Hi, my name is Joe Thompson and I am a trainee solicitor wanting to specialise in the sporting industry.
*All views expressed on this site are my own and do not represent the opinions of any entity whatsoever with which I have been, am now, or will be affiliated.
How Does a Pandemic Affect the Sports Industry?
We can look at the impact of Covid-19 on the sporting industry in
Firstly, and most importantly from a fan perspective, is that this
pandemic is potentially going to change the outcome for all our teams. What
will happen should the premier league or any other league be forced to abandon
all games for the remainder of the season? Will Liverpool be given the title?
Will Leeds and West Brom be promoted? This has already been discussed to death
in the media. Everyone has their recommendations and opinions, biased or not.
It is something that we cannot predict with certainty because it depends on the
status of the virus in the coming months.
It may be worth looking at a previous example of a league
cancellation for guidance. In November last year, the Chilean football league
was cancelled 6 games before the end of the season due to the riots throughout
the country at the time. They decided to award the 13-point-ahead runaway
leaders Universidad Catolica the title. Even Liverpool’s most passionate rivals
must objectively admit their 25-point lead is deserving of similar treatment. However,
more controversially, the Chilean football association also declared no teams
from the Primera Division would be relegated and no teams from Primera B would
be promoted. At the time Santiago Wanderers sat 4 points clear, by no means a
certainty, the same can be said for Leeds and West Brom who are only 7 and 6
points clear respectively.
Secondly, the Coronavirus will affect the sporting industry from a
business and legal perspective. Behind all the passion and sweat we forget
there are thousands of contracts, agreements and financial deals holding up the
industry. For example, if the season is completely abandoned, League One’s
Southend are looking at a £750,000 hit. This comes from losing around £450,000
in ticket sales from their five remaining home games and the prospect of having
to refund season ticket holders and hospitality packages. This would be a
crippling blow for an already cash-strapped team.
coming months, maybe even years, we are going to see a large number of
contractual disagreements as a result of Covid-19. Many contracts will be
delayed, performed to a lower standard, or even cancelled completely. The
doctrine of frustration in English common law means a contract may be terminated
if a party is incapable of performing their duties due to it being impossible. However,
impossibility and not merely a delay is debatable, even during a pandemic. Most
contracts also have a ‘force majeure’ (superior force) clause which comes from
civil law. In several countries (not the UK) where force majeure is codified
in a civil code, specific legislation could deem an event to constitute force majeure, as the Chinese government has done in
response to Covid-19 by issuing force majeure certificates.
However, in the UK there is no such legislation, whether an event is force
majeure is open to much more disagreement as every contract is worded
refer to ‘force majeure events’ without anywhere defining what those
events are. An interesting decision from the Court of Arbitration of Sport
(CAS) in 2015 was that the Moroccan football association was not entitled to
postpone their hosting of the African Cup of Nations due to the Ebola outbreak.
CAS held that Ebola was not a force majeure event and it did not make
organising the tournament impossible, just more difficult. Of course, there are
big differences between Ebola and COVID-19, especially in the fundamental issue
of how it is spread. Finishing the fixtures for Premier League clubs arguably
may not be impossible should the British Government not actually order the
remaining fixtures to be cancelled.
majeure clauses refer to “pandemics” which would apply to Covid-19, but
others don’t. For example, clause 5 of Leicester Tigers Seasonal Hospitality
terms and conditions lists “strikes, lockouts, industrial disputes, riots,
wars, civil disturbance, fire, explosions, storms, power failure, governmental
or local authority or rugby authority regulations and requirements, loss of
liquor licence and difficulties relating to venues”; while pandemics are
not mentioned, governmental or regulatory requirements are. This means if the
government or Premiership Rugby ordered that a match must be cancelled or
played behind closed doors there undisputedly will be force majeure, but if the
club voluntarily cancels a match it is disputable.
As a result
of Covid-19, it is clear there will be many legal disputes like this, as well
as many disputes arising from decisions taken by sporting bodies like UEFA or
the FA. Ultimately, this virus is going to shape the sporting industry and
sports law for the foreseeable future.
HM Revenue & Customs (HMRC) have been clamping down on how tax is paid by football players over the last few years. On 31 March 2021, HMRC released new guidance. This guidance, along with the rise of investigations, indicates the changing attitude of HMRC to how tax on football agency fees will be handled going forward. What was the position? It is common in practice for an agent to represent both the player and the club in a transfer or contract negotiations. This is known as dual representation and is permitted by the Football Association under the current regulations. When representing both player and club, agents would split the services provided for the player and services provided for the club 50:50 for the purposes of tax. This position was accepted by HMRC until now. The club would pay 100% of the agency fee, of which 50% of this (plus VAT) would be paid on behalf of the player for the services provided to the player as a benefit-in-kind. A player or his employer must de
Sheffield Wednesday In November 2019, the EFL brought charges against SWFC for misconduct in relation to the sale of Hillsborough stadium. Charge 1 – SWFC included the sale of Hillsborough in their 2018 accounts, when it appears the stadium was not officially sold until 2019. The reason why SWFC sold their stadium and included the sale in the 2018 accounts was so that they could comply with the EFL’s Profit and Sustainability Rules (the EFL’s version of financial fair play) for the 3-year period 2015-18. SWFC argued that assertions made by the EFL at the time gave rise to a ‘legitimate expectation’ from SWFC that it could be included in the 2018 accounts. These assertions were made in emails from EFL employees. The Independent Disciplinary Commission made it clear this was no defence because employees of the EFL have no powers to waive or change the requirements of EFL rules. SWFC claimed that they had entered into a heads of terms agreement which was dated before 31 July,
Issue 1 – Did the Club Financial Control Body (CFCB) breach its obligations of due process and, if so, what were the consequences thereof? MCFC: The decision by the Investigatory Chamber of the CFCB to refer the case to the Adjudicatory Chamber of the CFCB before concluding their investigation was premature and did not allow MCFC the opportunity to present its case. The CFCB breached duties of confidentiality and impartiality when leaks came out about the investigation and were published in the media. UEFA: There were no procedural flaws, and even if there were, they were cured by the new review from CAS, and also the Adjudicatory Chamber. CAS: The fact that the case was referred to the Adjudicatory Chamber before concluding the investigation did not prejudice MCFC. The leaks did not impact the impartiality of the decision-making process. Agreed with UEFA that new review by CAS (and the Adjudicatory Chamber) has a curing effect because both parties must resubmit all evidence.