The Sports Lawyer: ‘It is possible the QPR ruling – with its inconsistency – won’t be the end of the matter’

THE SPORTS LAWYER is actually a posse of Britain’s brightest lawyers, from the Sport & Media team at the UK law firm, Thomas Eggar, who will be contributing features, analysis and insight on a regular basis on the key sports law issues of the day. In TSL’s latest column, Andrew Nixon discusses the alleged breaches by QPR in the Third Party Ownership hearing and the implications of the potential outcomes.

By Andrew Nixon

9 May 2011

The ruling of the Independent Regulatory Commission was finally handed on Saturday afternoon, just before QPR’s match against Leeds United kicked off at Loftus Road. QPR ultimately lost the match 2-1, but that did not impact on the club’s promotion to the Premier League: the Commission imposed a fine but, crucially, ruled that the club would be allowed to keep the 88 points it had accumulated during the season.

The charges

QPR faced seven FA charges, including entering into an agreement with a third party who owed the commercial and registration rights to Alexandjro Faurlin (FA Rule C.1 (b)(iii)), a failure to notify the FA of the true nature of the transaction (FA Agents Regulation J6), making payments to an unauthorised agent (FA Agents Regulations J1, J2, A1, A2 and A3) and the submission of false documentation to the FA (FA Agents Regulation J6). The investigation commenced last September, but it took more than seven months to bring the matter before the Commission.

The sanctions

Two of the seven charges were found proven: a breach of FA Rule E3, which is effectively a ‘catch all’ clause in relation to the conduct of licensed clubs and a breach of FA Agents Regulation A1, which specifically prohibits clubs using or paying (directly or indirectly) unauthorised agents. The Commission found that in respect of the breach of FA Rule E3 the club be fined £800,000 and in respect of the breach of FA Football Agents Regulation A1 the club be fined a further £75,000. In addition the club was warned as to its future conduct, with particular regard as to regulatory compliance and was ordered to pay 50% of the costs of the Commission. The remaining five charges against the club (including the charge that the club breached third party ownership rules and one charge against Mr Gianni Paladini) were found not proven.

Comment

So, after a process that has lasted for several months, QPR will take their place in the Premiership for the first time since 1996. Had the charge in relation to third party ownership been proven, a points deduction would have been significantly more likely. There is also perhaps a certain amount of surprise that if there have been payments made to an unauthorised agent why tougher sanctions were not imposed; after all Luton Town suffered a significant points deduction for payments to unauthorised agents and the failure to register payments with the FA. Whilst the number of incidents of unauthorised payments in the Luton Town case was far greater than what is at issue in this case, there does appear to be a certain amount of inconsistency in sanction.

Either way, it is entirely possible that the Commission’s ruling will not be the end of this matter. In the Tevez case, Sheffield United sought to appeal the Tribunal’s ruling that West Ham would not face a points deduction. The club was unsuccessful in that appeal, on the logical basis that it was not a party to the proceedings. However, it nevertheless sought to challenge the ruling under the FA’s Arbitration Rule K. The Arbitration panel found in United’s favour, stating that in its view West Ham should have been deducted points, and that as a result Sheffield United would have retained Premiership status. However, the decision could not be reversed because despite the Arbitration panel’s view, it also accepted that the original decision fell within the rational range of decisions a governing body is entitled to make, and that it was procedurally sound. Instead, the panel accepted Sheffield United’s alternative argument that West Ham breached the contract both clubs were party to (the FA Premier League Rules) and made a significant award of damages against West Ham.

What does this mean for the clubs potentially affected by the ruling? Those clubs are all party to the Football League Rules, in the same way as West Ham and Sheffield United were party to the FA Premier League Rules. It therefore follows that the clubs may have a cause of action against QPR for breach of contract, as it is now clear that QPR has breached at least some of the relevant regulations. There would clearly be a quantifiable loss, in terms of lost revenue, but the key issue would be whether QPR’s breaches caused the loss. To determine causation it would be a case of analysing the performance and impact of the player in question throughout the course of the season, which is in effect what the Arbitration Panel did in the West Ham case (albeit over a shorter period of time), and indeed found that Carlos Tevez did have a direct and material influence on West Ham retaining its status.

The clubs confirmed in places 3-6 of the Championship (namely Swansea, Cardiff, Reading, and Nottingham Forest) will now focus their energies on the play offs; however, depending on the outcome, any club who fails to secure promotion may well undertake a review of the Commission’s ruling, and indeed request further information from QPR in relation to the transfer, particularly in view of the Sheffield United/West Ham case.

The future

Football in this country is heavily regulated. The FA’s (entirely understandable) objective is to ensure that there is complete transparency, and full disclosure, in relation to transfers and transactions. The rules in relation to third party ownership were put in place because there was considerable discomfort with the concept of a third party (whether that be a natural person or an organisation) owning the rights to a player, as it went against the concept of all transactions being at arms length.

That said, regulation only works if it is applied consistently across the board and it could be argued that the regulations, as they currently stand, have created as many issues as they have solved. The FA has stated its intention to review the FA Agents Regulations generally, and it is a widely held view that those regulations are not doing what they were supposed to do: i.e. provide a logical and consistent means of policing transfers and agency activity in football. It may well also be that the governing body will review its position on third party ownership in light of this case.

Andrew Nixon is an Associate in the Sport and Media Group at Thomas Eggar.