What has happened and what does it mean?

On Monday, an emergency meeting of all 20 PL clubs resolved to temporarily ban “related party transactions” (i.e. clubs entering into commercial deals with close business affiliates).  18 clubs voted in favour of the resolution.  Manchester City abstained.  Only NUFC voted against.  The ban will be in place for three weeks.If the decision is lawful (which itself is disputed – see below), it means that PL clubs cannot, for the next three weeks, enter into new commercial / sponsorship arrangements with parties closely connected to them.  While the resolution does not specifically name NUFC, it has obviously been prompted by our takeover.  The Saudi investment in NUFC was, and is, intended to generate commercial and sponsorship opportunities for Saudi companies, such as Saudi Aramco, Saudi Telecom, and the national airline, Saudia.The ban is blatantly aimed at preventing NUFC from signing deals with these potential commercial partners in the immediate short term.

Why do the other clubs care?

Quite simply, they feel threatened by NUFC and its wealthy new owners. Without going into extensive detail, UEFA’s Financial Fair Play (FFP) rulesban clubs from spending more than they earn, and stopwealthy owners from simply pumping more money into the clubs they own.  Some clubs have effectively side-stepped (and, many would say, cynically subverted) FFP, by entering into lucrative deals with commercial partners affiliated to their owners.  Although FFP prevents Sheikh Mansour from pumping limitless money directly into Manchester City,

it does not prevent that same money entering the club indirectly, by way of affiliated companies (such as Etihad) acquiring stadium naming rights and shirt sponsorships.  The same applies to Leicester: King Power cannot simply throw money at the club, but they can payfor the stadium to carry their name and therefore generate an “income” entry in Leicester’s accounts.  NUFC could similarly get around FFP (and therefore be able to spend more in the transfer market and on wages) by entering into money-spinning deals with the biggest Saudi companies.  The other clubs are, unsurprisingly, threatened by the financial clout thatwe could now have.

Isn’t FFP a good thing? If so, then isn’t this ban a good thing?

FFP is a good idea in principle, but the other PL clubs are acting out of pure self-interest. As some have already rightly pointed out, nobody was pushing for a ban on “related party transactions” when Mike Ashley using St James’ Park as cheap advertising space for Sports Direct.  It is naked self-interest, on the part of the other clubs, to bang the drum about “related party transactions” now.  This is all about the current “top” clubs trying to prevent us from joining them at the top table.  FFP is a noble cause, and the three-week ban itself is proposed as a prelude to a “working party” being set up to discuss how related party transactions should be addressed going forward.  This is, inherently, reasonable.  The sole point of the ban, however, is to seek to prevent NUFC from already having those deals in place, at the point when those deliberations start in earnest (if, indeed, they ever do – and it must be seriously doubted whether that genuine intention exists).

This is all deeply unjust.  There is absolutely no suggestion, for example, that any existing deals should be unravelled (such as those at Manchester City and Leicester, mentioned above) prior to the working party being set up.  The clubs who have already benefited from these deals are trying to pull up the drawbridge behind them, and the smaller clubs are simply jealous.  The club was right to vote against the resolution.  FFP is a good cause, but now is not the time for Newcastle United to play along to the other clubs’ tune.  If you are looking for a metaphor, you could do worse than the debate about nuclear disarmament.

The UN Security Council repeatedly calls for countries not to develop nuclear weapons.  Yet, the countries on the UN Security Council are there because they have nuclear weapons.  Global nuclear disarmament has never happened (in fact, the opposite has occurred, and nuclear weapons continue to proliferate) because the nuclear powers themselves will not disarm, and sensible debate cannot start from a position of hypocrisy.  Similarly, any reasonable debate about related party transactions which is initiated by those who have benefited – and continue to benefit – from them, is doomed to fail. Bluntly, the other PL clubs can quite frankly fuck off.  And that’s coming from someone who fundamentally supports FFP.

Is this ban legal?  Are we going to be stopped from doing lucrative Saudi deals?

The PL clubs can pass whatever resolutions they like.  As such, what happened on Monday was not unlawful, in and of itself.  Under the PL’s rules, the clubs operate as a decision-making body, and they reached a majority decision in accordance with those rules.  Of course they did.  They hate us (as noted above).  However, the much more importantquestion is whether the PL would actually take steps against NUFC if we were to flout the ban, and this depends on both legal and commercial considerations.  Note, incidentally, that – unlike in the case of the takeover itself (which could not pass without PL approval) – the PL does not have the ability to directly intervene in commercial arrangements between clubs and their sponsors / commercial partners.  The PL would never be able to block NUFC from signing a deals with, e.g. Saudi Aramco – they would merely need to consider whether they wanted to take enforcement action afterwards (e.g. imposing a fine, deducting points, kicking the club out of the league) on the basis of a deal already signed.  This is a key point as it means the PL can only ever play catch-up in relation to any transactions that have already taken place: they would therefore not be in the same position here, as they were in the case of the takeover.  They’d need to do more than just sit on their hands and delay things.

The legal question is whether the ban itself (as opposed to merely the resolution) is lawful.  If not, then the PL will not impose penalties on NUFC (unless you believe the PL has zero regard for the law – which is an outlandish view that is adequately catered for elsewhere online).  To me, it seems far from clear that it is lawful for PL clubs to block related party transactions.  Both NUFC and Manchester City claim to have obtained authoritative legal opinions to the effect that a ban would be unlawful.  And, indeed, the default is that companies should be free to enter into commercial arrangements as they wish.  UK companies legislation and accounting standards already make extensive provision in relation to how related party transactions are to be governed and accounted for, and it is common for companies (whether they are big, small, profit-seeking or charitable)to enter into such transactions, not least because it is normal to want to do business with partners whom you know.

For the PL clubs to attempt a wholesale blocking of any such transactions seems to be an attempt to go beyond their powers under the PL’s rules, as well as potentially violating general principles of commercial law.  PL clubs are empowered to make collective decisions in relation to the operation of the football competition itself.  This makes sense.  However, for some PL clubs to attempt to interfere in the commercial (non-football) affairs of other PL clubs, is not the same thing.  Furthermore, the notion that existing related party transactions should be allowed to remain in place, while future transactions cannot happen, is highly likely to be challenged.  The legality of any ban is therefore questionable, which means the PL might think twice before taking enforcement action against NUFC for flouting it.

The commercial question is also interesting: would the PL actually want to impose penalties on NUFC, even if the ban was lawful?  Personally, I have my doubts as to whether they would.  There is a critical distinction to be made between the other clubs (who hate us, and – out of self-interest – are clearly looking to frustrate our attempts to join the elite) and the PL itself.  The PL approved this takeover.  Despite all the hot air about the PL having acted anti-competitively, and the PL being controlled by the big clubs, and the PL being unfair to us, the reality is that they waved our takeover through as soon as the piracy issue (which was always a genuine issue) was resolved. Far from having been successfully lobbied by the clubs, they have in fact royally pissed the other 19 clubs off.  I

n my view, which I have repeatedly published for True Faith, the PL wanted this takeover to go ahead because the Saudi money is as good as anyone else’s – they have never been too precious or sniffy about where money comes into the league from: whether it is China, Qatar, Russia or – now – Saudi Arabia.  If that is correct, then they are unlikely to be too harsh when it comes to disciplining NUFC for entering into any “related party transactions” with Saudi Aramco, or anyone else – having known that those transactions were an almost inevitable consequence of having approved the takeover, which they actually did in double-quick time when push came to shove.

What happens next?

The resolution only mentioned the ban being in place for three weeks.  This may well allow a window of time for the clubs, as well as the PL, to obtain the necessary legal advice in relation to whether a ban would actually be lawful and enforceable.  If the (other) clubs obtain advice which suggests that they can extend the ban, then they might look to do so.  However, it does not (as a matter of practically) stop NUFC from signing deals with Saudi partners, nor does it necessarily follow, from the existence of a ban, that the PL would take aggressive steps against NUFC.  We’re one of the big boys now, after all.  The PL might be fine with us playing at the top table, even if the other so-called “big clubs” don’t like it.

On FFP itself, as mentioned, any working party set up by clubs who benefit from related party transactions is doomed from the start.  The way in which FFP operates, and the way in which commercial deals are used as a means of avoiding the intentions of the FFP regime, are matters which should be looked at by an independent regulatory body.  Also, as FFP is something which was introduced by UEFA, it should be really UEFA who takes the lead in initiating any such review – and certainly not just a few directors of PL clubs who are annoyed by the fact that NUFC now, finally, has a chance of competing for honours and prestige.

We’re back, and there are plenty around who don’t like it one bit.

Howay the Lads.

YOUSEF HATEM – @yousef_1892