Could football see a return of third party ownership before it has even left the sport?

Third party ownership, also known as a TPO, is when the transfer rights of players are wholly or partially owned by a third party other than the club the player plays for. Since 2006, this practice is something that is already prohibited in England ever since the media interest surrounding Carlos Tevez and Xavier Mascherano’s transfers to West Ham United.

This new blanket ban by FIFA came in to force on the 1st January 2015 and was implemented at Article 18er of the FIFA Regulations. It states:

“No club or player shall enter into an agreement with a third party whereby a third party is being entitled to participate, either in full or in part, in compensation payable in relation to the future transfer of a player from one club to another, or is being assigned any rights in relation to a future transfer or transfer compensation.“

This ban does not come into play until 1 May 2015, any contracts which involve this kind of agreement pre-dating the new rules will be allowed to run its term and any new agreements made between 1 January 2015 and 1 May 2015 can not exceed the duration of one year.

These new rules created by FIFA have been applauded by many supporters, notably by UEFA President, Michel Platini, who in a recent interview described TPO as “a type of slavery that belongs in the past”; going on to say, “Today it is shameful to see some players with one of their arms belonging to one person, a leg belonging to a pension fund located who knows where and a third person owning his foot.” . However, there are two sides to every story and this ban isn’t welcomed by everyone. Notable arguments are that without third party ownership many clubs will struggle to keep up with the pace set by the European giants such as Manchester United, Real Madrid or Bayern Munich. An example of success is Atletico Madrid who won La Liga as well as make the Champions League final last year, through the use of such schemes.

 This method of investing in players, that clubs could not otherwise afford, is predominantly seen in South America; however the biggest opposition to FIFA’s ban has come from Europe. On 9 February 2015, the Liga de Fútbol Profesional (LFP) and the Liga Portuguesa de Futebol Profissional (LPFP) denounced the world governing body to the European Commission for anti competition agreements and abuse of dominant position by them.

 The above claims are made under Articles 101 and 102 of the Treaty on Functioning of the European Union, which deal with anti-competition practices. These articles state that:

 Article 101:

“The following shall be prohibited as incompatible with the internal market: all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the internal market.”

Article 102

“Any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it shall be prohibited as incompatible with the internal market in so far as it may affect trade between Member States.”

Sports governing bodies must obey this treaty as they are classed as economic operators. As a result, FIFA is under the obligation to obey Articles 101 and 102.

 The LFP and the LPFP are arguing that as a result of being bound by the TFEU, FIFA have contravened this European legislation by restricting the freedom of competition by stopping clubs, that use TPOs to compete on the European market, from using them.

 There is yet to be a response from the European Commission on this newly instated competition claim from the Spanish and Portuguese FAs, but if this claim was to be successful FIFA could be looking at a fairly hefty fine as well as the possibility of being liable for damages to clubs, players and companies involved in TPOs.

 A ruling such as the one that is sought by the LFP and LPFP could have repercussions closer to home, this could mean that the FA Rules banning TPOs could be illegal. Therefore, re-opening the litigation on this seemingly ugly side of the beautiful game.

Written by guest blogger Steven Vettorel.

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Richard provides expert opinion on rejection of Massimo Cellino appeal

Following the announcement yesterday from The Football League that the appeal by the Leeds United Owner Massimo Cellino against his disqualification under the Owners and Directors test had been rejected, FrontRow Legal’s Principal Richard Cramer was once again on hand to provide expert opinion to the national and local press on the ramifications of this decision. For a selection of this commentary please see below:

http://www.itv.com/news/calendar/update/2015-01-19/will-latest-cellino-blow-be-one-to-many-says-sports-lawyer/

http://www.dailymail.co.uk/wires/pa/article-2856450/Cellino-plans-appeal-failed-test.html

https://www.youtube.com/watch?v=GScpkKlqh5Q

A brief overview of the present situation is provided below:

The latest development relates to an Italian Judgment dated March 2014, whereby Mr Cellino was found guilty of failing to pay import duty tax on a luxury yacht. As a result of this, he was ordered to pay a fine in the region of 600,000 euros. Subsequently, The Football League endeavoured to block his attempt to acquire the majority shareholding of Leeds United under their Owners and Directors test, previously known as the Fit and Proper Persons test. Under this, individuals who have unspent convictions for offences of dishonesty are disqualified from taking such action.

Mr Cellino successfully appealed against this decision in May 2014, when an independent QC, Mr Tim Kerr, ruled that the offence could not be proven to be dishonest until such time as the full Judgment from Sardinia had been released. Mr Cellino finally became the majority shareholder of Leeds United in April 2014 when his company Eleonora Sport Limited agreed to purchase the club from previous owners GFH (Gulf Finance House) Capital, a limb of the Bahraini investment bank GFH.

Following the release of the full Italian Judgment, The Football League subsequently found that Mr Cellino had, in fact, acted dishonestly in relation to the tax evasion case. They therefore moved to disqualify him. Under this disqualification, Mr Cellino was ordered to resign as a club director and take steps to ensure that he is not acting as a relevant person at the Club within 28 days. Mr Cellino however appealed against this decision, which allowed him to continue in his role pending the appeal.

A Professional Conduct Committee, set up by The Football League and chaired once again by Tim Kerr QC, considered the appeal at a Hearing on 15 January 2015 and rejected it. Following this decision, the Leeds United Owner has now been disqualified from acting as a ‘relevant person’ until 10 April 2015. Under the relevant rule, Mr Cellino’s conviction will be deemed ‘spent’ on 18 March 2015, however the suspension will be extended as a result of the appeals process.

Leeds United’s Chief Operating Office Matt Child has however confirmed that the Club continue to consult with their lawyers and it may be the case that we are yet to hear the end of this matter. When it comes to Leeds United, its fans will be familiar with their Club being in the press recently more for their off-field activities rather than their performances on the pitch. It is almost certain that this latest scenario has a long way to go yet. It will certainly be interesting to see what sort of frameworks are put in place to run the club in Mr Cellino’s temporary absence and whether this latest decision has any long-term effect on the passion of the Owner and subsequently Leeds United as a Club.

Posted in Regulatory & Disciplinary, Sports Business | Comments Off

FrontRow Legal provide expert sports law opinions to the press on Massimo Cellino ruling

Following the recent announcement from The Football League that Leeds United Football Club owner Massimo Cellino will be forced to resign from his role at the Club after receipt of the Judgment from the Italian court which found him guilty of tax evasion, FrontRow Legal were called upon to provide expert opinions on this issue to the press.

Whilst Principal Richard Cramer provided commentary on the various legal ramifications of this decision to the BBC, ITV, Press Association and local news providers, Trainee Solicitor Alan Darfi provided a detailed interview for Radio Yorkshire.

An extract from Richard’s interview with the BBC can be located at 09:00 by clicking on the following link:

http://www.bbc.co.uk/iplayer/episode/b04sxcg1/look-north-yorkshire-01122014

Various articles quoting Richard can be located by clicking on the links below:

http://www.sportinglife.com/football/news/article/2/9588451/massimo-cellino-disqualified-from-owning-leeds-united-by-football-league

http://www.nationalheadlines.co.uk/834343/cellino-plans-appeal-of-failed-test/

http://www.thetelegraphandargus.co.uk/sport/football/footballleeds/11638283.print/

http://www.westerndailypress.co.uk/Cellino-vows-contest-ruling-resign-position-Leeds/story-25006131-detail/story.html

Alan’s interview can be found by clicking on the following link:

http://radioyorkshire.co.uk/articles/sports-lawyer-discusses-cellinos-disqualification/

Posted in Regulatory & Disciplinary | Comments Off

Should an employee quit as soon as they consider there to be a breach of the employment contract?

When advising employees on their various options following an alleged breach of contract by an employer, one issue which always arises is at what stage the employee should formally resign, if taking this course of action. There is always the concern that, through not resigning immediately, it could be held that an employee has affirmed any breach of conduct. Potentially, this could be the case even where it should be clear that they did not intend for the contract to continue.

The Employment Appeal Tribunal have held however in the recent case of Chindove v Morrisons Supermarkets that delay in resigning in itself cannot amount to an affirmation of a breach of contract. The Employment Tribunal had held in the first instance that due to the fact that the last act of mistreatment (this being the failure of an HR manager to investigate a grievance) had occurred 6 weeks prior to resignation, the employee had affirmed the breach of contract. On appeal however, it was held that the matter of time is not to be taken in isolation. What is more important is whether the employee has demonstrated through their conduct that they have made a choice that they wish for the contract to continue.

This is good news for employees who are simply considering their options following a breach of contract, or attempting to negotiate a settlement with their employers, as often happens in sport. It is not uncommon for negotiations of a settlement to take several weeks, particularly in these days of foreign owners and busy schedules. The news that it is possible to undertake this process without running the risk of being accused of affirming a breach is well received therefore. As confirmed in the case, it is the conduct which is important. Therefore, if it can be shown that a participant has been replaced (as is easily demonstrated where a new manager or coach have been appointed) and that the individual has been engaged in attempting to agree a settlement, it will not be held that the breach which lead to the resignation has been affirmed, simply by the fact that it occurred some time before any resignation, following a breakdown in negotiations.

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Who’s the self-employed independent contractor in the black?

It is likely that many a football fan will have joked about issuing a formal complaint to a referee’s employer following dubious performances throughout the season. However, the question of whether match officials are actually employees of their respective Football Associations is not as straight forward as you would first think, as has recently been confirmed in the case of Conroy v Scottish Football Association.

In the case, which was considered by an Employment Appeal Tribunal, Mr Conroy, a top level Scottish referee, issued claims against the Scottish Football Association for unfair dismissal, age discrimination and holiday pay. The Scottish FA however argued that Mr Conroy was self-employed and was therefore not entitled to issue such claims. An employment tribunal had previously found that he was not an ‘employee’ for the purposes of the Employment Rights Act 1996. However, it had held that he was an ‘employee’ for the purposes of the Equality Act 2010 and a ‘worker’ for the purposes of the Working Time Regulations 1998. Mr Conroy appealed against this decision. The Appeal Tribunal have dismissed this appeal however and have upheld the original decision. Accordingly, Mr Conroy is unable to pursue his clam for unfair dismissal. However, he is still able to pursue the claims for age discrimination and holiday pay.

In making this finding, the fact that Mr Conroy purchased his own equipment, such as flags and whistles, was taken into consideration. Additionally, attention was drawn to the fact that the Scottish Football Association were not obliged to offer any fixtures to the match official and he would not be disciplined for withdrawing from fixtures. Although the FA provided private medical care and insurance cover, they did not pay any sick pay and Mr Conroy was responsible for his own tax. Finally, it was noted that Mr Conroy had a full time job, although it was noted that he was paid £213,000 each season for officiating at matches.

The result of this finding means that, although Mr Conroy still has several options still available to him, he will be unable to pursue a potentially lucrative claim for unfair dismissal. Although on first viewing it would be easy to say that the question of whether a referee is employed by a Football Association is a simple one, as is often the case with employment law issues a lot depends on the facts specific to the case.

So the next time you feel the urge to hurl abuse at a match official for making what is perceived to be an incorrect decision, have some sympathy for them. They are choosing to give up a lot of time without actually becoming employees and benefiting from the receiving of employment rights in return. And those flags aren’t cheap either, even if you are being paid £213,000 a season.

Posted in Sports Business, Uncategorized | Comments Off

End of the football season = start of the real work?

With the football season having finished it would be easy to suggest that for those working behind the scenes a long period of holiday is now upon us. However, this could not be further from the truth, particularly in respect of player transfers. Although the forthcoming World Cup in Brazil has provided a certain element of distraction for the press, we are already seeing daily rumours about potential big name transfers appearing across all the usual outlets. But what actually happens for the lawyers and agents involved in these rumours and transfers?

Although the transfer window doesn’t officially open until 1 July, clubs and agents will already be negotiating behind the scenes. This is in spite of the fact that most players and managers will have taken a very short post-season break. These negotiations include agreeing contract extensions (particularly where the original contract contained an option to do so at the end of the season), attempting to renegotiate terms (mainly in respect of lengths and salary) and even attempting to find ways of terminating a contract or gaining leverage to help with any negotiations (Happy Birthday to any footballers reading this, by the way….)

In a lot of cases players will have agreed with their agents during the season that they would like to move clubs. Should this be the case and a player is still under contract, FA and FIFA regulations state that discussions are not permitted to take place without the permission of the employer. Despite the fact that the FA sees relatively few high profile referrals under its Rule K arbitration process for ‘illegal approaches’ (more commonly known as tapping up), there can be no doubt that this process takes place relatively frequently. Unfortunately however money talks, therefore if this takes place and it leads to a transfer then clubs are usually satisfied that they have been amply compensated. In addition, it could even be said that this process is accepted as part and parcel of the game.

If a club are interested in a player, they then have to make a formal approach to the employer. Any agreed transfer will need to be confirmed by The FA once the transfer window opens. This follows normal negotiations between clubs and then subsequently between the club and player, to be followed by a formal contract.

You often read in the press about smaller clubs being dissatisfied with the ‘poaching’ of their young players by bigger organisations. Where a player under the age of 24 has been offered a new contract, which is rejected in favour of signing for a different club, rules set out that compensation is payable. Should a figure not be agreed between the clubs the matter is referred to arbitration which is run by the Professional Football Compensation Committee. This body hears a range of evidence in respect of the player’s history and the background to the transfer and will set a figure. Frequently this is staged to include additional sums dependent upon future performances.

Of course all of this work has not even mentioned pre-season training, which commences sooner and sooner each year for players. When you take into consideration the fact that agents and lawyers are probably already working hard behind the scenes, alongside the fact that players will soon be reporting back for pre-season training (should they not be involved in the world cup), then it is fair to say that, although the playing season has finished, football never really takes a break.

Posted in Players, Coaches & Managers, Regulatory & Disciplinary, Sports Business | Comments Off

Richard called upon yet again to provide expert legal opinion

Following the recent announcement that Norwich City, Fulham and Cardiff City have instructed lawyers to challenge a decision made by the Premier League to only fine Sunderland AFC following the fielding of an ineligible player, FrontRow Legal’s principal Richard Cramer was once again on hand to provide expert legal opinion to the national press.

Although the Premier League have stated they feel that a points deduction for Sunderland is unlikely following this process, the challenge does still have the potential to alter relegation from the 2013/2014 FA Premier League, therefore the subject has been picked up by the majority of the major news outlets. For Richard’s interview with BBC Radio 5 Live please visit the link below, the interview starts at 1 hour 37 minutes:

http://www.bbc.co.uk/programmes/b042lgs9

Posted in Regulatory & Disciplinary, Sports Business, Uncategorized | Comments Off

Yet more media coverage for FrontRow Legal Principal Richard Cramer

Following the recent announcement that an independent QC had upheld the prospective Leeds United Football Club owner Massimo Cellino’s appeal against the decision of The Football League to reject his takeover of the Club, Richard was again on hand to provide an expert opinion to the press.

To watch Richard’s interview with Radio Yorkshire please follow this link: http://radioyorkshire.co.uk/?post_type=articles&p=554

Posted in Uncategorized | Comments Off

Employment law changes taking effect from 6 April 2014

Back in December we commented on what were, at the time, forthcoming changes within the area of employment law (http://www.frontrowlegal.com/blogs/blog/forthcoming-employment-law-changes/)

With several of these amendments coming into force on 6 April 2014 we thought it a good time to pick out two areas which are likely to be of interest to those seeking to make a claim against their employers.

ACAS Early Conciliation

It has now been confirmed that any potential claimants must first refer their claim to the Advisory, Conciliation and Arbitration Service (ACAS), before they are able to submit an ET1 claim form to the employment tribunals. This service will be brought in from 6 April 2014 and will become mandatory from 5 May 2014.

Once ACAS have been notified of a claim they will contact the potential claimant to obtain further details from them about the matter. Importantly, the potential claimant is not required to proceed with the ACAS service and can simply confirm that they do not require their assistance. If this is confirmed it will not prohibit them from subsequently proceeding with the case through the employment tribunals.

Where a potential claimant indicates that they do wish to utilise the ACAS service, a Conciliator will contact the employer and attempt to reach a solution between both parties. One of the main reasons why the current Pre-Claim Conciliation Service has not proved successful is due to the fact that the limitation period, this being the time within which a claim must be issued, is only 3 months from the date of dismissal in employment cases. Under the new scheme, ACAS will contact potential claimants within 2 days of initially being notified of a claim. They will then have 1 calendar month from receipt to promote a settlement which can be extended by up to 14 days where there is a reasonable prospect of settlement and both parties agree. The time limit to submit a claim to the employment tribunals is paused from the time that ACAS are first contacted and will re-commence once ACAS have confirmed that the early conciliation procedure has been concluded, either through settlement or the fact that the proposed claimant/employer does not wish to continue with the service.

One interesting aspect however is the fact that the Conciliators are not able to make judgments about whether tribunal claims have any merit. There will therefore be situations where ACAS are obliged to continue with the conciliation process, even if they do not consider the claim to be valid. Additionally, Conciliators can only convey to an employer what the potential claimant has told them. It will therefore be difficult to establish if any potential claims exist where this information is unclear or incomplete.

It will be interesting to see how these changes affect the numbers of potential claims which are settled without the need to involve the employment tribunals. There is no doubt that there will be an increase, however it remains to be seen whether people simply refer their potential claims to ACAS with no intention of actually using the service, in order to be able to continue through the standard process.

Increased figures

One other change which will be of interest is that the maximum amount for a week’s gross pay is being increased from £450 to £464, when calculating amounts that can be claimed by an employee. This uplift is likely to apply to a large number of claimants, in that this calculation is used to calculate the basic award and will therefore provide a larger pay-out for those who are on annual salaries over £23,400, whereas previously their claim would have been restricted. Additionally, the maximum compensatory award is being increased from £74,200 to £76,574, this award being compensation for actual loss of income. It could however be said that this is likely to only affect those on large salaries, or those who are likely to be unable to find work for a significant period of time.

 

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Leeds United: Richard asked to provide expert opinion to the press

The past few weeks have been busier than usual for FrontRow Legal’s principal Richard Cramer, with various national and local journalists, including those from the BBC and ITV, requesting interviews to discuss the recent events surrounding the proposed takeover of Leeds United FC by Massimo Cellino.

On 18 March 2014, the Italian courts fined the proposed new owner following a finding of guilt in relation to tax evasion. Richard was asked to comment on what the likely outcome would be following this, particularly in light of the fact that The Football League were in the process of assessing whether the Italian passed their owners and directors test.

When The Football League subsequently announced that the finding would lead to Cellino failing the test, Richard was again called upon to provide expert opinion on what this now means for Leeds United.

For Richard’s detailed commentary on this issue please see the national press.

Posted in Regulatory & Disciplinary, Sports Business, Uncategorized | Comments Off

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