English Football League clears Paul Scholes over potential conflict of interest

Posted in Football

Co-written by Tom Maturi

On 27 December 2018, Oldham Athletic FC sacked manager Frankie Bunn following a 6-0 Boxing Day defeat to Carlisle United FC. Academy boss Pete Wild was placed in charge temporarily but, in the weeks that followed, Paul Scholes, former Manchester United FC midfielder and lifelong Oldham Athletic fan, became the media frontrunner to take on the manager’s role full-time.

In 2014, Scholes was part of a group of five former Manchester United players to buy a stake in Salford City FC and, last month, it was announced that a sixth former player, David Beckham, has also bought a stake in the club.

The regulations of the English Football League (the EFL) seek to safeguard against concurrent interests in different football clubs being held at the same time.  Specifically, EFL regulation 104.1 states that “except with the prior written consent of the Board [being the board of directors of The Football League Limited] a person, or any associate of that person, who is interested in a Club cannot at the same time be interested in any other football club”. 

Under regulation 104.2, “interest” includes, amongst other things, directly or indirectly (i) holding securities or shares of that football club, (ii) being a member of that football club, (iii) being involved in the management or administration of that football club, or (iv) having any power to influence the financial, commercial or business affairs of that football club.

At the time of writing, Salford City are in 5th place in the National League, four points behind the league leaders, and, if promoted, the club will likely be in the same division as Oldham Athletic next season.  Regulation 103.3.1 also confirms that a “football club” under regulation 104 includes football clubs in the National League, even though they are not strictly clubs within the EFL (which only comprises the Championship, League One and League Two).  Indeed, the definition of “football club” under the regulation includes football clubs all the way from the Premier League to the Northern Premier League, Southern League and Isthmian League, as well as clubs in any league under the auspices of the Scottish Professional Football League or Irish Football League. 

Regulation 104.5 further states that “the holding of not more than 10 per cent of the share capital of any football club shall be disregarded for the purposes of this Regulation 104 provided that those shares are, in the opinion of the Board, held purely for investment purposes only”. It is believed that Scholes’ stake in Salford City amounts to 10 per cent exactly and, on the week commencing 4 February 2019, it was reported that the English Football Association, together with the EFL, had approached Scholes asking him to clarify his role at Salford City. 

Following this, on 11 February 2019, Scholes was publicly unveiled as Oldham Athletic manager. On the same day, Salford City also released a statement which clarified that “although Paul was never operational in Salford City he will resign as a director of the football club, allowing him to focus completely on his new role at Oldham”.  It is understood that, as a result of regulation 104.5, the board of directors of The Football League Limited (the Board) granted its consent and decided that there would be no breach of the dual interest regulation even if Scholes retained his 10 per cent stake in Salford City.  It has, however, been reported that the Board granted its consent on the condition that the former England international will not be allowed to sign players from, or sell players to, Salford City whilst he is manager of Oldham Athletic.

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