It aint what you do, It’s the way that you do it.

clark_kent

Clark Kent.  Not Greg Clarke.  Nor Superman.

Greg Clarke, the chairman of the Football League has finally come out and admitted that the League have made ‘administrative oversights’ when registering players contracts on behalf of Coventry City FC, errors seemingly replicated at the FA.  The golden share resides with CCFC Ltd, whereas players registrations have been assigned to CCFC Holdings Ltd.  Although third party ownership of players is against FL regulations, the FL do not appear concerned by assets straddling two companies at this point.  Clarke did not confirm to what extent the registrations had been incorrectly listed, but admitted that the ‘errors’ came to light in March 2013, as CCFC Ltd entered administration.  It has taken some five months for the governing body to make a statement on the issue and to highlight the ‘errors’.  This information was withheld when prospective bidders for CCFC Ltd were writing proposals sought by Paul Appleton, the SISU nominated Administrator, to purchase the company. SISU is the Cayman Island’s registered Hedge Fund which ultimately controls the club via the myriad of investment vehicles and companies.  Had the information been made available, it may have significantly altered the outcome of the administration process and prevented the need for the future liquidation.   Some serious and real questions would now be being asked of the role of the football authorities, had a company not associated with SISU become the preferred bidder, paying in excess of the £15 million that Otium paid for the company for very little in the way of assets.  It is almost as though the League were confident that they knew what the likely outcome would be and so were not unduly worried by any future challenges.  Or incredibly naive.  Clarke could not clearly state when any of these errors were initially made.  The Coventry Telegraph, who conducted the interview, proudly reported that Clarke had responded to their repeated questioning but subsequently failed to get the Chairman to confirm any dates, which is disappointing.

Tim Fisher, CEO of Otium entertainment Group Ltd, the preferred bidders to take CCFC Ltd out of administration, has suggested that submitting registrations in the name of Holdings was a practice which SISU inherited from previous regimes. He believes that the ‘administrative errors’ have occurred since before they took control in 2007 and have been allowed to continue.  All companies limited by guarantee are assigned company numbers at Companies House when formed, which never changes whilst the company is in existence.  You can change the name of the company, but the registration number is a constant.  Collectively, players contracts are worth billions, so attention to detail and careful examination is paramount.  How can the FL chairman claim that the ‘error’ was a simple administrative oversight?  The switch between the companies would have been glaringly obvious, but was, and is being, allowed to continue.  Timing is key in all of this.  The last set of accounts showed players registrations in CCFC Ltd, not Holdings Ltd.  Has this activity been ongoing since well before 2007, or has it occurred more recently?  If the latter, as suggested by the official documents submitted to Companies House, this could have serious implications.  CCFC Ltd went on a rent strike in the summer of 2012, withholding monies contractually due to ACL, the clubs landlords at the Ricoh.  ACL would have used the accounts when undertaking credit risks on the company – accounts which may well have contained significant errors.

Fisher insisted throughout the fans forums that the issue of the registration was so complicated that only a court of law could ultimately decide.  This was confirmed by freelance broadcaster, Stuart Linnell, who chaired the forums and a later date, suggested the arrangement was too complex for the majority of his listeners to comprehend, responding to a questions on SkyBluesTalk fan forum, stating

 When I say “court” I suppose what I mean is an environment with an indisputable degree of expertise, qualification and unbiased perspective that would allow for appropriate clear, concise questions and appropriate clear, concise answers.

And yet now the chairman of the Football League has illuminated quite a simple explanation – there was no wide spread fraud, conspiracy or collusion, no need to ask a court for guidance nor the involvement of expert lawyers and forensic accountants, just a simple administrative error.  An appropriate, clear and concise answer to one of the appropriate, clear questions.

The league has now undertaken an audit of the other 71 teams and found no similar cases elsewhere.  Whilst it is difficult to gauge if the club has gained from this arrangement in footballing terms, ACL will almost certainly feel that the company in administration have benefited in financial terms.  Assets have moved or been incorrectly recorded.  Assets have monetary value.  As such, ACL may well be able to identify quantifiable losses that have impacted on the amount of revenue they are set to receive as an unsecured creditor and will no doubt be exploring their options for future action. The FL do not appear overly concerned by any of this.  And yet the FL are usually very strict on their administrative procedures and have taken the matter very seriously in recent times.

Actions taken by the Football League for breaches to regulations on registrations

Paperwork and timing is key for the football authorities and players registrations.  The main concern deals with preventing a team from gaining an unfair advantage by using players registered for one club yet representing another.  However, most cases seem to be personnel at the clubs simply forgetting to complete or renew the relevant documents, or falling foul of late submissions, rather than looking to gain an advantage.  Crystal Palace were docked a single point in 2009 when Arsenal loanee, Rui Forte, came on as a substitute in a game after his papers had expired.  The club was fined £20,000, of which £15,000 was suspended for not submitting documents, even though the player had been at the club on loan with no break and correctly registered previously.  In 2011, Hereford United and Torquay United were both fined £10,000 and docked three and one points respectively for not completing the registrations of Rob Purdie and Jake Robinson ahead of the FL deadline, the day before the match in February. The papers were not processed by a matter of hours.  Simple errors resulted in points being lost and fines imposed.

Recent Examples in the Lower Leagues

The most extreme case I have been able to find relates to one of the most recently formed clubs to make it to the Football League, one that was formed as a reaction to the League allowing the first franchise club to be established in Milton Keynes.  AFC Wimbledon, formed after Wimbledon relocated and soon became MK Dons with the Leagues blessing, fell foul of ticking the wrong box on a registration form for Jermaine Darlington, the first player to play for both ‘Wimbledon’ teams.  The club did not declare that he had been previously registered in a foreign league, with the Welsh FA, whilst playing for Cardiff City in the English League.  He had terminated his contract by mutual consent there after a series of injuries and went on to play amateur football back in England for almost two seasons before his career was resurrected by the offer of professional terms by AFC.   The error only came to light after he received a caution in a game, not when the registration were originally received. The oversight resulted in an expulsion from the FA Trophy, a £12,000 fine and an 18 point deduction for AFC in 2006/07.  After interventions from the then Prime Minister, Tony Blair, and an appeal, this was reduced to three points.

In a similar case this season, Marine FC of the Evo-Stick Northern Premier were docked three points after Sean Doherty played for the club without gaining international clearance.  Again, the Welsh FA was at the centre – Doherty was registered as a player at Colwyn Bay in 2011.  Marine received the penalty despite Doherty playing in English leagues for AFC Liverpool and Droylsden in the intervening two years.  The case is so similar to AFC’s that it is barely indistinguishable, apart from the punishment.  Three points for Marine, initially eighteen for AFC Wimbledon.

Thurrock FC of the Rymans Premier League played Joel Barnett in a game in 2012 after gaining clearance from the Essex county FA.  Barnett was not on the leagues own suspension list, nor that of the local FA.  It came to light at a later stage that Barnett was under suspension in West Ryding FA, but this had been omitted from the leagues own publication. Thurrock’s press officer, Tony Flood said at the time

The league missed this too. I really wonder what the point of the league is if it misses things like this.

The rules for the competition are clear – a club ‘shall’ have a points deduction for fielding ineligible players.  The decision, arrived at in May 2013, resulted in the clubs relegation to the Rymans Premier League North and their chairman estimated it is likely to result in around £40,000 of lost revenue.  In January 2013, Workington Reds were docked four points for not completing documents relating to extending a loan agreement from Tranmere Rovers.  Solihull Moors were deducted four points for playing an ineligible player, along with Salisbury City, docked one point after fielding a loanee from Exeter City whose registration papers were not received in time by the league.  Fortunately for Salisbury, they still made the play-offs and were subsequently promoted.  Some are not so lucky.

International breaches of the regulations

In 2009, the Swiss FA were forced by FIFA to deduct FC Sion 36 points for fielding ineligible players after a transfer embargo was placed on the club after breaching regulations when signing the Egyptian goalkeeper Essam El Hadary.  The club continued to sign six further players who went on to represent the club.  The Swiss FA own statutes limited deductions to a maximum of 12 points, but after pressure was applied by FIFA, the original amount stood.  The club were about to participate in the Europa League after lying third in the top division with 31 points. Instead, the decision resulted in the expulsion from UEFA competitions and subsequent relegation.  Celtic FC benefited from the decision after being reinstated to European competition.  This ruling will have cost FC Sion millions.

West Ham & Investment group, MSI

Football fans, and those from Sheffield United in particular, don’t forget this case.  Javier Mascherano and Carlos Tevez both represented West Ham in the Premier League in 2007.  The players economic rights were registered to MSI, an investment company unconnected to the club in a clear case of third party ownership.  The pair played all season, were influential in many games and yet the punishment was restricted to a £5 million fine and no points deducted.  Sheffield were subsequently relegated.  West Ham did not reveal to the governing bodies that the Argentineans had been incorrectly registered when they unexpectedly arrived at the start of the season.  The owners and administrators of the club knowingly lied to the FA. They proceeded to evade the issue when suspicions were first raised in January 2008.  A large fine was eventually imposed, yet no points were deducted.   Other clubs fall foul of simple administrative processes and procedures, and points were, and are, deducted with significant consequences, both on the pitch and in the pocket.  It is a breach of natural justice and fair play – something which the Victorian founders of the League considered paramount 125 years ago.

The statement from the FA on the West Ham affair at the time stated that

​The fans and the players have been fighting against relegation against the ever-present threat… the efforts and loyalty would be to no avail were we to now deduct points.

What about the fans of Middlesborough, of AFC, FC Sion, Hereford and Crystal Palace and others?  What about the fans of Coventry City?  There seems to be no consistency on how the regulations are followed and how the punishments are distributed.  Clubs are all treated equally, yet some are treated more equally than others, to paraphrase George Orwell.  Retribution is not applied with any uniformity.  What sanctions can the club now expect?  Using recent history as an indicator, the club would face expulsion from the league for repeating the offences and allegedly over many seasons – a large amount of points would need to be docked so that relegations are almost inevitable.  However, Clarke has suggested this may not be the case.  Instead of penalising the club, the Football League intends to write to the Sports Minister, Hugh Robertson, to explain themselves and the errors.  Other clubs should take note.  At the Football League, it certainly appears that it ain’t what you do, it’s the way that you do it.  And that’s what gets results…

Edited to correct error – Sheffield Utd were relegated, not Middlebrough as originally stated
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7 Responses to It aint what you do, It’s the way that you do it.

  1. gregogee says:

    Good article – but there is is a key difference between the Coventry situation and the other examples you have quoted. The essence is a player has to be registered to only one club. Both Coventry companies were part of the same club so there was no doubt or argument as to which club the effected players were registered. Hence why “The FL do not appear overly concerned by any of this.”

    • Why were the FL so concerned at AFC for ticking the wrong box for example? This is a far more innocent mistake than this new development of assets being shifted around. Assets with monetary considerations against a mark on a document? It doesn’t make sense.

      • gregogee says:

        I don’t know about that, apart from what you have told us – but from what you have said there are two factors that may be critical 1. international clearance – which I don’t think has any bearing on the Coventry situation and 2. You say he had played for both MKD & Wimbledon, one club that split into two – So the FL had to be very careful and alert to that situation and where his registration lay. (Not saying they shouldn’t ALWAYS be careful!)

  2. Mark C says:

    Coventry’s issue is unique in so many ways.
    1) the club under the guise of SISU, the then owners, went into administration in 2012/13 season, were deducted 10 points and fell away from a position of challenging for the league play offs.
    2) the administration process has been conducted by the previous owners own appointed administrator, Paul Appleton, which is not illegal, but is surely questionable morally, when Paul Appleton is the only person who is aware and in control of making a decision about who he sells the club to; bearing in mind who his employers were.
    3) Paul Appleton then agrees to sell the club, effectively back to SISU, the company who took the club into administration, because a subsiduary of SISU, OTIUM Entertainment, fronted by the very same Directors of SISU paid £1.5M, it is reported, for the rights to own the club.
    4) There is a perfectly good stadium in Coventry for Coventry City FC, regardless of who it’s owners are, to play in. The Ricoh Arena has housed football games, including International and Olympic matches, so the suitability of this ground is not in question. What is stopping Coventry City playing here and being allowed, yes allowed by the Football League who’s motto is ‘Real Football, Real Fans’ to play 34 miles away in a different town which already has a Football League club, Northampton, is the fact that the new owners OTIUM Entertainment were not successful in their purchase of the Ricoh from ACL, Arena Coventry Limited, which is part city council owned and part charity owned.
    5) This is the sole reason that they have thrown their toys out of the pram and moved a club with 130 years of history, 34 miles away. They first claimed that they could not afford to pay the rent at the Ricoh and after many months of wrangling and the administration process, ACL offered a reduction in these by some considerable amount. They have since claimed that because they cannot purchas eor part purchase the Ricoh, they do not generate any additional matchday revenues and that because of this, rather than play at a stadium which holds 32, 609 fans, but would likely get gates of around 12,000 on a League 1 matchday, they have moved to a ground with a capacity of 7,653 and where the opening ‘home’ game of the season drew a modest crowd of 2,204.
    6) Assuming that this is the only reason that OTIUM have moved CCFC (the club) to Northampton, if we assume that the opening day’s tickets averaged £15 at Sixfields, the club grossed £33,060 on tickets, if we assume that each person spent an additional £5 on matchday extras totalling £11,020, this means the total gross on the day was £44,080. If we assume that the opening day of the season was played at the Ricoh in front of 12,000 fans at the same ratio, minus the contentious matchday extras then Coventry City FC would have grossed £180,000 alone. Can somebody explain to me why it’s not better to gross £180K rather than £44K and what the the benefit to any business is for doing this? For a start, this probably doesn’t cover the squad’s wages, running and travelling costs for the week.

    This is why the TRUE fans of Coventry City are asking the Football League NOT to fine us another 10 points, not to allow OTIUM’s takeover to be ratified, not to install the same owners who took us into administration and left creditors and businesses who used to scrape by on matchdays at a huge financial loss, not to allow us to relocate our ‘home’ matches 34 miles away, not to have to move our games from Saturday’s to Fridays and Sundays when there are matchday clashes with Northampton Town FC, but instead to be fair. Really look at whether these are fit and proper people to own a football club, whether they are responsible enough to look after a 130 year legacy and to make them play home games back where they belong, in Coventry.

  3. Paul O'Donnell says:

    Sheffield United not Middlesborough were relegated on the strength of West Ham being not having a points deduction, which makes matters worse really, as look at the Blades now.

  4. Paul Burton says:

    Massive load of info but nothing is going to change. CCFC are left as they are. FL are seemingly happy. Games are being played. ACL are screwed looking for alternative events (ladies football next – wow). SISU are still busy squeezing the life out of our team while attempting to find land to build on. So loads of huff and puff but no game changer. Rhetoric.

  5. Paul O'Donnell says:

    The fact that Joy Seppala sits on the Takeover and Mergers Panel is the biggest irony since Derek Higgs wrote the HIgg’s Report on corporate governance whilst sitting on the same board of directors at Coventry City as Bryan Richardson.

    A case of poacher turned gamekeeper whilst still poaching.

    It was good to see that Private Eye have turned their attentions to SISU as well. Shame there is no more detail about their settlement with HMRC.

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