By Dan Chapman
Hot off the press, but following last week’s news that the now Rochdale Chief Executive had been suspended by the Football Association for some 12 months or so, is a decision of the FA’s Regulatory Commission which may well frighten a number of football clubs, and possibly give some widely used practices a much needed shake-up.
The decision of The Football Association v (1) Hartlepool United FC; (2) Mr Russ Green; (3) Mr Stephen Chandler; and (4) Mr David Buncall involves – in addition to the much beleaguered Hartlepool – their then Chief Executive and two FA Registered Intermediaries.
The basic issue at hand here is that all of the charged parties failed to comply with the FA Regulations on Working with Intermediaries, and specifically regulations A3 and A6. Regulation A3 makes it clear that clubs, players and Intermediaries must not arrange matters in order to conceal or misrepresent the reality of a transaction (which in the this case, were three different player transfers). Amongst other things, Regulation A6 states that all clubs, players and Intermediaries must make sure that the identity of an Intermediary who worked on a transaction is clearly identified on the relevant documents.
The three player transfers that are the subject of this judgment all took place in June and July 2016. At that time Hartlepool United FC publicly operated a policy of not paying agents’/Intermediaries’ fees on player transfers, which would prove to have serious unintended consequences.
At the time of each transfer, all of the players were signed to a representation contract with a Registered Intermediary. On the face of it, if Hartlepool were not prepared to pay a fee then the players (whose primary liability it is to pay) would have been expected to pay their Intermediary. It would appear that Hartlepool’s policy caused the club difficulties in these transfers and resulted in Russ Green and the respective Intermediary attempting to ensure the player signed for Hartlepool, and the Intermediary (or their company) still received payment from the club so as not to have to demand that the player pay, all whilst complying with Hartlepool’s no-agency fees policy.
In each transfer, Hartlepool submitted an IM1/NR form – this is the standard form which is submitted to the FA to signify that a transfer has taken place, but no Intermediary has been involved and, crucially, no payment (directly or indirectly) has been made to an Intermediary in relation to the transfer. In every case, the form was signed by the relevant player and the Hartlepool United Club Secretary and submitted to the FA.
This workaround may well have gone unnoticed (as I believe it often does) but for a routine and inadvertent email from the company employing Mr Chandler chasing the FA Clearing House for payment of their agency fees (a chasing process with which most FA Registered Intermediaries will be only too familiar). That email shone a light on the arrangement entered into and the FA – to their credit some might say – leaped at the evidence that had fallen in to their lap. The email had said “just chasing outstanding (per attached) agency commission payments from league clubs”. The schedule attached to that email showed “Nicky Deverdics – Hartlepool – £2100” – Nicky Deverdics being one of the players whose transfer was the subject of this charge.
Clearly that email was quite damning, since the FA of course realised that an IM1/NR had been completed in respect of that transfer, and therefore there was no agency fee due in this case, let alone one that an Intermediary should be chasing their Clearing House about. They presumably began investigating why Nr Chandler’s office thought that an agency fee was payable and subsequently an email emerged from Mr Chandler to a colleague with the subject “RE: Nicky Deverdics”, reading: “I have agreed a fee of £5200 + vat. This MUST be invoiced as a “Scouting Fee” (and not as an agents/intermediary fee)”. The clear idea behind this being an intention to pass off the payment as a “Scouting Fee”, thereby complying with Hartlepool’s policy on agency fees.
The other two player transfers, regarding Padraig Amond and Lewis Alessandra, contained similar breaches of the FA Regulations where ‘scouting fees’ were paid, and the FA found that all of the charges levied against Hartlepool, Mr Green, Mr Chandler and Mr Buncall were comfortably proven.
Hartlepool United were fined £25,000 for its part, and the FA considered the fact that Hartlepool had been relegated to the National League (and that all of the fault was with Mr Green) in deciding the level of this penalty. Mr Green was fined £10,000 personally, and was banned form football activities from 16 June 2018 to 30 June 2019. As Mr Green had moved on to become the chief executive of Rochdale, this punishment will hurt them in a way that one has to sympathise with. Both Intermediaries, Mr Chandler and Mr Buncall, we banned from football activities from 16 July 2018 to 31 August 2019, and fined £7,500 and £5,000 respectively.
Why is this decision important?
This Regulatory Commission decision is particularly important on a number of levels. Firstly, my experience is that the prevailing attitude across football is that the FA do not enforce the Regulations on Working with Intermediaries with any kind of vigour, so some of the finer details of the Regulations are often ignored as much by clubs as they are by Intermediaries. Whether it be paying a ‘scouting’ fee, or dealing with an Intermediary who is not actually contracted to the player in question or (remarkably) dealing with an Intermediary who is not even registered or even already banned, some may have taken the view that Intermediary compliance is optional or – at least save for some of the more obvious and egregious breaches which will and have led to sanctions – need only be observed in spirit, rather than detail. This decision may cause attitudes to shift.
That said, it remains the case that this situation only came to light because of an inadvertent email sent to the FA Clearing House and one suspects it is for that reason that the Regulatory Commission wanted to send out a clear warning message. Indeed, they said the penalties they imposed “include an element of deterrence for these and other Participants.”
Secondly, I am not aware of a previous instance since the implantation of the new Intermediary Regulations in 2015 of a club’s Chief Executive being charged (or indeed any office at a club tasked with dealing with transfer and contract negotiations) – it is normally the Intermediaries who are the subject of these types of sanction. This is a step from the FA to be welcomed as it has been all too easy in the past to sanction Intermediaries who face personal hardship as a result, a club as a corporate entity who pay out a fine, but the officer of the club who was as complicit in the unlawful conduct as the Intermediaries walks away freely. Thinking back to some of the higher profile cases in the past where clubs and Intermediaries (or agents as they then were) were sanctioned for unlawful transactions, a few senior directors or club officials might be feeling rather fortunate right now.
So that is the key point here: will this decision now serve as a wakeup call to all clubs and particularly those higher up the pyramid who have in the past been prepared to be ‘creative’ in how they record their agency transactions? Or what of those clubs – and some of these instances have been well documented and debated in the public domain – that sign IM1/NR forms saying that no Intermediary was involved when they know full well there was? Or where they sign forms to say a player self-represented when in fact his Intermediary is sitting in the room at the time advising him? Or where the club knows that the player’s Intermediary has suddenly rid himself of that responsibility and wants to act only for the club itself, whilst a new Intermediary appears from nowhere to now represent the player?
An interesting issue is also why the three players involved were not charged – they all signed IM1/NR forms that have been held to have been untrue. It may be that players in future will not be so fortunate to escape censure, and the writer has already said that it is not until a player is banned for Intermediary wrongdoing will the game really sit up and take notice.
There is also the matter of HMRC; by structuring an agency fee as a scouting fee, P11D tax has been lost. Whilst it is clear that the purpose of the structure in this case was not so as to avoid tax, tax loss nonetheless there was (albeit that the sums in this case would have been minimal). Losses would not be minimal, however, if structures such as this are used at the top end of the game.
There are many such ‘creative’ transactions taking place in any transfer window, for a variety of reasons well beyond the scope of this article. But as Hartlepool have to now pay out a fine of £25,000 – as a non-league club – and Mr Green begins his ban, might this decision see a line drawn in the sand?
As our England team return home from Moscow having represented us all and the FA in a way that we can be proud of, it would be timely if this decision of the FA’s Regulatory Commission was the beginning of a new era of a cleaner, domestic game.
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The spearhead and Senior Partner of Full Contact, Dan is an experienced solicitor and advocate, with a specialist background in employment law and sports.
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