Tuesday briefing: English Football Governance Bill to be published today as government’s patience with Premier League snaps

IMAGO

19 March 2024 - 4:30 AM

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Tuesday briefing: English Football Governance Bill to be published today as government’s patience with Premier League snaps

  • Nottingham Forest handed four-point deduction for Premier League PSR breach
  • Olympique Lyonnais agree the sale of Seattle Reign FC for $54 million
  • Negreira case: Barcelona court extends investigation by six months

Legislation imposing an independent regulator on English football will finally be published today following last week’s failure of Premier League clubs to agree on a new financial settlement deal with the EFL.

The landmark Football Governance Bill will be formally launched by the UK culture secretary, Lucy Frazer, at League One club Leyton Orient after the government’s patience snapped over delays to the so-called ‘New Deal for Football’.

The tabling of legislation drafted partly in response to the doomed European Super League will be followed by an event today “to look at the Bill’s strengths and weaknesses”.

“Proportionate regime”

In a statement, the Premier League said it “will now study the Football Governance Bill, working closely with Government, parliamentarians and key stakeholders.”

The league added: “We agree it is vital that football clubs are sustainable, remain at the heart of their communities and that fans are fundamental to the game.

“The Government has consistently stated that it wishes to support the Premier League’s continued global success which generates funding to help sustain the entire football pyramid.

“With our clubs, we have advocated for a proportionate regime that enables us to build on our position as the most widely watched league in the world. Mindful that the future growth of the Premier League is not guaranteed, we remain concerned about any unintended consequences of legislation that could weaken the competitiveness and appeal of English football.”

“Important milestone”

The EFL released a statement from its chair Rick Parry, in which he said: “The EFL welcomes today’s arrival of the Football Governance Bill to Parliament in what we hope will be an important milestone to help us secure the long-term financial sustainability of England’s football pyramid.

“If delivered on the right terms, this landmark legislation can help fix the game’s broken financial model by offering the independent input ultimately needed to help ensure that all Clubs can survive and thrive in a fair and competitive environment.

“The establishment of the Independent Football Regulator will be at the heart of this reform, and we are encouraged that the Regulator will be given backstop powers to deliver financial redistributions should the game be unable to agree a deal itself.”


 

Nottingham Forest handed four-point deduction for Premier League PSR breach

Nottingham Forest have been handed a four-point deduction following a breach of the Premier League’s profitability and sustainability rules (PSR).

The club was referred to an independent commission in January after reporting losses that exceeded the permitted amount over the three-year period ending 2022/23.

Forest, who have dropped to 18th following the penalty, had admitted to a breach of the relevant PSR threshold of £61 million by £34.5 million. The threshold was lower than £105 million as the club spent two of the three seasons under review in the EFL Championship.

In a statement, the Premier League said: “The independent Commission determined the sanction following a two-day hearing this month, at which the club had the opportunity to detail a range of mitigating factors. The Commission found that the club had demonstrated “exceptional cooperation” in its dealings with the Premier League throughout the process.”

Angry reaction from Forest

Forest have reacted angrily and in a statement noted that the “Premier League sought a sanction of eight points as a starting point,” which the club argued “was utterly disproportionate when compared to the nine points that their own rules prescribe for insolvency.”

While thanking the commission “for agreeing to deal with this matter on an expedited basis”, Forest said it was “extremely disappointed” with its decision and “extremely dismayed by the tone and content of the Premier League’s submissions.”

In their statement, Forest also referred to their sale of Brennan Johnson to Tottenham Hotspur last summer, which it is understood formed the crux of their argument. The Welsh forward was sold for £47.5 million on the 1st September deadline day in a record sale for the club.

Forest said: “Even after the Club had missed the PSR reporting deadline, it still took steps to ensure Brennan Johnson was sold before the end of the transfer window. That was a clear demonstration of our respect and support for PSR.

Forest now have seven days to notify whether they intend to appeal against their sanction. The Premier League has pencilled in 24th May as a backstop date for any appeal. The last day of the season is 19th May.

 

Olympique Lyonnais agree the sale of Seattle Reign FC for $54 million

Olympique Lyonnais’ parent company OL Groupe has announced it has reached an agreement for the sale of National Women's Soccer League (NWSL) club Seattle Reign FC (formerly OL Reign) to a group that includes the MLS club Seattle Sounders and global investment firm Carlyle.

In a statement, OL Groupe said the team, which it acquired in January 2020 for $3.5 million, will be sold for $58 million for 100 per cent of the shares, with the group selling its entire stake, representing 97 per cent of the club's share capital.

The sale is expected to be closed soon, subject to approval by the NWSL and MLS. OL Groupe said: “This transaction is in line with the Group's strategy, in particular the refocusing on men's football announced on October 25.”

The deal follows the completion last month of the sale of the Lyon women’s team to the American businesswoman Michele Kang, who also owns the NWSL’s Washington Spirit.

Rapidly growing valuations

The agreement is another indicator of the rapidly growing valuations of US women’s teams seen over recent months. It follows the sale last week of San Diego Wave to the Levine Leichtman family in a two-part deal that values the club at $113 million. That agreement marks the highest price ever paid for a controlling stake in an NWSL team, eclipsing the $63 million paid in January for the Portland Thorns.

Commenting on the transaction announced by OL Groupe and what it means for Lyon, Trion Reid, an analyst at Berenberg, said: “The deal is in line with the stated strategy, represents an attractive return on the initial investment, and will help to ease the club’s debt burden. However, leverage still remains high and the group remains unprofitable.”
 


 

Negreira case: Barcelona court extends investigation by six months

A ruling on the Negreira case has been pushed back to this autumn at the earliest after the judge presiding over the case agreed to extend the investigation by six months.

The case is examining FC Barcelona's payments to the former vice-president of the Spanish FA’s refereeing committee, José María Enríquez Negreira.

As reported by Spanish media, Joaquín Aguirre, the head of the court of instruction number 1 of Barcelona, has agreed to the six-month extension to the investigation, pending a report from the Spanish Civil Guard.

Negreira himself is due to appear at the court today after he was summoned by the judge to testify. He is the first of the individuals being investigated over the payments made by Barcelona to be called to testify.

Meanwhile, the Barcelona court has also ordered the admission of the Spanish Football Federation (RFEF) to the case as a private defendant after section 21 of the court upheld the appeal filed by the federation following the investigating judge’s initial rejection of its claim that it was part of the case.

The court has justified its decision on the grounds that the RFEF exercises public functions under the tutelage of Spain’s Higher Sports Council (CSD), which in turn depends on the Ministry of Culture and Sport, and considered that the RFEF is not authorised to appear as a public prosecutor.

Payments of more than €7.3 million over 17 years

The Negreira case was initially brought after prosecutors filed a complaint last March over payments of more than €7.3 million over 17 years to firms owned by Negreira, allegedly for referees to act in favour of Barcelona. Both the club and Negreira himself have denied any wrongdoing.

Barcelona were originally charged with alleged corruption in sport, corruption in business, false administration and the falsification of commercial documents. Charges of bribery were added in September after a judge said Negreira "exercised public functions" as vice-president of the Spanish FA’s refereeing committee, equating him to a civil servant.

Monday briefing: AC Monza set to agree takeover deal with Orienta, marking ‘end of Berlusconi era’

AC Monza

18 March 2024 - 5:30 AM

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Monday briefing: AC Monza set to agree takeover deal with Orienta, marking ‘end of Berlusconi era’

  • VfB Stuttgart's executive board proposes working group amid power struggle
  • NWSL club San Diego Wave to be sold to Levine Leichtman family in $113 million deal
  • Newcastle United aim to speed up Dan Ashworth exit to Old Trafford amid compensation talks

Monza look set to have new majority shareholders, with the Italy-based holding company Orienta Capital Partners close to an agreement to buy shares “greater than 60 per cent” in the Serie A club, according to La Gazzetta dello Sport.

The deal is being described as the “end of the Berlusconi era” across media outlets in Italy, as it marks a takeover from the current ownership group Finnivest – a holding company that was set up and formerly headed by the ex-AC Milan owner and former Italian prime minister Silvio Berlusconi.

Finnivest, which is set to retain a minority stake in Monza following the takeover, completed its purchase of Monza in September 2018, and Berlusconi held the presidency until his death in June 2023.

Galliani to remain at club

Berlusconi was joined at Monza by AC Milan’s former CEO and vice-chairman Adriano Galliani, who is still Monza’s CEO and is set to remain with the club after the takeover.

Orienta Capital Partners’ acquisition of Monza has not yet been completed, but the report from La Gazzetta dello Sport indicated that negotiations were progressing well and smoothly.

 

VfB Stuttgart's executive board proposes working group amid power struggle

In the midst of an open power struggle at VfB Stuttgart, the club's executive board is taking action by proposing the creation of a working group. The board emphasizes the need for unity and constructive dialogue, especially as the club is on the verge of qualifying for the Champions League for the first time in 15 years.

Following the dismissal of Claus Vogt as Chairman of the Supervisory Board, and subsequent distancing from him by other members of the presidency, the executive board has now spoken out, calling for calm.

"Given that we are just nine Bundesliga games away from achieving something very big after many years, it is essential that we have a close alliance among all parties," said the executive board, which includes CEO Alexander Wehrle, Dr. Thomas Ignatzi (Finance, Administration and Operations), and Rouven Kasper (Marketing and Sales).

The proposed working group aims to address "existing issues related to future-oriented structural questions" across all roles, functions, and instances within the club. This includes discussions about the chairmanship of the Supervisory Board.

Future-proof regulations for VfB Stuttgart

The executive board has presented this proposal to various stakeholders within the club, including the Supervisory Board, Presidency, and Club Advisory Board. They also plan to incorporate perspectives from the Fan Committee, VfB Friends' Circle, and Statutes Commission.

The goal is to enable VfB members to discuss not only the issue of the Supervisory Board chairmanship but also to establish and adopt binding, future-proof regulations for VfB Stuttgart at the next general meeting.

"These regulations could then be incorporated into the basic agreement between e.V. and AG (registered association and corporation), or into the rules of procedure for the club's organs, depending on their nature and legal feasibility."

 

NWSL club San Diego Wave to be sold to Levine Leichtman family in $113 million deal

National Women's Soccer League (NWSL) club San Diego Wave is being sold by billionaire Ron Burkle to the Levine Leichtman family in a two-part deal that values the club at $113 million, according to a report from Sportico.

The deal, which is said to have already been approved by the league owners, marks the highest price ever paid for a controlling stake in an NWSL team, eclipsing the $63 million paid earlier this year for the Portland Thorns.

Sources told Sportico that Lauren Leichtman and her husband Arthur Levine, founding partners of Levine Leichtman Capital Partners, are paying $35 million now for 35 per cent of the team, and have agreed to buy the other 65 per cent for $78 million after the 2024 season.

The deal is understood to carry a weighted average of $113 million, although the valuation in the later transaction is $120 million.

$2 million expansion fee

It is believed that Burkle, who paid a $2 million expansion fee when the Wave joined the NWSL less than three years ago, will maintain control of the franchise until the second transaction occurs following the end of this NWSL season.

The second part of the deal is said to be a contractual obligation, meaning the buyers cannot choose to stop at 35 per cent.

Burkle said: “We are proud of the unprecedented success we have had as an expansion team and I am confident that [the Levine Leichtman] family’s investment will contribute to the growth of our team and the San Diego community.”

 

Newcastle United aim to speed up Dan Ashworth exit to Old Trafford amid compensation talks

Newcastle United want to speed up sporting director Dan Ashworth’s move to Manchester United amid ongoing negotiations over compensation, The Daily Telegraph reports.

Newcastle remain adamant they want a large compensation fee after losing one of their key appointments since the Saudi Arabian-led takeover, and the talks on the issue are said to remain a priority.

However, it is believed the club is willing to negotiate after it was revealed they were initially asking for as much as £20 million to reduce the length of Ashworth’s gardening leave.

Although the Newcastle hierarchy are extremely reluctant to let Ashworth – whose gardening leave is due to run until the end of 2025 – start work before the summer, it is believed they would consider a deal that will see him begin his new role at Old Trafford before the end of the year if Manchester United pay suitable compensation.

Paul Mitchell heads shortlist

The Telegraph also reported that Paul Mitchell is heading a shortlist of candidates to take on the sporting director role at Newcastle left vacant by Ashworth.

Mitchell, the former Southampton and Tottenham Hotspur head of recruitment, whose last job was sporting director at AS Monaco, is understood to feature prominently in discussions over Ashworth’s replacement.

The shortlist is also thought to include Brentford’s director of football Phil Giles, a boyhood Newcastle fan, West Ham United’s Tim Steidten, and former AS Roma sporting director Tiago Pinto, who has publicly expressed his interest in the job.

Friday briefing: FC Barcelona economic vice-president Eduard Romeu steps down

IMAGO

15 March 2024 - 4:30 AM

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Friday briefing: FC Barcelona economic vice-president Eduard Romeu steps down

  • Manchester United clear £120 million of debt after Sir Jim Ratcliffe investment
  • EFL underlines disappointment over Premier League funding deal “setback”
  • German football faces ‘€250 million liquidity gap’ after withdrawal of bank
  • Benfica post €18 million profit for H1 2023/24

FC Barcelona have announced that the club’s economic vice-president Eduard Romeu has resigned from his position.

In a statement released yesterday morning, Barça said Romeu “has presented his resignation to president Joan Laporta due to the position's incompatibility with full-time dedication to his professional work.”

The statement added: “President Laporta has accepted the resignation and expresses his gratitude for Mr Romeu's work at the head of the Economic Area, which has focused on developing a feasibility plan that was implemented during this mandate and which has turned around the institution's financial situation.”

At a press conference held later in the day, Romeu said: “When I joined the management area of FC Barcelona, I had some professional occupations that were made to be able to combine them with the activity at the club. Now, things have changed, not of their own volition.

"The board has committed a great patrimony to ensure the viability of the club and the fact of having to pay bills has made me undertake new professional projects."

Romeu has served as Barcelona's economic vice-president since March 2021. Laporta said his duties will be taken over by the economic department, without giving details of who will be in charge.

The president added that Romeu “leaves this area of the club under control, which is something to be thankful for. He has been key in the economic work of the club and we will continue to follow his advice.”

String of exits

Romeu’s departure marks the latest in a string of exits by senior executives from Barcelona. Late last month, Maribel Meléndez stepped down from her role as the club’s corporate director, citing personal reasons.

Ferran Reverter left his position as Barça’s CEO in February 2022, also pointing to personal reasons. And last June, the director of the Espai Barça project, Jordi Llauradó, also left, followed in August by Ramon Ramírez, who was director of heritage and Espai Barça.


 

Manchester United clear £120 million of debt after Sir Jim Ratcliffe investment

Manchester United cleared £120 million from their revolving credit facility following Sir Jim Ratcliffe’s $300 million (£234.2 million) cash injection into the club, their latest filing to the U.S. Securities and Exchange Commission (SEC) has revealed.

United’s financial results for the second quarter of 2023/24, released on Tuesday, showed their debt totalling £773.3 million, but the SEC filing on Wednesday night revealed that on 28th February, United paid off £120 million worth of debt, reducing their overall debt down to £653.3 million.

The club’s revolving credit facility has a limit of £300 million and the balance now stands at £140 million, down from £260 million, following the payment.

The SEC filing also showed a £5.5 million payment to Richard Arnold after he stepped down as the club’s CEO in December. Arnold will be replaced by Omar Berrada, who has left his role as chief football operations officer at the City Football Group.

Major cost-cutting exercise

Meanwhile, Ratcliffe has appointed corporate restructuring firm Interpath Advisory to undertake a major cost-cutting exercise at United, according to a report from The Daily Mail.

The review by Interpath, which is an offshoot of accountancy firm KPMG, began earlier this month. The consultants are said to be working with the club to analyse all areas of United's business in an attempt to maximise the resources made available for football.

It is understood the review will firstly assess United's business costs such as travel bills and contracts with external companies, and then later this year analyse United's employee costs, which is expected to lead to a reduction of the club's staffing levels of between 20 and 25 per cent, which would mean the loss of hundreds of jobs.

United have by far the biggest staff of any club in the Premier League, with over 1,112 employees on the payroll compared to around 900 at Liverpool, 750 at Tottenham Hotspur, 720 at Manchester City and 700 at Arsenal.

Ratcliffe's other sporting investments run by INEOS are notoriously lean operations in contrast to United, where even staff concede privately that there is fat to trim following a huge expansion of their commercial and digital teams under the Glazer family's ownership.


 

EFL underlines disappointment over Premier League funding deal “setback”

The English Football League (EFL) has expressed its disappointment over the “repeated failure” of the Premier League to present a new financial settlement deal for clubs across its three divisions.

The EFL board met yesterday after Premier League clubs again failed to agree on a new offer for sharing revenues with EFL teams at a shareholders’ meeting on Monday.

In a statement, the EFL said: “Despite pressure from Government, fans and united voices across the professional game, the latest development represents a further setback.”

The EFL added that it “is clearly disappointed at [Premier League clubs’] repeated failure to put forward any new funding offer for EFL Clubs that would have significant benefits for the entire football pyramid.”  

The statement continued: “The League eagerly anticipates the introduction of the Football Governance Bill given it is now more important than ever that the Independent Regulator is provided necessary powers to secure the long-term sustainability of the pyramid.”

“Reconfirmed their commitment”

In a statement following its meeting on Monday, the Premier League said its clubs “reconfirmed their commitment to securing a sustainably-funded agreement with the EFL, subject to the new financial system being formally approved by clubs.”

The EFL said that it “now awaits a formal update from the Premier League as to how it proposes to re-engage on its latest commitment to deliver” such an agreement.


 

German football faces ‘€250 million liquidity gap’ after withdrawal of bank

The withdrawal of a German bank from the country’s football industry has created a €250 million liquidity gap which could lead to far more clubs only receiving their licence from the DFL under financial conditions, according to a report from Kicker.

VR-Bank Bad Salzungen-Schmalkalden, which currently has business relations with around 15 clubs – some from other parts of Europe, but the majority in Germany – has decided to move away from football as it battles with controversies related to allegedly highly speculative real estate transactions.

Sources indicated that the bank's football business amounts to around €250 million, although it declined to confirm this sum.

Bad Salzungen has provided several German clubs with loans in the form of overdraft facilities that could be used repeatedly. The loans were secured against future income such as media revenues or transfer fees and helped teams meet some of the DFL’s licensing requirements by showing they had enough liquidity to get through a full season.

Commitments valid until 30th June, 2024

According to Kicker research, the commitments from VR-Bank Bad Salzungen were valid until 30th June, 2024, meaning that German football is currently due to miss out on a sum of up to €250 million for the 2024/25 season due to the bank’s move away from football.

It means there is now a risk of a significant liquidity gap as replacement banks are often not easy to find. It is understood that compared with Bad Salzung, other institutions want much more proof of the collateral of future income. "They were simply more lax, without me saying that they were acting dubiously," one club executive said of the bank.


 

Benfica post €18 million profit for H1 2023/24

Benfica have reported a €18 million profit for the six-month period ending 31st December, 2023, thanks largely to further success in the transfer market.

The club made a player trading profit of €57 million for the period, more than compensating for a five per cent decline in regular turnover due to the team’s failure to qualify from the group stage of the Champions League.

The biggest player sale was that of academy product Gonçalo Ramos to Paris Saint-Germain for €65 million. Benfica will keep €58.7 million of the fee for the striker and could add another €15 million in variables.

The Portuguese giants also received a further €3.5 million in variables from the transfer of Uruguayan forward Darwin Nunez to Liverpool in 2022.

Among the regular income streams, broadcast revenue fell by 13 per cent to €68.2 million, with UEFA payments declining from €52.5 million in the first half of the previous year to €43.4 million for H1 2023/24.

Last season Benfica reached the quarter-finals of the Champions League, but after failing to qualify for the knockout stages of UEFA’s elite competition this campaign they entered the last 16 of the Europa League. Income from the club’s domestic TV rights remained stable at almost €25 million.

Sponsorship revenues also stayed the same, at almost €12 million, but total commercial income increased by 25 per cent to €20.6 million, thanks to growth from additional activities such as the club museum and stadium tours. Matchday revenue grew by €1 million to €17.6 million, with a 26 per cent increase in VIP and hospitality revenues.

Wage bill rises to €62 million

As for costs, personnel expenses rose by 4 per cent to more than €62 million, while transfer amortisation costs increased by 24 per cent to €28.4 million. The accounts also showed that, on the back of the profit obtained during the period, the club increased its equity by 16 per cent, to €131.2 million.

Thursday briefing: European Super League told to find new name after Danish Superliga secures EU trademark

IMAGO

14 March 2024 - 4:30 AM

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Thursday briefing: European Super League told to find new name after Danish Superliga secures EU trademark

  • Sevilla FC secure €108 million of new financing in deal led by Goldman Sachs
  • AC Milan headquarters raided by police in probe over RedBird takeover
  • Sunak pushes to create independent regulator after Premier League clubs fail to agree EFL deal

The European Super League has been told it must find a new name after the Danish top-flight trademarked the Super League brand with the EU.

In a statement released yesterday, the Danish Superliga confirmed it has registered ‘The Super League’ as a trademark.

The league’s CEO Claus Thomsen said it had done so because the breakaway ESL, run on behalf of its two remaining supporters, Real Madrid and FC Barcelona, was trying to do something similar.

The EU found in favour of the Danish case, formally registered as ‘SUPERLIGA’, and jointly owned by the 12 clubs in the division.

‘The Super League’ was the brand chosen by the rebel 12 clubs when they launched their original botched breakaway from UEFA in April 2021.

Value invested

Thomsen said the decision in favour of his league, which is sponsored by major Danish trade union 3F, meant the other Super League would have to call itself something else.

“We are very happy that the EU’s trademark authority has agreed that the [Super League] trademark in the EU will violate the value that the Danish clubs have invested in 3F Superliga,” he said.

“We have always been against the big clubs’ desire for a new European league. We believe there must be openness and qualification for international club tournaments via national competitions.

“Football should not be a closed party for clubs that do not dare to participate in an open competition. So of course we are extra happy about this victory outside the pitch.”


 

Sevilla FC secure €108 million of new financing in deal led by Goldman Sachs

Sevilla FC have obtained €108 million in new financing through the club’s largest ever debt deal in a ten-year agreement structured by Goldman Sachs.

In a statement, the LaLiga club said the debt has been agreed “at an extraordinarily reasonable cost” and will help it return to profitability in the coming years. The club suffered aggregate losses of €85.5 million between 2020 and 2023.

Sevilla said: "The support of international investors provides the club with liquidity and solvency to carry out its operations normally and execute its strategic plan over the next few years.”

The club plans to sell more players and cut costs as well as boosting income. It said the financing will help "lead the club to profits in the coming seasons, in an environment of financial stability, generating equity again that strengthens the company's balance sheet".

Sevilla’s net financial debt as at 30th June, 2023 stood at €49.1 million, while debts with other clubs amounted to €41.5 million.

“Appropriate solution”

Sevilla president José María del Nido Carrasco said the new financing "is a coherent and appropriate solution, which allows us to face the coming years with full guarantees".

The club added that "it complements the short-term financial lines that it already had and that are maintained, in an operation that allows the entity not to have to resort to capital increases or what in the sector are called levers".


 

AC Milan headquarters raided by police in probe over RedBird takeover

AC Milan’s headquarters have been raided by Italy’s finance police as part of an investigation into potential irregularities over the sale of the club back in August 2022.

The Serie A giant was sold by US hedge fund Elliott Management to the private equity group RedBird for €1.2 billion. As part of the deal, Elliott agreed to lend RedBird €600 million via a so-called “vendor loan” to finance the transaction.

According to a search warrant seen by The Financial Times that authorised the raids, which took place on Tuesday, prosecutors launched their probe following allegations that Elliott still controls AC Milan despite the sale to RedBird.

The search warrant alleges the club’s current CEO Giorgio Furlani and his predecessor Ivan Gazidis fraudulently concealed information that should have been communicated to the Italian Football Federation (FIGC) concerning the ownership structure of the club.

“It seems that the majority of the funds used to buy the club originate from an investment vehicle that does not belong to RedBird,” the search warrant states. “The suspicion is that Elliott currently maintains effective control of the company.”

The warrant also claims Elliott indirectly controls Ligue 1 club Lille, who the prosecutors allege to be in breach of UEFA rules.

Elliott and RedBird deny allegations

Elliott rejected the allegations as “false”, adding it has no control over AC Milan or any stake in the club since the sale two years ago. RedBird also denied that the hedge fund controls the club.

The allegations are based on filings with the US Securities and Exchange Commission and other documents previously seized by Italian investigators, people close to the investigation said.

According to the warrant, Italian finance police also searched the homes of Furlani and Gazidis over allegations they were obstructing the Italian football watchdog COVISOC.

A spokesperson for AC Milan confirmed the raids and said the club was not involved in the investigation. “The club is providing full co-operation with the investigating authority,” the spokesperson said.

The investigation stems from a complaint lodged by AC Milan’s former Luxembourg-based investor Blue Skye following the 2022 takeover. A lawyer for the firm said it “raised doubts” over the RedBird deal immediately after the sale, accusing Elliott of a “lack of transparency over the terms of the sale.”


 

Sunak pushes to create independent regulator after Premier League clubs fail to agree EFL deal

English football’s independent regulator has moved a step closer after the Football Governance Bill was signed off by the UK prime minister Rishi Sunak this week, according to a report from Bloomberg.

The move comes after Premier League clubs again failed to agree on a new financial settlement for sharing revenues with the English Football League (EFL) at a shareholders’ meeting on Monday.

The decision not to offer EFL clubs a stake of broadcast revenues, potentially worth around £900 million over six years, has frustrated politicians. The legislation is set to give the regulator powers to impose a deal on both the Premier League and EFL.

A spokesperson for the Department for Culture, Media and Sport said: “The Government is on the side of football fans, and we continue to engage with leagues and clubs ahead of the introduction of the Football Governance Bill.

“We have a clear plan to deliver a sustainable future for football, with fans at its heart, and our forthcoming legislation will deliver this through a tough new independent regulator.”

Urged to push forward

Caroline Dinenage, chair of the Culture, Media and Sport committee, tweeted that it was “appalling” for the Premier League and its richest clubs to shelve the deal with the EFL, and urged the government to push forward with establishing the independent regulator.

The Football Governance Bill, which the government is planning to introduce as soon as this month, will need to pass through Parliament before it becomes law. Though the establishment of an independent football regulator is expected to gain cross-party support, it may take several months.

In a statement following its meeting on Monday, the Premier League said its clubs “reconfirmed their commitment to securing a sustainably-funded agreement with the EFL, subject to the new financial system being formally approved by clubs.”

Wednesday briefing: Manchester United post £20.4 million profit for Q2 2023/24

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13 March 2024 - 4:30 AM

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Wednesday briefing: Manchester United post £20.4 million profit for Q2 2023/24

  • FSG confirms return of Liverpool’s ex-sporting director Michael Edwards
  • Barça Visión IPO pushed back to November

Manchester United have reported a profit of £20.4 million for the second quarter of the 2023/24 financial year, up from the £6.3 surplus achieved in the same period the previous year.

The result follows the £25.8 million loss for the first quarter of the current year, and means the club made a loss of £5.3 million in the first half of 2023/24, compared with a deficit of £20.2 million in H1 2022/23.

United achieved record second-quarter revenues of £225.8 million for the three-month period ending 31st December, 2023, up from £167.3 million in Q2 2022/23.

Compared with the same period the previous year, Q2 broadcast income rose from £58.7 million to £106.4 million, while matchday revenue increased from £29.9 million to £47.6 million, with the club’s return to the Champions League, after playing in the Europa League last season, a key factor.

However, commercial income fell from £78.7 million to £71.8 million, which United said was primarily due to a one-off sponsorship credit in the prior year quarter.

United’s wage bill for Q2 2023/24 totalled £95.1 million, up from £77.3 million over the same period the previous year, also due to the club’s participation in the Champions League.

Exceptional costs of £9.6 million for Ratcliffe deal

The second-quarter profit was achieved despite United paying exceptional costs of £9.6 million in professional fees related to Sir Jim Ratcliffe’s deal to buy a minority stake in the club and the strategic review process that led to it.

That figure does not include the $31.5 million due to be paid to investment bank Raine Group, which advised the club throughout the strategic review.

United’s total debt stood at £773.3 million, up from £741.9 million at the same time last year, in part due to a £60 million drawdown on the club’s revolving credit facility in October.


 

FSG confirms return of Liverpool’s ex-sporting director Michael Edwards

Liverpool’s owner, Fenway Sports Group (FSG), has announced that Michael Edwards, the club’s former sporting director, has agreed to return to Anfield to help shape the post-Jürgen Klopp era.

Edwards’ new job title at FSG will be CEO of football. In a statement, FSG said that as well as heading football operations at Liverpool, the 44-year-old executive will be “supporting the growth of FSG in global football through additional investment and acquisition.”

He will be charged with helping to identify a second club, from which Liverpool can attract global talent, and will also lead a restructure of Liverpool’s footballing hierarchy.

Edwards will succeed the FSG president Mike Gordon as the day-to-day decision-maker on all footballing matters at the group. Gordon intends to reduce his involvement in the sport but will remain on the FSG board into which Edwards will now report.

Huge transition

Liverpool are in the midst of a huge transition following manager Klopp’s decision to step aside this summer, with his closest staff also scheduled to leave and sporting director Jorg Schmadtke already having departed.

Now that Edwards has accepted FSG’s offer, Richard Hughes, whose exit as Bournemouth technical director was confirmed last Wednesday, is now set to be confirmed as Liverpool’s new sporting director, with his arrival considered a formality.


 

Barça Visión IPO pushed back to November

The IPO of FC Barcelona’s digital unit Barça Visión has been postponed until November following the failure of the German investment fund Libero to pay the club €40 million for the purchase of a stake in the business.

As reported by Spanish media, the deadline for the merger of Mountain & Co, the special purpose acquisition company (SPAC) set up to channel the move on to the American stock market, with Barça Visión has been extended by a further six months until 9th November.

The latest delay to the merger, which will trigger the IPO, was approved with 99 per cent of votes in favour at a Mountain & Co shareholders' meeting. However, a number of shareholders abstained after deciding to abandon the process and requesting the redemption of all their shares.
The shareholding package of those investors who opted out amounted to 3.1 million shares, at a price of $11.42 per share, equating to up to €35.8 million of share capital.

The merger agreement previously signed between Mountain & Co and Barça Fusión gave the SPAC the new digital content business at a valuation of €900 million. The conglomerate includes Barça Vision, Barça Studios and Barça eSports.

Previous delays

Barcelona had originally planned for Barça Visión to go public last autumn, and the plans were then pushed back to March this year. It emerged at the start of the year that Barcelona had still not been paid by Libero after extending the deadline for payment to 31st December, leading Mountain & Co to request a further postponement.

Tuesday briefing: Premier League to prioritise changes to PSR after clubs reject latest proposal for EFL deal

IMAGO

12 March 2024 - 4:30 AM

Tuesday briefing: Premier League to prioritise changes to PSR after clubs reject latest proposal for EFL deal

  • Liverpool’s former sporting director Michael Edwards set to return to club in expanded role
  • Bernd Reichart: Premier League clubs have held talks with A22 since CJEU ruling

The Premier League’s latest attempt to secure agreement for a new financial settlement with the English Football League (EFL) has been rejected amid a continued stalemate between its clubs.

In a statement issued yesterday, the league said its 20 clubs have instead opted to prioritise agreeing changes to its Profitability and Sustainability Rules (PSR) ahead of voting on the so-called ‘New Deal’.

“At a Premier League Shareholders’ meeting today clubs agreed to prioritise the swift development and implementation of a new League-wide financial system,” the Premier League statement read.

“This will provide certainty for clubs in relation to their future financial plans and will ensure the Premier League is able to retain its existing world-leading investment to all levels of the game.

“Alongside this, Premier League clubs also re-confirmed their commitment to securing a sustainably-funded financial agreement with the EFL, subject to the new financial system being formally approved by clubs.”

According to Sky News, the resolution on PSR was overwhelmingly backed, with 19 clubs voting in favour, and only Manchester City – who are believed to be taking legal action against the league over associated party transaction rules – understood to have abstained.

Independent regulator legislation

Sky also reported that yesterday’s meeting of top-flight clubs was likely to have been the last opportunity to agree the proposed £836 million deal with the EFL before the UK government introduces legislation to establish the new independent regulator for English football.

Whitehall sources told Sky that the Football Governance Bill is likely to be published later this month. The legislation is set to give the new regulator powers to impose a deal on both the Premier League and EFL.

Increased levy on player transfers

It is understood that a planned vote on the New Deal was scrapped at the Premier League shareholders’ meeting yesterday after it became clear it would not win support from the required majority of 14 clubs.

Teams were due to be asked to approve a revised version of a deal for the EFL that included proposals for an increased levy on player transfers. The revamped blueprint included provision for an immediate £44 million payment to the lower leagues, followed by a further £44 million within months.

However, this £88 million was effectively to be pitched as a loan that would be repayable by the EFL over a period of more than six years.

According to Sky, the Premier League had decided to make the vote independent of any conditions attached to wider financial reform of English football, alarming a number of top-flight owners.


 

Liverpool’s former sporting director Michael Edwards set to return to club in expanded role

Michael Edwards, Liverpool’s former sporting director, is close to agreeing a senior role with Fenway Sports Group that would include leading the Anfield club’s football operations, Sky Sports News has reported.

Edwards’ return in an expanded capacity, also encompassing other external tasks, is expected to be confirmed this week. His previous spell at the club lasted 11 years and he was sporting director from November 2016 to June 2022.

It is understood that Edwards had initially rebuffed an approach from Liverpool's owners to oversee the post-Jurgen Klopp era at Anfield, but face-to-face talks with FSG in Boston earlier this month are said to have paved the way for his return.

The remit discussed was wider than initially stipulated and offered more responsibility than other roles Edwards has turned down since stepping aside from the Merseyside club in 2022, specifically becoming Chelsea's CEO of Football.

Richard Hughes set to be new sporting director

Liverpool are in the midst of a huge transition following manager Klopp’s decision to step aside this summer, with his closest staff also scheduled to leave and sporting director Jorg Schmadtke already having departed.

If Edwards accepts FSG’s offer, the sporting director position is expected to be filled by Richard Hughes, whose exit as Bournemouth technical director was confirmed last Wednesday.


 

Bernd Reichart: Premier League clubs have held talks with A22 since CJEU ruling

Bernd Reichart, the CEO of A22, the company behind the European Super League, has claimed it has held private talks with Premier League clubs since the European Court of Justice (CJEU) delivered its landmark ruling in December.

English football’s co-called ‘big six’ – Arsenal, Chelsea, Liverpool, Manchester City, Manchester United and Tottenham Hotspur – were founder members of the original Super League project three years ago.

The clubs quickly withdrew amid fan protests and pressure from the football authorities and the UK government following the original botched launch in April 2021. All six teams also publicly distanced themselves from plans to launch a new competition outlined by A22 after the CJEU’s December verdict.

However, in an interview with the PA news agency, Reichart insisted that English clubs have been involved in dialogue with his organisation since then.

Asked directly whether there had been conversations with Premier League teams since the CJEU ruling, the German media executive said: “Yes of course. It’s absolutely a logical and natural process.

“Everyone is trying to get a sense of what the ruling could mean. It’s the professional obligation of clubs to know what this change in club governance in Europe could mean for them.”

New talks with clubs in Europe

Reichart also said there were clubs in Europe who had publicly declared support for UEFA and its existing competitions who have subsequently held new talks with A22.

“There’s still a situation where [clubs] hate getting calls from the political establishment every time they stick their head out of the window,” he said.

“We haven’t put out a deadline, we haven’t said ‘this ship is sailing now’ and we haven’t invited people to come out with declarations because we don’t want [other clubs] to then get calls saying ‘now you have to counter that declaration which came out of your domestic league’.”

Super League concept “resonated more easily” with Scottish teams

Reichart also admitted the Super League concept “resonated more easily” with clubs in the Scottish Professional Football League (SPFL) compared to their English counterparts due to “their domestic TV revenues … losing competitiveness year after year to bigger leagues.”

He said: “They would love to be more exposed to a bigger, united European single market that helps them retain their talent, make their investments and stay competitive.”

A court in Madrid is set to hear the Super League case again on Thursday, having now received the answers to the questions it asked the CJEU about whether UEFA’s 2021 rules which blocked the Super League’s formation were anti-competitive.

Monday briefing: Manchester United to explore options for building new Old Trafford

Old Trafford

11 March 2024 - 5:30 AM

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Monday briefing: Manchester United to explore options for building new Old Trafford

  • Chelsea mysteriously drop Oman Air sponsorship deal
  • Saudi sports vice minister: SPL preparing for new ‘wave’ of private investment
  • Everton takeover: More doubts emerge as 777 Partners faces lawsuit over asset transfers

Manchester United have announced that they will look into the feasibility of building a new stadium “of national significance” to replace Old Trafford.

In a statement, United said: “A joint task force has been created to explore options for regenerating the Old Trafford area of Greater Manchester, with the development of a world-class football stadium at the heart of the project.”

The ‘Old Trafford Regeneration Task Force’ will be chaired by Lord Sebastian Coe, former chair of the organising committee for the 2012 London Olympics. Other members will include Greater Manchester mayor Andy Burnham, Trafford Council CEO Sara Todd, and former Manchester United captain Gary Neville.

United said the task force “will assess the feasibility of a new stadium of national significance equipped to host international games and finals, as well as providing a modernised home for Manchester United.”

It added that the group “will bring together local leaders and national experts to examine how stadium development can support renewal of an area of the city with rich industrial history and huge potential for the future, and deliver social and economic benefits for the entire region.”

Ratcliffe preference for new stadium

While United are also considering options for redeveloping the current Old Trafford, the preference of the club’s new co-owner Sir Jim Ratcliffe is to build a new stadium and the club’s board is understood to be supportive of such a move.

In the United statement, Ratcliffe said: “This can be a major regeneration project for an area of Greater Manchester which has played such a key role in British industrial history, but which today requires new investment to thrive again.

“The north-west of England has a greater concentration of major football clubs than anywhere else in the world, yet we don’t have a stadium on the scale of Wembley, the Nou Camp or the Bernabéu. We will not be able to change that on our own, which is why this task force is so important to help us seize this once-in-a-century opportunity.”

 

Chelsea mysteriously drop Oman Air sponsorship deal

Chelsea have mysteriously terminated its sponsorship deal with Oman Air, which is thought to be worth £2 million-a-year and was announced last July.

Under what was described as ‘a multi-year deal’, Oman Air became Chelsea’s ‘airline partner’. However, it no longer features on the ‘club partners’ section of the official website, where Chelsea’s other sponsors are listed and sources have told The Daily Telegraph the deal has been terminated.

That means Chelsea currently do not have first-team front-of-shirt, sleeve or airline sponsors confirmed for next season.

Sources have suggested the problem over the deal arose on the Oman Air side, which forced Chelsea to agree to a termination, but neither party has commented or disclosed any details.

Deal to change chairman every five years

Meanwhile, the newspaper also reported that Chelsea’s owners can pass the chairmanship of the club between them every five years as part of an extraordinary written agreement.

Todd Boehly has been chairman since the current owners bought the club in 2022, which means Clearlake Capital, owned by Behdad Eghbali and Jose Feliciano, will have the opportunity to nominate their own representative in 2027.

The agreement is an option, rather than an obligation, and Boehly could remain as chairman for another five years in 2027 should Clearlake decline the opportunity to take over. Were Clearlake to take the chairmanship, then Boehly would be able to reclaim it in 2032.

Breakdown of shares

Chelsea have never officially confirmed the breakdown of shares in the club since the takeover, but The Telegraph said it has obtained the details of how the money and power is split. Its report revealed that Clearlake Capital, the private equity fund managed by Eghbali and Feliciano, owns 61.5 per cent of the shares and voting rights in the UK-based company behind Chelsea, 22 Holdco.

The remaining 38.5 per cent is split equally between Boehly, Hansjorg Wyss and Mark Walter, meaning each man owns a stake of just under 13 per cent. Boehly, along with Eghbali and Feliciano, is listed as a person of significant control.

While Boehly’s stake is entirely privately funded with his own money, Eghbali and Feliciano have smaller personal stakes within Clearlake’s 61.5 per cent fund that they manage.

 

Saudi sports vice minister: SPL preparing for new ‘wave’ of private investment

A senior figure at Saudi Arabia’s Ministry of Sport has said the country is anticipating a fresh injection of private capital into Saudi Pro League (SPL) clubs as it works to open up to investors.

Speaking at the Bloomberg Power Players Jeddah event last week, the Saudi vice minister of sport Bader Alkadi said: “We expect to have another wave of privatisation coming up soon. That gives us opportunity to make the investment in sport a sustainable investment, an investment that gives us a return to reinvest.”

He added that the flurry of player transfers last year, which brought stars including Neymar and Karim Benzema to the SPL, is also likely to continue. However, it is unclear whether they will be on the same scale.

Spending spree

Saudi Arabia and its sovereign wealth fund, the Public Investment Fund (PIF), have been on a sports spending spree in recent years and Bloomberg previously reported that it was considering a push to attract more outside investors to bolster the SPL.

The kingdom has bankrolled most of its own investments and initiatives thus far, but is seeking more private capital, not only in sports but in its push for more tourists and its aim to build dozens of mega projects that will support Crown Prince Mohammed bin Salman’s Vision 2030 transformation agenda.

Amanda Staveley, CEO of PCP Capital Partners and co-owner with the PIF of Newcastle United, said she sees a “fantastic opportunity” to take a stake in a Saudi club.

 

Everton takeover: More doubts emerge as 777 Partners faces lawsuit over asset transfers

The proposed takeover of Everton by 777 Partners is facing further uncertainty after it emerged that the Miami-based firm is being sued by a creditor who wants to stop it from transferring two subsidiaries, claiming that the transaction was designed to “shield” the assets.

As reported by Bloomberg, Obra Capital said in a New York lawsuit last week that 777 Partners attempted to transfer the two “cash rich” units in order to avoid repaying its debts. Obra said 777 transferred Sutton Specialty Insurance Co. and Sutton National Insurance Co. to co-founder Steve Pasko “for no consideration.”

The creditor said it loaned 777 $40 million in June 2020 and another $15 million the following year. While Obra said that 777 in June 2022 owed it more than $63 million, the debt currently stands at $22.4 million.

777 faces multiple lawsuits over unpaid debts and Obra said the transfer should be blocked to protect all of the investment firm’s creditors. Obra has also filed previous lawsuits against 777 and the insurer over the debts, both of which are still pending.

Questions over 777’s financial health

Obra also claimed that the planned purchase of Everton and its ownership of other clubs has raised questions about 777’s financial health.

“Until recently, 777 maintained a relatively low profile that kept its questionable business practices and penchant for stiffing creditors out of the public eye,” Obra said in the lawsuit. “Then in late 2021, 777 began buying multiple sports teams in Europe and Latin America.”

It added: “777’s flashy shopping spree raised questions about the source of its funding and the health of its business operations.” Obra said the additional attention from the Everton deal led 777’s “house of cards” to begin “crumbling down.”

777 has declined to comment on Obra’s legal action and claims about the firm.

Thursday briefing: Chelsea parent company posts £653 million loss after heavy spending on players

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8 March 2024 - 4:30 AM

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Thursday briefing: Chelsea parent company posts £653 million loss after heavy spending on players

  • Leicester City face potential points deduction for alleged breach of Premier League's financial rules
  • Fears grow over long delay to independent regulator as Premier League pushes for diluted powers

BlueCo 22, the company that owns Chelsea, made a net loss of £653 million following its takeover of the club from Roman Abramovich, the firm’s accounts have revealed.

The entity, controlled by private equity firm Clearlake Capital and investors including Todd Boehly, acquired ownership of Chelsea in May 2022 following Russia’s invasion of Ukraine.

BlueCo 22’s accounts, covering the 16-month period from 2nd March, 2022 to 30th June, 2023 showed that the company’s revenue was £534 million, largely from Chelsea’s commercial, broadcast and matchday income. However, operating expenses, including staff costs, were more than £1.1 billion.

Since the end of the period covered by the accounts, BlueCo has spent £454 million on 22 players and sold 10 for £48 million.

The company’s accounts also revealed that Chelsea made a loss of £90.1 million for the year ending 30th June, 2023, after suffering a deficit of £121.4 million the previous year.

Turnover climbed above £500 million for the first time, increasing from £481.3 million in 2021/22 to £512.5 million for 2022/23. Commercial revenue rose to £210.1 million and matchday income to £76.5 million following the easing of government restrictions on the club after sanctions were placed on Abramovich the previous year.

However, broadcast revenue fell to £225.9 million, down from £235 million, despite Chelsea reaching the Champions League quarter-finals last season, due primarily to the club’s 12th-placed finish in the Premier League. The net loss was incurred despite a profit on the disposal of player registrations and fixed assets of £142.2 million.

Fresh doubts over PSR

Chelsea’s latest losses have raised fresh doubts about the club’s ability to comply with the Premier League’s Profitability and Sustainability Rules (PSR).

The rules permit losses of up to £105 million over three years, although certain costs can be deducted, such as investment in youth development, infrastructure, community and women’s football.

In a statement, the club said: “Despite the loss in the year and the continued fallout from the sanctions placed on the club in the prior year, the Club continues to comply with UEFA and Premier League financial regulations.”

Meanwhile, BlueCo 22’s accounts showed that the company paid an initial €76 million for Ligue 1 club RC Strasbourg last June, as part of the Chelsea owners’ plans to expand their portfolio of clubs.


 

Leicester City face potential points deduction for alleged breach of Premier League's financial rules

Leicester City are facing a charge for allegedly breaching the Premier League's Profit and Sustainability Rules (PSR) which could lead to a points deduction next season, according to Sky Sports News.

It is understood Leicester's accounts for the 2022/23 financial year, which will be made public later this month and cover the season they were relegated from the top-flight, are expected to show they exceeded the £105 million losses permitted under PSR over a three-year period.

Sky understands that it could mean the club is formally charged by the Premier League as soon as next week.

It is within the rules for a Premier League PSR breach to lead to a club being punished in the Championship. However, Leicester will not face a points deduction this season.

The Premier League voted at its AGM last summer to introduce new rules to fast-track financial breaches as has happened with Everton and Nottingham Forest – but those new rules were introduced after Leicester had been relegated, and so don't apply to them.

Avoided sanction from EFL

The development comes after Leicester avoided sanction from the EFL earlier this week, despite their latest accounts indicating they were on course to break the Championship’s financial rules by the end of the season.

The EFL is reportedly planning to change its rules to close a loophole that it feels Leicester have exploited in order to avoid being subjected to a strictly-controlled business plan.


 

Fears grow over long delay to independent regulator as Premier League pushes for diluted powers

The independent regulator for English football is in danger of being delayed until the end of the year, as the process enters a “critical” three weeks, according to a report from The Independent.

Government legislation was expected at the start of last month following months of planning, but there have been no further developments since beyond talks.

It is understood that if the necessary bill is not published by 27th March there is unlikely to be any chance of it getting through until after the next general election, which will take place by January, 2025.

That would also inevitably bring rewriting of the bill, which would likely push the implementation of the regulator until the end of the year.

The strength of the regulator has been one of the main sources of contention, with the Premier League lobbying the government to water it down after sounding a warning last year over risks to future investment in the game.

Talks over new Premier League-EFL deal

Concerns over a delay to the regulator have emerged as secretary of state for culture, media and sport Lucy Frazer has been involved in connected talks over a new financial deal between the Premier League and EFL. An agreement is virtually a prerequisite of the bill.

The Premier League has another meeting on Monday to try and finalise its stance, and insists that the ambition is to get a deal over the line. There is said to be an optimism that it has taken a turn through the last round of negotiations.


 

RSC Anderlecht sale under investigation over suspected fraud

The Brussels Council Chamber has begun an investigation of alleged fraud into the sale of RSC Anderlecht to current owner Belgian businessman Marc Coucke back in 2017.

As reported by The Brussels Times, Belgium’s federal prosecutor is pursuing 16 suspects, five of which are companies and 11 individuals.

Anderlecht’s former owners and their associates are suspected of selling the club above its true value. The prosecutor seeks to bring them before a correctional court for deception, forgery, money laundering, corruption, breach of trust, and violation of professional secrecy.

Among the accused is former sports director Herman Van Holsbeeck, who reportedly admitted to fraud during his interrogation by the Central Office for the Suppression of Corruption (OCRC).

Ex-president

Other implicated parties include Anderlecht’s ex-president Roger Vanden Stock, former CEO Jo Van Biesbroeck, former CFO Rene Trullemans, and the then club’s lawyer.

Player agent Christophe Henrotay, already in legal sights for other football-related cases, and two of his associates, along with the British company Foot Innovation owned by Henrotay, are also suspected.

Thursday briefing: EFL plans to close financial 'loophole' after dispute with Leicester City

Leicester City

7 March 2024 - 4:30 AM

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Thursday briefing: EFL plans to close financial 'loophole' after dispute with Leicester City

  • Burnley could sue Premier League for compensation over Everton's PSR punishment
  • Brazilian club Coritiba’s owner seeking partner to share 90 per cent stake
  • FC Barcelona looking for new sponsor to help balance 2023/24 accounts
  • Fleetwood Town under pressure over ownership of club by convicted fraudster

The English Football League (EFL) is planning to change its financial rules to close a loophole that it feels Leicester City have exploited in order to avoid being subjected to a strictly-controlled business plan.

Under the financial rules, Leicester were allowed to lose up to £83 million over the last three years - two of which were in the Premier League, with rules in the top flight allowing £35 million losses per year on average, while the EFL says a maximum of £13 million can be lost per season in the Championship.

However, the EFL's independent club financial reporting unit discovered that Leicester were on course to have losses in excess of £83 million for the three-year period.

Leicester did not breach the EFL rules, but their accounts showed they were on course to do so by the end of the season. As a result of the predicted rule breach, the EFL followed its own procedures and told Leicester they wanted the club to submit to a business plan, enforced by the EFL, to ensure the club returned to compliance by the summer.

However, Leicester objected to that suggestion, arguing that because they were in the Premier League for most of the period, the EFL rules did not apply to them. They asked for the matter to be reviewed by the independent Club Financial Reporting Panel, who found in Leicester's favour.

In discussions with the football authorities

A Leicester statement read:

"Although the Club is pleased that the CFRP's decision found in its favour, it is concerned that it was necessary for the CFRP to intervene in this way to prevent the CFRU from acting outside of established EFL rules.

"Leicester City confirms it is in discussions with the football authorities regarding its profitability and sustainability calculations. Notwithstanding the CFRP's decision, the club remains committed to seeking an appropriate overall outcome in this matter."



Burnley could sue Premier League for compensation over Everton's PSR punishment

Burnley are reported to be taking legal advice over suing the Premier League for compensation following Everton’s six-point penalty – reduced from ten points following an appeal – for breaching the league’s Profitability and Sustainability Rules (PSR).

It emerged last year that several Premier League clubs were considering legal action against Everton after they were charged with spending breaches, but that prospect has dissipated due to the club’s financial problems.

However, according to The Daily Mail, Burnley are exploring the possibility of bringing a financial claim against the Premier League on the grounds that they were relegated to the EFL Championship due to what they regard as the top-flight’s failure to enforce its financial rules in real time.

Burnley finished four points behind Everton in 18th place in the 2021/22 season, the final campaign of the three-year period for which the Merseyside club have been punished for overspending, but would have stayed up had the six-point penalty been imposed during that season.

Burnley and Leeds United wrote to the Premier League in May 2022 with a warning that they reserved the right to sue due to concerns over Everton’s spending after they posted losses of £371.8 million over three years without being charged.

Weighing up the costs

Everton were charged with breaching PSR the following March, and now that the case has finally concluded Burnley are understood to be considering their options. Their decision will be based on weighing up the costs of taking legal action against the potential reward should they be successful.

In an interim judgement last summer the chair of independent commission that heard Everton’s case, David Phillips KC, ruled that their Premier League rivals would be entitled to pursue compensation if the club were found guilty.


 

Brazilian club Coritiba’s owner seeking partner to share 90 per cent stake

The private equity firm Treecorp is seeking a partner for part of its 90 per cent shareholding in the Brazilian club Coritiba, according to a report from Bloomberg.

Treecorp, a Brazilian financial group, agreed to buy control of Coritiba last May following a change in the law allowing clubs to seek outside investment. The firm is now understood to be working with London-based Oakwell Sports Advisory to help it seek a partner.

Sources told Bloomberg that Treecorp, which has committed to invest $100 million in Coritiba over 10 years, would ideally like to team up with a multi-club owner that could fit the team into its structure.

They added that it could also pair up with a strategic partner that could help the club be more competitive, and that the firm is also keen to bring in the latest technology.

Pipeline of players

Like many Brazilian teams, Coritiba, who are based in the country’s southern state of Parana, have enjoyed a healthy pipeline of players who have gone on to play in Europe after earning fees for their home club.

Winger Igor Paixão signed a five-year deal with Feyenoord in Holland in 2022 after playing for Coritiba. In 2020, Manchester City brought in the then 17-year-old defender Yan Couto from Coritiba. He is now playing on loan at Girona in LaLiga.


 

FC Barcelona looking for new sponsor to help balance 2023/24 accounts

FC Barcelona are looking to agree a deal with a new sponsor which could play a pivotal role in the club’s efforts to balance their accounts for the 2023/24 financial year, Mundo Deportivo has reported.

The sector or location of the new potential commercial partner has not been disclosed, although Barça president Joan Laporta has recently made several trips to Dubai with the aim of closing a new deal. It is understood that if agreed the contract with the new sponsor would be highly valuable to the club.

The Catalan giants are currently forecasting a loss of around €30 million for 2023/24, far worse than the calculations made at the beginning of the season, when they anticipated closing the year in the black.

That figure does not include the €40 million owed by the German investment fund Libero for the purchase of a stake in Barça Visión, which has prompted the club to postpone its planned IPO of the digital unit.

Barcelona are said to believe the money will be collected before the end of the 2023/24 financial year, even if it is through another company.

Stadium move

Barça’s temporary move to the Lluís Companys Olympic Stadium in Montjuïc, while the Camp Nou is being revamped, is said to be a key factor behind the club’s projected losses for the current year.

Barcelona had originally expected to generate around €80 million from matchday income at the venue. However, attendances have been lower than expected, averaging 40,000 in a stadium with a capacity of 56,000.


 

Fleetwood Town under pressure over ownership of club by convicted fraudster

Fleetwood Town are coming under growing pressure over the continued ownership of the EFL League One club by the convicted fraudsterAndy Pilley, The Athletic reports.

Last July, Pilley was sentenced to 13 years in prison for ripping off small businesses and charities across the UK via his utilities companies, stealing money from vulnerable people and becoming rich in the process.

Despite resigning as a director of Fleetwood’s parent company immediately after his conviction, Pilley still owns the club.

EFL rules required him to divest his shares after the “disqualifying event” of his lengthy prison sentence, but nine months after his conviction, this has not happened.

The group of energy companies Pilley founded in 2002, BES Utilities, is still deeply intertwined with the club on which he has spent £30 million. Its logo is on the team’s shirts and the company headquarters is based in the stadium.

The BES Utilities group includes BES Commercial Electricity Ltd and Business Energy Solutions, both of which are based in the Parkside Stand at Fleetwood Town.

“Continued dialogue”

Fleetwood said they are in a “continued dialogue” with the EFL about a change of ownership. “Andy Pilley (is) in the process of divesting of his shares,” a spokesperson said. “Mr Pilley resigned as a director of the club shortly after the verdict.”

Wednesday briefing: Aston Villa post £119.6 million loss for 2022/23

IMAGO

6 March 2024 - 4:30 AM

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Wednesday briefing: Aston Villa post £119.6 million loss for 2022/23

  • FIFA withdraws Wanda sponsorship rights amid dispute over missed payments
  • EFL secures record deals of ‘at least £148 million’ for international TV rights
  • Premier League clubs to face sanctions for inflating sponsorship deals under new rules

Aston Villa have announced a £119.6 million loss after tax for the year ending 31st May, 2023, after achieving a small profit of £0.3 million the previous year.

A key factor in the huge deficit was a 42 per cent increase in the club’s wage bill, which reached £194.2 million, compared with £137 million in 2021/22.

Turnover rose to £217.7 million, up from £178.4 million, largely due to the extra revenue from the team’s seventh place finish in the Premier League, after ending the previous season in 14th.

Those seven places were worth an extra £19 million and also saw the club return to Europe for the first time in over a decade. They will be competing in the last 16 of the Europa Conference League this month. The club are currently fourth in the Premier League, which would lead to a place in the Champions League next season. Matchday and commercial income also increased in 2022/23 but Villa spent a further £63.7 million on new players while generating a profit of over £22 million from player sales.

In a statement, the club said: “This investment is part of the reason why employee wage costs rose to £194.2m (up from £137m) although there were also increases in central support functions to support the growth of the Club which resulted in a 9% increase in overall employee numbers.

“The amortisation of player contracts also increased by £10m to £92.5m reflecting the increased investment in playing staff.”

PSR breach set to be avoided

Despite the massive overall loss, Villa are not expected to be in breach of the Premier League’s profitability and sustainability rules (PSR), which allow for losses of up to £105 million over three years. Some costs can be deducted, such as investment in youth development, infrastructure, community and women’s football.

The club said: “It is important to note that these figures are in line with the strategic business plan, and we continue to operate within the Premier League’s Profit and Sustainability rules.”

Villa also revealed that it almost doubled the amount it spent on Villa Park – one of the Euro 2028 venues – to £13.4 million, up from £7.1 million, and said they will “continue to seek opportunities to increase the capacity of the stadium [but] we recognise that this must be done in tandem with improvements to the local transport network".


 

FIFA withdraws Wanda sponsorship rights amid dispute over missed payments

FIFA is locked in a dispute with Dalian Wanda, one of its highest-paying sponsors, and has ceased activating the company’s sponsorship rights after it missed scheduled payments, according to a report from SportBusiness.

The Chinese commercial property conglomerate announced its FIFA Partner deal with the governing body back in 2016 at the height of China’s sports investment boom. The deal was set to run for 15 years, from 2016 to 2030.

The Wanda Group company logo did not appear on pitchside advertising boards during the recent FIFA Beach Soccer World Cup in Dubai and had been removed from the governing body’s FIFA+ streaming platform last week. However, the logo continues to appear on the federation’s main website.

FIFA and Wanda are expecting to hold more discussions soon over the issue, which has been triggered by a shift in Chinese government policy and the heavy impact of the Covid-19 pandemic on Wanda’s property empire.

Both parties told SportBusiness they would not comment on the matter due to its confidentiality.

Focus on domestic market

The Wanda-owned Infront agency has helped oversee the implementation of the sponsorship deal with FIFA, as well as agreements with other rights-holders. The activation of the sponsorship has largely focused on Wanda’s domestic market.

The deal was the first of Gianni Infantino’s reign as FIFA president and the first top-tier sponsorship deal to be signed by the governing body since an agreement with Russian oil and gas company Gazprom in 2013.


 

EFL secures record deals of ‘at least £148 million’ for international TV rights

The English Football League (EFL) has announced that it has secured record deals, reported to be worth at least £148 million, for its international TV rights over the next four years.

In a statement, the EFL said two agencies, Pitch International and Relevent Sports, will represent the organisation across global TV markets until the conclusion of the 2027/28 season.

According to The Athletic, the deals could see the EFL earn more than the minimum guaranteed £148 million, which in itself is a 40 per cent increase from the previous deals.

It is understood the EFL will receive at least £104 million from Pitch, which covers Europe, the Middle East and North Africa, sub-Saharan Africa, Asia, Australia and New Zealand, and £44 million from Relevant, covering the Americas.

Under the deals, Pitch will distribute 155 Championship games, 38 League One and League Two matches, all promotion play-off fixtures, Carabao Cup rounds, and three EFL Trophy matches.

Relevent Sports will sell all EFL matches, promotion play-off games, Carabao Cup rounds, and three EFL Trophy fixtures and will also manage all betting rights throughout the US.

Streaming services

The EFL said that as part of the new agreement, “clubs will be able to continue international streaming services direct to fans overseas, where matches are not being broadcast exclusively, enabling those based abroad the chance to watch their team’s matches throughout the whole season”.


 

Premier League clubs to face sanctions for inflating sponsorship deals under new rules

Premier League clubs will face sanctions if they try to secure inflated sponsorship agreements or cheaper transfer deals with companies, organisations or other teams connected to their owners, The Times reports.

New rules published in the top flight’s handbook are much tougher and aim to block clubs bypassing financial controls by earning unfair amounts via means such as sponsorship from a company linked to an owner, or by signing a player cheaply from another club in the same ownership group.

Under the revised rules, teams can now be charged with a breach of the rules if they do not “use all reasonable care” to ensure deals are of fair market value.

There will be no fixed tariff of sanctions should rule breaches occur –all penalties would be available to an independent commission, depending on the severity of the offence.

The updated Premier League handbook states that the rules “seek to ensure the long-term financial sustainability of clubs by extinguishing reliance on enhanced commercial revenues received from entities linked to the club’s ownership”.

Bitter split

It is understood the new rules caused a bitter split in the league when a vote on them went through last month. It was thought to be the closest in the Premier League’s history, with 12 clubs voting for the changes and six against, with two abstaining, just passing the threshold of a two-thirds majority.

The details outlined in the handbook are said to help explain why some clubs were pushing strongly for the revised rules – and why state-connected clubs such as Manchester City and Newcastle United, or those in multi-club ownership groups, were fiercely opposed.

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