CFG, where two of its clubs have qualified for the same UEFA competition. There have been conflicting reports on this story, with some claiming that INEOS will seek to sell its entire shareholding in Nice. Other reports suggest that INEOS will seek to reduce its shareholding in Nice to less than the 30% threshold, as required by the UEFA rules. This would involve INEOS transferring some of its holding in Nice to a blind trust – the same option as reportedly being chosen by CFG. Under the UEFA rules, if no resolution is found, Manchester United would be demoted to the UEFA Europa Conference League, as it finished in a lower domestic league position compared to Nice, in the 2023/24 season.
INEOS have been more outspoken on the MCO issue, in contrast to UEFA, which have largely remained silent. In a statement, INEOS said: "We are aware of the position of both clubs and are in direct dialogue with UEFA. We are confident we have a route forward for next season in Europe."
This is interesting for two reasons.
Firstly, the existence of a "direct dialogue" highlights UEFA's track record of taking a pragmatic approach with MCO owners, which carries the potential to allow their clubs to compete in the same UEFA competition. RB Leipzig and RB Salzburg were a previous example of this dialogue.
As raised in our first article, we questioned whether UEFA's willingness to negotiate its rules, undermines the purpose of having MCO rules in the first place. In any case, UEFA is under increasing pressure to update its MCO rules. However, if such rules are updated to permit MCO clubs to play in the same UEFA competition, how can UEFA uphold the purpose of the MCO rules to "ensure integrity"? Will UEFA introduce a new purpose to the new rules? This will be a key consideration for UEFA.
Secondly, INEOS' confidence that its clubs will play in Europe next season, conveys that despite the MCO restrictions under UEFA Rules, INEOS, and perhaps clubs in general, are leading the dialogue with UEFA. We already know that the burden is placed upon clubs to prove that no such "control or influence" exists. This therefore insinuates that INEOS are confident that they can navigate around UEFA's rules and have both clubs in the 2024/25 UEFA Europa League. Does this undermine UEFA's position as the European governing body, if the clubs, for which it is responsible, are publicly suggesting that the rules can be sidestepped?
Moreover, we consider UEFA's silence on the cases of the Manchester clubs and its offering of "transitional rules" to likely suggest that UEFA are preparing to re-write its MCO rules. In doing so, it is hoped that the new rules will provide greater clarity from the outset as to whether MCO clubs can compete in the same UEFA competition.
Our thoughts are also underpinned by a statement from UEFA president, Aleksander Ceferin, who has previously admitted that the growing concept of MCO "needed greater thought." But does "greater thought" include introducing more stringent measures for the 2025/25 season? Only time with tell.
Conclusion
With no clear indication from UEFA as to how it will manage the rise of MCO clubs qualifying in its UEFA competitions in the long-term, we continue to wait for UEFA to update its rules.
However, UEFA's offering of temporary solutions for the 2024/25 season would allow MCO clubs to compete in the same UEFA competition and this does suggest that the European governing body is preparing for, what is hoped at least, will be more transparent regulations.
Whilst the wait continues, MCO owners INEOS and CFG, among other owners in the future, face the same problem – they want their clubs playing in the highest European competition, which their clubs have qualified for.
Whichever "transitional rule" is chosen by CFG and INEOS, given their labelling as "transitional", UEFA have recognised that the measures are not sustainable. It will be intriguing to see how UEFA seeks to update its rules for the 2025/26 season, or whether the "transitional rules" will be extended. Given the continued rise of MCO, we do not consider any extension to be suitable for too much longer.
This article was authored by Christopher Allen, Partner, Andy Hughes, Senior Associate, James Bateman, Solicitor, Jack Rudgeley, Trainee Solicitor
Footnotes
1. https://www.nytimes.com/athletic/5577722/2024/06/20/manchester-united-transfer-news-jim-ratcliffe/
2. https://www.nytimes.com/athletic/5577722/2024/06/20/manchester-united-transfer-news-jim-ratcliffe/
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