Premier League clubs have voted to temporarily block teams making lucrative sponsorship deals in conjunction with a club’s owners following the Saudi Arabia-backed £ 305 million acquisition of Newcastle.
Eighteen clubs voted in favor of the ban at an emergency meeting on Monday.
Newcastle voted against and Manchester City abstained, both questioning the legality of the move.
It means a month-long temporary ban on any business associated with club owners while the issue continues to be discussed.
That prevents Newcastle from signing sponsorship deals with companies affiliated with Saudi Arabia’s Public Investment Fund (PIF), which owns 80% of the club.
Top teams complained to the league after the Newcastle takeover was completed on October 7th out of frustration with how the deal stood the test of owners and directors.
Last week, Leeds owner Andrea Radrizzani said Around the takeover, Financial Fair Play (FFP) rules need to be enforced to ensure that the 20 Premier League clubs are “playing the same game”.
The Premier League FFP rules allow clubs to make maximum losses of £ 105million over a rolling three year period.
The league said it agreed to the takeover after receiving “legally binding assurances” that the Saudi state would not control the club.
The PIF, which will provide 80% of the funding for the deal, is viewed as separate from the state.
This is despite the fact that the Crown Prince of Saudi Arabia, Mohammed bin Salman, is listed as chairman of the PIF.
PIF is worth £ 250 billion which makes Newcastle one of the richest clubs in the world.
Several major European clubs have sponsorship deals linked to their owners.
The Manchester City stadium, training complex and jerseys are sponsored by Etihad, the airline of Abu Dhabi. In 2008, the owners of the city of Abu Dhabi took control of the club.
city successfully knocked over a two-year ban on European club competitions for violating financial fair play rules after they were acquitted of all major allegations relating to the manipulation of sponsorship deals in a sports arbitration court last year.
The Premier League’s own investigation into City for violating the FFP rules has yet to come to a conclusion.
“Internal War in the Premier League”
Sports geopolitical expert Simon Chadwick on BBC Radio 5 Live
Domestically and across Europe, there are rules about what you can invest.
This is to ensure that you are focused on generating revenue, controlling your costs and that there is no “financial doping” occurring. In other words, when owners put money into the club and it distorts competition.
The four-week suspension is a bit unusual as sponsorship deals typically happen at the end of the season.
I think this reflects the fact that there is an internal war going on, an internal struggle.
The takeover by Saudi Arabia was long and drawn out. It has become political, it is very, very divided. That rumbles behind the scenes.
These are the other 18 clubs that are making a notice of objection to the Premier League and sending a statement to the Saudi Arabian owners at Newcastle United and the Abu Dhabi owners at Manchester City that you can’t buy yourself success, there are rules ‘You have to follow the rules and if you don’t we will take action against you.
What is financial fair play?
Both the European football association Uefa and the Premier League have rules for financial fair play in order to prevent the clubs from spending beyond their means.
As part of the rules, clubs must offset football-related expenses – transfers and wages – with revenues, including revenues from their commercial departments.
This does not include money that is spent on stadiums, training facilities, youth development or community projects.
Both Uefa and the Premier League have limits on the amount of money a club can lose over a period of time.