Tom Murray, Legal Director
Mishcon de Reya
So tonight’s event was an annual review of financial sustainability in football. So what we did is we looked back over the past twelve months and picked out the key developments that we think the public need to know about so, one of these is Manchester City’s case against the Premier League, we looked at the Football Governance Bill, we looked at the new squad cost rules coming in place in the Premier League and also we had a case against sustainability by Kieran Maguire. We’re delighted to welcome so many of you to this evening’s event, which is an annual review on the financial sustainability in football. My name’s Tom Murray and I’m a Legal Director here at Mishcon’s, I also head up our Sports Law Academy programme. I regularly advise clubs on PSR matters and co-wrote the Financial Regulation chapter in Nick De Marco’s leading textbook, Football and the Law, along with my colleague Simon Leaf.
Now, ten years ago, if I’d have told you that we’d have 300 people sign up to an event to hear two lawyers and two accountants talk about financial sustainability, you probably would have laughed at me, but in today’s world what happens in the boardroom and often the courtroom, is just as likely to be a newspaper headline as what happens on the pitch and this has turned our panel into stars. Nick has regularly featured in The Times and Kieran is now on TV more than Gary Neville.
Tonight we are joined by the best and the brightest of those working in financial sustainability. First up we have tonight’s host and self-entitled Socratic interloper, Nick De Marco KC. Now Nick is a KC at Blackstone Chambers and the go-to barrister for sports disputes. He is regularly instructed by Premier League and EFL clubs and has acted on the last count on 45 clubs in England. In the context of FFP Nick’s acted for the likes of Leicester City, Nottingham Forest, Sheffield Wednesday, Derby County, his beloved QPR, AFC, and AFC Bournemouth and is one of the true experts in this area. Next up we have on the far side, we have Felix Vetter. So, Felix is the Managing Director of Ankura, a firm of experts and advisors who have acted on some of the most high profile Premier League PSI cases. Now Felix is a forensic accountant with over twelve years’ experience. And finally, we have Liverpool University’s Kieran Maguire whose voice you’ll no doubt recognise from the Price of Football podcast. So Kieran is the author of The Price of Football book, which I have on my desk and also Unfit and Improper Persons and is a regular expert who appears on the television and the press. Now for tonight’s event many of the views which people will share won’t necessarily reflect their own personal or professional views so, if you are attributing views to a certain person, please consider that. Thank you in advance to our panel and I now pass you over to the eminent Nick De Marco.
Nick De Marco
King’s Counsel, Blackstone Chambers
Thank you very much, you know, I was going to start with something very similar about who, who would have thought that the sexiest subject in sport is now financial regulation in football, but it, but it is, you, you can hardly turn on the radio these days without hearing someone like Kieran talk about amortisation of some other word that most football fans might have been unfamiliar with ten years ago. But it, it’s now so central to so much of what we do and the two experts sitting on my right, along with Tom, provide a really good panel to discuss it. What we’re going to do is discuss some of the perhaps more controversial and interesting and dynamic areas today. First of all Tom is going to give a short introduction, which he’s already done, sorry. That was good, that was great, yeah, do another one. So, we’re then going to move onto some presentations. Felix is going to go first, he’s going to do an introduction to the FFP PSR rules but also what may be or may not be replacing them, the squad cap rules have been spoken about. And then Kieran’s going to make a, a sort of polemic argument I think in favour of non-sustainability it’s written down here and Newcastle United. And then Tom is going to give us – and these are all going to be about 5 or 10 minute bitesize chunks – Tom is going to give us an insight into the Man City Premier League arbitrations in so far as such can be given. And then we’re going to have some even shorter bitesize pieces. I might say a little bit about the problems with these rules in respect of promotion and relegation between the leagues in particular thinking about the Nottingham Forest case and the Leicester City case and then Tom and Felix will say something about associated party transactions. The Chelsea Women’s recent transaction you will have heard about, Kieran will speak about and we all might chip on these bits and then Football Governance Bill and how that may be affected by or affect all these types of developments. I think Kieran and Felix are going to lead on that, but that will all be I think a bit, you know, we’ll all, all chip in if we can. And then finally, at about 6.30 if we do this properly, you can all ask questions so please do store them up and get them ready and have any questions you have, we’ll have 15 minutes for that and at 8.45 we’ll have drinks and so, I think we should start straight away with Felix giving us that introduction. Thank you.
Felix Vetter
Managing Director and Forensic Accountant, Ankura
Great, yep, thank you, yeah, so I thought I’d start off with I know probably a lot of you already know but a sort of brief explainer of PSR and FFP so, I think Nick and Tom have already explained the sort of significance of the, the topic now and I think release of I guess certain clubs’ accounts last week has also sort of driven more stories in the press around this so, in the Premier League we obviously have the profitability and sustainability rules which effectively are a son of FFP as a term in general, UEFA have their own rules, financial sustainability regulations, they do, the two rules do operate quite differently, they’re different in different formats, they apply differently and also the enforcement is, is quite different so, at high level so, the Premier League rules they focus on profitability so, allowable losses over a three-year period of £105 million depending on, on certain levels of, of investment in, in the team by the owners. UEFA have obviously, as most people are probably aware, moved onto a new squad cost rule which we’ll explain in a bit more detail in a moment but they, alongside that they still also have a football earnings rule so, similar to the Premier League’s rule but they have a different maximum allowable loss which is €90 million, again it slightly depends on, on the club’s performance and investment by the owners. Another important aspect when looking at these numbers is to know that it’s not about the headline numbers that you might see reported or in, in the club accounts, there’s, there’s deductions allowed for effectively good expenditure so, community expenditure, infrastructure, youth, women’s football so that’s sort of some basics. Then I also just wanted to sort of talk about a little bit about has FFP so far been a success? So, I think we have to look at from the point of view of sustainability not fair play as it might be or historically has been described. So, a lot of analysis done by UEFA generally shows that profitability across Europe in clubs has improved. Covid has had an impact on that so a lot of the numbers pre-Covid show good improvement. Obviously, that had a significant impact but more recent reporting has also shown that there’s been a reduction in the sort of large growth of player wages that we’ve seen and that these are now growing at a lesser rate than revenue so potentially showing that some of these rules are starting to bite. I also wanted to talk a little bit about enforcement so I think historically a lot of these rules probably seem more of a sort of slap on the wrist but I thin some of the more recent, I guess more stringent enforcement by the Premier League in terms of applying points deductions has really changed the view on that for, for many clubs. What one area that the rules have led to is certain activities driven by the accounting rules so an obvious one is the sort of sale of academy players. So the sale of academy players effectively because they’re held by clubs at no value allow full profit to be recognised on, on their sale so, there’s sort of been a drive of clubs making those sales especially potentially around the near the year end if they see that they’re, they’re short on, on their results and I guess the other area that we see a lot of reporting around is the circumvention and some reporting even suggested recently that it’s effectively making the rules meaningless. I’m not sure I would quite agree with that but there are certainly examples of what you may describe as circumvention so, one of the sort of simpler methods right at the sort of outset was longer term contracts, i.e. over, over five years, eight years, player contracts allowing you to sort of spread that cost over a much longer term, that was quickly limited by the regulators to five years. Another thing that we’ve seen recently, especially last June, was an unprecedented number of player swaps, so these were sort of convenient transactions that went both ways, happened at the same time but were by the clubs described as absolutely independent and definitely not swaps. Again, certainly all this activity driven by the accounting rules. And again more recently we’ve also seen those intragroup sales of assets, businesses, again that was something, a rule that the Premier League could have changed and I believe they had a vote on it last year but chose not to.
So, what’s changing? So today FFP rules in England have generally looked at losses or profitability so the new regime specifically looks at the value of the squad against revenue so, some of the sort of drivers behind that sort of potential change and approaches, success of salary caps in the US and the thought that this would be more targeted at overspending and the sort of financial issues that some clubs have faced. I’ve also read some arguments that this may lead to sort of less ability to circumvent but Kieran will probably agree with me that if a club wants to there’s still plenty of ways of doing that even with the new rules. So just to briefly explain the squad cost rules that I guess UEFA already have and the Premier League are considering so, effectively there’s sort of a soft salary cap, you take all the first team player wages, wage of the head coach plus the amortisation of the transfer fees, so effectively your annual cost of your player purchases and you take that as a ratio of the income generated by the club plus the profit from, from player sales and UEFA started it as 90% limit, now down to 70% and I believe the Premier League are talking about limiting this to 85%.
The other concept that’s been discussed and this is specific to the Premier League is this concept of anchoring so, this would effectively provide a maximum amount of how much a club can spend on their squad. So, and the anchor will be, well the discussion is that it will be based on the broadcast, Premier League broadcast income of the lowest finishing club in the, in the League so, it’s just over 100 million I believe on sort of more recent numbers so, it will be a multiple of that undecided what that will be but take a five time multiple that would effectively mean that you could spend up to 500 million on your squad and we’ll talk about it in a minute a bit as to what that potentially might mean. So, I guess the, what’s the impact of potential change in regime and I guess some of the impact already seen with the, with the change in the UEFA rules so, even under the new regime the, the limit is still linked to a club’s revenue so, a club like Manchester City might, you know would still have an ability to spend over 500 million a year on their squad even, even with, with that limit whereas someone like Aston Villa for example would only be able to spend about 250 million so there’s still an enormous gap between the clubs and I think the, probably the biggest challenge is for those challenger clubs, Newcastle, Aston Villa, that are trying to come up so it, it’s not going to generate a level playing field as such but I guess is that the objective? So obviously UEFA’s objective is long term financial sustainability and stability of clubs, clubs to operate within their means and each club is different, they all have different incomes, revenues so, you know, is, is liking it to those actually the fairest way of doing it? Looking at that concept of anchoring again, that potentially would, depending on where the anchor is set, could have an actual impact on competitiveness so for example if you set it at three, so limiting you know the squad cost to 300 million, suddenly clubs like Chelsea and Manchester City couldn’t spend all the money that they previously could so that potentially would then have a big impact but obviously that comes with a lot of other challenges, legal challenges I’m sure and then also impact on potential competitiveness in Europe against other clubs, Spanish clubs for example or, or the Bundesliga. So, squad cost is definitely, would definitely be a big change as we’re moving away from assessing profitability and one of the potential I guess consequences is for example, debt taken on by clubs, so at the moment if you take on debt generally the interest payments come into your, into your losses or effect your profitability so take, those get taken into account. For example, under squad costs you don’t consider costs in that sense so, is there a risk that clubs end up taking on a lot more debt than they have under the current regime where you may have those, those limits. Another important factor in the impact of those rules is going to be the enforcement so obviously PSR rules are now more stringently enforced has led to some change in, in club behaviours, obviously we don’t know yet what the enforcement regime will be for these rules but it will certainly impact heavily on how, how they’re, how they’ll be seen and then I also briefly wanted to talk about potentially some of the unintended consequences of move to the new rules. So for example some of the current trends that we’ve seen from, from the rules in terms of that sale of homegrown players, player swaps, those won’t change because the income from those is still relevant so, I don’t see any, any changes in, in those types of behaviours under the rules as currently designed or proposed. Potentially we could see a change in those intragroup sales, again it will depend obviously on the specific drafting but for example under the UEFA rules those are generally not allowed. It probably, again, won’t solve that issue around circumvention and you know that sort of disbelief by fans as to how certain clubs are potentially perceived to be getting around, I think that will remain and there’ll still be tricks of, new tricks that we’ll potentially see and, and one example just wanted to just talk through that we, we may see, so this is the potentially the what I call grossing of revenue so just to sort of give an example, if you run a club, running a club’s, club store, you may run it on a profit share basis so you effectively ask another party to come in, run that store for you and they effectively give you a share of the profits so, let’s say they give you 50 million is the share of your profits for the year under the squad cost rule of 85%, that effectively means you can spend 42 and a half million on your squad. You could set this up in a different way, i.e. you run the store yourself, which effectively means you get all of the revenue but you also bear all of the costs so in this example you would have let’s say 100 million of revenue from that store but you also have the cost of operating the store, let’s call it 50, you end up with the same profit but actually the amount that you can put into your squad cost calculation is 100, so suddenly you can spend 85 million. So, similar models could potentially be used in hospitality and lots of other areas of, of football clubs and we’re really seeing in Spain increasingly complex models of, of, of some of these areas. So, you know, potential question marks there of, you know, whether that will ultimately lead to the goal of sustainability. That was sort of, yeah, the main things initially wanted to just…
Nick De Marco
King’s Counsel, Blackstone Chambers
Thank you very much for that comprehensive introduction. Can you just clarify one thing which is that my understanding is that the squad cost rules is no certainty at all they’ll ever come in, in this country now is there because they were meant to get through the Premier League recently and a number of clubs seemed not that happy about them and perhaps preferred to stick with the old rules even so, we, we don’t now know whether these, they’re certainly not going to come in next season.
Felix Vetter
Managing Director and Forensic Accountant, Ankura
No.
Nick De Marco
King’s Counsel, Blackstone Chambers
So we don’t now know whether they’ll come in at all, is that right?
Felix Vetter
Managing Director and Forensic Accountant, Ankura
Yeah, as far as I know, yes and I believe the, some of the ongoing APT cases with Man City had an impact on, on that, waiting for the outcome of those, as some of that may impact so…
Nick De Marco
King’s Counsel, Blackstone Chambers
So I think we’re now going to have a, a polemic argument from Kieran.
Kieran Maguire
Academic, Author and Broadcaster, The Price of Football
Yeah, I’ve got my, I’ve got slides. It’s okay if I stand? Because otherwise I won’t be able to see what, what I’ve written. Okay, good, good afternoon ladies and gentleman, my name’s Kieran, I’m, I’m a teacher, I teach at the University of Liverpool, I also teach for the Professional Footballers’ Association, I also teach for the League Managers Association, I also teach at Canary Wharf and uh, street, probably not going there in, in the next few weeks, they’ve got other things to occupy their minds. So this is, this is a talk about the issues of sustainability so, my argument is going to be a contrarian one and these are not necessarily my views, but the view, the argument is going to be sustainability, do we need it? So, let’s, let, let’s start off, if you take a look at the Premier League handbook, it’s got the definition of a 137 different terms, it does not include the definition of sustainability. So therefore I had to find another source and that source was Charles Dickens. I went to David Copperfield and Wilkins Micawber, this is sustainability, this is sustainability in the eyes of most people who have an understanding of broad finance, i.e. don’t live within, outside of your means, and if you take a look at the statement which came from Daniel Levy when the Spurs annual report was announced in the last 24/48 hours, he was effectively reflecting that particular view so, he wants Spurs to be a sustainable football club. Let’s take at something which is pre sustainable era. This is the Premier League trophies that were awarded. What we had before the introduction of new owners who took the belief that sustainability was an irrelevance was a duopoly as far as the Premier League was concerned. Manchester United won it every season, in the few years when Arsenal used to go and take it from them and actually the Premier League was becoming a bit of a boring product as a result of that. If you take a look at those countries where one or two clubs are winning the trophies every year and then you take a look at the value of the TV rights, those TV rights tend to be lower. So what we have now, we have a new era of football so I’m going to give you an example of one club which has been both sustainable and not sustainable and we’ll take a look at the reaction of stakeholders. Under Mike Ashley, Newcastle United made profits in the Premier League years of £132 million. That is to be applauded if you are an accountant and if you believe that the accountant’s perception is the one which should be dominant. Yet Mike Ashley was not being cheered to the rafters by the Newcastle fanbase because when the ambition of the club is to finish seventeenth or higher, then that becomes quite disillusioning, if you take a look at the number of empty seats and you took a look at the incentives that, that the club was undertaking in order to, to try to pretend there were more people at St James’ than there actually were, it was quite noticeable. We’ve had the takeover of Newcastle United in subsequent years and since PIF acquired the club, Newcastle United is no longer a sustainable football club in the traditional viewpoint because under PIF in three seasons, the club’s lost £157 million and yet ten days ago, 300,000 people in Newcastle went to celebrate the winning of the Rumbelows Cup. 300,000 people. So, do, does our perception as professionals in law and finance, does that reflect the views of other stakeholders in the game? And is sustainability focussed on the wrong stakeholders? If we take a look at the biggest loss-making clubs in the period 2004 to 2021, so this is also known as the Abramovich Era in football. So here I’ve got a table, these are the five biggest loss-making clubs during that period of time Chelsea Football Club and Manchester City Football Club between them lost £1.6 billion. During that period of time Manchester City and Chelsea Football Club also won the Premier League Club, sorry won the Premier League on 11 occasions, they won the FA Cup on 9 occasions, they won the Champions League on 3 occasions and they won the Rumbelows Cup on 8 occasions. So sustainability says this is an unsuccessful model. If I’m teaching this in traditional business school style, I would say that’s not a way to run a business and yet if we go to the Champions League final in 2021, it was contested between these two clubs. How many trophies did Manchester City and Chelsea win during the pre-sustainable era? Manchester City were in the Third Division for part of that time. Chelsea would occasionally win the FA Cup and yet the transformation into first of all destroying the duopoly that we had and secondly, making these clubs successful on the pitch, let’s take a look at it from the perspective of different stakeholders, the owners are happy, they’re getting high profile, they’re getting soft power, the players are happy because their wages have gone from being mid-tier to top tier, the fans are happy because they’re winning trophies. Where is the downside of having a non-sustainable football club? Well, you could argue that the downside is, if you’re Everton, that was not sustainable during that same period of time and the club was in danger of going out of business. Aston Villa at one point in time were within 24 hours of going into liquidation let alone administration. So that’s the risk, that business is full of risk should football clubs be deemed to be treated differently. Do we see other sports being run in a sustainable manner? The America’s Cup, how much did that cost? Offshore gym. In terms of funding the, the America’s Cup bid, it was millions and millions of pounds. I don’t know if any of you have got shares in racehorses but the race horsing industry loses money. So if we have other sports which are not sustainable and yet they continue to exist, why should we separate football into being sustainable/profitable which appears to be the ambitions and aims of the administrators and the regulators. And then if we’re going to say that sport should be sustainable, do we apply those same principles to the rest of our life? So let’s take a look at two of the biggest issues which are likely to affect us. First of all, having children. How many of you have made a profit? If you add up school fees, you add up holiday fees, you add up nanny fees, you add up clothing, you add up clothes, how many of us have made a profit and yet that’s the most important thing in our lives, the welfare and the upbringing of our children, we don’t do it for financial reasons, why should we therefore apply the same to football? What else? The second and probably the most important thing, getting married. You know, you don’t, you don’t work out that financially. My first divorce notwithstanding, my second probably shortly to arrive given the amount of media work I’m doing at present. So, if, what we, if we take a look at returns of investment, if we take a look at sustainability in our own lives, we don’t apply those principles so why should we apply them to football? So that’s forming the basis of my talk so, so what is football? I said that the two most important things is the person that you love and your children of course you love as well, well how does football fit into our lives? One has to therefore go to the coolest man that has ever been in the sport, the one and only Carlo Ancelotti and what does he say? Football is the next most important thing, it’s the most important of the least important things in life. If I list out the ten most important events in my life, seven of them involve Brighton Hove Albion. I’ve got two kids and one wife. They fit in and yeah, my wife, she’s number six, she’s, she’s happy, you know she’s, I’ve explained the importance of Hereford in ’97 to her and she doesn’t… so, so my argument ladies and gentleman is as follows, that we have our focus incorrect, we have focussed on financial sustainability and actually what we have in football is a trophy asset model. The people that have come into the game who have spent vast sums, who have transformed the game into what we see today, they’re not looking for a financial return. PIF are not going to go bust. Sheik Mansour is not going to go bust. Tony Bloom is not going to wake up one morning and say to himself I’m getting a bit bored of Brighton, I’m just going to chuck it all in. So, provided we have a series of appropriate checks and balances, having a different system for football, allowing challenger clubs, as Felix has said, to be able to challenge is actually good for the game because since the introduction of non-sustainability we’ve had Chelsea winning the Premier League, Manchester City winning the Premier League, Liverpool winning the Premier League and Leicester City winning the Premier League and I would argue that none of that would have happened had we stuck to make profits.
Nick De Marco
King’s Counsel, Blackstone Chambers
Thank you very much Kieran for that, that excellent argument and I’ll be interested to hear if, if anyone in the questions and comments stage can, can put forward a counter argument. Given time, I’m going to hand straight over to Tom to talk about the Man City case.
Tom Murray, Legal Director
Mishcon de Reya
Thanks very much. Just to counter a couple of the points made by Kieran so, there’s plenty of other sports where financial sustainability exists so, Formula 1, Rugby, NFL all have various models to control spending or losses. He also points out that two of the most important life events in his life, you know, you wouldn’t ever consider financial sustainability, one of which is marriage and one was, one was children, I think if we’re to analyse this from a footballing lens, at least for Kieran, spending money on a marriage could be seen as an investment, it’s the women’s game which is actually exempt and spending money on children could be seen as investment to the academy which is also exempt. Anyway, I’m here to talk about Manchester City and I must admit that when we were planning this event, I did think we were going to have a decision by now and we could have had, this could be dissected and discussed by lawyers and accountants alike but instead we’re all still waiting. So, this has been a really long and complicated process and you’ll probably be forgiven for forgetting how the hell did we even get to this point so, I’m going to give a quick run through how we got to these proceedings and then also talk about what’s the likely outcome, we don’t know, when are we expecting the decision, we don’t know. So let’s get started so, back in November 2018 there was a German newspaper called Der Spiegel who for a series of leaks revealed that Manchester City had inflated its revenues. So this then led to a UEFA investigation and in February 2020 UEFA’s appeals chamber released a statement confirming that they found Manchester City had committed serious breaches of the UEFA FFP regulations in two ways. So first of all they overstated their sponsorship revenue in their accounts and secondly, they failed to cooperate with the UEFA investigation so Manchester City originally were given a fine of €30 million and were banned from EUFA competitions for two years. Manchester City thought we’re not going to have any of this so they appealed to the Court of Arbitration for Sport and in July 2020 CAS found that whilst Manchester City had committed severe and serious breaches or the duty to the cooperate from which they received a €10 million fine, certain alleged breaches were time barred so UEFA had a, a five year prosecution period to take action, which they didn’t, and the remaining alleged breaches were not sufficiently made out given the severity of the allegations so, Manchester City essentially before UEFA got away with a €10 million fine. So then the Premier League in at the similar sort of time, so this is December 2018, commenced its own disciplinary investigation into Manchester City and they sought various documents from the Club. So as was the case in, in, before the Court of Arbitration for Sport and UEFA, there was a litany of legal challenges by Manchester City so, first of all Manchester City said look, we’re not going to disclose certain documents to you, the Premier League then brought an arbitration against Manchester City to encourage disclosure. Since then Manchester City had an unsuccessful challenge to the jurisdiction of these arbitrators, they also had an unsuccessful application to the commercial court where they’re arguing that the arbitration panel was biased. This led to a judgement which was given in March 2021, they then tried to appeal that judgment, so they then tried to prevent publication of that judgment and said that this was a private matter, the commercial court said no, we’re going to publish it, they then sought an application to appeal before the Court of Appeal and the Court of Appeal ruled in the Premier League’s favour. So then after four years of investigation, in February 2023 we finally had this press release from the Premier League to say, and everyone remembers the famous number, 115 breaches of the Premier League rules have been referred to a commission. There’s also a kind of set of additional proceedings that relate to associated party transactions but we’ll discuss that more generally as part of the panel. So, what do these charges relate to? So there’s this magical number, 115, which is burned into the football folk law and everyone’s memory. It’s actually suggesting now that it’s more than that, it's 130 charges and arguably you can split these up into three main buckets, so first of all Manchester City are accused of disguising putting money into the club as sponsorship, the reason you do that, it inflates your profit, you can then use that money to spend on players or you are less likely to get in trouble for breaching the Apple loss threshold. Secondly, they’re accused of paying money to staff through a third party. Why would you do this? It would reduce your losses. And thirdly, surprise, surprise, they’re accused of not cooperating with the Premier League. So when do we expect a decision? I wish I could tell you and I suspect with most members of the panel, we’ve been cued up for a couple of months now to speak to various news outlets to analyse the decision and I’m still waiting to go on holiday so I can do that. But only a handful of people in the country really know when this decision is going to be released and there is of course the high likelihood that we have a decision as to liability before we have a decision as to sanction, so we could be waiting a while to find out what the sanction is, if any. So what’s the likely outcome? Well, most people think that there will be some sort of points deduction and the reason, the reason people argue in favour of points of deduction is they say that a fine or a warning or a transfer embargo just isn’t a sufficient disincentive to prevent this type of behaviour. If we look at recent cases, there’s certainly a trend towards a points deduction being seen as the most appropriate sanction so, in February 2024 Everton received a points deduction, it was originally 10 points, it was then reduced to 6 points, they exceeded the 105 million upper loss threshold by 24.5 million, the following month Nottingham Forest then received a 4 point deduction having admitted they had breached the relevant PSR threshold which was slightly less because they’d been, spent some time in the Championship and they were also found in that case to have demonstrated exceptional cooperation was deemed to the Premier League which I think’s unlikely in Man City’s case. But look it’s well understood and acknowledged that the primary purpose of the sanction isn’t to punish the club, it’s to try and protect the integrity of the competition, people’s confidence in the competition and to ensure fairness between clubs in a proportionate manner which I think most fans would agree has been, has been lost throughout this case. I would say that depending on, on the outcome of the breach, I think we should, we should fully rule out expulsion. The reason I say that is in, in the Nottingham Forest case, there was a, there was a kind of throw away line that said where a PSR breach is described as major and it may be the case that a very severe sanction such as expulsion is more appropriate. So let’s wait to see what the outcome of this is.
So what are the likely implications of this decision? Well first of all I think we can expect that there will be a huge, huge crowd of clubs seeking compensation under the Premier League rules and this is something which is permitted and has been acknowledged so, Nick will remember well in, in, in 2023, Leeds United, Nottingham Forest, Southampton, Leicester City and Burnley sought to intervene in proceedings against Everton and there was an analysis of a very specific rule under the Premier League rules and it was held that whilst this does enable a club to seek compensation, it doesn’t enable them to participate in the issue of whether or not a breach has occurred in the first place and it also does not extend to allowing the disclosure of certain documents. We also understand that Burnley have sought compensation against Everton having been relegated in the 2021/22 season, so they fell 4 points behind Everton and if Everton’s point deduction was 6 points, the argument is well, had they received the 6 point deduction in that season then we would have stayed up. The real challenge with these types of claims is, is causation, can you prove that the, that the wrongdoing resulted in the, in a relevant loss so, if, if Burnley had been able to spend more money on players, would they have stayed up? And that’s the, that’s the really difficult argument to try and run.
There’s been this kind of similar historic cases so people will remember the, the famous move of Carlos Tevez and Javier Mascherano to West Ham. Sheffield United sought an action against West Ham and were paid a settlement of 18 million reportedly. There’s also kind of similar settlements elsewhere in the Championship between Middlesbrough and Derby County and also Wycombe Wanderers. In the context of Manchester City there will be, I suspect there will be lots of claims for compensation and you can, you can think about what these are so, if you miss out on a Premier League title you know what’s the loss you suffered there and you can quantify those things. If you miss out on a Champions League qualification, everyone knows how valuable those Champions League spots are. Or if you, if you finish lower down in the league, you miss out on certain merit based payments.
So the next question that everyone always has is will there be an appeal? I suspect there will be an appeal. This could be brought by the Premier League or Manchester City and we’d expect it within 14 days of the decision. There are, there’s also an option for appeal under another section of the Premier League rules, but this has very kind of limited circumstances. So look, whatever the outcome of this decision there’s, this is certainly not the last you’ve heard of Manchester City and the Premier League and I think we’re going to be talking about this for a, for a couple more years but what I would hope is that the, that’s what’s been described as The Trial of the Century is resolved this century. Thanks very much.
Nick De Marco
King’s Counsel, Blackstone Chambers
Thanks you very much, Tom and I’m sure there’ll be lots of questions about the Manchester City case. I’m going to talk very briefly about how these rules might work or might not work as between promotion and relegation and I think honestly, perhaps those who drafted the rules, both the EFL and the Premier League, were less focussed on that element as they may naturally have been as to how they may work in their own leagues and it’s created some anomalies but it also made me reflect on the, the problem with points deduction as a sanction, in particular in relation to this issue. So, the two examples I give and I’ll try and be as neutral as I can talking about them because I was involved in those cases but I can’t, it’s difficult to be completely neutral when you’ve had that involvement, but the Nottingham Forest case, now those of us old enough to remember Nottingham Forest were champions of Europe under Brian Clough, fantastic team, they hadn’t been in the Premier League for over twenty years, they’d had a very long period outside the Premier League and the year of their promotion, they were the only one of the three promoted that was not a beneficiary of parachute payments. Now what does that mean? It means that when they were promoted and they had the, it’s actually, it’s great for fans but it’s unfortunate for accountants and people who run clubs, they were unfortunate to get promoted through the play off finals, so you have less time to, to plan your, your squad investment and so on. It means that they have to spend quite a lot more to be competitive in the Premier League than any other club in the Premier League and even the other promoted clubs who are the beneficiaries of parachute payments, they’re there precisely to enable them to continue paying the, the wages of Premier League players when they have been relegated, or at least to create a soft landing. So, they’re having to spend more money and they spend more money and some people say they went crazy and they spent far too much money and you know everyone can argue about that but they spent the money they spent and they had planned a way to pass the PSR rules which of course has already been indicated in one of their three years they had a smaller amount of money they could spend because they were in the Championship. And the way to pass was to sell an Academy player, which is the way that all clubs really at that sort of level can pass PSRs now because it’s a balance sheet profit and so they, they identified a player, Brendan Johnson, they know that they can sell him for a large amount of money and if they sell him before the financial year end 30 June, they pass PSRs, everything is fine. They don’t sell him before the 30 June, they sell him at the end of the transfer window, so they fail PSRs and so they’re subject to the, they’re in breach and they’re subject to the points deduction we’ve seen. And, and all the arguments we may have run about how this is all a bit unfair because they have, they’ve come up, they’ve had to invest, they tried to sell the player, all those arguments were basically rejected on the grounds well, you know it might seem unfair to you but those are the rules and the rules are the rules and you’re stuck with them. So that was when Nottingham Forest ended. Leicester City, slightly different position, they get relegated but they are relegated before the end of that financial year, the 30 June. So they’re no longer a member of the Premier League at the point when they could have done what Nottingham Forest tried to do, which is sell the star Academy player which in fact they also did to Tottenham shortly after Maddison, shortly after the closure of the, the expiry of the account period. That, that period, what they did and what they didn’t do, they’re no longer subject to the Premier League rules and so that was part of their defence or jurisdiction or challenge or call it what you like, that they had against the Premier League and they lost that at first instance and won it on appeal and then there’s been a, a lot of argument about that and the Premier League has not been happy about that result and has said that, you know, it allows cheating, it allows breaching, but one could say that to the Premier League what they said to Nottingham Forest, which is the rules are the rules and if you don’t like it, you know, go away and redraft them, those are your rules. But I think there’s a more fundamental issue when you think about it, which is why would it have been better for the Premier League to have jurisdiction over Leicester City? It would have meant that the Premier League would have had the power to impose a points deduction only in the Premier League because they can’t impose it in the Football League so it would have meant that they could impose a points deduction on Leicester City in the Premier League. But what’s the point of a points deduction? As, as Tom has just said, it’s to maintain the integrity of the competition, it’s to if you like punish or deter those who have breached the rules but reward those who have not. Now if you get relegated from the Premier League to the Championship, then how does a points deduction in the Premier League remedy anything? Particularly, you might stay in the Champion… you might do Nottingham Forest, stay in the Championship or even go down and come back again for twenty years so a Premier League points deduction isn’t going to help anyone and you’ve already suffered the worst thing you could suffer, which is relegation. And so whatever rule changes there may be about jurisdiction, there still seems to me to be this fundamental conceptual problem about imposing points deductions in different leagues at different times where other clubs are going to benefit from it who haven’t actually been complying with the rules in that league where they’re benefiting from it. And it seems to be that one of the problems we’ve had which is no doubt a result of my learned friend Mr Lewis’, my colleague from Chambers, fantastic advocacy in so many of these cases, is that it has become a sort of accepted wisdom that you must have points deductions for breaches of financial fair play rules, but sometimes that just doesn’t work and it seems to me that if you need a sporting sanction, a far more sensible or effective one for this type of situation would be something more like a registration embargo. If you, if you have supposedly spent too much on players, you’re not allowed to sign any players until, for instance, your books are balanced again. That is a very effective sporting sanction but of course it would apply in the league you are competing in and not somewhere else. So that’s just a thought about, you can, you can rewrite all the rules but let’s actually think about where the points deductions do make sense in all circumstances if there is a breach.
So, that’s all I wanted to say on that and we’re going to quickly trot through so that I am going to cut it off at 6.30 to allow you to ask questions. APTs first. I think Tom or Felix are going to lead on that. Which, which one of you wants to… Tom?
Tom Murray, Legal Director
Mishcon de Reya
No, just, just so I’m sort of building onto the sort of next point I think often the interaction between these various sets of rules is the, is the thing that causes people’s minds to get a bit foggy so, often you know, clubs competing in, in UEFA competitions will be subject to two sets of rules at the same time and I think it’s that, that thought process where clubs might get promoted to the Premier League and then mistakenly, you know, or beyond their expectations qualify for UEFA competition and then suddenly be subject to what was a, you know, a lower restriction and I think often yeah it’s the interaction between the, the sets of rules which can, can cause problems. So, yeah, APT rules so, this is a, another, another case which has been rolling on involving Manchester City so, I’ll try and, try and give a, a fair summary in the time I’ve got. So, these rules were introduced following the acquisition of Newcastle by a consortium led by the Public Investment Fund. Essentially, the concern was there was going to be a rush of Saudi sponsorship of Newcastle which was then going to inflate their profits and allow them to do what Manchester City and Chelsea have done which is to, to buy up lots of good players and compete with the big boys. So, in order to address this in, in December 2021 a set of rules were introduced by the Premier League and this included an expanded definition of associated parties so, essentially the rules required any associated party transactions to be approved by the Board before the club proceeds any consideration. The easiest way to think of these is like sponsorship deals so, if you have a sponsorship by Etihad that would be deemed an associated party and therefore that needs to be approved. This really impacted Manchester City because it, it had two kind of sponsorship deals lined up, one with Etihad Airways and one with First Abu Dhabi Bank which were blocked by Manchester City. Manchester City then brought a challenge against this. In, in January 2024 was when Manchester City made a request for arbitration and they argued that the APT rules were both anti-competitive and procedurally unfair. The Premier League then made a kind of, a minor adjustment to the rules. One of the key issues in both the amended rules and the original rules was that they excluded shareholder loans so, of a shareholder, an equity participant give, puts a loan into, into a football club to, to give them more money to operate there was an exception under the rules to exclude this so it didn’t get caught and often these loans will be at zero interest rather than say at 4% above the Barclay’s lending rate. So this is part of Manchester City’s challenge. In September 2024, the tribunal found that certain elements of the APT rules were unlawful and the two things they focussed on were the exclusion of shareholder loans from the scope of the APT rules and also the, the process by which clubs were informed of benchmarking decisions. So essentially, the league set up a process by which it could benchmark certain agreements and, and, and mainly focus on sponsorships so they could work out whether the amount paid by one club or one sponsor was, was broadly proportionate to that paid by others and given the fact that clubs were unable to comment on the benchmark and analysis that was carried out by the league, they said that that was procedurally unfair. So in November 2024 a new set of rules were brought in which then included shareholder loans as part of the scope and in January 2025, Manchester City initiated a new legal action against the Premier League. It’s going to be held by the same tribunal so it hopefully will be resolved quite quickly but, again, it’s a part of the ongoing saga where people don’t really necessarily know what’s happening at the moment.
Nick De Marco
King’s Counsel, Blackstone Chambers
Thank you. I’m going to jump straight across to the recent controversy about the sale of the Chelsea Women’s team from I think entity of Chelsea to another, but Kieran will explain.
Kieran Maguire
Academic, Author and Broadcaster, The Price of Football
Chelsea announced on the 28 June 2024 that the control of Chelsea Women’s Team Ltd had been transferred from Chelsea FC Holdings to Blueco 22, which is effectively the parent company, and there was no more details of that. Chelsea’s accounts came out at the weekend, I think a lot of people had been curious given that Chelsea has had significant investments into the men’s team and the women’s team, it has, it has to be pointed out. In the accounts we saw that the sale proceeds were £200 million. What is the value of a business? What is the value of, of any asset? Ultimately, it’s a bit like beauty, it’s in the eye of the beholder but within the world of finance, there’s sort of some guidelines, they’re not tramlines, they’re guidelines. If I’m choosing to buy a house, how do I work out how much I should pay for it? Well, I’ve just bought an apartment in Liverpool, there’s 70 other apartments next to it, so therefore I look at what the prices are next door and you make adjustments. Have I got a better view? Have I got a bigger bathroom? Is, is it looking tatty than the other ones and so on. So, you see you can do comparative analysis. There’s no evidence of any other club. Angel City in the NWSL, I think was valued at around about $150 million. Angel City is playing to crowds of around about 16,000. Chelsea is playing to crowds that averaging 4000. So that seemed a little bit strange. Another way that you can value a business, this is something, again we, we sort of, we refer to this as sort of quick and dirty valuation, you value it on a multiple, if we can say that on average a business is worth twenty times its profit or five times its revenue you can do some analysis for other deals and we can apply that to the, the, the business in question. In the case of Chelsea Football Club, they were sold for, I think it works out as £19 of value for every £1 of revenue. Manchester United, arguably the biggest club on the planet, was sold for seven times, Chelsea was sold for five times, Newcastle United was sold for two times their revenue. So this appears to be an outlier. You can value clubs on a multiple of profit, but we’ve got a problem, as I was explaining earlier, football is not a profitable business. Chelsea, in their most recent accounts lost £8 million on revenue of 11, so you can’t value a business with, you can’t start off as minus 8 and give, multiply that by a number to get a positive number, so therefore the revenue multiplier is, is one we do, and the third way of valuing a business is to estimate future cashflows, put into a, a magic machine in our spreadsheet, which we like doing, work out, use again a magic number why £1 in five years’ time is not worth the same as £1 today, we call that a discount factor and it spits out a number. For Chelsea realistically, to have a value of £200 million and look, Chelsea Women’s team are absolutely brilliant and this is the thing which upsets me most of all, we’ve got a fantastically successful football team where all of the attention has been on the wrong things. You look at a, a discounted cashflow model and it’s very difficult to see, unless there’s going to be spectacular growth but I don’t see people going to King’s Meadow, you know Chelsea had 2500 for their, their match, what three weeks ago at home to Crystal Palace. So where are these future revenues going to come from that are going to develop the spectacular growth? So you look at all of the traditional model methods and they don’t come out with a figure of £200 million, 50 or 60 if you’re being generous perhaps. Given that the buyer was the equivalent of the bank of mum and dad, and I put out a, on, on social media when this came out, my, the previous day my granddaughter had drawn her picture of me. Now that has great value to me. Would I pay £100 for it? Yes. Would anybody else in this room pay more than a penny for it? No. So, is this the same position that we have in Chelsea that because it’s so close to the overall business, we therefore are going to give it that paternal valuation, that is the only possible way of coming to that figure. The Premier League as we understand it, are monitoring and reviewing. They have not agreed that, to that value, they’ve not disagreed to that value, so that’s, that’s the position we have today.
Felix Vetter
Managing Director and Forensic Accountant, Ankura
I guess probably just also worth adding that the accounts were obviously signed off by a Big 4 auditor so, they would have agreed to a material extent to that valuation as well which probably increased the challenge for the Premier League to, yeah, challenge the number.
Tom Murray, Legal Director
Mishcon de Reya
I suppose it wouldn’t be the first time that Chelsea have had something revalued by the Premier League though so, they sold their hotels for 76.3 million and that was then reduced by the Premier League by 6 million as well so, you know the Premier League have shown that they are willing to, to step in and, and revalue things if they think it doesn’t quite pass the smell test.
Felix Vetter
Managing Director and Forensic Accountant, Ankura
It’s probably also worth adding that all won’t come into obviously the current year’s assessment, that’s now passed so, that will come into whenever that happens into that period, that adjustment so, obviously that leaves the club open to other deals to try and obviously recover any adjustment they may or may not face.
Nick De Marco
King’s Counsel, Blackstone Chambers
Thank you. We were next going to do independent regulator, but maybe we’ll do that as a, in a minute or as an answer to questions so we can open it up to questions now, if that’s alright. So, questions or comments either from the floor or I think we’ve got a number of people who, oh, right, we’ve got some already, already edited, do we? Here we go from Namit, “How do financial sustainability rules in football balance their stated aims of promoting club stability against potential conflicts with antitrust competition law principles even if we consider the objective to be financial stability, is it proportionate?” So, I think that’s a question for one of the lawyers. I’ll look at you.
Tom Murray, Legal Director
Mishcon de Reya
I was going to say good question for you Nick actually.
Nick De Marco
King’s Counsel, Blackstone Chambers
Well, it’s interesting because the, the only competition law challenge I’m aware of to the actual concept of financial fair play rules was one I was involved in many years ago for QPR against the very first incarnation of the English Football League rules and that case famously lost and the rules were found to be proportionate, even if they did, even if, even if competition law applied to it and the case unfortunately, for some reason that’s never been published but is referred to repeatedly in just about every other competition law challenge to a sports governing body rule since, so it really ought to be published so everyone can see it, but I wonder whether one would have the same result now, not if exactly the same arguments were run but if perhaps some more sophisticated arguments were run than were run in that case. I wonder if you would have the same results because we’ve had a number of far more interventionist decisions both through the European Court of Justice, the Super League case, ISU case and so on, but also in domestic arbitrations in the Football Agent’s case last year and in the APT case that Tom just spoke about where, and I think it’s a result of the fact that more and more money has gone into football and Premier League football in particular, where competition law challenges have been either largely or partially successful to the decisions of governing bodies and the problem with financial sustainability rules are two-fold in my view, first of all they bake in inequality, they bake in status quo, the more you earn, the more you’re allowed to spend, if you’re, if you earn ten times more than Luton Town you can spend ten times more than Luton Town and that is in terms of not competition law but in terms of simple competition as between clubs, it is anti-competitive, it stops people competing, it stops investment and so it’s difficult from a sort of sporting competition angle to justify those rules and so that’s why I think a traditional justification has been sustainability and, and Kieran spoke about that but I think the other side to that is, is Kieran may have done his argument down slightly because the problem with, with some of those clubs that may be spending beyond their means, is not necessarily that they are unsustainable, they are unprofitable of course but they are sustainable, maybe not in the Macawber sense, but they are sustainable in the sense that they have got owners and backer who are prepared to sit behind them and sustain them and keep putting money in and, and the obvious problem is, it is the, you know the Derby Counties or, or, or whatever where the owner for one reason or another is no longer able or willing to put the money in and walks away. But there must be other more sophisticated ways to stop that, whether that’s bonds over football wages and so on and if there are more proportionate ways then there is potentially a, a basis for such a challenge.
Other, I’m going to take a question from the, a couple of questions from the floor and then go back to the iPad, if that’s allowed. Yep.
Audience member
Kieran, you made the point about sustainability but you focussed much more on the Premier League. One of my challenges or feelings is that the rules should apply equally across the whole of the English football because in the end, the leagues are interlinked and when, when the parachute payment system was set up the drop in, drops of revenues between the Premier League and the Football League, bearing in mind that it’s only this year that TV money is going up by about 50% and they’re also going to be marketing the TV rights globally on behalf of both the Premier League and the EFL. We’re now in a strange situation where a club like Ipswich Town, who’ve gone up back to back, have less money to be able to lose because three seasons ago they happened to be in the third tier and we’re now in the situation where teams are effectively trampolining back up into the league, potentially Sheffield United being the latest example, and it’s virtually impossible for three, well we’re virtually getting three clubs going up, going down, up and down, and it makes it very hard for clubs like Bradford who’ve dropped down, to, to gain. Just wondering what the panel think, how we could optimise situations where we protect the spirit of the game, protect actual competition, to give people a fair shout?
Nick De Marco
King’s Counsel, Blackstone Chambers
Thanks. Kieran, do you want a go at that?
Kieran Maguire
Academic, Author and Broadcaster, The Price of Football
My view, I’m from an insolvency background so, I’ve done investigations into football clubs which were about to go into administration, ideally didn’t go into administration and so on and my main issue is, is in the form of the management of cash which, which nobody talks about, we talk about profitability, sustainability, balance sheets, nobody talks about cashflow. So I think there should be greater emphasis on, on good cash management and I do think that we’ve stored up a lot of problems in, in all of the leagues. I think you, you mentioned, mentioned those clubs, Luton Town have gone from the National League to the Premier League, Ipswich Town have gone from League One to the Premier League, Brentford have gone from League One to the Premier League, Brighton have gone from League One so, it can be done. Is it difficult? Yes. It should be difficult. This is the Premier League, it’s a premier for a reason so therefore those clubs who either at a Board level have gone for an air shot and if you take a look at Luton Town, they spent £28 million buying players in their first and only season in the Premier League, they really didn’t try to stay. If you take a look at their wage bill, the average wage of a Luton Town player last season was £25,000 a week, it’s a lot of money but it’s a third of the average of that of the Premier League. We saw similar with Burnley and Sheffield United so I think that unless clubs are willing to be smart and trying to come up with solutions and the poster boys for that are Brentford Football Club, Brighton Hove Albion and so on, then we are going to have this, this trampoline effect. Luton Town aren’t going to get promoted this season, they, they are, they are in danger of dropping down to League One. We saw Sunderland spend two seasons in League One, despite receipt of parachute payments, again, it comes down to if you look at success of any business, opportunities, resources and quality of executive management. That third issue I think is hugely underrated in the industry.
Nick De Marco
King’s Counsel, Blackstone Chambers
And goes back to my, if I could just say of Nottingham Forest example, you know they’re criticised, they go up without parachute payments, they’re criticised for overspending, Luton Town were very sustainable and did not overspend. Who is in a better position now, Nottingham Forest or Luton Town?
Felix Vetter
Managing Director and Forensic Accountant, Ankura
I think you also mentioned parachute payments, potentially a necessity of those but I think there has to be some system, mainly because of that sort of massive gap in revenue between the Premier League and a, and a Championship club and you know you, you get relegated, you’ve still got all the same players on the books, probably many don’t, most don’t have relegation clauses because if you’re a club in the lower of the Premier League and you want to sign someone and you put a relegation clause in their contract, they’ll probably either refuse to come or won’t sign it so, there needs to be some system to stop those clubs that get relegated from then effectively going, going bankrupt. So, it has to be something, it might not be perfect as it is and obviously it’s a, we haven’t talked about the Football Regulator potentially a topic they may or may not look at but yeah.
Tom Murray, Legal Director
Mishcon de Reya
Yeah, this is like ongoing discussion between the Premier League and the EFL and the suggestion at the moment is that the independent regulator will have a kind of a backstop process to, if the EFL and the Premier League are unable to agree the financial distribution model that the regulator could then step in and decide that for them.
Nick De Marco
King’s Counsel, Blackstone Chambers
I’ve got a question from Kypros, “What are the panellists’ views on points deductions and interclub disputes for compensation? Will visiting the successes of clubs instigate a butterfly effect on the fate of other clubs, the outcome of which will be nearly impossible to determine or quantify?” Who wants to have a go at that?
Kieran Maguire
Academic, Author and Broadcaster, The Price of Football
Sounds like a legal issue to me.
Felix Vetter
Managing Director and Forensic Accountant, Ankura
I mean in terms of points deductions, I think I would say, I think I made this point earlier, the rules were often sort of seen as sort of, you know, slap on the wrist if you didn’t comply. I think since that imposition of those first points deductions, I think the picture has changed, the views of clubs, you see managers talking about it in, it has focussed the mind so, would be a point on that.
Tom Murray, Legal Director
Mishcon de Reya
Although, if you look in the EFL, like points deductions are quite common and didn’t necessarily resolve every, every issue although they’re kind of new, new way of dealing I think in the EFL has slightly improved that. I think in, in UEFA, for UEFA competitions, fines tend to be the most common thing, presumably because a points deduction would the, to your point Nick, would then affect the, the league in which they’re in. But yeah I think the big question is for, if for Manchester City, if there is a points deduction that comes in, if actually that dates back to wrongdoing from 2008, 2009, 2010 onwards, you know there’s, there’s a, there’s a gap between the wrongdoing and the punishment that’s imposed that could be so great that you have to really question whether that, whether that is able to address the wrongdoing that happened so far in the past.
Nick De Marco
King’s Counsel, Blackstone Chambers
Yes.
Audience member
Thank you. On, on the subject of the Premier League Man City case, I’d like to see if you can settle an argument between me and my colleague Aaron here. My conjecture, my theory, which is, which is all mine, to quote a Monty Python, is that perhaps the reason for the delay, the long delay, longer than expected delay is that behind the scenes a deal is being done by all the parties, I don’t think Donald Trump’s involved but there would, it would make a huge amount of sense, from a commercial perspective this is, this will be so damaging to the Premier League particularly if there’s, if the previous titles were removed from Man City so, I can see a real commercial incentive imperative for all of the Premier League clubs to draw a line under this and I can see some sort of mediation, arbitration going on. It would need the agreement of all the clubs because they’ll, they’d need to agree not to pursue further cases. It just strikes me, everyone’s being saying it’s so long since a verdict was, initial verdict was decided on, something must be going on. Do, do you think that’s possible or…?
Nick De Marco
King’s Counsel, Blackstone Chambers
I, I think it’s a sensible thing to do to have such a commercial solution to this dispute but I think the fact that there’s been a delay should not lead you to necessarily think that that is happening. And I also think that you know for the reasons you’ve said, other clubs would have a, would want to have a say about that and so it would be very difficult to keep it completely secret and we know that so many things do leak out so, my own view is what you’re saying might have been sensible but is unlikely and also that you’ve got 115 charges, you’ve had a hearing that went on for weeks and weeks and weeks, it’s going to take a long time to get through all that all and write a decision so, I, I don’t think there’s necessarily been a delay, it’s, it’s perhaps a time one might expect for this kind of decision but you know other people closer to the case may have a different view.
Audience member
Thank you. I just wanted to ask on the Man City case, apart from Man City themselves do you expect the outcome to have a profound impact on the rule book of the Premier League and the way the Premier League operates? Anyone?
Nick De Marco
King’s Counsel, Blackstone Chambers
Tom?
Tom Murray, Legal Director
Mishcon de Reya
I don’t, I don’t think I necessarily envisage there being any significant changes, I think it would depend on the, yeah, I think it will depend on the outcome of the decision. We, we have, obviously Felix has touched upon some of the changes that, that Richard Masters at least thinks will be coming in, in, in, soon and I think those changes are the things that we expect to see. Obviously the changes will then have to be voted through by the, by the clubs as well so, I think the, the hard, the difficult point we’re getting to is the Premier League is becoming sort of more similar to, to the EFL where you essentially have three blocks of clubs that would vote against one another and it used to be that the Premier League reached consensus on, on, on most things and we’re now in this position where certain clubs, you know Aston Villa, Newcastle, Chelsea in some instances, Manchester are, are now in a disagreement but I think, yeah, the most, the most likely changes to the rules are the ones we’ve, that Felix has touched upon.
Nick De Marco
King’s Counsel, Blackstone Chambers
We have one more question. Rob, at the back?
Audience member
Hi guys, Steve Parish made a comment recently that we’ve always been told football’s not like a normal business, you’re a community asset, you know when you get in a commercial court, obviously you’re treated exactly like a business so, is, is it time for football to have some kind of carve out from the competition law and even if that was desirable in theory, is it ever possible? Like, like the American sports, MBA, NFL etc with a collective bargaining agreement.
Nick De Marco
King’s Counsel, Blackstone Chambers
The last point you made is a very good one because it’s as I understand it the, the labour exception it’s called in the United States under antitrust law, that allows them to have a, a carve out from antitrust law and, and one of the interesting things about the current, one of the current biggish potential issues of anchoring that Felix spoke about, is, is that that is a salary cap and it’s a salary cap or a type of salary cap that the Premier League at the moment is refusing to get the consent of the PFA, the players’ union, to agree to, saying that it’s unnecessary to get the PFA to agree to that and, and so it would be difficult in those circumstances in my view to sustain the view that because there is collective bargaining which the Premier League is ignoring in this, in this particular instance, something like that is completely immune to competition law challenges. Of course the law is different in Europe and in England to it is in the States and that, that labour exception is not established in the same way here but I think it’s, you can’t, you can’t have one without the other, if you, if you want to have a closed system, salary caps, immune from competition law then you may have to have much more collective bargaining than we currently have.
Any more questions? One more and then we’ll break for drinks. Yep, go ahead.
Audience member
We, we’ve heard a lot about consequences of bad governance, sorry, yeah so, we’ve heard a lot tonight about bad governance and the consequences of that. What do you think could be done to incentivise good governance by clubs and kind of better management so we avoid a lot of the consequences we’ve heard about tonight?
Nick De Marco
King’s Counsel, Blackstone Chambers
Felix, do you want to do that one?
Felix Vetter
Managing Director and Forensic Accountant, Ankura
Just trying to think, it’s a, it’s a, it’s a good question. I guess the, the current approach is more of a, a stick in terms of you know the rules. Obviously, if you, you know, I think if you, I think good examples potentially to look at Tottenham, you know, well, well run club, you know, they’ve managed to build a great new stadium generating lots of additional income that potentially other clubs can’t generate so, potentially in the future outlook is, is very positive, obviously I guess if you look at sort of trophies and current results, that may not immediately reflect but I mean, yeah, I mean, there’s obviously other regulations that every company and you know you have to comply with in terms of you know your, your governance but in terms of I think, I think you’re probably right in saying in terms of the rules, they’re more to stop anyone misbehaving as opposed to incentivising, you know you don’t get extra points for being, you know, profitable by a hundred million, for instance, but I’m no, I’m not sure that would also be, work, to be honest.
Nick De Marco
King’s Counsel, Blackstone Chambers
You’d qualify for Europe because you’d make a profit.
Felix Vetter
Managing Director and Forensic Accountant, Ankura
Yeah. Well actually you say that, I did recently read that UEFA are considering offering a place in, I think in the Champions League, to the most profitable club in Europe so that actually, that’s a good, good reminder that potentially, I think the big debate currently though is what is profitability, i.e, what do you count, where do you draw the line? You know, if you’re a Manchester United fan you might say EBITDA because they’re very successful in that area but so you sort of start heading down the line and add interest payments in and other things then, you know, you might be less profitable so that, but that, that may be is actually a good example, yeah.
Nick De Marco
King’s Counsel, Blackstone Chambers
Well look, there’s lots more questions and debate but we can hopefully have those over drinks and just to thank very much Tom and Simon and Mishcon de Reya for organising this and excellent panel and all of you for listening and your brilliant questions, thank you.