Supporters are planning to demand answers from the Manchester United board about the recent deals struck by BSkyB, taking 9.9 per cent stakes in Leeds United and Manchester City, with the right to appoint a director on to the board of both clubs, while still owning 11.1 per cent of Manchester United. It has emerged that the Leeds deal is an apparent breach of the Premier League rules, which require "prior written consent" to be given if the holder of over 10 per cent of a club is to hold any shares in another. It appears that no such consent was given.
A spokesman for Leeds said that it was "assumed" at the time of the deal that BSkyB's stake in Manchester United would be reduced to below 10 per cent and therefore that no Premier League consent would be required. There is no question that BSkyB still holds 11.1 per cent, but a BSkyB spokesman said yesterday that the company does intend to reduce its stake in United but it is "an issue of timing". Manchester United, he said, have asked the Premier League to allow the 11.1 per cent stake to remain. A Premier League spokesman this week refused to discuss the question of whether prior written consent was in fact given for the deal, but said: "The Board is currently considering the issue in relation to Leeds and Manchester United and will come to a decision shortly."
This is a puzzling stance if consent has already been given prior to the deal. It is an embarrassment to the Premier League if their own rules were not followed to the letter.
Supporters argue that the media deals, which give the broadcasters the right to act as "sole agents" for the sale of clubs' TV rights, are potentially dangerous for football in two broad ways. First, there are the competition issues - the influence broadcasters may be buying in the direction of football's TV deals, which are due to be renegotiated for the start of the 2001-2 season.
In the case of Manchester United, the Monopolies and Mergers Commission ruled that a BSkyB takeover was against the public interest because it would skew broadcasting in favour of BSkyB, and give them influence over the sale of the Premier League's collective deal and any individual deals the clubs might strike. The MMC also ruled the deal would be bad for football's independence, and could further widen the wealth gap between large and small clubs.
The second, and new, threat, is the question of "multi-ownership" of clubs. The 10 per cent rule is aimed at ensuring that clubs remain independent rivals, but the purchase of 9.9 per cent stakes by such powerful companies stretch the effectiveness of the football authorities' rule books.
Adam Brown, a member of the Football Task Force and a Manchester United supporter, has written to the football authorities about the multi-ownership rules being apparently breached, and to the Office of Fair Trading and Department of Trade and Industry, calling for a halt to the ownership of stakes in football clubs by media companies.
"The broadcasters are seeking to get by the back door what they failed to achieve through the front door in April," he says. "The MMC was very clear about the dangers, and it will be a scandal if these deals are allowed." At Leeds and Manchester City, BSkyB are denying their approach is to influence the Premier League's TV negotiations, but the MMC dismissed similar undertakings in the United deal. Brown's argument has been strengthened by a remarkable admission from NTL, the American cable company that owns six per cent of Newcastle United.
"NTL is interested in gaining a seat at the negotiating table when it comes to television rights," said an NTL spokesman, Bruce Randall, in a letter to a student at Manchester Metropolitan University. "This is one of the reasons why we have taken a stake in Newcastle United."
This week a well-place television analyst said that the BSkyB strategy, which has not been cheap - their football club investments are valued at about pounds 80m - is to buy influence on the direction of football's TV rights in 2001. Besides the confirmed deals, Murdoch has likely allies at Tottenham, which is owned by Murdoch's long-term business ally Alan Sugar, and employs the former BSkyB chief executive, Sam Chisholm, and at Sunderland, where David Chance, BSkyB's former managing director, is a director. Spurs is rumoured to be next to strike a deal.
United supporters, victorious in April, may find this spate of takeovers more difficult to oppose. Both the Premier League and Football Associationare looking at the issue, but only in terms of multi-ownership, not media ownership, although the Premier League says it is considering whether to allow clubs with media connections to be involved in TV negotiations. The Government now looks unlikely to step in; the OFT confirmed yesterday that it will not investigate the first such deal, Granada's pounds 22m investment in Liverpool in July. A company has to have assets of at least pounds 70m to qualify for OFT intervention, and Liverpool, it decided, does not.
It is now very likely that the Leeds and Manchester City deals will be similarly cleared by the OFT. A DTI spokesman said yesterday that they can only act on references from the OFT, and so the Secretary of State, Stephen Byers, at present, is powerless to act. He said: "The Secretary of State has a quasi-judicial role on competition matters; which are are dealt with by the relevant authorities, in this case the OFT. He cannot do anything to prejudice the process."
At last year's United AGM, supporter-shareholders lambasting the proposed BSkyB deal accused Martin Edwards of agreeing to it because of the pounds 80m he stood to make personally from selling his shares. Edwards denied it, arguing that BSkyB's backing would allow United more funds, and the ability to compete in Europe. Today, he will stand before them with the deal having being blocked, the treble won and himself pounds 41m richer, following the sale of half his United shares last month.
United supporters are furious at Edwards for selling to City institutions, and the Shareholders United group is calling for United to institute a scheme to encourage supporters to hold shares in the club in trust. The battle is part of the growing movement by supporters to fight for a more community and supporter oriented approach to clubs than the relentless drive to maximise financial returns from football plcs. Over the BSkyB takeover, United supporters won a remarkable and hard-fought battle. With the rapid development of an alternative strategy by broadcasters, supporters are finding the war, for the independence of football clubs, longer and more difficult, on ground becoming more slippery by the week.Reuse content