Sport and law, sport and business, what are we to make of the decision of the independent arbitration tribunal (although formed under applicable FA rules) that West Ham are legally liable to compensate Sheffield United for the financial losses arising from the latter's relegation from the Premier League? To fans and sports lawyers alike the outcome will look surprising and also worrying. The question that people are inevitably asking is "where will it stop?" Will every disputed decision lead on to litigation and potential financial compensation? Will clubs now need to run three senior squads, the first team, the reserves and the lawyers' XI?
As someone who has worked in sports law for the past 20 years I see what most people see clearly for themselves. The importance of law and dispute resolution mechanisms in sport has grown to a point where no professional sports organisation can be without competent legal support, probably in house and available 24/7. Frankly, we are entitled to question whether that is healthy.
We still don't know the final outcome of this arbitration and we don't yet know the financial award that is going to be made. Speculation suggests that it could be as high as £30m and I can see a justification for this figure, possibly more. This arbitration has progressed in two stages: the first is to establish whether there is a legal basis for Sheffield United's claim that West Ham owe them money as a result of fielding Carlos Tevez when they had not fully or properly complied with the Premier League's player registration requirements, the second stage is to establish how much they are owed.
Round One to the Blades and their attention will now turn from lawyers to accountants as they seek to build a case in support of the huge financial losses they are claiming. I can imagine that their advisers will now be busy preparing schedules of financial loss. No doubt their claim will run into millions, and the job of the arbitrators at the next hearing may be even more difficult than it was at the last one as they sift through the claimed losses item by item trying to decide which are clearly due and which are more speculative. There's no precedent for the job the arbitrators have now set themselves and they may, privately at least, come to rue their desision as they wrestle with files and files of financial projections, graphs, profit and loss accounts, fortune tellers' predictions and the like.
So how did we get here? Well, one of the reasons that a decision of this type is now possible is that football has effectively privatised its litigation. Rule K of the FA rules provides an arbitration mechanism for settling all football disputes. This is an alternative to the civil courts and has the effect of making arbitration more likely as the parties typically see that as an easier proposition than High Court litigation. The Lausanne-based Court of Arbitration for Sport does the same job, historically for Olympic sports, but now also for certain appeals from Fifa. Interestingly Rule K does not provide a route to appeal to the CAS, and says that decisions are final and non-appealable. On this basis it is going to be very hard for West Ham to mount any challenge: in my view they need to focus on the accounting now and try to limit their losses. I think there will be plenty of scope for attacking the figures put forward by Sheffield United.
So is this decision going to lead to a plethora of claims between clubs, and maybe even involving officials? This decision will certainly make financial arbitrations under Rule K more likely. Clubs will now be alive to the possibility of claiming financial compensation as well as or instead of football related compensation. The decision could have a floodgates impact on the game. However, I'm equally certain that it is only in the most extreme and clear case that another club will succeed in the way that Sheffield have. The fact that everyone, including the Premier League Disciplinary and Appeals Panels, holds the view that Tevez made the difference and that without him West Ham, not Sheffield, would have faced the drop is pretty unique. The individual performance of Tevez was so extraordinary that it is possible to reach a conclusion that the result of the critical games would have been different had he not played. It will be a very rare thing indeed for a similar set of fact to arise again. Also we can assume that club administrations will need to adapt to the risks and their compliance systems are going to have to improve.
There is still an important difference between field-of-play decisions taken during a game and the type of regulatory breach that has caught West Ham out. This decision is no precedent for suing referees and mistakes from the man with the whistle will still largely go unremedied.
Mike Townley is a Sports Lawyer with London firm Bates, Wells and BraithwaiteReuse content