What is sports law?

Welcome to the Chris Farnell sports law blog. Sports law requires an in-depth familiarity with the leading figures in sports, great knowledge of sport laws and regulations, knowledge of sport institutions and legal proceedings within various legal frameworks. Sports law has a global potential and has been regarded as a gold-mine and untapped market, especially in developing regions. 

Recent news

 Manny Pacquiao may have a difficult time fighting again in the United States if he decides to come back from retirement even for just one bout. The 43-year-old eight-division world champion is still dealing with some legal issues with Paradigm Sports Management at the Superior Court of California.

And while there’s buzz that a Pacquiao comeback is imminent this year according to MP Promotions head Gibbons, a source privy to the situation thinks otherwise. The case filed by PSM – a sports management agency that handles UFC star McGregor – stems from its allegations that Pacquiao breached an earlier agreement with them regarding a fight with welterweight contender Garcia.

But the source denied Gibbons’ claims, saying the situation is similar to what happened the last time when they failed to sign Mayweather for a rematch after the Keith Thurman fight in 2019. They said this was stipulated in the contract Pacquiao signed with promoter Premier Boxing Champions in 2018. They added the only way Pacquiao would be able to fight again in the US is to settle his case with PSM, show remorse and apologize for turning back on his obligations. Find out more about Chris Farnell here. 

Read more about the latest news regarding footballers contracts on Chris Farnell blog here 

On 30 January, an decision was made by the Court of Arbitration for Sport (CAS) which FIFPro, the European professional footballers' union, has already said will be the most significant case to impact upon the football transfer system since Bosman. This case was related to  Andrew Webster, formerly of Heart of Midlothian FC (Hearts), who independently, terminated his contract under article 17 of the FIFA Regulations on the Status and Transfer of Players  in May 2006, and then signed for Wigan Athletic FC (Wigan). Andrew Webster joined Hearts in March 2001 for a transfer fee of £75,000 on a four-and-a-half-year contract. He then signed a new four-year contract in July 2003.

Hearts were unhappy so disputed with  FIFA in November 2006, and in April 2007 FIFA's Dispute Resolution Chamber (DRC) ordered Webster and Wigan to pay Hearts £625,000.

In May 2007, Andrew Webster, Wigan and Hearts, who were all unhappy with the DRC's verdict, appealed to CAS. Hearts requested a payment of £4.6 million in contractual damages, including a claim of £4 million in respect of the alleged replacement value of  Andrew Webster and the loss of opportunity to transfer him. Wigan and  Andrew Webster requested that the compensation be fixed at an amount representing no more than the residual value of his contract - his total salary over the remaining term of the contract.

In its findings, CAS stated that the nature of professional sport required  a reasonable balance between the needs of contractual stability on the one hand and the free movement of players on the other, to find solutions that found to be  the good of football by reconciling in a fair manner the various and sometimes contradictory interests of clubs and players.

CAS found that any alleged estimated value of a player on the transfer market cannot be considered because that form of compensation is not clearly agreed upon contractually, and to impose it by regulation would simultaneously cause the club to be enriched and the player to be punished.

CAS also decided that Hearts did not have the right to claim reimbursement of any portion of the transfer fee paid for Andrew Webster because the fee must be reduced over the term of the contract, and Webster had remained with Hearts for longer than the agreed term of four and a half years under his first contract.

The CAS found that , beyond the protected period, it would be admissible for a club to reclaim a portion of the transfer fee as compensation for unilateral termination, unless such a form of compensation was agreed between the parties and stipulated in the employment contract.

It was discovered that the most appropriate criterion of article 17 to apply and determine the level of compensation due to Hearts was the remuneration remaining due to the player under the employment contract upon its date of termination, which was £150,000, plus interest from the date of termination of the contract. This is significantly less that the £4.6 million claimed by Hearts and is also much lower than the £625,000 that the DRC ordered Andrew Webster and Wigan to pay to Hearts under the original petition to FIFA. In addition, CAS found that  Andrews Webster and Wigan were jointly and severally liable to Hearts for the sum on a strict liability basis. They also considered aggravating factors like if conduct of the player, agent or club (current or future) - was left open in this case because there was no evidence of such factors. Such factors may therefore be relevant in future matters.

In Summary the decision although criticised by FIFA, has to be taken at this stage to represent the legal framework within which the football industry must now operate. Clubs must consider how they can protect themselves in the light of this legal framework, this will include careful drafting of players' contracts and more frequent contract renegotiation. Players will also be able to use this decision to pressure clubs into more regular renegotiations of contracts. The likely inflationary effects on wages and destabilisation of contractual stability for clubs will no doubt frustrate FIFA and others within the football industry.

Chris Farnell advises leading Premier League and Football League Clubs, leading sporting and media agents and a number of high profile sporting individuals on a wide variety of matters. Learn more about Chris Farnell Charlton here. 

£20M Negligence Suit for Breach of Duty

Welcome to the Chris Farnell football news and sports law news blog. London firm Mishcon de Reya has admitted breach of duty by failing to file a hard copy of an appeal bundle in time on behalf of a former Premier League football club, the High Court heard today. The claim centres on the signing of midfielder Ricardo Alvarez.

The firm accepts it failed to file Sunderland AFC’s appeal bundle in hard copy with the Court of Arbitration for Sport (CAS) in time during a long-running dispute over the signing of an injury-prone player, but denies that the breach caused any loss to the club.

Sunderland’s professional negligence claim, which the court heard is valued at around £20m but is understood to now be for a smaller sum, centres on the signing of Argentinian midfielder Ricardo Alvarez from Italian giants Inter Milan in 2014.

Under the deal, the player joined the then-Premier League club on loan and would be signed permanently if a pre-existing injury to his left knee did not get any worse. Sunderland says that, after a number of injuries, Alvarez saw a specialist who recommended surgery on his right knee for which Inter Milan would not give permission – so the club terminated the transfer and the player’s contract.

Inter Milan brought proceedings against Sunderland in a case that ultimately went to CAS, which ordered Sunderland to pay Inter Milan €10.5m (£8.8m) plus costs.

Separately, Alvarez successfully brought a claim against Sunderland for wrongful termination of his contract, with the dispute resolution chamber of football’s governing body FIFA ordering the club to pay £4.2m plus interest.

The club appealed to CAS and Mishcon filed an electronic copy of Sunderland’s appeal brief in time, but failed to file a hard copy before the deadline. CAS dismissed Sunderland’s appeal and, on Alvarez’s cross-appeal, ordered the club to pay its former player £4.77m plus interest of £1.1m. Sunderland claims that, as a result of Mishcon’s breach of duty, it lost the chance to challenge FIFA’s jurisdiction and lost the opportunity to argue that Alvarez lied about his knee injury.

However, Mishcon argues that ‘it is inevitable that CAS would have dismissed Sunderland’s appeal’ in any event. CAS rejected Sunderland’s assertion that Alvarez made any fraudulent misrepresentations ‘in unequivocal terms’ on the player’s cross-appeal, Mishcon’s barrister Daniel Saoul QC told the court. Chris Farnell is a sports lawyer from IPS Law. In this blog we follow the latest news and views from the world of sports law. Find out more about Chris Farnell Charlton here. Follow Chris Farnell on Facebook here.