FOOTBALL CLUB SUFFERS FROM LOST OPPORTUNITY DUE TO BREACH OF CONTRACT

Breach of the Rules

Traditionally football news was limited to the back pages of the national newspapers. Footballer’s lives as well as their wives are engulfed with PR experts and now receive full coverage on the front page. To almost complete the circle football is now well represent on the legal pages. One of the most recent cases involves Liverpool FC and Middlesborough FC. Mr. Christian Ziege is an accomplished left sided footballer of some renown, who in recent years has played for a number of clubs and is a German International. In the 1999/2000 season he was voted as the Middlesborough FC player of the year. Liverpool FC short of a top quality left sided footballer cast envious eyes on Mr. Ziege and entered into discussions directly with him concerning the prospect of joining them. The overtures of Liverpool FCs representatives were successful as Mr. Zeige agreed to a transfer along with his personal terms. Unfortunately this direct approach was contrary to the Association Premier League Rules to which as a club in the Premier League Liverpool were bound. It is a requirement of these rules that prior written consent of Middlesborough FC should have been secured before Liverpool FC approached Mr. Zeige

Transfer Details

Mr. Zeiges contract of employment included a clause which required Middlesborough to allow him to be transferred to another club who made an offer of at least £5.5m. This escape clause had been included at the request of Mr. Zeige. Middlesborough were reluctant to lose Mr. Zeiges services but in view of the escape clause had little option. They were most upset that the price paid was as low as £5.5 m as they claimed to have received offers from Rangers and Chelsea in the region of £7.5 m. It was alleged that the provisions of the escape clause had been leaked by Mr. Zeige to Liverpool FC which conditioned the amount of the offer. This was hotly denied by Liverpool FC who whilst pleased to sign Mr. Zeige considered that the amount of the fee did not represent a bargain. Not satisfied Middlesborough FC commenced an action against Liverpool FC for £2.0 m being the difference between what they considered was a true and proper valuation of the player based upon the offers received from Rangers and Chelsea and the sum paid by Liverpool FC. Alternatively had Mr. Zeige refused to be transferred to either of these clubs the retention of his services would have enhanced the income of Middlesborough by a similar amount. Their reasoning was that with Mr. Zeige in the team they would have anticipated finishing four places higher in the league than they achieved the season after he left. With such a higher ranking they would have attracted more spectators and as a result recouped higher gate money; secured a greater profit on ancillary profits from sales to the increase numbers of spectators and received great TV coverage with the associated extra fees.

Their case was that as a result of the breach of rules by Liverpool FC they had lost the opportunity of securing a larger transfer fee, or of enhancing their income had the player stayed at Middlesborough.

Courts View

The judge in the lower court was of the view that Middlesborough FC faced a problem as a result of the wording of the escape clause. Once an offer of £5.5 m pounds had been received they were obliged to sell. To succeed Middlesborough FC would have to prove that had Liverpool FC not known about the clause they would have offered more than the minimum figure. Liverpool FCs response was that but for the clause they would have offered less. The judge felt that there was no prospect of Liverpool FCs representatives changing their testimony and therefore considered there was no case to answer. Middlesborough FC appealed the decision and received a better result in the Court of Appeal. The lower court had made its decision on the written testimony of Mr. Rick Parry the Liverpool FCs chief executive and Mr. Zeige.

These testimonies had remained unchecked against any documentation and untested by cross examination. Lord Justice Simon Brown felt that the case should not be dismissed but be allowed to continue. Success on the field he observed brings financial reward.

If a club is wrongfully deprived of a valuable player the courts ought not simply to throw up their hands and say that its loss is incalculable. The courts will be left to do the best it can to arrive at a just figure.

Relevance in Construction Cases

This case at face value has nothing to do with construction however the legal principles are very relevant. In the case of Harmon CFEM Facades (UK) v The House of Commons (2000) it was held that a subcontractor had been treated unfairly in connection with the award of a contract for the cladding of the new Parliamentary building Portcullis House in breach of a term in an implied contract. Due to the unfair treatment the subcontractor was not awarded the contract. The subcontractor’s claim included the costs of preparing and submitting the tender together with the loss of opportunity of earning the anticipated profit that would have been earned if the contract had been awarded to the claimant. Another loss of opportunity situation arose in the case of Blackpool and Fylde Aero Club v Blackpool Borough Council (1990). In this case a tender was submitted strictly in accordance with the tender enquiry. Due to an administrative error by the local authority the tender was recorded as arriving late and therefore not considered. It was held by the court that there was an implied undertaking on the part of the local authority that if tenders were submitted in accordance with the tender enquiry they would be considered. No doubt the claimant was entitled to payment of the lost profit.

Conclusion

These cases establish that if due to some failure or breach the injured party can demonstrate that a reasonable opportunity to make a profit has been lost the court will award a pay out. We can all produce a long list of possible reasons why what was hoped for may well have been thwarted or argue that the very idea of making a profit was fanciful. Courts however are likely to take a robust view and problems associated with calculating an accurate amount of loss will not be allowed to stand in the way.