Has multi-club ownership hit its limits?
Crystal Palace: victims of their own success © PA Wire/PA Images
Long before a ball was kicked, the Club World Cup set an important precedent with big implications for investors.
Fifa’s decision to eject Mexican side Club Leon from the tournament due to its common ownership with Pachuca has set a hard line on what is permissible under multiclub ownership. That the case then went to the Court of Arbitration in Sport further underlined a new reality in which governing bodies can no longer turn a blind eye.
Crystal Palace may be the first victim of the new approach. The south London club won its first major trophy less than a month ago, but the celebrations have been crudely interrupted. Its place in next season’s Europa League is in peril — due solely to the make-up of its ownership group.
Palace have four owners — longtime chair Steve Parish, Apollo co-founder Josh Harris, Blackstone executive David Blitzer, and tech entrepreneur John Textor. None of them has a controlling stake, all four have equal voting rights.
Textor’s Eagle Football, which owns Olympique Lyonnais, RWD Molenbeek and Botafogo, has the biggest slice at around 45 per cent. And that is where the problem lies. Palace qualified for the Europa League by winning the domestic cup, but Lyon also made it after finishing sixth in Ligue 1 (a feat managed in injury time on the last day of the season).
Uefa has raised concerns about Lyon and Palace both competing in the same competition, due to Textor shareholdings in both. There is precedent, such as Red Bull Leipzig and RB Salzburg being allowed into the same competition, and Manchester United and OGC Nice, both backed by Ineos.
Other clubs with shared owners have been able to use blind trusts as a work around. But even if Textor had the foresight (Palace had never qualified for Europe before) ahead of the March 1 deadline to move his shares into a trust, that could have complicated efforts to sell them — as has been his aim for more than a year. Indeed, the money expected from the stake sale is key to his plans to fix Lyon’s battered balance sheet.
Palace now have a couple of weeks to find a solution. Textor has been trying to accelerate a sale of his stake, possibly to Woody Johnson, the former US ambassador to the UK and owner of the New York Jets in the NFL. But a sale to anyone other than Harris and Blitzer may not solve the problem, as any new owner would need to pass the Premier League’s owners and directors test.
The Palace situation has some pretty unique elements, yet it nonetheless poses real questions about the future of multiclub ownership. In theory, the multiclub approach is meant to improve the performance of every team in the network. But if widespread success then puts owners in a situation where they have to relinquish control, what’s the point? And while Uefa’s concern has always been about protecting the integrity of its pan-European competitions, what about the impact on domestic football when owners find themselves having to pick favourites?
The recent trend of investors owning more than one club may not go into reverse, or even slow down. But the questions around whether it does more harm than good are going to keep getting louder.