The Premier League is currently vulnerable to new investors and team owners who could have sourced their wealth from illicit activities.
That's according to a new peer-reviewed paper which is the latest to raise concerns about the competition's Owners' and Directors' Test - colloquially known as the 'Fit and Proper' test - saying "complex and opaque structures permit the misuse of EPL club ownership for the channelling of illicit finances".
Criminology experts from The University of Manchester, who led the study, say their findings demonstrate "conditions which are known to be associated with the use of organisational structures for illicit activities in the ownership structures of many EPL clubs".
Such conditions include the "widespread use of various legal entities and traditional 'secrecy' jurisdictions" that can hide who owners and investors are, as well as the presence of unnecessarily complex arrangements, and an absence of information on who all the owners actually are.
They state the current Owners' and Directors' Test does not do enough to prevent potential new owners and investors from withholding the source of their funds, "which could be from illicit activities".
The test, they state, also does not prevent investors from concealing "the nature of particular transactions, which could involve violations", nor obscuring the "actual investors or owners of clubs, who may be unscrupulous actors looking to conceal their illicit funds or intentions".
Reporting in the journal Sport in Society, co-author Nicholas Lord, a Professor of Criminology at Manchester's School of Social Sciences, says these enabling conditions require further "scrutiny by responsible regulators".
"The obscuring of transparency around the ownership chains and networks presents significant obstacles to regulators seeking to assess the suitability of individuals and owners for football club ownership.
"The conditions of EPL (English Premier League) ownership structures in itself does not imply anything inappropriate is taking place, but these conditions make it possible for some people, who may be motivated to do so, to use ownership structures to obscure key information.
"The conditions we found are known to be associated with the use of organisational structures for illicit activities, such as money laundering, and are reflected in the ownership structures of many EPL clubs."
Co-author Dr Pete Duncan, who recently completed his PhD in the Department of Criminology, adds: "12 of the 20 clubs have at least 10% of their holdings, which - due to secrecy provisions - cannot be formally traced back to their beneficial owners.
The experts launched their study "motivated by recent concerns regarding links between football and illicit finance".
They searched the academic literature to identify conditions regularly observed in cases of money laundering and illicit financial management. They then collected and analysed data from the ORBIS portal (a database of over 489 million companies from 170 sources) and the 2023/24 EPL Handbook to qualitatively determine whether club ownership structures "shared common conditions with structures which enable the management of illicit finance". The aim was to examine whether conditions that are often present in cases of illicit financial flows could also generate "the potential for illicit financial management through EPL clubs".
They also assessed the ownership structures of each club, noting down the number of corporate or other non-natural person entities in each club ownership chain; the incorporation of holding companies in non-UK jurisdictions; the number and types of different legal entities composing each club's organisational structure; and whether over 90% of holdings in each club could be attributed to natural persons. They then extracted the 'secrecy score' measure of the 2022 Financial Secrecy Index for each related jurisdiction used from the Tax Justice Network's (2022) webpage.
Findings demonstrate that Manchester United had the greatest number of legal entities in its ownership chain (13), followed by Crystal Palace and Manchester City (both 11).
Also, the experts found 14 clubs have at least one corporate entity in the structure incorporated overseas (including in Jersey). When considered proportionally, Bournemouth, Wolves and Liverpool are the clubs with the greatest proportions of their ownership structures made up of overseas-based corporate or other legal entities - where most score relatively highly on the TJN's 'secrecy score' scale.
"Whilst it might be understandable for an overseas beneficial owner to own an EPL club via a holding company incorporated in the overseas jurisdiction they reside in, the combined use of multiple secrecy jurisdictions and opaque entity types that ultimately result in the obscuring of true beneficial ownership is concerning," adds Dr Duncan, whose PhD examined the nature, organisation, and regulation of variably illicit tax minimisation in UK professional football.
"The use of these varied ownership mechanisms and structures makes it challenging to differentiate between sources of legal or illegal finances and wealth, whilst the creation of complex arrangements that are inherently legal and commercially plausible offers great scope to co-mingle both legal and illegal activities.
"It is these structures that should be scrutinised most closely by regulators and other stakeholders."
Professor Lord concludes: "What is certain is that such complicated ownership structures are not strictly necessary to run a successful EPL club.
"Many structures do not simply extend beyond what is strictly necessary in a single dimension, but in fact combine multiple enabling conditions in the construction of seemingly anomalous structures".
Whilst such structures and arrangements can be used for good reason in business, what should be a concern for football stakeholders and law enforcement, is that the seemingly unnecessarily complex and opaque structures identified in this research could permit the misuse of EPL club ownership for the channelling of illicit finances.
"Any exposure to illicit financial flows could seriously jeopardise the futures of clubs, which would have serious negative consequences for those most attached to these very important institutions.
"Furthermore, opaque ownership structures make it difficult for football regulators to ensure that regulations regarding multi-club ownership are being complied with."
Dr Duncan and Professor Lord recommend that future regulation involves mapping the structures of teams to identify conditions that are susceptible to misuse.
They also suggest further research on the topic, such as to analyse in what ways football club ownership structures have been misused for illicit financial flows, and how these behaviours are organised.
One limitation of their paper is that extracted ownership data originated from varying financial years, meaning some were not 'live'.
