The Football Governance Bill sets out to establish a new Independent Football Regulator (IFR) for English men’s elite football. As these plans for a new regulator continue to unfold, research conducted by the Department of Criminology at The University of Manchester has found that the ownership structures of many English Premier League football clubs share characteristics with corporate structures which can be misused for the management of illicit finances, including money laundering. In this article, Dr Peter Duncan and Professor Nicholas Lord contend that part of the new regulator’s role should involve closer scrutiny of club ownership structures, especially where risky conditions are identified.

• Researchers from The University of Manchester analysed the ownership structures of Premier League football clubs.
• Research findings suggest that current regulation is insufficient to protect clubs from financial misuse.
• A new regulator should check and scrutinise the anomalous complexity of club ownership structures, including the combined use of various legal entities, incorporation of holding companies in known ‘secrecy’ jurisdictions, and the obscuring of beneficial ownership.

Illicit finance in football

The English Premier League (EPL) is still one of the wealthiest sports leagues in the world, and increasing investment in clubs from shareholders based overseas has only increased the financial flows involved.

Social scientific and policy concerns regarding the risks of football clubs being (mis)used to enable varied financial crimes, including money laundering, are not new. Both the Financial Action Task Force, the global anti money laundering body, as well as the European Commission, have highlighted the use of football clubs in the organisation of criminal behaviours.

Several prominent cases have contextualised these concerns, drawing attention to – for example – club owners being implicated in frauds and corruption, criminal finances flowing through the obscure ownership structures of clubs, and the illicit obscuring of funding structures to circumvent financial regulations.

New open access research conducted at The University of Manchester sought to identify whether ownership structures of EPL clubs possess characteristics which could enable financial crimes and illicit financial flows.

Premier League club ownership structures

By combining data from a variety of sources – including the ORBIS database, 2023/24 EPL handbook, and Tax Justice Network website – we have discovered a range of ownership structures, from relatively simple and straightforward to seemingly unnecessarily complex and convoluted. Some key findings are that:

• Many club ownership structures are made up of large networks of holding companies (more than 10 corporate entities between club and owners).
• Over half of the clubs had at least one holding company incorporated offshore, usually in jurisdictions which score relatively highly on the Tax Justice Network’s ‘secrecy score’ scale.
• Seven clubs make use of multiple overseas jurisdictions in the overall chain.
• Ownership chains are made up of varied organisational forms with varying levels of opacity.
• 12 of the 20 clubs had at least 10% of their holdings which – due to secrecy provisions – could not be formally traced back to their beneficial owners. For many of these, the entire clubs’ shareholdings could not be formally verified.

Whilst there may be legitimate and commercially plausible justifications for organising club ownership in this way, these structures make many clubs ideal vehicles for motivated actors to obscure the source of funds (which could be from illicit activities), the nature of particular transactions (which could involve violations), and/or the identities of investors or owners of clubs.

Our evidence indicates that regulations need to better protect clubs from this kind of misuse because the exposure of such illicit financial flows could seriously jeopardise the future of clubs. Ownership structures which combine the incorporation of opaque holding companies across multiple secrecy jurisdictions should be scrutinised most closely by regulators and other stakeholders.

How to improve regulation of club ownership

In 2023 it was announced that the UK Government would pass legislation to form an Independent Football Regulator to protect the interests of football in the UK. Reducing the flow of illicit or criminal finances into clubs and the football system aligns with these goals. Understanding the vulnerabilities that exist for misusing football clubs and related transactions to enable flows of criminal and illicit finances can directly inform regulatory decisions about the suitability of new and current club owners, their sources of wealth, and commercial transactions that clubs enter into.

The EPL’s current ‘Owners’ and Directors’ Test’ intends to prevent EPL clubs from falling into the ‘wrong’ hands, but its success in achieving this goal has been repeatedly challenged. At present, individuals are required to take the test if they will either act as a Director of an EPL club or acquire more than a 25% stake of the voting shares of a club. In other words, it is possible to own up to a quarter of an EPL club without needing to pass any checks on source of funds or other propriety.

Our research supports the suggestion (made in a Department for Culture, Media and Sport statement) that a revised Owners’ and Directors’ Test should require that individuals taking the test undergo detailed due diligence relating to identity and source of funds checks, including: ‘a fitness and propriety test (owners and directors), enhanced due diligence of source of wealth (owners), and a requirement for robust financial plans (owners)’. These additional layers of scrutiny should be embedded into legislation as they would likely help to prevent problematic club ownership, but there is room for further improvement.

Specifically, we recommend that it would be wise for football regulators to review proposed ownership structures – including overall complexity, as well as use of secrecy jurisdictions. The regulators should seek detailed justification where complex structures are proposed. Working in partnership with HMRC to consider the tax implications of various structures would also be recommended.

Finally, government should require the new regulator to uphold the requirement that clubs publish the identities of beneficial owners which should be supported with official and publicly verifiable information. Enhanced regulation and transparency embedded into legislation will ultimately protect the future of our national sport.