Argie bargy

Diego Maradona once dubbed Carlos Tévez the “Argentine prophet for the 21st century”: high praise indeed from a player with the dexterity of a deity.

Diego Maradona once dubbed Carlos Tévez the “Argentine prophet for the 21st century”: high praise indeed from a player with the dexterity of a deity. However, it is unlikely that even Tévez could have foretold the chronicle of the controversial relegation of Sheffield United in 2007 and the ongoing legal fallout of his transfer to the English Premier League.

By the time of his transfer in August 2006 Tévez had played for South American giants Boca Juniors and Corinthians and become a fixture in the Argentine national team. He now plays for Manchester United and may in the future play for Real Madrid. However, in the 2006-07 season he shocked the footballing world when he agreed a deal to play football for the relatively humble West Ham.

By April 2007 the Football Association (FA) had fined West Ham £5.5m for breaching Premier League rules over the signing of Tévez and his compatriot Javier Mascherano. The principal breach concerned the rule against third-party ownership of a player (Rule U18), which could potentially permit said owner to influence the club’s affairs, such as when to sell the player. Tévez’s professional playing rights were partly owned by Media Sports Investments, an international media and sports investment company.

There was no UK precedent for breach of this rule and Tévez was permitted to play the rest of the season for West Ham. The club were not sanctioned by a points deduction and, in April 2007, escaped relegation at the expense of Sheffield Utd, with a run of seven wins in their last nine matches. Tévez scored seven vital goals for West Ham in this run and, in the final match of the season, scored the only goal in a 1-0 victory over Man Utd at Old Trafford. On that day Sheffield Utd lost at Wigan and were relegated.

Estimates of the commercial impact of relegation from the Premier League vary, but it is commonly thought to be in the region of £30m. This figure, the majority of which derives from media and broadcasting revenues, does not include the financial ­losses sustained by clubs’ players and staff.

Sheffield Utd unsuccessfully applied for reinstatement to the league and issued arbitration proceedings against West Ham under Rule K of the Rules of the Football Association. By an interim award issued in September 2008, the Independent Arbitration Panel held unanimously that Sheffield Utd could recover damages from West Ham for breach of contract arising from the Tévez signing. In November 2008 Sheffield Utd obtained an injunction restraining West Ham from appealing that decision to the Court of Arbitration for Sport in Lausanne, Switzerland.
In March 2009 West Ham settled the claim and have reportedly agreed to pay Sheffield Utd compensation in excess of £20m in a series of annual instalments.

But if West Ham thought it was all over, it certainly is not. The FA has announced a fresh inquiry into the tribunal’s conclusion that the club had not terminated the ­offending third-party rights contract. In addition, a host of potential claimants are seeking compensation in what promises to be a series of increasingly interesting legal and arbitration proceedings, described ­publicly by West Ham as “legal anarchy”.

So what is the composition of the ­Hammers’ off-field opponents? Present ­indications are that a group of around 20 Sheffield Utd players and former players will bring claims in excess of £5m in aggregate for personal financial losses following their ­relegation to cover loss of salary, bonuses and impaired career prospects. There will also be claims from former management and coaching staff for similar losses. Neil Warnock, now at Crystal Palace, but who was Sheffield Utd’s manager at the time, has said he is considering lodging a claim.

Other Premier League clubs have reserved their positions. In April 2007 Fulham FC finished sixteenth in the league, one place below West Ham, and is believed to be ­considering bringing proceedings for media revenue sharing losses, as are Wigan, who finished seventeenth. Laurie Sanchez, Fulham’s then manager, is reported to be considering legal action for his financial losses.

Other non-Premiership clubs have taken legal advice. Leeds Utd are reported to have sustained significant financial losses as a result of Sheffield Utd’s relegation by the loss of contingent bonus payments due on three player transfers to the club.

What, then, of the season ticket holders at Sheffield Utd, whose present outlay takes them to fixtures at Barnsley and Doncaster and not the likes of Liverpool or Arsenal?

The Tévez affair raises a number of serious legal points that will have to be grappled with by arbitrators and courts alike.

The Premier League is the richest, and the most successful, league in the world. One team’s success in remaining in that league causes another’s exclusion. Participation in such a professional league has long been recognised as an ‘economic activity’ for ­competition law purposes (per Bosman (2005)). The Court of Appeal said in 2002 of the Premier League that “professional football is a business like any other”. The increasing involvement in the Premier League of publicly quoted and internationally owned football clubs serves to reinforce this point.

These cases will require tribunals to consider the legal effect on third parties of commercial contracts made in professional sport. The law on economic torts is in development and may be deployed in these cases. In addition, tribunals will have to decide the legal relationship between the regulatory regime of professional sport and civil claims for compensation made following decisions and finding of facts made in disciplinary proceedings.

As for Sheffield Utd fans, their best bet may be this season’s Championship playoffs, when if successful they can look forward to future fixtures against West Ham. n

Jonathan Bellamy is a commercial barrister and chartered arbitrator specialising in sports law at 39 Essex Street