The Uneasy Truce

The long-running dispute between West Ham United and Sheffield United over Carlos Tevez could finally be drawing to a diffident conclusion after the Hammers reluctantly acceded to pay compensation to settle the matter. It would bring to an end the legal battle that began with the Yorkshire club arguing that Tevez's participation in key matches in breach of the Premier League's third-party agreement rules had played a material role in helping West Ham to remain in the top league while Sheffield were relegated. Writing in this morning's Independent, Jason Burt reveals an announcement could be made as early as today, although the finer details were still being discussed last night.

It is thought West Ham will pay a sum in excess of £10million in exchange for Sheffield United withdrawing all complaints against them. Although the exact terms of the agreement are likely to remain confidential, it is understood that the key for facilitating the deal is that the payments will be staggered over the next five years rather than met as a lump sum. In this way, it significantly eases the short-term financial burden on the club and could expediate any future sale with prospective interested buyers. While it is understood Sheffield United have accepted substantially less than the figure they originally sought, the payments probably still amount to more than the sum West Ham had previously hoped to be liable for. However, precisely because they are staggered, West Ham will be able to absorb the hit more easily into their budget.

The Blades have been seeking damages ever since they were relegated from the Premier League at the end of the 2006-07 season. They lodged an initial demand for £30million, later revised up to £60million and then back down to £45million. West Ham firmly repudiated the claim but an independent FA arbitration panel chaired by Lord Griffiths found in Sheffield United's favour, ruling that Tevez had had a decisive effect on the Blade's fate. A formal damages hearing had been due to commence on Monday to hear arguments over the size of compensation, but following the settlement agreed yesterday the hearing has now been cancelled.

Even up to the last minute West Ham United were steadfastly preparing to reject Sheffield United's arguments next week having calculated that the real cost of relegation from the Premier League was far lower than the exorbitant sum claimed. It was their strong contention that a forensic examination of the south Yorkshire club's accounts, which included an analysis of the costs of player recruitment – transfer and signing-on fees – and wages, would erode the assertion that they are liable for all the Premier League television money the Blades missed out on by being relegated. Ultimately, pragmatism led the club to concede defeat rather than risk another adverse finding and it is a decision that will likely bring solace and anger to West Ham supporters in equal measure- relief that the case has been settled but resentment that the club is paying compensation. Burt insists the club remains convinced by its case, but is simply not in a position to risk having to pay compensation as a "one-off" hit because of the financial problems of their Icelandic owner and chairman, Bjorgolfur Gudmundsson.

There is also the real concern about what Lord Griffiths might have deem as sufficient damages. He chaired the independent panel which made the controversial, and much-debated, ruling last year in favour of the Blades. Given the nature of his ruling, in which he effectively said that Tevez saved West Ham from relegation and condemned United to the drop, it was thought too great a risk to allow the hearing to go ahead. If, for example, Griffiths had ordered West Ham to pay £7million, which would arguably have represented a victory for the Hammers, the cash is not available. With West Ham's parent company facing acute financial difficulty in Iceland it would have raised the spectre of the club having to sell a key player in the summer to meet any immediate demand for payment. By paying in instalments they have now removed that threat, though Sheffield United are understood to have extracted a higher price in exchange for the five-year payment schedule.

If Gudmundsson's wealth had not been decimated by the global financial meltdown, it is unlikely a deal would have been agreed at this stage. The Independent claims the compensation agreement was thrashed out during a series of meetings in Brussels between the Sheffield United chairman, Kevin McCabe, who lives in the Belgian capital, and West Ham's chief executive, Scott Duxbury. Although West Ham have long been resigned to the fact that they will have to pay damages, they also believe they are making a hard-headed business decision for the future of the club and to remove a degree of uncertainty at a time when Gudmundsson has been facing pressure to sell up.

The settlement brings to an end a corrosive saga that began in April 2007, when West Ham were fined by an independent Premier League inquiry for breaching rules governing third-party ownership. No points were deducted and controversially Tevez was permitted to play in the final three games of the season after West Ham claimed they had unilaterally terminated their third-party agreement with the players' advisors, a consortium headed by Kia Joorabchian. Tevez was seen as instrumental in helping the Hammers survive, scoring the winner against Manchester United in the last game of the season at Old Trafford; a goal that is often (*but erroneously) directly attributed to ensuring West Ham United's continued presence in the top division.

The Blades had argued that they were relegated as a direct result of West Ham's admitted breach of Premier League rules in the transfer of Tevez from the Brazilian club Corinthians at the start of 2006-07. The case opened up the thorny issue of player ownership and so-called third-party agreements. West Ham ended the season three points ahead of Sheffield United in the table and instead of receiving a points deduction were fined £5.5million for fielding Tevez, who subsequently moved to Manchester United that summer, by the original independent commission which sat on behalf of the Premier League. Sheffield United lost a High Court challenge to the Premier League panel's decision and then persuaded the FA that it should convene an arbitration panel to rule on the decision. Lord Griffiths's ruling was hugely controversial but ultimately decisive, and West Ham's concession yesterday finally brings the dispute between the two clubs to an uneasy close.

That said, the Premier League has since instigated a new inquiry, together with the Football Association, into the affair, because of the comments from Griffiths, that Duxbury had given so-called "oral cuddles" to Graham Shear, the solicitor for Tevez's adviser, Kia Joorabchian. Their lawyers have written to those involved asking them for written statements and arranging face-to-face interviews. Shear claimed Duxbury had provided an assurance that the third-party agreement, which West Ham had ripped up, was still in place. West Ham firmly reject this and point to the legal action taken by Joorabchian to recover money from the club as an indication that they acted as they had promised. "We have acted in good faith throughout the inquiries and investigations into this matter and fulfilled the undertakings given to the Premier League following the initial penalty," said the club at the time. "We have nothing to hide and will ensure that this is once again reflected in our evidence to the FA and Premier League." It nevertheless raises the possibility, notes the Guardian, that West Ham could still face the prospect of a further fine or a points deduction.


Tevez tears: How signing turned sour for Hammers (courtesy of the Independent)

31 Aug 2006 West Ham sign Media Sports Investment-owned striker Carlos Tevez for £12m.

2 Mar 2007 Premier League charge West Ham for breaches of transfer rules.

27 April West Ham are fined £5.5m but receive no points deduction.

13 *May Tevez's goal at Manchester United keeps West Ham in the top flight. Sheffield United lose at home to Wigan and are relegated.

3 July Sheffield United's legal challenge against relegation is dismissed by an arbitration panel.

3 Aug Tevez allowed to join Manchester United after Hammers agree deal with MSI.

23 Sept 2008 Panel chaired by Lord Griffiths rules for Sheffield United in compensation claim.

12 Mar 2009 Sheffield United agree '£10m' settlement with West Ham.