Beer Engine

There's nothing like a bit of competition to concentrate minds. Pinnacle have had their 21 days and either (a) apparently they have just figured out that there's no way we're getting those 10 points back (doh) or (b) they've known all along and are playing "chicken" with Aviva and Barclays. Next season is almost upon us - we haven't got time for brinkmanship. Let's see what the other bidders have to offer.

Ditto

Blimey - does that make you the Bishop of Bath and Wells ...?

I thought the FL was fair and reasonable. TL knows that we've got no chance of overturning the appeal - I think Pinnacle are using the FL to buy time to resolve those minor but strangely persistent legal issues that seem to be getting in the way of completeion ...

Can I urge people NOT to bombard the FL with emails of complaint ... the FL has behaved quite reasonably in all this We need their goodwill more than they need Saints to survive ... so can we lay off please

These are the restrictions placed on Leeds right to appeal the 15 point deduction: 4.1 Leeds hereby release the League ... from all claims, whether known or unknown to Leeds, which Leeds has or may have against [the League] arising out of or connected, whether directly or indirectly with ... the conduct of the League with regards to OldCo, the Conditions and the imposition of the sanction or, if passed, the Appeal Sanction (the “Claims”). (Emphasis added) 4.2 Except for the obligations created by this Agreement Leeds hereby covenants that it shall not ... commence, or threaten to commence any proceedings in any jurisdiction before any court, arbitration body ... against [the League] ... arising out of or connected, whether directly or indirectly with any of the Claims”. (Emphasis added) Leeds FA Arbitration was dismissed on the basis of this clause alone.

Leeds FA Arbitration was dismissed solely on the ground that the agreement betwen New Leeds and the FL contained a waiver of the right to appeal trhe 15 point deduction. QUOTEWe are satisfied that the Claimants case begins and ends with the Compromise Agreement which clearly embodied the intention of both parties. Taking the Agreement as a whole and in particular Clause 4 Leeds NewCo agreed to the imposition of the 15 points and to release the League from the claims which have now been advanced and to waive any rights to do so. Leeds NewCo specifically covenanted not to bring the claims it has now sought to assert and there is no basis to allow it not to honour that covenant. The Tribunal dismisses the Claim on this ground alone.

I think the FL thing is a smokescreen which buys them time to sort out other problems.

Tony You know as I well as I do that there is no chance of having the points deduction overturned by any tribunal. So is the FL thing a smoke-screen while you buy time to sort out those "minor" legal issues that seem to be holding everything up? COYR

Dear Lest we Forget WTF are you on about? That stuff you've highlighted in bold is irrelevant - I think you've missed the point of what is a fairly standard "insolvency" clause more often tied to a right of termination in a commercial agreement ... Moreover, I am actually agreeing with you about the final outcome - we have no chance of having the points deduction overturned.

The FL will tell us to join another league if we don't like their Regulations.

Technically, the FL argument is correct. Southampton Football Club did consist of SFC Limited, SLH plc and the company owning the stadium. This is entirely consistent with the FL's Regulations - notwithstanding the deficiencies in the drafting.

We should have faced up to our troubles and put SFC Limited, SLH plc and the companies that own the stadium and training ground into administration and planned a coherent exit route for all the assets and liabilities of the football club. Instead we have relied on some half-baked jinksy argument about SFC Limited not being in administration from some incompetent junior lawyer and put the whole club at risk as a result. What a bunch of ****wits we've had running and advising our club.

No I agree - the stumbling block could well be that the FL have refused to give an assurance that the sporting sanctions will not be worse than a 10 point deduction. The FL can't give an assurance. Pinnacle cannot proceed without one. That's why I'm worried.

The FL will say, Saints have been punished, like other clubs before them, in accordance with the rules which Saints signed up to as members of the League. The FL cannot back down on the 10 point deduction. If Pinnacle, foolishly in my view, cannot accept a 10 point deduction as the price of being able to pick up the club and stadium on the cheap then my fear is that the FL will say, OK, if you don't like our rules, go find yourself another league to play in. I am seriously worried now.

Actually - it is that simple - the FL's staement is (for once) bang on the money. Here's the clinching argument:- 1. Rule 12.3.1 of the Regulations of the Football League Limited states that .. "if any Club shall ... have an administration order made in respect of that Club ... the Club shall be deducted 10 points etc .." 2. The word "Club" is defined in Rule 1.1 to mean .. "any Association Football club which is from time to time, a member of The League ..." 3. There is nothing in the FL Rules that runs contrary to the FL's finding that Southampton Football Club comprised SFC Limited, SLH plc and the company that owns the stadium. 4. One of the "Force Majeure" events that would allow an appeal against 10 points deduction for clubs in administration (Rule 12.3) is "Default by another Club:... where [going into administration] is caused by the default of another football club" - so, if Saints had gone bust solely due to the fact that the holding company for say Derby County owed us £3 million in unpaid fees for a player we had sold them, then according to the argument put forward by Pinnacle and their lawyers, we would not be able to overturn our 10 points deduction on the narrow, technical ground that Derby's holding company did not comprise all or part of Derby County football Club ... That is why narrow, technical arguments designed solely to thwart substantive justice always fail in the end ....

Hi Frank's Cousin But go right back to square one - our football club tried to gain a competetive advantage by building a large stadium and by buying and paying players that it could not afford. As a result we don't have enough money to continue trading. In the world as it was before the invention of this remarkable thing called "administration" the club would have gone into liquidation straight away. Bye bye Saints. Now, we're hoping to keep all our assets like the stadium and the players (God knows why incidentally but that's another point) but we don't want to pay back the money we borrowed to finance them. It looks like "we" or Pinnacle might do it - keep the club going, let Aviva take a hit for 15 million, Barclays a hit for 2 or 3 million, local businesses another couple of mil?. What possible right do we have to skin our creditors for 20 million? And if we do get away with it as it seems we might, isn't a 10 point deduction a very, very small price to pay for getting off with 20 bars worth of assets?

No lawyer in his right mind could beleive that Southampton Football Club has a watertight (or indeed any) case for getting the points put back - this is nonsense/bluffing or very very poor legal advice.

OK - any company within the group whose business is essential for the continuing survival of the football club - not the radio station company obviously. No amount of pedantry is going to get us off the 10 point deduction. It might be that Pinnacle is prepared to agree not to "appeal" against the 10 point deduction but that the FL is not prepared to give a reciprocal undertaking not to increase the deduction depending upon the eventual fate of SLH plc et al.

I don't think we'd have a cat in hell's chance of avoiding our agreement with the FL on the grounds of duress - although lack of reasonable alternatives might help us overturn the the popularly held view that the decisons of sports' governing bodies are not susceptible to judicial review. The FL's decision to deduct 10 points (if that is the only issue at stake here) is fair on its merits - so no court or tribunal is going to stretch existing legal principles to overturn any decision that is essentially fair. Also if we were succesful in avoiding the contract then it would be as if the contract had never been entered into - so we wouldn't have the golden share.

The chance of overturning the points deduction either at arbitration or in the High Court is less than 5%. Why? The FL decision was fair. All the FL have to say is that when a football club's business is hived off into various companies within a group and the business of that group is substantially comprised of running a football club (as stated on the OS), the FL's insolvency regulations will apply if any company within the group goes into administration. It's a simple argument that will prevail despite the deficiencies in the drafting of the FL Rules. Trust me on this -our so-called "right" to appeal is not worth having so it shouldn't be a deal-breaker. Please feel free to PM me if you or those you speak for would like to know more. Please fe

Don't get me wrong - the FL Rules have been drafted very badly and a narrow, technical interpretation of those rules might, in theory, have let us off the hook. Having said that, whilst it is true that SFC Limited is not in administration, it is also true that Southampton Football Club and SFC Limited are not one and the same thing. Apparently a number of the assets and liabilities that comprise Southampton Football Club, like the stadium, training ground, mortgages and bank loans are attached to other companies within the SLH plc group. So, if the business of SLH plc and its subsidiaries is primarily the running of Southampton Football Club (which by its own admission on the OS it was), then the FL have a good case when they say that the points deduction should apply even if it is only the holding company that is insolvent. Or as the FL put, the activities of all the SLH plc group companies are inextricably interlinked. There are technical flaws with the FL's broad brush approach - but their verdict is fair in the context of the purpose of the FL Insolvency policy. It is obvious that if all the assets and liabilities of Southampton Football Club had been vested solely in SFC Limited then SFC Limited would have gone into administration. The splitting up of the club into various companies does not alter the fact that, taken as whole, the football club's business was insolvent. We're very unlikely to get anywhere with an appeal based on a narrow, technical application of the FL's (admittedly) woefully drafted rules because the substantive merits of the case are with the FL who, after all said and done, are merely attempting to stop football clubs from living beyond their means and using the administration procedure/corporate restructuring to avoid the consequences of their overspending. If the FL didn't do this then irresponsible, overspending clubs like Southampton would be able to gain an unfair competetive advantage over other FL members who have lived within their means. The supreme irony is that we broke the bank to buy a bunch of useless players who gave us a competetive disadvantage! Pinnacle's lawyers must have advised them to accept that the 10 point deduction will stand - so what does it matter if you sign away a right to appeal? My concern, therefore, is that the apparent absence of a CVA for the liabilities of SLH plc Group and its potential descent into liquidation may propmt the FL to impose an even heavier points penalty on Southampton Football Club regardless of new ownership and a newly created corporate structure. This, in turn, might have a significant detrimental effect on the valuation of Southampton Football Club and the price that Pinnacle is prepared to pay to own it - if anything.

The root of the FL's difficulties is simply this:- FL Regulations were drafted on the incorrect assumptions that (a) a football club and the entity that owns it (ie a limited company) are one and the same thing; and (b) the assets and business that comprises a football club will all be owned by a single company. Saints transgressed the substantive rule that requires that a 10 point deduction is applied to any club going into administration - with the added penalty that the deduction will apply in the following season if the club goes into administration after the cut-off date AND if the club would have been relegated at the end of the season even without the application of the points deduction. We have tried to dodge the FL rules on a technicality - specifically on the basis that the football club was in fact SFC Limited (not in administration) rather than SLH plc. There is no merit in our claim - even the OS used to have an investors page (hastily removed after we went into administration) stating that SLH plc's primary business was running Southampton Football Club. The fact that SLH plc chose to hive out assets and liabilities to SFC Limited and the companies that apparently own the stadium and training ground etc. makes no substantial difference to the situation. In those circumstances, the FL's argument is that Southampton Football Club is a basket of assets and liabilities held by a group of companies which are united by the shareholdings of the parent company SLH plc - a company which crucially has no other significant business interests. In short - the FL's argument is that the whole holding comany scenario is a deliberate sham set up to thwart the proper application of the FL Rules. We have no chance of succeeding in overturning the 10 points deduction on appeal - regardless of where that appeal or review is heard. The worst that will happen is that the judge/adjudicator will reccomend that the FL Regulations are clarified to explicitly cover the holding company scenario. I find it very hard to believe that the delay is due solely to Pinnacle having to sign away a right of appeal which is worthless anyway.