Hundreds of players released, lawsuits over transfers and £200MILLION in damages to promotion-chasers…one sports lawyer explains why voiding the 2019-20 season would cause CHAOS
- The future of the 2019-20 season is up in the air amid the coronavirus crisis
- There have been a growing number of voices suggesting it should be voided
- But that would lead to serious issues in terms of legal disputes in the future
- Sportsmail spoke to sports lawyer David Seligman to find out what might happen
- Coronavirus symptoms: what are they and should you see a doctor?
Everything around football is up in the air. The season has been suspended for weeks and it is unclear when – and if – it might return. As time goes on, there are more voices calling for the campaign to be called off amid the coronavirus crisis.
They do not seem to factor in the sheer number of issues that would be caused by ending it in the near future. There has been speculation over potential legal action – but what would actually happen if they decided to announce it was over today?
Sportsmail has spoken to sports lawyer David Seligman of Brandsmiths to find out what would happen if the season was rendered null and void…
The Premier League and EFL seasons are up in the air amid the ongoing coronavirus crisis
There have been suggestions it could be rendered null and void but what might happen?
A lot of EFL clubs will basically get rid of every player they do not want to keep. Every season, EFL clubs release loads of players. They’d save salaries for April, May and June and a month’s severance, so four months of wages.
They wouldn’t be able to argue force majeure – unforeseeable circumstances that prevent someone from fulfilling a contract – because EFL and Premier League contracts don’t include those express clauses.
What they might be able to do is argue that the contract is frustrated. It means that for reasons beyond control of the parties you can’t do what the contract promises. Contracts could be set aside because of unforeseen events that render the obligation impossible. That applies to employment contracts and loan contracts.
Sportsmail spoke to sports lawyer David Seligman (right) to discuss the possible outcome
A huge number of players could be released in the EFL if clubs can argue for frustration
If you set aside a contract for a player who is engaged to play for you next season they are unlikely to re-sign for you, but if you have a player that you are counting down the days until they leave, the doctrine of frustration would be used to the club’s advantages.
Players are unable to play. No players or clubs thought they’d be in this situation. It’s physically impossible for the players to fulfill the obligation in the contract.
Frustration is an argument I’d raise on behalf of the clubs to set aside employment contracts and loan players.
It’s potentially hundreds of players being released from their deals and clubs having a valid legal basis to do so.
It could lead to potentially hundreds of players being released from their contracts early
Say you want to keep players and they are meant to be getting a bonus for staying up or qualifying for Europe – would they have a right to claiming it?
It depends. Say the season is voided – it depends how the contract is drafted, if it says if we ‘retain our status at the end of the 2019-20 season’ then it would be pretty hard to argue around it on the basis that they have, albeit in unusual circumstances.
But there will be issues if the season doesn’t finish and they decide to relegate the bottom three teams anyway. There are players due for a wage cut if they go down. It’s unlikely, but there would be an argument that they haven’t been relegated due to performance, so they shouldn’t have their wage cut.
The obvious one if they voided the season would be obligations to other clubs for transfers. For example, if a club sold a player to Luton and a clause of the transfer agreement states that if they stay up, they will pay £100,000. The selling club would argue they stayed up so Luton owe them the money. Luton would argue that it is as though the season never happened, that obligation passes onto next season essentially.
The EFL and Premier League would have to implement some very detailed guidance in an attempt to give clubs clarity in such circumstances.
Bruno Fernandes signed for Manchester United in January – like most deals, it includes options
Wouldn’t teams just come to an unanimous agreement?
Clubs throughout the pyramid have vastly different issues to contend with. For example with loan players, if you’re in League Two, you might have five players in on loan and decide you don’t want to pay for them so you argue the contract has been frustrated.
But a Premier League or Championship side may have 10 out on loan and they will want the money under those loan agreement. They’re going to disagree.
If it ended today, the EFL and Premier League will have to set out guidelines or regulations that wouldn’t necessarily determine an outcome but can lead to clubs reaching a sensible compromise.
Clubs would then have to come to agreements or simply sue each other.
Premier League clubs and EFL sides might have different attitudes over loan agreements
If English leagues are voided and players are released, could they sign for clubs abroad?
This depends on FIFA and the Member Associations. FIFA will likely let the Member Associations effectively pick their own transfer windows.
Therefore if the Premier League and EFL lobby the FA to keep the window shut and if the registration window is opened by the RFEF, say, and Pedro is released by Chelsea due to frustration, Barcelona could bring him in for free to get them over the line.
He might even go to Chelsea and say, ‘Release me, I want to go and play abroad’.
Pedro is coming towards the end of his deal with Chelsea and wants to leave in the summer
What about options in contracts?
Options generally have to be activated by the third Saturday in May. But if the season ends today, players might be able to terminate their agreements and sign for another club immediately. That’s an issue – clubs would say they didn’t have a chance to decide on whether to activate the option, especially when there is no visibility as to when the next season may commence.
How could you extend a contract when you don’t know when next season is or ends either? When would it start and finish? How can you negotiate performance related bonuses? There’s so much uncertainty and that always brings disputes.
How long could legal cases go on for?
An option I would advocate would be to set up a COVID arbitration committee to deal with disputes. As it stands, there’s FA Rule K arbitration.
They are heard and decided upon quicker than high court proceedings. But they can drag out. And the arbitrators can be QCs or seasoned lawyers, which can cost £15,000 to £20,000. If it’s a dispute of, say, £50,000, it’s a large chunk of the potential payout.
EFL clubs have the Player Related Dispute Commission. Whenever I’ve dealt with it, you rarely get to a final hearing because it takes such a long time that matters usually get settled and both parties take the compromise.
There needs to be an alternative to this. A COVID arbitration committee would be useful as it would likely see many of the same arguments raised with many factual similarities between case. Precedent could be easily set and the arbitrators would be well versed in the law pertaining to frustration, force majeure and failure of consideration and how that could be applied to these types of cases.
Manchester United are yet to decide if they want to activate a clause in Nemanja Matic’s deal
What about sponsors? Would that be an issue?
Sponsorship deals are relatively straight forward contracts – you pay X amount and you gain the value from your brand appearing on shirts etcetera. There’ll be some shirt sponsors who will say they will not pay because the games are not happening. They may argue there is a failure of consideration – an essential element to a contract.
Clubs will counter that by saying that as they’ve played three quarters of the season, people have bought shirts and there are re-runs of matches on TV so you’re still getting the exposure under the contract and so there is no ‘total failure’ of consideration – the legal test.
Sponsors may also argue frustration, or some contracts may have force majeure clauses in them.
That’ll be a huge issue and dispute as sponsorship income is a vital source of revenue for clubs at all levels and sponsorship fees are often paid quarterly. There may be a few defaulting payment this June.
Liverpool’s sponsorship deal with New Balance will expire at the end of the season
What about Liverpool switching to Nike from New Balance?
If the contract with New Balance says that agreements on the final day of the 2019-20 season, then the agreement may be terminated earlier than expected.
This could cost New Balance financially, for instance lost marketing opportunities or holding excess stock. Alternatively it could benefit Liverpool and Nike who may be able to bring forward the switch.
Generally in circumstances such as this, one party will try and use the situation to get the edge over a competitor in a business transaction.
What about promotion? What legal basis would clubs have for damages if they are denied it?
The EFL is a company called The Football League Limited and each club is a shareholder. It’s a hard argument to run, but if they decided to act in accordance with the Premier League and cancel the season, Leeds and West Brom could argue the EFL’s board acted with unfair prejudice against a minority shareholder.
For example what if the decision was solely made to retain Leeds as an EFL club as they have global support and offer a better sell to broadcasters? A decision of this kind would completely prejudice Leeds and other clubs seeking promotion, it would also not in keeping with the ethos of the EFL articles.
Damages would be fairly easy to quantify. It’d be a hard case to win but you might not bring it on your own. You’d bring it with every promotion chasing side in the divisions.
Leeds and West Brom would get the most in damages but even lower down it’s worth it. Leeds and West Brom’s potential legal action is one of the reasons the EFL would be so keen to finish the season.
Imagine if the Football League ended the season, Leeds and West Brom lost revenue, were denied promotion, it went to a tribunal and they won with damages of £200million – it would bankrupt the Football League.
It would be a tough case to argue but promotion-chasing sides could sue for huge damages
What would happen with broadcasters?
It depends what the contracts say. They might have force majeure clause in it. Also, Sky have given everybody the option to suspend Sky Sports. It’s good PR. But if I were the Premier League and EFL, I’d argue that they get loads of content around live action. People watch Premier League Years and season reviews. Therefore Sky would have failed to mitigate their losses.
They’ve not lost that much but this PR act has encouraged people to add to Sky’s financial losses. That is an argument the Premier League and EFL could raise.
Also – when football comes back, you still want to have the rights. If you void the original agreement with the season cancelled, how willing will the Premier League and EFL be to go back to Sky again? Amazon, Netflix and YouTube are breathing down their neck.
In a time like this, a recession, it might even be in the Premier League’s interest if the contract was terminated.
Amazon and Netflix have an unlimited pool of money – people are still buying things from Amazon now while they’re in lockdown. They could even use the situation to lobby the FA to get rid of the 3pm blackout rule, which would increase the value of the deals.
There could be issues if Sky Sports and BT Sport ask for their money back over the TV deal
And say the FA Cup – they’ve already dished out prize money for that…
Clubs have definitely spent that already, especially further down the pyramid. There’s also broadcasting money. They wouldn’t be able to afford to pay that back.
What about European football?
If they hand it to the top four, the team in fifth would argue – it is a problem. If they go for the same four teams as last year for the Champions League – again it would be seen as unfair.
There’s a number of issues, including transfer agreements. There are deals where the price can be decided by qualifying for Europe. If UEFA void their competitions and you are given a place, have you qualified or has it just been handed over? Does that trigger the payout?
There are so many disputes.
UEFA’s decision making over European qualification would also have a significant impact
Say someone bet on Leicester to finish in the top four at the start of the season… how would gambling companies have to handle it?
It depends on how the betting companies define the word ‘season’ in their terms and conditions.
If the terms of the bet are fourth position at the termination of the 2019-20 season and the season is terminated on April 1, you’ve won your bet. The betting companies would argue it was meant to be over a 38 game season.
But you could argue the season has finished and they should pay you out.
How would you see it panning out, if that decision to void the season was made?
It would be total chaos. It’s not workable and has to be completed somehow!
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