Blog #5
Building Out The Footprint
Introduction
As football continues to evolve, trends tend to become more noticeable. One of these trends is the multi-club model. Todd Boehly, Chelsea FC co-owner, stated in September 2022 that he was interested in adopting the multi-club model. Nearly a year later, BlueCo, the investment vehicle for the takeover of Chelsea, acquired French side RC Strasbourg [1].
So, what are multi-club models, why are they used, and what are some legal and regulatory implications of these models?
The Multi-Club Model
A multi-club model is a network of football clubs owned and controlled by one entity. As of this year, UEFA has stated that more than 180 clubs were part of a multi-club model [2]. The most notable multi-club structure is the City Football Group, which includes Manchester City, Girona FC, Bahia and ten further clubs spread across the globe [3].
There are several advantages to a club adopting a multi-club model. One is that you can more greatly control the development of a player sent out on loan. Clubs within the same network will be sharing data, amongst other things. Players thus will be developed in line with the idea for the player of the lead club in the multi-club model. Furthermore, there will be greater transparency regarding player development as the two clubs are interlinked.
In addition, multi-club models allow clubs to sign talented prospects from outside Europe who are not yet ready for first-team football and send them on loan to develop for the lead club in the multi-club model. Given the effects of Brexit, young players, especially from South America, sometimes struggle to meet the requirements for a work permit in this country. As a result, acquiring a club where the immigration policies are less stringent allows players to play to obtain the work permit points they would need. I will discuss the points system for work permits later in the article. Most recently, Andrey Santos, purchased by Chelsea FC in the January transfer window, was denied a work permit as he had yet to play for the Brazilian national team and, up to that point, only played in the second division of Brazil. These factors meant he did not obtain the 15 points needed to be endorsed by the FA [4]. Santos ultimately returned to his former club on loan, now in the first division of Brazil. He also made an appearance for Brazil in March 2023. Santos was later granted a work permit and joined the Chelsea squad this summer. He is now on loan to Nottingham Forest, a loan made possible due to the work permit.
Owners of clubs may also want to position themselves in different markets, making access to emerging talent easier. Clubs involved in a multi-club model are usually more resourceful. As a result, they can lure local talents with lucrative contracts and highlight the potential for a pathway to the lead club in the multi-club model. The City Football Group have a club based in every continent, bar Africa, giving them an advantage in unearthing hidden gems as they can more regularly and easily monitor players. In addition, it may also grow the brand of the lead club in the new market, which can have different benefits, including financial ones.
There are also disadvantages to running a multi-club model. Clubs could become over-reliant on their network and start to hoard talent. Players are to be attracted to the pathway of playing for the lead club but may never get there, wasting crucial developmental years of their careers. The City Football Group have been labelled as talent wasters when they have signed prospects, with barely, if any, players breaking into the Manchester City squad. Moreover, these players may become unsettled as they move between partner clubs.
There can also be drawbacks. Fans of acquired clubs may view themselves as a feeder club with its only purpose to accommodate the lead club. They say never fall in love with a loan player, but as a fan, when you see a player performing regularly for your club, fans will inevitably become attached to the player. If this repeatedly happens, fans will become uneasy and may start to riot against the hierarchy. They will feel like there is no stability and regularity at the club.
A recent example of backlash against becoming part of a multi-club model is the failed acquisition of NAC Bread by City Football Group [5]. City Football Group had agreed to a €7m deal for the club, but the fans objected via chants and banners. Due to pressure from the Breda fans the deal fell through.
Immigration Law in Football
Foreign national footballers are required to obtain an international sportsperson visa [6]. This visa gives the holder the right to work in the United Kingdom for up to three years. The player can then extend it after three years.
Obtaining an ISV starts with being endorsed by the Football Association (FA). Before June 14 of this year, a player had to accumulate 15 points from six different tables using a reference period of 12 months before the date of the application [7]. As of June 14, if a player does not meet the 15 points necessary, like Andrey Santos, an FA exceptions panel will endorse a player if they are a young player of significant potential and quality [8]. Each premier league club can have a maximum of four players who do not meet the points threshold endorsed for the international sportsperson visa.
Once endorsed, the club can assign a certificate of sponsorship to the player who can make their application to the Home Office for the international sportsperson visa [9]. From there, the applicant must attain at least 70 points under the UK’s point-based immigration system. You can first score 50 points by getting the certificate of sponsorship mentioned above. You can obtain a further 10 points by meeting the English language requirements. Sportspersons must pass an accredited English test at level A1 [10]. Meeting maintenance requirements achieves ten more points. You must show that you can support yourself financially in the UK by proving that you have at least £1270 in your bank account for at least 28 days within 31 days of applying for your visa.
Regulatory Landscape
Regarding English football, the Owners’ and Directors’ Test prohibits a person from exercising control over more than one English league club [11]. Similarly, to ensure the integrity of UEFA club competitions, UEFA Article 5 prevents an individual or legal entity from simultaneously having a decisive influence on more than one club participating in a UEFA club competition [12].
The keyword is control. UEFA investigated control regarding the ownership of Red Bull Leipzig and Red Bull Salzburg in 2017. Both clubs had qualified for the Champions League, and at face value, this seemingly contravened UEFA Rules. UEFA considered several factors, but not limited to, to establish whether the two clubs were under common control [13]:
The input of the same individuals into the management of the two clubs;
Loan agreements between FCS and Red Bull;
A cooperation agreement between the two clubs; and
Sponsorship agreements between the two clubs and Red Bull
UEFA ultimately ruled that the two clubs were not under common control as, following a restructuring, Red Bull no longer had a controlling stake in the club and was merely a sponsor of the club [14].
Sir Jim Ratcliffe may find himself in the difficult position of being involved in multi-club models soon. He is in the race to take over Manchester United and owns OGC Nice. Were he successful in the takeover of Manchester United, he could be in a position where he would have to sell his stake in Nice to avoid the prospect of UEFA excluding either club from a UEFA club competition, were both clubs to qualify for the same competition [15]. The club that finishes higher in their respective league is given priority and would enter the competition over the other. As a result, there could be a situation where Nice finishes second and United third, meaning UEFA would exclude United from the Champions League. The Premier League is perceived as better than the French league, making this a real possibility.
Conclusion
There are pros and cons to adopting the multi-club model. Sending unrefined talent to high-level leagues can do wonders for their development. However, there can easily be high levels of scrutiny, making the running of the club harder than it needs to be.
If a club is to pursue the multi-club model, it needs to adopt the highest levels of due diligence when selecting which club to add to its portfolio.
Clubs must also consider the sporting and integrity implications of the multi-club model. If two clubs of the same model enter the same UEFA competition, UEFA would have no choice but to kick one of the clubs out of the competition. Fans would be outraged if their club were to be kicked out of the Champions League if they had qualified on merit, potentially leading to mass protests, so owners must be mindful of this drawback.
References
[1] Reuters, Chelsea Owners Buy Majority Stake In Ligue 1 Club Strasbourg, ESPN, https://www.espn.co.uk/football/story/_/id/37899403/chelsea-owners-buy-majority-stake-ligue-1-club-strasbourg (last accessed 29 August 2023).
[2] The European Club Footballing Landscape 2022/23, UEFA, https://editorial.uefa.com/resources/027e-174740f39cc6-d205dd2e86bf-1000/ecfl_bm_report_2022_high_resolution_.pdf (last accessed 29 August 2023).
[3] City Football Group Clubs, https://www.cityfootballgroup.com/our-clubs/ (last accessed 29 August 2023).
[4] Why Andrey Santos Missed Out On Chelsea Work Permit, 90min, https://onefootball.com/en/news/why-andrey-santos-missed-out-on-chelsea-work-permit-36818935 (last accessed 29 August 2023).
[5] David Hytner, City Football Group Plan To Buy NAC Breda Fails After Supporter Backlash, The Guardian, https://www.theguardian.com/football/2022/apr/22/manchester-city-football-group-plan-to-buy-nac-breda-fails-after-supporter-backlash (last accessed 29 August 2023).
[6] Visa to Play Football In The UK, Davidson Morris, https://www.davidsonmorris.com/visa-to-play-football-in-the-uk/#:~:text=Under%20the%20UK's%20post%2DBrexit,is%20the%20International%20Sportsperson%20visa (last accessed 29 August 2023).
[7] James Nalton, New Work Permit Requirements For Players Moving to English Clubs Post-Brexit, World Football Index, https://worldfootballindex.com/2020/12/work-permits-premier-league-post-brexit-english-clubs-efl-libertadores/ (last accessed 29 August 2023).
[8] Steve Price, New Work Permit Rules Give Global Talents A Path To The Premier League, Forbes, https://www.forbes.com/sites/steveprice/2023/06/15/new-work-permit-rules-give-global-talents-a-path-to-the-premier-league/?sh=6333b58f4ede (last accessed 29 August 2023).
[9] Visa to Play Football In The UK, Davidson Morris, https://www.davidsonmorris.com/visa-to-play-football-in-the-uk/#:~:text=Under%20the%20UK's%20post%2DBrexit,is%20the%20International%20Sportsperson%20visa (last accessed 29 August 2023).
[10] Sportsperson Visa, Immigration Advice Service, https://iasservices.org.uk/sportsperson-visa/#:~:text=What%20are%20the%20Sportsperson%20Visa,job%20offer%20in%20the%20UK (last accessed 29 August 2023).
[11] Owners’ And Directors’ Test, FA, file:///Users/nickfernandes/Downloads/owners-and-directors-test.pdf (last accessed 29 August 2023).
[12] UEFA Rules Article 5 Integrity Of The Competition / Multi-Club Ownership, UEFA, https://documents.uefa.com/r/Regulations-of-the-UEFA-Europa-League-2023/24/Article-5-Integrity-of-the-competition/multi-club-ownership-Online (last accessed 29 August 2023).
[13] Champions League: RB Leipzig And Red Bull Salzburg Both Allowed to Compete, BBC Sport, https://www.bbc.co.uk/sport/football/40348340 (last accessed 29 August 2023).
[14] Case AC-01/2017, UEFA, https://editorial.uefa.com/resources/0258-0e2dece33fb8-5cc21edafedf-1000/rb_leipzig_fc_salzburg_-_cfcb_adjudicatory_chamber_decision_-_june_2017.pdf (last accessed 29 August 2023).
[15] Mark Ogden, Man United Bidder Ratcliffe May Have To Sell Nice Stake To Avoid UEFA Exclusion – Source, ESPN, https://www.espn.co.uk/football/story/_/id/37637549/manchester-united-bidder-jim-ratcliffe-sell-nice-stake (last accessed 29 August 2023).