Insights

Super League: What legal consequences will the clubs involved face?

22/04/2021

The proposed Super League may go down in history as the league that never was, but that does not mean that the clubs involved will be let off without consequence. While a Spanish court gave a preliminary ruling on Tuesday afternoon, several questions remain on whether the clubs will face any financial or legal repercussions, whether any legislative reforms may occur and how governing bodies will react to proposed developments.

Will offending clubs be punished financially or otherwise?

Theoretically, there are several sanctions available against clubs who signed up to the Super League. Notably, Premier League rule B.16. states that "In all matters and transactions relating to the League each Club shall behave towards each other Club and the League with the utmost good faith." It could be argued that the six clubs involved in the breakaway Super League did not act in good faith either towards the League or their fellow clubs.

Premier League rule L.9 states that Premier League clubs cannot enter into any new competitions without the prior permission of the Board. Section W.3 provides a list of possible punishments, with quite a wide latitude ranging from issuing a reprimand, to referring the matter to a disciplinary Commission. The Commission itself has very harsh penalties at its disposal, and can include an unlimited fine, suspension from playing League Matches, deduction of points, and even expulsion from the Premier League. It remains unclear whether the "letters of intent" to join the ESL signed by the six Premier League clubs would amount to a breach of Premier League rule L.9 given no new competition was formed.

Before the teams pulled out, the Premier League issued a statement saying that they are considering all possible action in order to hold the clubs involved to account. On Wednesday morning, once all six clubs had announced they would not in fact be joining, Brighton chief executive Paul Barber still called for “appropriate action” to be taken against those involved. Views will undoubtedly be contrasting as to what "appropriate" amounts to; consequently, it will be interesting to watch the posturing undertaken by all of the Premier League clubs over the coming months. 

However, on a UEFA level, Aleksander Ceferin has already welcomed back the clubs once they decided to step back from the Super League. It does seem that there is not a huge appetite amongst the governing bodies to sanction the participating clubs.

What financial costs or penalties will the Super League clubs incur by extricating themselves from the Super League?

The majority of the SL clubs, including all six English clubs, have now announced they are pulling out of the Super League. There could be financial costs involved in revoking their decision to join.

JP Morgan, the American investment bank, was planning to underwrite the cost of the Super League by way of a €3.25 billion loan, including a "welcome bonus" of €200-300 million per team. This loan was presumably to be set against the large broadcasting agreements the clubs would have signed.

In terms of setting up the Super League, it has been reported that the initial 12 clubs invested £8 million each for an equal stake in the new company overseeing and organising the Super League. If they do indeed pull out, they would likely lose this initial investment.

It has also been reported that the initial agreement was for a term of 23 years, with a clause that the founding clubs could not leave for the initial three years. With all six English clubs seemingly breaching this clause, they could face financial penalties due to a breach of contract.

The Spanish Court's Decision and its implications

On Tuesday 20 April 2021, the Business Court of Madrid in Spain delivered its verdict on a pre-action injunction which the Super League (European Super League Company S.L.) brought against FIFA and UEFA.

In it, the Super League argued that UEFA and FIFA held a monopoly that violated articles 101 TFEU (distortion of competition through unfair and disproportionate of restrictions) and 102 TFEU (abuse of dominant position). The Super League further argued the sanctions threatened by UEFA and FIFA would, if imposed, violate their right to provide services, freedom of movement of workers, freedom of movement of capital and freedom of establishment under the Treaty on the Functioning of the European Union.

While the court did not make a declaration that UEFA and FIFA were violating articles 101 and 102 of the TFEU, the court granted the temporary pre-action injunction. The Court decided that FIFA and UEFA must refrain from taking any steps or publishing any announcement that could hinder the preparation of the Super League, while the main proceedings are ongoing. For the time being FIFA and UEFA were also ordered not to take, or even threaten to take any disciplinary measures against any clubs, club personnel or players that will join the Super League. This includes not excluding clubs or players involved in the Super League from any competition, including both domestic league competition and international club competitions such as the Champions League.

Notably, it also instructs FIFA and UEFA to instruct their members (such as the FA) to comply with this court order.

Will the Super League clubs be allowed back in the European Clubs Association, and what are the ramifications of exclusion?

The ECA was quick to announce a new Executive Committee, which of course does not include any former members who left the ECA to form the Super League. The ECA has significant influence on key decisions made by UEFA, with two members elected by the ECA holding positions on UEFA's Executive Committee. In addition, UEFA's Club Competitions committee, which relates to competitions such as the Champions League and Europa League, is largely made up of ECA representatives. The ECA is therefore integral to the organisation and direction of European Club Competitions.

Notably, beginning in 2024/2025, a new Champions League format will take effect, which was largely shaped by the ECA. This includes not only more matches, but spaces reserved for historically successful clubs that would not have otherwise qualified that year, an obvious benefit to the 6 English teams involved in the Super League. Given the ECA is no longer within the former Super League's clubs sphere of influence, it is plausible that future similar changes which inherently benefit "bigger" European teams are less likely to transpire. Should former Super League teams remain outside of the ECA, they could lose a significant amount of influence in shaping European club competitions moving forward.

UEFA have a commercial decision to make; do they punish the ESL clubs for their intransigence to dissuade future attempts to undermine UEFA's Authority, or, given that the ESL clubs are some of UEFA's most important assets in attracting lucrative TV and sponsorship deals, do they welcome them back with open arms?

Will politicians and legislators be the saviours here, and what obstacles will they face? 

PM Boris Johnson and the Secretary of State for Culture, Media and Sport, Oliver Dowden, have both already condemned the European Super League plans and plan to do everything in their power to prevent it from going ahead. The Prime Minister has threatened to "drop a legislative bomb". Although politicians can certainly be effective in their lobbying, in reality they hold next to no direct power in halting a new, international sporting competition. However, avenues whereby the Government may be able to assist indirectly could be through governance reform and competition law.

On Monday, 19th of April 2021, Dowden addressed the House of Commons and stated he would do "whatever it takes to protect our game."

He states that a review "will cover the financial sustainability of the men's and women's game, governance and regulation and the merits of an independent regulator. Crucially, in the light of this weekend's proposal, it will also consider how fans can have an even greater say in the oversight of the game and models which might best achieve that." These comments have been welcomed by the Football Supporters' Association. Tracey Crouch MP has been put in charge of the review and will look at the governance and regulation of the sport in the UK.

One of the proposals could include an independent regulator of football in the UK. This has been called for by Conservative MP Helen Grant and Burnley Football Club Chairman Alan Pace. An independent regulator, such as in the style of the telecommunications and broadcasting regulator OFCOM, could regulate football while holding no financial or commercial interest in the sport. In theory this could enable the regulator to act in the best interest of the sport, its supporters and the wider football community while reducing the grip of the super-rich over the game.

It has been reported that one possible measure which could be introduced is fan ownership of clubs, such as in Germany where fans must hold a 50% + 1 stake in clubs. However, this would likely be difficult to implement as the owners of English clubs would need to divest billions of pounds worth of their stakeholdings. This rule is likely the reason German giants Bayern Munich and Borussia Dortmund rejected the Super League's invitation.

Another suggestion also reportedly being considered is the implementation of "golden shares" which could give supporters groups allocated seats on club boards, with possible veto powers over certain issues. This would likely face strong resistance from clubs.

However, articles 14(1)(i) and 19(1) of the FIFA statutes state that member associations must remain free to manage their affairs independently of any third party (including governmental and political) interference. Violations may also lead to sanctions, even if the third-party influence was not the fault of the member association concerned. FIFA has enforced this recently by suspending both the football federations of Chad and Pakistan for political interference. Greece was previously threatened with sanctions when its government was considering laws to curb violence in football. It is hard to see how, if any of the actions above are taken, that the FA would not fall afoul of non-interreference regulations.

However, while FIFA and UEFA are usually strict in implementing non-interference laws, it remains to be seen what they will do in this particular instance, where their financial interests are highly aligned with the Government's political interest in preventing a Super League. 

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