How West Ham United escaped relegation despite "serious breaches" of FA Premiership rules in signing Tevez and Mascherano
In August 2006 Argentine internationals Carlos Tevez and Javier Mascherano signed for West Ham United FC (WHFC). Players reputed to be worth tens of millions were secured for undisclosed fees. Questions were asked as Kai Joorabchian, major shareholder of MSI Ltd, was negotiating to takeover WHFC and was reported to “own” the players through MSI. Assurances were sought by FA Premiership Ltd (FAPL) as to the transfers. WHFC’s then owners provided these to FAPL’s satisfaction, but with actions that would subsequently prove to be wrong and misleading.
Following the club’s takeover in November 2006 by Icelandic billionaire Eggert Magnusson and an FAPL announcement on 24 January 2007 of a proposed report regarding third party ownership of footballers (specifically outlawed by FAPL rules and by many other European leagues), WHFC’s new owners declared their problem with Tevez and Mascherano, whose transfers had been secured by third party contracts. An investigation led to an independent commission declaring on 27 April that WHFC, then in the midst of a relegation battle, would be fined a record £5.5 million, but not deducted points.
The commission’s task was to sanction WHFC, who had admitted contravening FAPL rule B13 (failing to conduct itself in good faith) and rule U18 (entering into arrangements allowing third parties to materially influence its policies or the performance of its team). Regarding the latter rule, in terms of the Tevez agreement MSI and Just Sports Inc owned and retained Tevez “exclusively and absolutely”; he could be transferred in January 2006 for £2 million, or in subsequent transfer windows “without any right of objection from the club or from the player” for £100,000; only the companies, not the club or player, could terminate the relationship; and the club could do nothing to the employment contract without the companies’ prior written consent. This was contrary to the standard FAPL employment contract, which reserved amongst other things the club’s right to discipline the player, who had to play solely for and at the instruction of the club.
The rule is intended to avoid third parties having influence over a club’s activities whilst being unaccountable to FAPL, by influencing a transfer against the player or club’s wishes, thus potentially influencing the club’s playing policies; influencing a player’s performance in order to influence a transfer; preventing a player’s transfer against the club’s wishes; and preventing termination of the player’s contract, affecting the club’s disciplinary control.
Regarding rule B13, the club failed to disclose the third party contracts when asked, and repeatedly misled or told mistruths to FAPL on enquiry. In mitigation, however: WHFC had pleaded guilty with a hitherto exemplary disciplinary record; new ownership and management were in place; different, lawful, arrangements could probably have been entered into (Mascherano had moved to Liverpool); delay in proceedings made the deduction of points more significant (consigning the club to relegation); Tevez had played following the discovery of these breaches, when FAPL could have terminated his registration; players and fans would be affected by a points deduction; and WHFC, under new ownership, brought the breaches to FAPL’s attention.
The commission regarded the breaches as extremely serious and ordinarily meriting points deduction, but decided this would be unjust in the present case. Instead, a financial penalty was appropriate to punish and deter. Relevant factors were that the club had secured two internationalists for no transfer fee; relegation would mean an end to the lucrative benefits of FAPL membership; were they to be relegated, they would receive a “parachute payment” of £11.5 million to help meet liabilities; and WHFC were prepared to pay a considerable sum to an agent to secure the players. The fine would have been £8 million, but with the guilty plea the sum was £5.5 million. The commission also ordered that Tevez’s registration could be terminated by FAPL, and that WHFC pay the costs of the proceedings.
Heading for a replay?
After the decision Tevez scored the goals that saved WHFC from relegation; Sheffield United were relegated instead. United have now challenged the commission’s decision through an FAPL arbitration, to be heard this month. To be successful it is thought they will need to (a) demonstrate that the tribunal can and should review the commission’s decision, and (b) hope that a new commission rehearing the matter would deduct points and not impose a more draconian fine. (United believe that success on (a) would be sufficient to secure reinstatement.) Whilst there may be questions surrounding elements of the first decision, including how it was said to be probable that Tevez could have been transferred other than by a third party contract where the commission earlier noted that WHFC had no option at the time, the distinguishing features of this case including the change of ownership, act of whistleblowing and delay in determination, taken with a discretionary sanctioning regime, all suggest that WHFC will be competing in the Premiership in 2007-08.
Bruce A Caldow, Partner, Harper Macleod LLP