Saturday, 14 July 2007

The Escape Route?

Legally West Ham have made life very difficult for themselves over Carlos Tevez writes Ian Felstead, sports lawyer at Olswang solicitors, but there may be a solution to their predicament. It is a tight spot but there is a workable solution...
The key stumbling block in the protracted saga involving Carlos Tevez and his transfer from West Ham United to Manchester United is the apparent insistence by Premier League that the bulk of the proceeds of the transfer remain with West Ham and not be passed on to the businessman, Kia Joorabchian, who is said to own the "economic rights" in Tevez. In some ways this is surprising, since the passing of proceeds of a transfer to a third party - or even an agreement to this effect - in itself is unlikely to be contrary to the rules of the Premier League.

At the centre of the problems concerning the transfer of Tevez is Rule U18 of the Premier League, which states that no club may enter into a contract which enables any third party "to acquire the ability materially to influence its policies or the performance of its teams".

In his blog on the BBC, Mihir Bose states that most football experts he has spoken to tell him that Rule 18 is an obscure rule. When it was initially designed by the former chief executive of the Premier League Peter Leaver, it was not even meant to cover player transfers. It had come in to deal with companies like Enic owning more than one club and the problems this would cause should the clubs meet in the same competition. Of course, historically Liverpool and Everton were both owned by the Moores of Littlewoods fame but those were different times when, so we are told by our elders, gentleman ruled the game, money and lawyers had not moved into football and nobody felt the Moores would do anything that was not proper and gentlemanly. Indeed, Rule 18 is so obscure that you have to search the Premier League rule book to find it. It comes in the section where there is also rule specifying that an advertisement for the Football Foundation must be in a club's matchday programme. The legal advice of many was that West Ham should be able to drive a coach and horses through Rule U 18 - but when it came to the hearing they pleaded guilty. Now, back to Felstead.

West Ham have long accepted that there was an agreement between them, Tevez and Joorabchian's companies which enabled Joorabchian to procure the termination of Tevez's playing contract during any transfer window and to compel West Ham and Tevez to transfer Tevez to another team. This clause was clearly a breach of Rule U18. When this came to light, West Ham were disciplined by the Premier League for their breach and also for their failure to disclose the agreement when questioned about it. The disciplinary panel fined West Ham a record £5.5m. However, crucially the panel neither deducted any points from West Ham nor cancelled Tevez's registration, leaving his registration as a matter for the Premier League.

The Premier League decided it would allow Tevez's registration to stand - and to allow him to play - if West Ham could confirm that the agreement with Joorabchian's companies had been satisfactorily amended (so that it no longer breached Rule U18) or was no longer in force. West Ham responded by stating that they had unilaterally served notice of termination of the agreement on Joorabchian. To lawyers, this was somewhat curious. One cannot usually terminate a contract unilaterally without good reason. It requires the other party to agree - otherwise it remains in force. In the event, Joorabchian did not agree and expressly reserved his position to sue on the contract. He, at least, thought it was still in force. This would mean West Ham were still in breach of Rule U18.

West Ham said that in any case they did not consider the agreement with Joorabchian was enforceable - since it constituted an unlawful restraint of trade - and assured the Premier League that they would continue to argue that the agreement was invalid and terminated (even if sued by Joorabchian) and that they would not perform their obligations under it. Somewhat surprisingly, the Premier League thought that satisfactory and allowed Tevez's registration to stand and for him to play. He then inspired West Ham to win all three remaining games, scoring three times, including at Old Trafford, which meant the club avoided relegation.

Now there is a transfer to United in the offing and speculation that the proceeds of the sale will be passed on to Joorabchian. The Premier League assumes this is not out of charity, but because West Ham are honouring a contract with Joorabchian which is still in force. This would obviously put in question the assurances provided by West Ham to the Premier League that they would treat the contract as invalid, the assurances which allowed Tevez to play those last three games. So West Ham have dug a hole for themselves. If they sell Tevez and pass the proceeds on to Joorabchian, the Premier League will want to know how this is consistent with the assurances they gave and, in the absence of a satisfactory explanation, they may institute fresh disciplinary proceedings. This may yet result in the deduction of points.

On the other hand, if West Ham keep the proceeds Joorabchian will undoubtedly sue them for the money, arguing that his contract with them is still in force. If he is successful, it will mean that West Ham did have an agreement with a third party in relation to Tevez in breach of Rule U18 and, once again, they may face disciplinary proceedings. But there may be a way out. While Rule U18 clearly prohibits any club entering into a contract with a third party which allows the third party, for example, to demand or prohibit a transfer of a player, there would appear to be nothing in the rule which prevents clubs simply agreeing to provide a share of the proceeds of a transfer to the third party. Indeed, clubs often agree to pass on a proportion of a transfer fee received to a third party, such as a player's former club in so-called "sell-on" fees.

West Ham may say that when they gave their assurance to the Premier League they had terminated their contract with Joorabchian's companies, or that they considered the contract invalid, it was only to the extent that the contract was incompatible with the Premier League's rules and did not cover the proceeds of sale (although it would have been helpful if they had actually said this at the time). They may even say that the Premier League is exceeding its authority by seeking to prevent the distribution of the proceeds of sale which would, in fact, be permissible under its rules.

This may not be foolproof. The Premier League, now under considerable pressure to take a tough line with West Ham, may say that, in any case, the club are again in breach of their obligation of good faith under its rules. But, in a tight corner, this may be West Ham's best option.

1 comment:

Hammersfan said...

So Interpol are after IKEA Joorabchian (he who "sold" us a flatpack Mascherano that we couldn't work out how to put together!). Never mind arbitration panels and the High Court, the Blunted Blades will be calling for a War Crimes Commission next, claiming Tevez is the son of Josef Mengele!


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