March 2024 Roundup
A roundup of notable football law news and decisions from March 2024:
Sandro Tonali charged by the FA for betting offences
As explained in Football Law’s October 2023 Roundup, Newcastle United FC’s Sandro Tonali (“ST”) had been sanctioned by the Federazione Italiana Giuoco Calcio (FIGC), the Italian football association, with an 18-month suspension, eight of which were suspended on conditions, and a fine of €20,000 for breaches of the FIGC’s rules against players betting on FIGC, UEFA and FIFA football matches. The ban was subsequently given worldwide effect pursuant to FIFA’s Disciplinary Code, article 70.
On 28 March 2024, the FA announced that ST had been charged with misconduct in relation to alleged breaches of the FA’s anti-betting rules. It is alleged that ST placed ‘bets on football matches between 12 August 2023 and 12 October 2023’.
Nottingham Forest FC sanctioned
As explained in Football Law’s January 2024 Roundup, on 15 January 2024 it was announced that Nottingham Forest FC (“NFFC”) had been charged with a breach of the Premier League’s (“PL”) Profitability and Sustainability Rules (“PSR”) for the period ending season 2022/23.
NFFC admitted the charge, and therefore the only matter to be determined by a PL Commission was the appropriate sanction.
On 18 March 2024 it was announced that NFFC had been sanctioned with an immediate four-point deduction for its breach of the PSR. The Commission’s written reasons identify that NFFC breached the PSR upper loss threshold of £61 million (as applicable to NFFC considering its two seasons in the EFL Championship during the three-year reference period) by £34,536,000.
An article considering the Commission’s decision is available in this Football Law article: ‘Seeing the Wood for the Trees’.
On 25 March 2024 it was also announced that NFFC is appealing against the four-point deduction.
Leicester City FC and financial fair play
On 6 March 2024 it was announced that a decision by the Championship Financial Review Panel (“the CFRP”) determined that Leicester City Football Club (“LCFC”) was not required to submit a business plan to demonstrate how it planned to comply with the EFL’s Championship Profitability and Sustainability Rules (found in Appendix 5, Part 1 of the EFL Regulations) upper loss threshold of £83 million going following a request from the Championship Financial Reporting Unit on 23 November 2023.
For an in-depth breakdown of the CFRP’s decision, see Football Law’s article: ‘EFL Outfoxed, For Now’.
On 21 March 2024 it was announced that LCFC has been charged by the PL for an alleged breach of the PSR and for failing to submit its audited financial accounts in relation to the period ending season 2022/23, when LCFC was still in the PL.
On 22 March 2024, the EFL also placed LCFC under a transfer embargo pursuant to CPSR, r. 2.10.1.
In response to the PL’s and EFL’s actions, LCFC announced on 22 March 2024 that it had issued two urgent legal proceedings against both the EFL and the PL.
Morecambe FC transfer embargo
Morecambe FC (“MFC”) has been placed on the EFL’s “Current Embargoes” list pursuant to EFL Regulations, reg. 17.3 and therefore identifying that MFC has been placed under a transfer embargo for its failures to pay liabilities to HMRC. The details of the liabilities are unknown. EFL Regulations, reg. 17.3 explains the effect of the embargo:
‘… a Club… shall not be permitted to register any Player with that Club without the prior written consent of The League for the period that the Club is subject to a Default Event’.
MFC’s chief executive officer has stated that ‘[the] circumstances around this issue are unusual following an assessment and we are working with the EFL & HMRC to resolve the matter as soon as possible’.
Swindon Town FC and Clemente Morfuni sanctioned
As explained in Football Law’s December 2023 Roundup, Swindon Town FC (“STFC”) and its director and majority shareholder Clemente Morfuni had been charged by the EFL for a breach of, it was understood, the EFL Regulations, reg. 21.1, 114.1 and 114.6 for STFC’s failure to declare and publish a ‘Significant Interest’ share acquisition in STFC that took effect in September 2022 and for Mr Morfuni’s failure to report the same to STFC.
A statement from the EFL on 4 March 2024 announced that STFC and Mr Morfuni admitted the charges, with Mr Morfuni taking ‘full responsibility for the breach’. Mr Morfuni was sanctioned with a fine of £10,000, and STFC was sanctioned with a reprimand and warning as to its future conduct. The written reasons of the decision are available here.
The written reasons confirm that the charges against STFC were in respect of those above-stated regulations in the EFL Regulations (albeit with the numbering slightly different in the written reasons due to references being taken from the EFL Regulations 2022/23 edition rather than the 2023/24 edition).
Paragraph 13 of the written reasons also indicate that there was significant mitigation, including the breaches arising from Mr Morfuni acting urgently to raise finance to satisfy a historic debt of STFC, Mr Morfuni not trying to keep the share acquisition secret, STFC and Mr Morfuni acting cooperatively with the EFL, STFC and Mr Morfuni making an early admission, and STFC and Mr Morfuni immediately rectifying the breaches.
Pontypridd FC sanction clarified
As explained in Football Law’s December 2023 Roundup, on 11 December 2023 it was announced that Pontypridd United FC (“PUFC”) had been sanctioned with an immediate six-point deduction and a further 135-point deduction suspended until the end of the 2024/25 season on condition that PUFC does not field any further ineligible players before that deadline. The sanction related to offences that occurred during the 2022/23 and the current 2023/24 season concerning non-payment of players’ wages, failure to register players, and playing ineligible players.
On 1 March 2024, FA Wales announced that PUFC, having been charged with further offences in respect of failing to register a player and fielding an ineligible player (albeit within the same period as the original charges that resulted in the 11 December 2023 decision and therefore not activating the suspended point deduction), had been further sanctioned with a further immediate three-point deduction.
In that same statement, FA Wales stated that PUFC’s suspended 135-point deduction had been miscalculated due to a misinterpretation of Cymru Premier Rules, r. 14.1. That sanction has therefore been clarified, to now be a suspended 75-point deduction.
Accordingly, at the end of it all, PUFC has been sanctioned with an immediate nine-point deduction and a further 75-point deduction suspended until the end of the 2024/25 season on condition that PUFC does not field any further ineligible players before that deadline.
Torquay United FC deducted ten points
On 22 February 2024, Torquay United FC (“TUFC”) owner Clarke Osborne announced his intention to appoint administrators.
As a result, on 13 March 2024 it was announced that TUFC, which plays in the National League South, had been deducted ten points in accordance with rule 13.A.1. of the FA Standardised Membership Rules due to the lodging of a notice of intention to appoint an administrator falling within the definition of an ‘Insolvency Event’ in rule 1.1 of the FA Standardised Membership Rules.
A further statement on 5 April 2024 confirmed that joint administrators had been appointed.
PL clubs approve amendments to rules on Associated Party Transactions
The PL has released its updated PL Handbook, which incorporates amendments to the PL Rules announced on 9 February 2024 relating to Associated Party Transactions.
The updated PL Handbook is available here.
Associated Party Transactions (as defined in PL Rules, r. A.1.24) were previously dealt with in PL Rules, r. E.55-E75. When the League’s Board of Directors considered that a transaction was not at Fair Market Value, rules E.64-E.65 generally provided that the transaction be prevented, ended, or varied to ensure the club in question did not unduly benefit from the Transaction.
A new r. E.70 in the PL Rules builds on this, setting out specific conduct in relation to Associated Party Transactions that constitutes a breach of the PL Rules and which shall be dealt with as a disciplinary matter pursuant PL Rules, Section W (Disciplinary). Such conduct includes ‘a failure by a Club to use all reasonable care to ensure that an Associated Party Transaction is at Fair Market Value’ (PL Rules, r. E.70.2). If proven, such conduct would result in clubs facing sanctions pursuant to PL Rules, r. W.51.
Further amendments are seen with new rules E.56, E.58.2 and E.66, with E.56 perhaps providing the most notable amendment:
‘Each Club submitting an Associated Party Transaction shall procure that a declaration by a director (or equivalent) of the relevant Associated Party by way of confirmation that they consider the Associated Party Transaction to be at Fair Market Value is obtained and submitted to the League with the Associated Party Transaction’.
PL seek to introduce new financial system
On 11 March 2024 a PL statement announced that at a shareholders’ meeting held on that day PL ‘clubs [had] agreed to prioritise the swift development and implementation of a new League-wide financial system’. The announcement explained that the proposed new financial system ‘will provide certainty for clubs in relation to their future financial plans and will ensure the Premier League is able to retain its existing world-leading investment to all levels of the game’.
The PL has yet to release any details of the proposed new financial system, although it has been reported that the proposals could see changes to the PSR, including amendments to the types of sanctions that would be imposed for a breach of the PSR and moving towards a UEFA financial fair play regulations and/or salary-cap model.
Dusseldorf court rejects FIFA’s appeal against FIFA Football Agent Regulations injunction
As explained in Football Law’s December 2023 Roundup, the FIFA Football Agent Regulations (“FFAR”) have come under intense international scrutiny and legal action.
On 24 May 2023, the Dortmund District Court in Germany ordered a preliminary injunction, effective until the European Court of Justice rules on the FFAR’s compatibility with European Union competition law. The injunction suspends the application of several provisions of the FFAR, as explained in Football Law’s December 2023 Roundup.
FIFA confirmed in Circular 1873 on 30 December 2023 that it had initiated an appeal proceedings against this injunction.
However, on 13 March 2024 it was announced that the Oberlandsgericht of Dusseldorf dismissed FIFA’s appeal and that the injunction remains in place.
UEFA changes multi-club ownership rules
UEFA has changed its multi-club ownership rules in relation to clubs under common ownership competing in UEFA club competitions (i.e., UEFA Champions League, UEFA Europa League, and UEFA Conference League).
Under the new regulations, as seen in the updated Regulations of the UEFA Champions League (“UCL Regulations”), clubs under common ownership that are not permitted to play in UEFA club competitions in the same season may be allowed to play in different UEFA club competitions. The changes can be found in Articles 5.04 and 5.05 of the UCL Regulations (and in the other club competitions’ regulations).
The changes will come into force on 1 May 2024.
Football Governance Bill
As explained in Football Law’s November 2023 Roundup and September 2023 Roundup, the Government’s Football Governance Bill, which will provide for the creation of an Independent Football Regulator (“IFR”), was to be introduced during the current parliamentary session.
On 18 March 2024, it was announced that the Football Governance Bill (“the FGB”) was introduced to Parliament.
The FGB will, amongst other things, give an IFR the backstop powers to enforce a financial funding settlement between the PL and EFL if the parties fail to agree a new deal on financial distributions. This will alleviate some of the EFL’s disappointment following the PL’s failure to reach an agreement on providing better funding to the EFL.
The FGB also proposes a new licensing regime for clubs from the National League to the PL. As part of the licence, clubs will be ‘required to consult their fans on key off-field decisions, such as club heritage and the club’s strategic direction’, in a bid to reaffirm the importance of fan engagement and contributions. Other notable elements of the FGB include the blocking of closed-shop breakaway competitions, such as the European Super League, and a strengthened owners’ and directors’ test.
This article from Steven Flynn of Kings Chambers and 2 Temple Gardens provides an excellent explanation and consideration of the FGB.
Kevin Miles, Chief Executive of the Football Supporters’ Association, welcomed the introduction of the FGB:
‘We’ll look at the Bill in great detail in the coming days and work with supportive MPs and Peers if amendments are needed to strengthen legislation… The regulator provides a means to intervene and stop clubs being run into the ground, protect the heritage of clubs, give supporters a much bigger voice in the running of the game, and prevent any chance of domestic clubs joining a breakaway European Super League’.
The FA stated that it welcomed ‘the commitment to strengthen independent financial regulation in football” and will “continue working with the Government and other stakeholders as the Bill goes through parliamentary process’.
The EFL’s Nick Parry said, ‘If delivered on the right terms, this landmark legislation can help fix the game’s broken financial model by offering the independent input ultimately needed to help ensure that all Clubs can survive and thrive in a fair and competitive environment’.
The PL stated:
‘The Premier League will now study the Football Governance Bill, working closely with Government, parliamentarians and key stakeholders. We agree it is vital that football clubs are sustainable, remain at the heart of their communities and that fans are fundamental to the game.
[…]
The Premier League remains fully committed to delivering its world-leading funding to the wider game, through £1.6 billion distributed to all levels of football across the current three-year term. This significant investment will continue and includes longstanding contributions to EFL and National League clubs, as well as women and girls’ football, and the grassroots of the game’.
This article was written with Claire Errington of 3 Hare Court Chambers.
8 April 2024