Match and spot-fixing (“fixing”) undermine the key ingredient of sport: uncertainty of outcome. For many fans, fixing is a worse offence than doping, as the purpose of fixing is cheating to lose. Whilst cricket has been blighted by scandals in recent years, Europol’s ongoing investigation into 425 officials, players and criminals in over 15 countries, together with the arrest and charging of six players in English football (including DJ Campbell), means the spotlight is now firmly on football.
The plethora of recent articles on fixing in football have focused on the questions of how prevalent it is, what sanctions should be imposed on the guilty and how football can effectively regulate against it. A less explored issue, however, is the knockon effect fixing has on the relationship between a club and its sponsors. It is clear that sponsors of clubs are sensitive to misconduct by that club’s players. Recently, Zoopla announced that it would terminate its shirt sponsorship of West Bromwich Albion from the end of the season, following Nicolas Anelka’s “quenelle” gesture. Photographs of Anelka wearing a shirt with “Zoopla” on the front making what many perceive to be an anti-Semitic gesture were splashed across the back (and front) pages of many newspapers, leading Zoopla to question the value of its sponsorship and stating that it would refocus its marketing efforts elsewhere.
The negative impact on the brand of any club whose players or officials are associated with fixing may hinder that club’s ability to retain its sponsors and attract new ones. The focus of this article is to analyse the ways in which sponsors and clubs can seek to protect themselves in sponsorship agreements against the risk of fixing.
Charged or guilty?
A player suspected of fixing can be subject to both criminal and sporting sanctions. Criminal sanctions may be imposed under section 42 of the Gambling Act 2005 (the ‘cheating at gambling’ offence) and various sections of the Bribery Act 2010. Fixing is also prohibited under Rule E(5) of the FA’s Rules of the Association and Rule J.6 of the Premier League’s Rules, breaches of which can result in sporting sanctions.
From a sponsor’s perspective, speculation as to the honesty of a club’s players is enough to diminish the value of association with that club. It is common for governing bodies to suspend their investigations whilst a criminal prosecution is ongoing, and with court cases sometimes taking years, the term of the sponsorship agreement may have expired before any criminal investigation is concluded. A sponsor should therefore design the relevant clause so that it is triggered by either a player being charged under law or investigated by the football authorities.
In contrast, a club will argue that a player should be innocent until proven guilty, and having a player accused of fixing should not in itself trigger contractual remedies. The club is unlikely to be able unilaterally to terminate the playing contract of the player until that player is proven to have been involved in fixing, and so could be placed in the invidious position of having to honour its commitments to the player but lose out in its sponsorship contracts.
Sponsors will clearly want the clause to capture as many people associated with the club as possible. The Premier League’s Rules, for instance, cover players (including academy players), directors, secretaries, servants and representatives (other than agents and auditors) of the club. In contrast, clubs will want to draft the clause as narrowly as possible and may argue that fixing by the manager or a first team player should be treated differently to fixing by less prominent individuals.
A club would be wise to limit the relevant clause so that it is only triggered if the fixing is in relation to matches of that club; any other matches are outside of its control and the club should not be held liable. For instance, Blackburn Rovers may feel it unfair to be held accountable for the alleged actions of DJ Campbell if such actions were for matches not involving Blackburn (which is likely given he only made seven appearances for Blackburn, having joined in the summer of 2013 and then going on loan to Millwall in January 2014). In contrast, sponsors may be successful in arguing that a player found guilty of fixing casts doubt over any matches in which that player has participated.
A club may wish to consider including additional conditions prior to a sponsor having the right to terminate (or exercise other remedies). For instance, a condition that the fixing must result in the club having points deducted or other sporting sanctions imposed would mean that the sponsor can only act in the most serious of circumstances in which the club, as well as a player, is sanctioned. Alternatively, the sponsor could be required to provide evidence that the value of the club’s brand has diminished eg, by sharing the results of a focus group.
Many sponsorship agreements will include either a continuing representation or an undertaking from the club in relation to fixing. Breach of such representation or undertaking will then leave lawyers arguing as to whether such breach only allows the sponsor to claim contractual damages or whether it can also terminate the agreement (either for repudiatory breach if it goes to the root of the contract or under any ‘material breach’ contractual termination right).
To avoid uncertainty, clubs and sponsors may prefer to specify in the contract the remedies available to the sponsor and, in doing so, can differentiate between different scenarios. For instance, the sponsorship agreement could state that the sponsor has the right to terminate in the event of the more serious scenarios (such as a first team player or manager found guilty of matchfixing). It could then state that certain lesser scenarios (such as academy players being found guilty, or first team players being charged, with fixing) do not give the sponsor the right to terminate but rather to exercise specific contractual remedies. These contractual remedies could include the right to a liquidated sum (provided such sum does not fall foul of the law on penalty clauses) and/or for the sponsor to have approval or consultation rights over the way in which the club deals with the issue to minimise the negative publicity.
The new financial rules being implemented across all levels of professional football place even greater importance on clubs’ commercial revenues. From UEFA’s Financial Fair Play Regulations for clubs participating in the premier European competitions to the Salary Cost Management Protocol for League One and Two clubs, the emphasis is now on clubs being self-sufficient (rather than being bankrolled by benevolent owners) by balancing expenditure against revenue. The loss of a key sponsor for a club will now, therefore, directly impact the level of funds available to spend on transfer fees and wages.
Whilst the bargaining power of both parties will determine how much protection a sponsor will achieve in the sponsorship agreement, clubs and sponsors can both benefit from focusing on the detail of fixing clauses to make sure that the triggers, and remedies, for breach are appropriate.
Article featured in FC Business, March 2014.