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Contemporary Issues in Sports Law and Practice 2011

November 15, 2011

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Friday November 4, 2011

Over the weekend, I finally managed to collate my various thoughts and notes into some semblance of order.

Firstly, our thanks must go to De Montfort University (DMU) and the British Association for Sport and the Law (BASL) for hosting what was once again a very enjoyable afternoon of speakers exploring a variety of key sports law topics. The half-day conference heard from six speakers, the first plenary session focusing primarily on football and Europe, the second plenary session focusing more on the investigatory and disciplinary processes behind the scenes:

Nick Craig (Director of Legal Affairs, the Football League) gave a presentation on ‘Financial Fair Play and the Football League’.  While the UEFA Club Licensing Regulations have been in place from the 2004/05 season (the current Licensing Manual is now in its 2nd edition), UEFA have also launched Financial Fair Play Regulations (FFPR) to be applied from the summer of 2011 with the view that all clubs in European competition break-even by 2018. The topic is hot news at the moment in both the mainstream press and more specialist legal coverage.

There were number of particularly interesting points about the contrast between the FFPR being applied in the Premier League as a condition of entry into European competitions, and the Football League (FL) model where the licensing regulations are intended more as a regulatory mechanism to control the clubs and force them to become more sustainable. Legally this agreement with the FL clubs represents a “soft” law approach where the clubs “agree  to actively work to introduce measures”, “increase transparency” and encourage clubs to operate”….  Time will tell how effective the league will be with this increased regulatory authority.

The big stick comes in Article 12(2) of the FFPR which states that:

2 The membership and the contractual relationship (if any) must have lasted – at the start of the licence season – for at least three consecutive years. Any alteration to the club’s legal form or company structure (including, for example, changing its headquarters, name or club colours, or transferring stakeholdings between different clubs) during this period in order to facilitate its qualification on sporting merit and/or its receipt of a licence to the detriment of the integrity of a competition is deemed as an interruption of membership or contractual relationship (if any) within the meaning of this provision.

This clause effectively holds that any club going insolvent restarts this three year process from scratch when it transfers its assets to a new owner, preventing clubs from ditching their debts and picking up where they left off free of all those troublesome creditors.

The devil as always is in the detail though, and while the cornerstone of the FFPR programme is in achieving break-even status, there are loopholes or ‘Acceptable Deviations’. In particular, the ability to lose €5m over the three years covered by the FFPR period (rising to a €45m loss if this is covered by equity contributions) neatly sidesteps the break-even provision, while Annex I A(d) of the FFPR lists an exception for:

d) Non-applicability of the three-year rule defined in Article 12(2) in case of change of legal form or company structure of the licence applicant on a caseby-case basis;   

or put another way, all clubs are equal, but some clubs are more equal than others, particularly if they might be a marquee name with large attendances and gate receipts!

 See also: http://www.financialfairplay.co.uk/ for more information on the FFPR rules

 

Chris Anderson (Associate, Brabners Chaffe Street Solicitors) gave a presentation on ‘Development Compensation for Young Football Players’.  One of the key drivers for this talk was the decision in ECJ – Case C-325/08 Olympique Lyonnais SASP v. Olivier Bernard & Newcastle United FC [41]:

“…In that regard, it must be accepted that, as the Court has already held, the prospect of receiving training fees is likely to encourage football clubs to seek new talent and train young players…”

 This will be a theme, the blog hopes to come back to in the near future, but essentially how much / little should be paid to clubs training (effectively as hot-houses) for new talent.

 Chris drew distinctions between:

  • the FIFA system which compensated for both the training costs of a player (although at times there were concerns these payments were ‘damages-based’ rather than a reflection of the actual training costs), and the ‘solidarity mechanism’ (which effectively acted as a wealth redistribution system to share up to 5% of any transfer between clubs training the player between the ages of 12 and 23).
  • The current domestic system which was based on agreeing costs (either by the agreement with clubs, or by reference to the Professional Football Compensation Committee (PFCC))
  • The proposed NEW domestic ‘Elite Player Performance Plan (EPPP)’ provisionally scheduled to start in July 2012. This system was created and driven by the PL to specifically produce greater numbers of talented home-grown players through increased coaching time and a more transparent (and legally defensible) fixed training cost mechanism. The new system is split into three main phases:
    • The Foundation Phase (U9-U11):  every academy charges a flat fee
    • Youth Development Phase (U12-U16): standardised model of fixed payments based on academy status
    • Professional Development Phase (U17-U21): Clubs (or PFCC) agree appropriate fee

 See also alternative perspectives from: http://www.bbc.co.uk/blogs/paulfletcher/2011/02/football_league_fears_over_pla.html; http://www.fiveyearplanfanzine.co.uk/News/football-league-votes-to-back-elite-player-performance-plan.htmlhttp://www.leedsunited.com/news/20111021/united-ceo-on-a-dark-day-for-football_2247585_2489344

 

Simon Boyes (Senior Lecturer, Nottingham Trent University) gave a presentation on ‘Sport and the European Union after the Lisbon Treaty’. The presentation traced the history of sport in the EU from its initial lack of academic interest, through the various reports, declarations, models and specificities to the present day and the Treaty of Lisbon. In doing so, Simon very much emphasised the evolutionary rather than revolutionary road to Lisbon. What was particularly interesting about the presentation was the thought that the EU was acting not so much as a regulator, but rather as a facilitator / supporter and using sport as a vehicle to engage in wider social missions (e.g. anti-doping, racism, corruption etc). These “softer” words such as “promotion…contribution…taking account of….developing” very much echoed Nick’s earlier talk on incorporating the UEFA licensing model into the Football League. Have all sporting regulators now embraced the softer stick? I thought that was just supposed to be horse-racing?

Any current discussion on Europe would not be complete without mentioning the recent Karen Murphy ruling (see here for a more in-depth analysis), and this was no exception! Interestingly, Simon suggested that fairness and openness were starting to creep into the ECJ rulings as values to be protected and upheld. This might be a trend to watch, particularly given the agenda for good governance and transparency.

 

 

Max Duthie (Partner, Bird & Bird Solicitors) gave a presentation on ‘The Sports Disciplinary Process’. The presentation started with, what seemed to be a recurring theme at the conference, the reluctance of the law to become involved in regulating sport (unless there was a clear departure from the rules / natural justice). Instead, Max pointed to the private, contractual nature of the disciplinary process, with governing bodies imposing their own regulatory codes of behaviour on the athletes under their jurisdiction.

Where I think that this presentation became more controversial was in the issue of jurisdiction, in particular who the sports were purporting to regulate. Max gave a number of examples:

  • Direct contractual links (Paul Stretford)
  • Implied contracts / contracts by conduct (Petr Korda)
  • Voluntary submission to jurisdiction (Dean Richards)

However, where I think the issue becomes greyer is in Sports Codes like the recent Lawn Tennis Association (LTA) Competition Regulations, effective from 1 September 2011:

1.3 By organising, entering, playing tennis in and/ or participating in any way in an LTA Official Competition (including as officials, staff, coaches, representatives, agents, medical staff, relatives and associates of a Player, a Player’s entourage and spectators), a person and/or entity agrees to be bound by and to comply with these Regulations.

It is one thing to bind an athlete to a particular code of conduct, but quite another to hold that they should be responsible for the conduct of all spectators, especially when the player is court-side during a match. On a similar theme, the regulations merely state ‘relatives’ – does this mean all relatives? Or do we need to apply an Alcock-esque ‘close-ties of love and affection test’?

There was also a particularly interesting discussion on whether disciplinary sanctions should be fixed or variable and Max talked about the trade-off between consistency (fixed) and discretion / proportionality (variable), before warning of the cautionary tale of Delon Armitage and the implications that plea-bargaining might have on future tribunals.

See also: http://www.guardian.co.uk/sport/2011/nov/08/delon-armitage-london-irish-england?newsfeed=true  

 

 

Adam Brickell (Head of Legal Compliance, British Horseracing Authority) gave a presentation on ‘The Investigative Processes of the British Horseracing Authority (BHA)’. The highly technical and diagrammatic nature of the presentation makes it somewhat difficult to summarise in any way that could begin to do justice to it. That said, Adam did make a number of interesting observations about the role of the BHA, and in particular the 5 areas that it is currently addressing:

    • Clear rules and regulations for participants
    • An effective investigative and intelligence capability
    • Robust disciplinary and licensing structures
    • Comprehensive, on-going education programme
    • Partnership approach with the Police, Betting industry and Gambling Commission

Two areas that may be of particular interest to watch in the future, are the concern that a number of betting firms are based offshore and, while they currently assist the BHA through Memorandums of Understanding (MoUs), these MoUs are not legally binding should the companies wish to subsequently withdraw their support. The second issue is linked to this and concerns the lack of regulation surrounding spread betting companies.

As an aside, Adam’s talk also continued Max’s theme from earlier about the regulation (or failure to regulate) members of the public not bound by the organisations rules. In particular, Adam gave the example of 6 individuals who placed suspicious bets on a particular horse, but fell outside the jurisdiction of the BHA when they decided not to cooperate with the investigation.

The final presentation belonged to Jonathan Merritt (Senior Lecturer, DMU) who gave us a sneak preview of his new PhD research into ‘Anti-Doping and Equestrianism’. We wish you every success in this venture…

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Contemporary Issues in Sports Law and Practice, 2010

November 9, 2010

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Many thanks to De Montfort University (DMU) and the British Association for Sport and the Law (BASL)  for hosting what was once again a very enjoyable afternoon of speakers. The half-day conference heard from five speakers exploring very diverse, but equally key topics:

  • Karen Moorhouse (RFL) discussed the Rugby Football League’s renewable three-year Club Licensing scheme and how this differed from a more American-style franchise system. The talk explored all aspects of this scheme from an overview of the current system and the criteria employed to define the applicable standards, to how the RFL had anticipated any potential challenges (both legal and fanbase). The proof of the pudding will really come in the next licensing round though when at least one Super League club will not have its current licensed renewed….
  • Alistair Maclean (The FA Group) gave an overview of the FA Group’s commercial rights. This was a very informative (and colourful) presentation and provided a thorough explanation of the new commercial strategy (FA Partner Programme 2010-14), blending a comprehensive whistle-stop tour through the FA Rights Inventory with commentary on the practicalities underpinning each branded item.
  • The blog’s very own, Jon Heshka (Thompson Rivers University, Canada) presented a paper on regulating ‘Technological Doping’ in sport. Jon outlined the key issues and controversies facing sport stemming from the current unprincipled approach to technology before analysing what options regulators and governing bodies could take. In particular, the talk debated the use of the WADA criteria for chemical enhancement and Jon posited whether the solution really lay in our definition of what were the essential characteristics of sport.
  • Christopher Stoner QC (Serie Court Chambers) provided a (much-needed) insight into Paralympic Disability Classification. The talk briefly covered all aspects of classification from a historical introduction to the current criteria for assessment, protests and appeals. What became particularly evident at the end of the talk was that while the current classification system has been in operation for a number of years, it is still evolving and being refined. It will be interesting to see what changes (if any) are made to protests ahead of the forthcoming 2012 Paralympics…
  • Ian Lynam (Partner, Charles Russell LLP) evaluated the use of player quotas in UK Sport, in particular, whether leagues could implement caps on the numbers of ‘foreign’ players. Essentially there were two key elements to this presentation, Direct Discrimination (as epitomised by the recently dropped FIFA 6+5 rule) and Indirect Discrimination (as seen in UEFA’s ‘Homegrown Player’ rule. Ian then rounded the event off with practical advice to any governing bodies wishing to implement such a rule.

The date for next year’s Contemporary Issues Event has now been set for 4th November 2011, information on how to book will follow nearer the time.

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Two bites of the legal cherry?

July 23, 2009

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Source: Full case report: (WESTLAW), see also the original tribunal hearing report in the Yorkshire Post containing more detail about the specific allegations: http://www.yorkshirepost.co.uk/news/Black-employee-wins-her-race.1253995.jp

Campbell v. Leeds United Association Football (in liquidation) [2009] EW Misc 4 (EWCC)

The case (heard in Leeds County Court) concerned a claim for psychiatric damages by Yvonne Campbell, a waitress and later banqueting manager at Leeds Utd Football club. Yvonne had earlier won two claims for damages for direct discrimination on the grounds of race, sex, victimisation and harassment at two employment tribunals in 2005 and 2006. She was awarded £5,000 by the first tribunal, and a remedy hearing was directed to be convened for the second tribunal, but in the end was never held (The Schedule of Loss for this second claim included psychiatric loss and loss of earnings and amounted to at least £110,000).

The problem is that in May 2007, Leeds United went into creditor’s voluntary liquidation and no return is therefore expected for unsecured creditors like Mrs Campbell. Although Leeds Utd were insured against claims by employees for personal injuries caused by negligence / breach of statutory duty, they were not insured against employment tribunal claims. The case is therefore Mrs Campbell’s attempt to secure damages via an alternative method. Indeed, the court noted at [11] that it is common ground that the allegations made are the virtually the same as those made before the Tribunal. The only difference is that the court case is based on a breach of regulations 3(1), 3(3), 3(6)(a), 4, 5(1), 5(2), 6, 7, 10 and 13(1) of the Management of Health & Safety at Work Regulations 1999, which led to a foreseeable risk of injury attributable to stress, rather than the Statutory direct discrimination actions argued at the Tribunal.

Although Leeds Utd tried to argue that Mrs Campbell was barred by estoppel from arguing essentially the same points, the Court held that a finding of discrimination was an entirely separate issue from negligence [24]. The court also ruled that Henderson v. Henderson (a principle that a party should not be allowed to reopen old cases to introduce new evidence) did not apply to the Tribunal’s assessment of psychiatric loss as no assessment had in fact taken place [36], and it would amount to a denial of justice if Mrs Campbell’s claim was struck out [37].

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2010 F1 rules (if there is a 2010 F1 series that is!)

July 3, 2009

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As close as I can get to a definitive timeline of the F1 dispute

8/1/09 – FOTA unanimously agree to (http://www.teamsassociation.org/press-release/2009-01-08/fota-press-release) :

  • cost reducing initiatives
  • sign a comprehensive Aerodynamic Test Restrictions Agreement (effective 2009)
  • develop and freeze low cost transmissions for 2010-12 seasons
  • reaffirm their commitment to £5m engine supply from 2010 for independent teams

5/3/09 – FOTA Roadmap for the Future of Formula one (http://www.teamsassociation.org/press-release/2009-03-05/fota-press-release). FOTA publishes its proposals for the sport:

  • 8 Engines per driver per season (at cost of £8m dropping to £5m per team by 2010)
  • Standardised KERS
  • 50% reduction in aerodynamics spend, with restriction on development changes through a season
  • Standardised telemetry and radio systems
  • 50% testing reduction
  • New points system (12-9-7-5-4-3-2-1) to differentiate GP winners
  • Radical new points scoring opportunities (1 championship point for fastest pit-stop)
  • Enhanced engagement with public and TV coverage, including Starting fuel loads, tyre specs and refuelling data made public
  • Findings of Global Audience Survey released
  • History of FOTA attached

20/3/09 – FOTA Press Release (http://www.teamsassociation.org/press-release/2009-03-20/fota-statement) objecting to the World Motor Sport Council decision to change the way the Driver’s championship is awarded.

26/3/09 – FOTA Press Release (http://www.teamsassociation.org/press-release/2009-03-26/press-release) claiming that CVC (the Commercial rights holders for F1) owe agreed sums of money to the teams for 2006-08 championships

 

The following letters were all published on the FIA site and can be downloaded at: http://fia.com/en-GB/mediacentre/pressreleases/f1releases/2009/Pages/fia_fota.aspx (bottom of the page, headings 1-4)

28/4/09 – Letter from Luca di Montezemolo (Ferrari / FOTA chair to Max Mosley) agrees in principle to process of cost-cutting started by FIA, but criticises its communication and implementation. In particular:

  • Objected to submission of new 2010 regulations (including the cost cap and difficulties in implementation both technically and for individual teams)
  • Rejected proposals for a two-tier championship
  • Reasserts Ferrari’s rights under the Concorde Agreement

 29/04/09 – Letter from Max Mosley (FIA) in response to Luca

  • Expresses fears that another team will drop out and absence of any legal agreement from any other team to continue. The cost-capped team is therefore ‘an insurance policy to maintain a full field’
  • Wish that any cost-cutting restrictions come in the form of financial measures, rather than the technological restrictions (proposed by FOTA).

 

Interestingly, the FIA approach seems to echo Ross Brawn’s who is quoted by Reuters as stating: One of the difficulties of Formula One is that we are turning into Swiss watchmakers. We are just refining everything to the nth degree instead of being able to make conceptual or innovative changes because the rules are becoming more and more constrictive. To try and contain the costs, we are just closing everything down so much, and I’m not sure that’s what Formula One should be. We can save costs by saying ‘That’s all you are allowed to spend, and have more freedom’. For me, that’s a more exciting Formula One for us and the public and we’ve always supported that concept.” (http://uk.reuters.com/article/motorSportsNews/idUKL815353020090508?feedType=RSS&feedName=motorSportsNews&sp=true)

 

30/4/09 – F1 Cost Cap Q&A and Discussions, Released by FIA (http://www.fia.com/en-GB/mediacentre/pressreleases/f1releases/2009/Pages/f1_cost_cap.aspx)

  • Confirmation of FIA position of cost-cutting through financial spending and leaving technological improvements comparatively unfettered
  • £40m cost cap
  • Establishment of Costs Commission to monitor compliance and enforce the costs cap

6/5/09 – FOTA meeting in Heathrow to examine FIA regulations (http://www.teamsassociation.org/press-release/2009-05-06/press-release). Constructive meeting, but seeks urgent consultations with FIA

At this point, while both the FIA & FOTA are agreed that cost cutting is necessary, the first sticking point seems to be in agreeing the extent. While the headline figure is £40m, there are a number of important exclusions in relation to driver salaries, fines / penalties, engines and corporate hospitality / marketing which actually makes the figure much closer to the team’s position. This is because driver salaries alone in some teams would have swallowed up much of this figure (Raikkonen and Hamilton are paid at least £10-20m) and while Mosley argued substantial salaries could still be paid, but in the form of dividends rather than wages, this was rejected by the teams.

The second sticking point is the team’s unwillingness to disclose their accounts to the governing body. Although the FIA agreed with Deloitte Accountants that the “vast majority of payments are traceable” and that any benefits in kind “can be valued”, the original plan would be that every team is audited by an FIA Costs Commission. This is quite firmly rejected by the teams.

 

At this point the lawyers really start to get involved and the letters become a lot more formal……..

12/5/09 – Letter from Peter (Ferrari Lawyers) to FIA

  • Asserts that Ferrari will be exercising their right of veto in respect of the introduction of any new Technical or Sporting Regulations (apparently given to them by the FIA in a letter, Jan 17th 2005) (it is perhaps just worth pausing for a moment while the implications of this actually sink in – what other sports teams, in any sport, have any special secret veto powers over what rules they do or do not like? There’s  favouritism and poor governance, and then there’s this!)

13/5/09 – Letter from Mosley to Peter in response

  • Suggests that as the teams have failed to deliver sufficient cost cuts and given the fact that Ferrari cannot stop itself from overspending(!), FIA has no choice but to act to protect the Championship [1]
  • Rejects any suggestion that the cost cap was improperly introduced [2]
  • Confirms existence of the 2005 agreement between FIA and Ferrari, and that it also included FOM. States that loyalty was an essential part of the contractual consideration and by Ferrari leading FOTA to seize control of significant aspects of the regulatory and financial functioning of Championship, and threatening to leave the Championship, it was not complying with these terms [7]
  • Rejects that any Ferrari exists, but if it did do so, the FIA suggest that these would only apply to any Sporting or Technical Regs that require Ferrari to alter its car (which does not apply here), and that this veto should have been applied before any regulations were adopted [10].

Ironically though, Reuters reports that Ferrari was the most cost-efficient Formula One team last season! Although F1 teams increased their overall budgets by an average of about 10%, the report estimates that Ferrari invested 328.2 million euros to win eight races and gain 172 points last season, while Japan’s Toyota and former Honda teams sit at the bottom of the list in terms of cost efficiency. (http://uk.reuters.com/article/motorSportsNews/idUKLO58544420090324?feedType=RSS&feedName=motorSportsNews) The report says nothing about absolute spending however.

 

15/5/09 – Letter from Peter to FIA

  • Doesn’t accept the description of the 2005 agreement and any conditions and suggests the only qualification to the agreement is on safety grounds (inapplicable here) [2]
  • Rejects FIA suggestion that the new regulations do not affect Ferrari [4]

 

20/5/09 – Ferrari v FIA in Tribunal de Grande Instance in Paris (no access to the official resource). From Press releases and news reports, seems that the court refused to strike out the 2010 regs, but suggested that Ferrari did have a potential veto.

23/5/09 – Another Letter from Peter to FIA

  • Rejects any suggestion that the 2005 Agreement with FIA means that Ferrari have a binding contractual obligation to compete in 2010 [1]
  • Confirms that under another 2005 Agreement with FOM that Ferrari extends their participation until 2012, subject to a condition precedent that a new Concorde Agreement is signed by FIA, FOM and Ferrari (this hasn’t happened yet) [2]

26/5/09 – Letter from FIA to Peter

  • Unsurprisingly, the FIA rejects all the claims and demands made in the previous Ferrari letters
  • Suggests that internal inconsistency between arguments in letter (that Ferrari did not have any contractual obligation to compete) and argument before French Courts / World Council (that Ferrari received 2005 consideration in return for agreement to compete)
  • By entering into the 2005 agreement, FIA argues that Ferrari accepts the obligation under the Concorde Agreement to participate in the Championship, in addition to any rights it feels it might have (veto)
  • Suggests that Ferrari’s opportunity to object to any regulations or use its veto had passed and no longer existed in relation to the 2010 regs
  • Seeks clarification regarding the status of the 1998 Concorde Agreement
  • Reasserts that Ferrari is contractually bound to enter the F1 Championship up to 2012

 

Then we get the following concessions from the FIA:

 

26/5/09 – Letter from Max to Luca

  • Proposes a cap for 2010, which could be as high as €100m (£86m) [1]
  • Proposes a Cap for 2011 at £40m [2]
  • Scraps proposal of separate rules for cost-capped teams [3]
  • Facilitate know-how transfer between new and old teams [4]
  • One employee per team (eg Chief Designer) in addition to drivers can be outside cap for 2011 [5]
  • Draft of proposed Concorde Agreement sent by the teams is broadly acceptable [6]
  • Cost cap can be renamed as “financial regulation” or any other term [7]

 

Before going back to all the lawyer’s letters……

26/5/09 – Letter from Peter in response to Max’s Letter

  • Ferrari accuses FIA of breach of contract in relation to the adoption of the 2010 F1 Regs in contravention of the 1998 Concorde Agreement
  • Confirms that the French Courts (20/5/09) recognise Ferrari’s veto right
  • Suggests that FIA refusal to recognise this right of veto over the 2010 regs is also a breach of contract
  • Suggest that as the FIA breach of contracts have created significant damages for Ferrari, the only sensible way for Ferrari to mitigate their damages is to immediately withdraw its proposed amendments to the existing F1 regulations, and that should the FIA continue to ‘refuse to honour its contractual obligations, Ferrari will be forced to consider its options, including holding the FIA liable for the losses sustained as a result of the various breaches by the FIA of its contractual obligations.’
  • Ferrari enters a conditional entry to the 2010 Championship

29/5/09 – FOTA Press Release (http://www.teamsassociation.org/press-release/2009-05-29/press-release) confirming that all FOTA teams have entered for 2010 season on basis of:

  • FOTA revision to 2010 regulations apply
  • New Concorde Agreement is signed by all parties before 12th June 2009

8/6/09 – Letter from FIA to Peter

  • Disagrees (again unsurprisingly) with all previous Ferrari points
  • Confirms that the French Court decision ruled that any veto that Ferrari had over 2010 regulations should have been used before this date
  • Rejects any suggestion that the FIA should have used the Concorde Agreement to make rule modifications
  • Rejects any claim that the FIA has breached any contract
  • Reiterates claims that Ferrari has breached agreement with FIA by threatening to withdraw from the Championship (suggests that the instability caused by this gives rise to damage, but that FIA has not decided what action to take although this is under active consideration)

9/6/09 – Letter from Peter to FIA

  • Rejects any contention that Ferrari has lost any rights under the 2005 Agreement
  • Suggests that Ferrari voted against the proposed changes at World Motor Sport Council (April 29, 2009), therefore FIA is still in breach of its contractual undertakings
  • States that as the French courts would not decide the issue, it thus remains fully open on the merits

Not written down by either side, but picked up by the Times F1 Blog (http://timesonline.typepad.com/formula_one/2009/06/the-big-bad-wolf.html) is the suggestion that following a meeting of the teams in Monaco, there is an agreement between the five manufacturers to pay each other £50 million each in compensation if they decide to leave FOTA and join the FIA. (The Times also uses the analogy here of a group of fish bolting themselves together to stop a circling shark ravaging them)

 

10/6/09 – Letter from FIA to Peter

  • Suggested that as Ferrari participated in 15 rule changes after the Concorde Agreement lapsed, any use of the Concorde Agreement is irrelevant (although the last paragraph in particular in phrased in somewhat indelicate language and almost guarantees a response back!!!)

11/6/09 – Letter from Peter to FIA

  • Suggests that FIA was misleading the public by suggesting that the Ferrari entry was unconditional and they therefore reserve their rights for the damages caused by this misleading statement. They also threaten to issue their own Press release.

12/6/09 – Two sentence response from FIA to Peter

  • In a nutshell, Ferrari has obligations under Concorde Agreement 98 to participate until 2012, therefore its not misleading or causes loss to announce this.

12/6/09 – Unsurprising Press Release issued by FOTA In response (http://www.teamsassociation.org/press-release/2009-06-12/press-release ) stating that their 2010 entries are conditional.

15/6/09 – FIA Press Release (http://fia.com/en-GB/mediacentre/pressreleases/f1releases/2009/Pages/fota_1.aspx) stating that the FIA and FOTA very close to agreement over technical regs and costs and that there was an element in FOTA who were determined to prevent any agreement being reached.

15/06/09 – FIA Press Release in Response to ACEA Statement (http://fia.com/en-GB/mediacentre/pressreleases/f1releases/2009/Pages/acea_1.aspx)  

16/06/09 – FIA Press Release (http://fia.com/en-GB/mediacentre/pressreleases/f1releases/2009/Pages/fota_meeting.aspx), detailing meeting of financial experts from FIA & FOTA and suggesting an inevitable financial arms race was inevitable if FOTA proposals were agreed.

16/6/09 – Interesting FIA Press Release on what they feel the main ‘philosophical’ issues are: http://www.fia.com/en-GB/mediacentre/pressreleases/f1releases/2009/Pages/fia_fota.aspx

17/6/09 – FIA Letter  to teams (the original teams letter hasn’t been published):

  • Governance – all parties should agree to 1998 Concorde Agreement and then negotiate new 2009 Agreement [1]
  • Finance – Suggested that reputable auditor backed up by signature of main company board member is sufficient, and that any suspected investigation over breach would be carried out by a mutually agreed auditor. Any breach would be subject to an agreed financial penalty (to be agreed) [2]
  • Confirmation that two tier regulations will be scrapped, however the letter also states that: “the Cosworth has to be allowed to run without limitation in 2010 (ie the 2008 duty cycle for a 2006 engine), because Cosworth have neither the time nor the resources to retune for 2010. Any engineer will confirm that this will not give the relevant teams any competitive advantage whatsoever” [3]

The response from FOTA was to issue this Press Release 18/6/09 (http://www.teamsassociation.org/press-release/2009-06-18/press-release) stating an intention to commence preparation for a new championship that:

  • Will have transparent governance
  • One set of regulations
  • Encourage more entrants
  • Listen to the wishes of fans (including offering lower prices for spectators worldwide)

19/6/09 – FIA Press Release in Response to FOTA announcement (http://www.fia.com/en-GB/mediacentre/pressreleases/f1releases/2009/Pages/fota_and_fia.aspx):

  • States that it is not surprised but ‘the actions of FOTA as a whole, and Ferrari in particular, amount to serious violations of law including wilful interference with contractual relations, direct breaches of Ferrari’s legal obligations and a grave violation of competition law. The FIA will be issuing legal proceedings without delay.’

24/6/09 – ‘Peace in our Time?’ Press Releases from World Motor Sport Council (http://www.fia.com/en-GB/mediacentre/pressreleases/wmsc/2009/Pages/wmsc_240609.aspx) and FOTA (http://www.teamsassociation.org/press-release/2009-06-25/fota-press-conference-transcript)

  • All teams have committed to the 2010 World championship using 2009 Technical Rules
  • Teams will, within two years, reduce the costs of competing to the level of the early 1990s
  • Teams agree to FIA as the sports governing body and FOM as the commercial rights holder
  • Teams will adhere to an upgraded version of the governance provisions of the 1998 Concorde Agreement
  • Max Mosley will not stand for re-election in October 2009

 

So the upshot is F1 continues as this year, and Max Mosley will not govern the FIA from October. Phew…….

The 2010 Regs: http://argent.fia.com/web/fia-public.nsf/755774E21C7A8B1DC12575B000326F7C/$FILE/1-2010%20F1%20SPORTING%20REGULATIONS%2006-05-2009.pdf

(for an interesting criticism of the current governance (or not) of the sport see also: http://www.telegraph.co.uk/sport/motorsport/formulaone/ferrari/5320514/Formula-Ones-warring-factions-are-making-the-sport-a-laughing-stock.html)

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Donington

July 2, 2009

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Sources: http://www.telegraph.co.uk/sport/motorsport/formulaone/5208205/British-Grand-Prix-future-threatened-by-Donington-Park-owners-lawsuit.html ; http://www.telegraph.co.uk/sport/motorsport/formulaone/5451581/Donington-Park-clear-legal-hurdle-in-bid-to-stage-2010-British-Grand-Prix.html; http://www.telegraph.co.uk/sport/motorsport/formulaone/5454942/Simon-Gillett-adamant-Donington-Park-will-host-British-GP.html ; http://www.express.co.uk/posts/view/98471/Gillett-banking-on-the-best-of-British):

Yet another twist in the proposed £100m redevelopment of the Donington race circuit in preparation for its hosting of the British Grand Prix in 2010. While Donington had beaten Silvestone to securing 17yr hosting rights for the event, at a reputed £12m pa, doubts had begun to be raised over the track’s ability to complete this redevelopment.

At the start of the year, Donington Ventures Leisure Ltd (DVLL) is reputed to have owed the track’s owners (Wheatcroft & Son Ltd) £2.47m in rent arrears dating back to September 2008. Kevin Wheatcroft finally launched a legal action (at Derby Crown Court) against the track in April to recover the outstanding rent and force the track operators to forfeit their 150-year lease on the circuit.

The catalyst for this action seemed to be when Simon Gillett (Chief Executive of Donington Ventures Ltd) missed the March deadline to announce details of a ‘debenture scheme’ to finance the track redevelopment. After this omission, it would seem that the Wheatcroft’s lost confidence in DVLL’s ability to repay their debts. North West Leicestershire District Council even threatened to revoke the planning permission they had previously agreed for the track development if the two sides could not reach an agreement over the section 106 document (concerning the event’s safety).

Legal action was however averted on 5th June, when the two sides confirmed they had reached an out-of-court settlement over both the outstanding rent and the planning permission.

The problems for Gillett arose when he lost the support of his bank (understood by the Telegraph to be Goldman Sachs in a joint venture with IMG) to fund the track redevelopment through a debenture scheme. He later released details of this scheme in the Daily Express (http://www.express.co.uk/posts/view/98471/Gillett-banking-on-the-best-of-British):

“Debentures will be offered on three, five and 10-year levels. People will be pleasantly surprised at the prices with the lower level at £1,200-a-year going up to the platinum at £4,000 with varying degrees of access to superb new facilities for debenture holders.

They also plan to have “participatory” events for debenture holders with track competitions and other schemes to allow hands-on use of Donington. “All of this with a superb debenture clubhouse with three levels with everything people want in terms of quality, from food to views,” added Gillett.

We’re only looking for 4,700 a year globally to buy into our idea. Our survey shows they are out there.”

Initial estimates suggested that the project would raise £175m over 10 years. Since March, this figure has now been revised to £140m, excluding corporate hospitality.  Similar debenture schemes were used to fund construction projects at Lord’s, Wembley, Wimbledon and Twickenham, see: http://www.telegraph.co.uk/sport/football/international/england/2322630/Wembley-forced-to-make-cutbacks.html

And will include 40 days of entertainment apart from the grand prix including other motorsport and music events such as the Download festival.

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