15 Points, We Give a F**k?
The final submissions have been made at the arbitration and the three man panel is considering its verdict. There is a part of me which says “f**k them”, let them uphold the decision; let us concentrate on our football and cap what in anyone’s terms has been a magnificent season with a sensational victory at Wembley stadium (anyone want to banish the memories of 1996??) and promotion to the Championship. Let Luton, Bournemouth and Rotherham reap what the Football League has sowed, take a further 15-point hit, possible eventual relegation to the Conference and oblivion. Thank you Lord Mahwinney.
I have to say I have been relatively calm about the whole thing throughout the season. Even after seven games when we had been winning games without playing particularly well - though the post match huddle and fervour generated at ER was one of the greatest feelings I’ve experienced as a Leeds fan – I would have taken the current scenario after the dross I had to suffer last year even if we had not been deducted any points.
However since the players, chairmen, managers and anyone else associated with our fellow League One clubs have started throwing their two-pence in I have become increasingly annoyed and have been thinking for a while about expressing my annoyance on paper, largely as a retort to the ill-informed and badly thought-out response of these people to the possibility that on 3rd May 2008 we might be playing for the title of Champions of League One.
What Happened in Summer 2007?
Most of this is well documented but here goes, in summary…
Having gone into administration at the end of last season and been docked ten points (correctly), none of which is in dispute, the attention turned to how the club would get out of administration.
The basic football league rules state that in order for a club to return from administration to receive a “golden share” – that is the right not only to play in the football league, but also to be active in the transfer market – it must exit administration through a Company Voluntary Arrangement (CVA). This is a vehicle created under insolvency law to assist companies who are technically insolvent to reach an agreement with their creditors to repay part of the debts owed under a structured arrangement managed by the insolvency practitioners appointed to oversee the administration – in this case KPMG.
As a side issue, there is some suggestion that the club could have played in the league for an extended period without the golden share, though there is no evidence to suggest that any transfer activity could take place at that time, nor that any funds would have been made available to maintain the club’s running costs.
In accordance with insolvency procedures a proposed CVA was in fact put to the creditors and, at a meeting, was ratified by the necessary percentage of votes. What then followed was a period of time in which any of the creditors could lodge an objection to the CVA and the proposals could then only be ratified by a court hearing; expensive and time-consuming.
H M Revenue & Customs (HMRC) was (and one suspects will always be) a creditor of the club but in recent years its status as creditor has changed in the footballing world from “preferential” – meaning in the order of payments to be made it would be paid in full – to merely “unsecured”, a member of the group of creditors who share the scraps when the secured and preferential creditors had been paid off. “Football creditors”, under the Football League rules, must be paid in full and are therefore treated as “preferential”. Unsurprisingly, HMRC is unhappy about this and has chosen to target this particular loophole for its challenge to the current system of distribution.
One hour before the stated deadline HMRC lodged a tactical objection with the court. This single act meant that for Leeds to exit administration through a CVA it would have to have fight the HMRC’s challenge and have the CVA ratified through expensive, drawn out legal proceedings (with no guarantee of success). A date for the hearing was set but could not be scheduled any earlier than early September, after the season had started.
In response to this challenge, the administrators KPMG, presumably acting in the best interests of the creditors (because the continuation of the company in administration would run the risk of liquidation?), called a meeting to agree the sale of the club. The administrators sold the club to Leeds United 2007 Limited.
There was some considerable unhappiness, amongt many Leeds fans in particular, about the sale to Leeds United 2007 Limited, a company run by Ken Bates. Having said that, and perhaps more importantly, the noises made by other seemingly interested parties at the time of the bidding process (Simon Morris, Redbus, Mr Revie, the Sheik etc.) seem to have been a lot of hot air as not one person has actually challenged the decision of the administrators and once the decision was made these parties went very quiet indeed.
Therefore the club had come through the administration process within the provisions of insolvency law but not within the provisions of the Football League’s basic rules, i.e. not through a CVA. So the company applied to the Football League for its golden share under an “exceptional circumstances” provisions –I haven’t actually read these rules because the Football League is a private member’s club so I can only use the information I have seen reported. The circumstances were, and remain, unprecedented; whilst this was, apparently, the 41st administration dealt with by the Football League, the “exceptional circumstances” provision had never been utilised before.
Without precedent, the Football League decided to allow the return of the golden share under the “exceptional circumstances” provision on two conditions; firstly that the club should be handed a fifteen point penalty and secondly that neither Leeds United nor the Football League would commence legal proceedings against the other party. The club then appealed the decision which was brought before an emergency meeting of the 72 (I think) Football League chairmen, an “overwhelming majority” - in excess of 75% - of which confirmed that (a) Leeds had breached the League’s insolvency rules and should be punished; and (b) that the punishment of 15 points should not be reduced.
As a result Leeds were, said Mahwinney at the time, “starting the new season in League One as a valued member of the league's football family but with a penalty of 15 points”. Anyone feel patronised?
So that is how we got to play football this season and the club have, despite signing an agreement to the contrary, initiated legal proceedings against the Football League who have asked for the matter to be dealt with privately through an arbitration hearing consisting of an independent panel of three and whose decision, we understand, will be accepted as final by all parties.
The Arbitration
The legal basis for the challenge by Leeds has not been fully revealed (due to confidentiality requirements for the arbitration) but one would imagine it would be based on the following – these are merely speculated and some, all or none may be valid:-
1. The condition of a signed agreement which says that neither party would initiate legal proceedings against the other has no legal effect on the grounds of duress – the “gun to the head” analogy.
2. The fifteen point penalty was wrong because:-
(a) the “exceptional circumstances” provision within the Football League’s rules does not have conditions attached, either the circumstances are exceptional and the unfettered return of the golden share is warranted or they are not. By agreeing that the circumstances were sufficiently exceptional (the failure of the CVA was entirely out of the control of the club) this should have been enough to return the golden share; and
(b) it is simply an attempt to punish the club who for taking a ten-point hit without being penalised in real temrs; an additional punishment because we didn’t actually suffer the first time around. Take for example, Paul Scally, the Gillingham chairman who openly admitted in front of the television cameras that Leeds deserved the fifteen-point penalty for the way they had conducted themselves.
3. The appeal against the penalty should not have been placed before persons with an undoubted conflict of interest. It is not a leap of faith to suggest that the parties voting at the emergency meeting in London had a direct (or indirect) interest in its’ outcome. When a court puts together a panel of jury members, questions are asked by a judge of the jurors as to whether or not they are “conflicted” vis-à-vis the defendant and in the case of every single member of our jury each one would undoubtedly have been excused.
4. The Football League’s rules are in effect unworkable as a result of the stated policy of HMRC to challenge any CVA proposed by a club in administration, which in turn would result in each case for a further fifteen point deduction. A club starting a season in administration on -10 points would be deducted a total of 25 points in one season for in effect the same misdemeanour. The Football League has a duty to protect the interests of its members and has done nothing of the sort in the face of HMRC’s challenge to its rules.
These are a few suggestions and focus on the flaws in the decision-making process along with the lack of any real justification for the 15 point penalty. As mentioned the Football League have been completely silent on their position since the initial decision in August 2007 so it is difficult to predict their precise position. If indeed their position hasn’t changed since August one can perhaps speculate on the following arguments:-
1. The club signed an agreement not to pursue legal action against the Football League. That agreement is valid at law and therefore the proceedings should be thrown out by the arbitration panel. Mahwinney stated at the time that all forty clubs who had previously been in administration had signed agreements on the same basis.
2. As a private members’ club (and therefore largely unregulated by statute law) is entitled to interpret and enforce its rules as it sees fit and in its absolute discretion, subject to the ratification of the members which constitute the club. The activities of the Football League are governed by the national (F.A.), continental (UEFA) and global (FIFA) football associations. This allows the League to govern itself and impose membership rules outside the sphere of some statutory rules (e.g. the Companies Act) and the standard rules of the courts (impartiality etc). It would probably be difficult to avoid liability under some statutory laws however, laws against discrimination are the most obvious of these.
3. Leeds United could have played in the league without the golden share back, to enable them to resolve the issue of the CVA at court with HMRC successfully, complied with the League’s rules on insolvency, and recover the golden share without having to face further penalty. Leeds United chose not to do so.
These are the only things I can think the League would put forward in countering the Leeds position, but there may be more or less, or these may be completely wide of the mark. It also (more importantly) does not mean that I think that any of them are valid.
So that is the history and a bit of speculation on the current position. Here are some facts. Since Mahwinney’s patronising comments our record on the pitch is as follows (as at 24.04.2008):-
Pld W L D GD Points
44 25 10 9 +32 85 (70)
Only Swansea have performed better than Leeds and, despite the shit that flies around on message boards, you have to concede that they deserve to be promoted (I won’t say as champions at this stage!) – the football they have played at times has been far too good for this division, with a manager who has an excellent footballing philosophy. It is interesting to think how we would have fared had McAllister been in charge since the beginning of the season, but this digresses onto matters for another topic, another debate, another day. Back to the task in hand…
The Ongoing Debate
At the time of writing the final submissions have been made and the panel are now deliberating on their decisions. Since beginning this it has turned into something much more in-depth than originally anticipated but what has gone before can serve as a platform to deal with the comments made recently as the potentially “affected” League One clubs come crawling out of the woodwork. It is frustrating that people seem intent on making comment without considering their position – such is the consequence of the partisan supporter I suppose – but perhaps we can clear up some of the fact from the fiction.
There are lots of elements to the “debate”, if one can call it that; usually a debate involves two opposing and potentially valid arguments to the same set of circumstances but no-one seems to be able to tell me what the Football League’s position is. So I thought I would look at the elements of current debate in turn.
Other League Clubs Considering Taking Action if Leeds Succeed
One overarching fact to bear in mind is that Leeds were always considering some form of legal action; the comments made by the club after the decision was ratified about this are well documented and can be seen from September onwards. It can therefore not come as any surprise to any other club in League One that some action has been taken.
So let’s say Leeds succeed, the other clubs are angry about it and want to take action. But who against? Leeds? I cannot see how they would have any avenue of redress against Leeds if an independent panel cleared Leeds of any wrongdoing. What about the Football League? Even if the other clubs can establish a breach of the Football League’s legal obligations to it’s members, what have they lost? If the League has such obligations and the arbitration reverses the League’s decision, wouldn’t it be Leeds who have lost out, not only in terms of the uneven playing field they have had to face all season, not to mention the signings that could have been made in the summer and the possibility of lost revenues associated with that.
I know that is quite speculative but what I am getting at is, how would the other League One clubs have behaved differently had Leeds started on zero points? It’s not as if they could argue “we would have tried harder”, “we would have spent more money”, “we would have picked a different team”. If anything the last of those three operates the other way because they reaped the benefits of the fall-out of us being unable to sign players during the summer who ended up going to rival clubs. What supporter in his or her right mind would stand for being told that the management and players of its club had given anything other than everything all season, irrespective of another clubs’ fortunes – one game under a given set of circumstances perhaps, but over a whole season? It would be a catastrophic admission.
Also, put yourself in the shoes of the board and management of the rival clubs in League One. Would you not be pressing home to your players that the punishment against Leeds is likely to be appealed (given the plethora of information in the public domain at the time) and that to make absolutely certain that you finish above them you have to remain at least 15 points clear. Surely any prudent manager with half a brain would be adopting this approach privately, even if not publicly. Furthermore, on the basis that Leeds’ challenge should not surprise anyone, why didn’t the rival clubs take legal advice at the start of the season on their position should the situation manifest itself? We can but speculate here, but it would appear not based on the panic-driven statements we are all reading in the papers. Is this imprudence not of itself a breach of a duty owed by the board and management of the clubs? Perhaps they have to ask themselves some serious questions on this point.
Vocal figures recently have included, amongst others, the chairmen at Brighton and Doncaster who have admitted they are “considering their position” but frankly it is difficult to see how they could argue a case without reverting to the dangerous admission that they, as a club, would have operated differently over the course of the season.
They may say of course that they were “entitled to assume that the punishment would stand” but their gripe on this point is therefore with Football League directly , not with us. However you look at it though but we do seem to end up in the same place; the Football League in its defence would argue that the league clubs have not relied upon the initial judgement to their detriment; that is they have not acted or behaved any differently than had the penalty never been imposed in the first place.
A further, potential argument, might be that they were deprived of something which was “rightfully” theirs e.g. play-off place or automatic promotion, but this argument must fail absolutely on two counts; firstly Leeds have, to date, been the second best performers in the division, a full six points better than the third best performers, so no other team could claim to be second best by right. Secondly the League’s decision would have been overturned by an independent tribunal and therefore any question of what is right can only be established by looking at the circumstances created by the ruling; i.e. if the deduction is upheld, Swansea are rightfully champions; if it is overturned, we are in second place by rights.
Nonetheless even if such arguments were put forward by the other clubs, they would have to take this up with the Football League and I cannot see how this would be anything other than a claim for compensation. What other remedy could the Football League, in the circumstances, offer other than financial compensation for inconvenience caused by its flawed decision-making processes?
If the arbitration panel rules in our favour; the other clubs can do as they please in relation to the Football League! Maybe they can sue each other for the way they voted at the original appeal in August!
The Timing of the Decision is Appalling
This is the one argument it is hard to disagree with. The fact that it took the Football League so long to offer the arbitration hearing shows that the League are as willing to procrastinate when a speedy and expedient decision is required as they were quick to judge at the outset when a balanced more thoughtful approach was needed. There is in any event to my mind, no reason why the arbitration could not have been set up in October and a decision made by Christmas. Whilst I have no doubt that we would have heard the same outpourings of panic and frustration from the same sources, the matter would have been resolved long before now and there would be the certainty that the Leeds supporters, as much as if not more than anyone in this division, have craved for so long.
Having said all of this we come back again and again to the same position. So what? Apart from being inconvenienced, what difference does it make if the arbitration happens in December rather than in May?
The 15 Point Deduction Spurred Leeds On
This seems to centre around an extremely weak argument that Leeds’ rise through the league has been because of the penalty and nothing else. There is no doubt that a siege mentality was created at the club because everyone felt an enormous sense of injustice at the decision, but the argument can be easily countered when you consider that before this season no team has managed to survive in a division having suffered a points deduction so all signs pointed to League 2 rather than the Championship.
The suggestion that we would not be where we are if it weren’t for the deduction is, of course, nothing short of ridiculous. Had we been allowed more than five working days to make transfers at the start of the season the players reportedly lining up to join us wouldn’t have gone elsewhere, the squad would no doubt have looked a lot different and we would have probably been one of the favourites to go up in any event so for me the argument holds no water at all.
In the event that the arbitration concludes in our favour it will be interesting to hear the undoubted claims about the impact of the decision on the last day performances of the clubs; “our morale was shattered so we couldn’t perform”, “we cannot be expected to play to our best under these circumstances” are examples that spring to mind. Hypocrisy at its height.
Leeds Should Have Accepted the Decision
Another weak, badly thought-out argument. Why should they have accepted it? Because it was imposed on them without precedent or deliberated reasoning? That the decision was ratified by the chairmen of clubs for whom Leeds have provided the biggest pay day they have seen in years, not only from the gates at Elland Road but when our supporters have paid to visit away grounds in their thousands (at times outnumbering the home support!). No fewer than the top six attendances in the division have involved Leeds United.
Most importantly, of course, there is not a single club (unless they are totally spineless) in the entire Football League who would not have pursued every avenue of redress available to them in the face of a decision of this nature. I simply cannot believe otherwise, and anyone who makes such a claim is lying to serve a different motivation.
Leeds Acted Improperly in Using the 10 Point Penalty Last Season
Again, find me a team who wouldn’t have used the loophole in the rules to their advantage. They do not exist unless they are run by people with the intellectual capacity of a boiled potato. Furthermore, it is crystal clear that the penalty imposed at the end of the 2006-2007 season has absolutely no relation to the current penalty being disputed. So any suggestion that the motivation for the 15 point penalty was that Leeds were in effect not penalised by the 10 point deduction does nothing more than serve the argument that the 15 point deduction is completely unjustified.
Swansea Should Have the Trophy on Saturday
(for their last home game)
This of course is the latest “controversy” but actually falls squarely into line with what was discussed above about clubs arguing that they are entitled to things by right. That argument, as discussed, is without foundation. The arbitration will rule on whether the Football League’s decision is right or wrong. If it is upheld, the trophy is Swansea’s. If not, we will fight it out on 3rd May in the last game. Interestingly enough, the Swansea supporters who contend that we are bleating on about the injustice of the points deduction cannot get to their keyboards quickly enough to post on this one.
This morning in fact, the seemingly absent-minded vice-captain at Swansea City, Alan Tate, has spouted the most unbelievable drivel actually blaming Leeds directly.
Some outstanding quotes include…
“Leeds are trophy killers”(!!!!!!!!)
"They should have been given the fine and told that was that, but they probably thought 'We're Leeds, we'll get away with it’”
"It's embarrassing that it's still dragging on now and if I was a Leeds fan I'd be embarrassed about it."
“They're trying to be the big club they were a few years ago. They are a big club, but they need to realise they are in League One.”
Quite honestly I have never heard such shite.
Decision Reversal will Punish the Other Clubs who Have Done Nothing Wrong
This is quite an interesting argument but I think this can also be dismissed straight away. As mentioned the arbitration panel will rule on whether or not the original decision was correct. If it was not, it was wrong. If it was wrong, the people responsible for the decision were wrong. You see where I am going with this! My point is that the clubs who were so quick to judgement in August appear unwilling to shoulder any responsibility for making that claim. A little internet research has thrown up an interesting anomaly which might give an insight into the blame game which will follow should the panel rule in our favour.
Lord Mahwinney in The Times, 9th August 2007:-
"Leeds United presented their appeal and why they thought the board was wrong, We then had a vote which overwhelmingly endorsed the decision that there should be a sanction. In a second vote the League overwhelmingly endorsed the sanction. Overwhelmingly means the vote was over 75 per cent in support of the board.”
Cue Paul Scally, Gillingham Chairman, on the same day, in the YEP:-
'I wasn't responsible for deciding whether Leeds should be punished, or what their punishment should be. Neither were any of the clubs. The board took that decision, and we were simply asked to back one party or the other using the evidence in front of us.”
Watch this space!
Leeds are Simply Seeking Media Attention
This is the latest spouting from the Swansea chairman on the morning that I finish this piece. Apparently now we are only doing this for media attention. Whilst the urge to curse and give this man the labels he will no doubt be deservedly attracting on the message boards is overwhelming, I will restrain myself and ask some questions in reply. Does he believe the media will influence the decision of the panel? Is he scared that some unbiased reporting (see The Telegraph on 22nd April 2008) might actually allow a sense of injustice seep into the consciousness of a public who revile us? The reality is of course that this comment is unhelpful, totally irrelevant and on the basis that it adds nothing to the debate is in fact entirely hypocritical; clearly he has nothing to say of any note but needs the media attention himself.
Conclusion & The Future
So here we are awaiting the verdict and it seems to boil down to a straightforward question; was the decision to deduct points right or wrong. Whether you are a Football League board member, a Football League club chairman, manager, player or supporter, it appears that the decision when made will draw a line underneath it.
As Leeds fans we do not think it fair and just that we have been treated this way and irrespective of the outcome it can only be deemed proper that we were given the opportunity to have the arguments we presented to the kangaroo court heard by an impartial tribunal. If they reach the same verdict, the precedent is set, we must hold our hands up and accept the decision. If they overturn it, similarly the decision must be accepted by everyone.
More importantly perhaps, every club going forward must be subject to the rules as they are decided. If the penalty is ratified HMRC will continue to challenge the CVAs and the 15 point deductions will only cease when that situation is finalised. This would of course mean a time-consuming and expensive court hearing so don’t expect any club to be taking that one on in the near future. Disappointingly, also don’t expect the Football League to take this on by testing the inconsistency between its and the HMRC’s positions in court which would be the most sensible course of action to clarify the position going forward.
If the decision is upheld we must look to the play-off route which is an absolutely remarkable achievement and for which we have received absolutely no credit whatsoever this season from anyone outside the football club. There is a sense that Bates cheated, morally if not legally last season, and the club continues to remain as unpopular as ever amongst its competitors. Not that this particular point is of concern to any Leeds fan of course but internal conflicts do still remain, only this morning as we prepare for the biggest gate at Elland Road in five years and the possibility of winning League One on that day, the perpetual “Bates Out” campaign continues to gather apace.
To be honest I have had to ensure so much nonsense from the people who have unfortunately been associated with Leeds for so long; predominantly those at board and managerial level, not to mention some of the players who have been the worst in the history of the club (not necessarily in terms of raw talent but in terms of attitude, application and passion) that I am just glad that I can look forward to watching a Leeds team with some players I actually like, some who actually have ability, and a management team who genuinely want me to leave a game feeling entertained.
Turning back to the present happenings, my view is that the issue should be black and white; the decision was right or it was not. If it was not the penalty must be overturned immediately and the points reinstated in full. The clubs may seek some form of legal redress but it really is difficult to see what they would be claiming for; no-one can argue with the bare facts and the success we have had on the field this year. They say the league table doesn’t lie; for me the League One table has been fibbing since day one of the 2007-2008 season.
Wizzy
I have to say I have been relatively calm about the whole thing throughout the season. Even after seven games when we had been winning games without playing particularly well - though the post match huddle and fervour generated at ER was one of the greatest feelings I’ve experienced as a Leeds fan – I would have taken the current scenario after the dross I had to suffer last year even if we had not been deducted any points.
However since the players, chairmen, managers and anyone else associated with our fellow League One clubs have started throwing their two-pence in I have become increasingly annoyed and have been thinking for a while about expressing my annoyance on paper, largely as a retort to the ill-informed and badly thought-out response of these people to the possibility that on 3rd May 2008 we might be playing for the title of Champions of League One.
What Happened in Summer 2007?
Most of this is well documented but here goes, in summary…
Having gone into administration at the end of last season and been docked ten points (correctly), none of which is in dispute, the attention turned to how the club would get out of administration.
The basic football league rules state that in order for a club to return from administration to receive a “golden share” – that is the right not only to play in the football league, but also to be active in the transfer market – it must exit administration through a Company Voluntary Arrangement (CVA). This is a vehicle created under insolvency law to assist companies who are technically insolvent to reach an agreement with their creditors to repay part of the debts owed under a structured arrangement managed by the insolvency practitioners appointed to oversee the administration – in this case KPMG.
As a side issue, there is some suggestion that the club could have played in the league for an extended period without the golden share, though there is no evidence to suggest that any transfer activity could take place at that time, nor that any funds would have been made available to maintain the club’s running costs.
In accordance with insolvency procedures a proposed CVA was in fact put to the creditors and, at a meeting, was ratified by the necessary percentage of votes. What then followed was a period of time in which any of the creditors could lodge an objection to the CVA and the proposals could then only be ratified by a court hearing; expensive and time-consuming.
H M Revenue & Customs (HMRC) was (and one suspects will always be) a creditor of the club but in recent years its status as creditor has changed in the footballing world from “preferential” – meaning in the order of payments to be made it would be paid in full – to merely “unsecured”, a member of the group of creditors who share the scraps when the secured and preferential creditors had been paid off. “Football creditors”, under the Football League rules, must be paid in full and are therefore treated as “preferential”. Unsurprisingly, HMRC is unhappy about this and has chosen to target this particular loophole for its challenge to the current system of distribution.
One hour before the stated deadline HMRC lodged a tactical objection with the court. This single act meant that for Leeds to exit administration through a CVA it would have to have fight the HMRC’s challenge and have the CVA ratified through expensive, drawn out legal proceedings (with no guarantee of success). A date for the hearing was set but could not be scheduled any earlier than early September, after the season had started.
In response to this challenge, the administrators KPMG, presumably acting in the best interests of the creditors (because the continuation of the company in administration would run the risk of liquidation?), called a meeting to agree the sale of the club. The administrators sold the club to Leeds United 2007 Limited.
There was some considerable unhappiness, amongt many Leeds fans in particular, about the sale to Leeds United 2007 Limited, a company run by Ken Bates. Having said that, and perhaps more importantly, the noises made by other seemingly interested parties at the time of the bidding process (Simon Morris, Redbus, Mr Revie, the Sheik etc.) seem to have been a lot of hot air as not one person has actually challenged the decision of the administrators and once the decision was made these parties went very quiet indeed.
Therefore the club had come through the administration process within the provisions of insolvency law but not within the provisions of the Football League’s basic rules, i.e. not through a CVA. So the company applied to the Football League for its golden share under an “exceptional circumstances” provisions –I haven’t actually read these rules because the Football League is a private member’s club so I can only use the information I have seen reported. The circumstances were, and remain, unprecedented; whilst this was, apparently, the 41st administration dealt with by the Football League, the “exceptional circumstances” provision had never been utilised before.
Without precedent, the Football League decided to allow the return of the golden share under the “exceptional circumstances” provision on two conditions; firstly that the club should be handed a fifteen point penalty and secondly that neither Leeds United nor the Football League would commence legal proceedings against the other party. The club then appealed the decision which was brought before an emergency meeting of the 72 (I think) Football League chairmen, an “overwhelming majority” - in excess of 75% - of which confirmed that (a) Leeds had breached the League’s insolvency rules and should be punished; and (b) that the punishment of 15 points should not be reduced.
As a result Leeds were, said Mahwinney at the time, “starting the new season in League One as a valued member of the league's football family but with a penalty of 15 points”. Anyone feel patronised?
So that is how we got to play football this season and the club have, despite signing an agreement to the contrary, initiated legal proceedings against the Football League who have asked for the matter to be dealt with privately through an arbitration hearing consisting of an independent panel of three and whose decision, we understand, will be accepted as final by all parties.
The Arbitration
The legal basis for the challenge by Leeds has not been fully revealed (due to confidentiality requirements for the arbitration) but one would imagine it would be based on the following – these are merely speculated and some, all or none may be valid:-
1. The condition of a signed agreement which says that neither party would initiate legal proceedings against the other has no legal effect on the grounds of duress – the “gun to the head” analogy.
2. The fifteen point penalty was wrong because:-
(a) the “exceptional circumstances” provision within the Football League’s rules does not have conditions attached, either the circumstances are exceptional and the unfettered return of the golden share is warranted or they are not. By agreeing that the circumstances were sufficiently exceptional (the failure of the CVA was entirely out of the control of the club) this should have been enough to return the golden share; and
(b) it is simply an attempt to punish the club who for taking a ten-point hit without being penalised in real temrs; an additional punishment because we didn’t actually suffer the first time around. Take for example, Paul Scally, the Gillingham chairman who openly admitted in front of the television cameras that Leeds deserved the fifteen-point penalty for the way they had conducted themselves.
3. The appeal against the penalty should not have been placed before persons with an undoubted conflict of interest. It is not a leap of faith to suggest that the parties voting at the emergency meeting in London had a direct (or indirect) interest in its’ outcome. When a court puts together a panel of jury members, questions are asked by a judge of the jurors as to whether or not they are “conflicted” vis-à-vis the defendant and in the case of every single member of our jury each one would undoubtedly have been excused.
4. The Football League’s rules are in effect unworkable as a result of the stated policy of HMRC to challenge any CVA proposed by a club in administration, which in turn would result in each case for a further fifteen point deduction. A club starting a season in administration on -10 points would be deducted a total of 25 points in one season for in effect the same misdemeanour. The Football League has a duty to protect the interests of its members and has done nothing of the sort in the face of HMRC’s challenge to its rules.
These are a few suggestions and focus on the flaws in the decision-making process along with the lack of any real justification for the 15 point penalty. As mentioned the Football League have been completely silent on their position since the initial decision in August 2007 so it is difficult to predict their precise position. If indeed their position hasn’t changed since August one can perhaps speculate on the following arguments:-
1. The club signed an agreement not to pursue legal action against the Football League. That agreement is valid at law and therefore the proceedings should be thrown out by the arbitration panel. Mahwinney stated at the time that all forty clubs who had previously been in administration had signed agreements on the same basis.
2. As a private members’ club (and therefore largely unregulated by statute law) is entitled to interpret and enforce its rules as it sees fit and in its absolute discretion, subject to the ratification of the members which constitute the club. The activities of the Football League are governed by the national (F.A.), continental (UEFA) and global (FIFA) football associations. This allows the League to govern itself and impose membership rules outside the sphere of some statutory rules (e.g. the Companies Act) and the standard rules of the courts (impartiality etc). It would probably be difficult to avoid liability under some statutory laws however, laws against discrimination are the most obvious of these.
3. Leeds United could have played in the league without the golden share back, to enable them to resolve the issue of the CVA at court with HMRC successfully, complied with the League’s rules on insolvency, and recover the golden share without having to face further penalty. Leeds United chose not to do so.
These are the only things I can think the League would put forward in countering the Leeds position, but there may be more or less, or these may be completely wide of the mark. It also (more importantly) does not mean that I think that any of them are valid.
So that is the history and a bit of speculation on the current position. Here are some facts. Since Mahwinney’s patronising comments our record on the pitch is as follows (as at 24.04.2008):-
Pld W L D GD Points
44 25 10 9 +32 85 (70)
Only Swansea have performed better than Leeds and, despite the shit that flies around on message boards, you have to concede that they deserve to be promoted (I won’t say as champions at this stage!) – the football they have played at times has been far too good for this division, with a manager who has an excellent footballing philosophy. It is interesting to think how we would have fared had McAllister been in charge since the beginning of the season, but this digresses onto matters for another topic, another debate, another day. Back to the task in hand…
The Ongoing Debate
At the time of writing the final submissions have been made and the panel are now deliberating on their decisions. Since beginning this it has turned into something much more in-depth than originally anticipated but what has gone before can serve as a platform to deal with the comments made recently as the potentially “affected” League One clubs come crawling out of the woodwork. It is frustrating that people seem intent on making comment without considering their position – such is the consequence of the partisan supporter I suppose – but perhaps we can clear up some of the fact from the fiction.
There are lots of elements to the “debate”, if one can call it that; usually a debate involves two opposing and potentially valid arguments to the same set of circumstances but no-one seems to be able to tell me what the Football League’s position is. So I thought I would look at the elements of current debate in turn.
Other League Clubs Considering Taking Action if Leeds Succeed
One overarching fact to bear in mind is that Leeds were always considering some form of legal action; the comments made by the club after the decision was ratified about this are well documented and can be seen from September onwards. It can therefore not come as any surprise to any other club in League One that some action has been taken.
So let’s say Leeds succeed, the other clubs are angry about it and want to take action. But who against? Leeds? I cannot see how they would have any avenue of redress against Leeds if an independent panel cleared Leeds of any wrongdoing. What about the Football League? Even if the other clubs can establish a breach of the Football League’s legal obligations to it’s members, what have they lost? If the League has such obligations and the arbitration reverses the League’s decision, wouldn’t it be Leeds who have lost out, not only in terms of the uneven playing field they have had to face all season, not to mention the signings that could have been made in the summer and the possibility of lost revenues associated with that.
I know that is quite speculative but what I am getting at is, how would the other League One clubs have behaved differently had Leeds started on zero points? It’s not as if they could argue “we would have tried harder”, “we would have spent more money”, “we would have picked a different team”. If anything the last of those three operates the other way because they reaped the benefits of the fall-out of us being unable to sign players during the summer who ended up going to rival clubs. What supporter in his or her right mind would stand for being told that the management and players of its club had given anything other than everything all season, irrespective of another clubs’ fortunes – one game under a given set of circumstances perhaps, but over a whole season? It would be a catastrophic admission.
Also, put yourself in the shoes of the board and management of the rival clubs in League One. Would you not be pressing home to your players that the punishment against Leeds is likely to be appealed (given the plethora of information in the public domain at the time) and that to make absolutely certain that you finish above them you have to remain at least 15 points clear. Surely any prudent manager with half a brain would be adopting this approach privately, even if not publicly. Furthermore, on the basis that Leeds’ challenge should not surprise anyone, why didn’t the rival clubs take legal advice at the start of the season on their position should the situation manifest itself? We can but speculate here, but it would appear not based on the panic-driven statements we are all reading in the papers. Is this imprudence not of itself a breach of a duty owed by the board and management of the clubs? Perhaps they have to ask themselves some serious questions on this point.
Vocal figures recently have included, amongst others, the chairmen at Brighton and Doncaster who have admitted they are “considering their position” but frankly it is difficult to see how they could argue a case without reverting to the dangerous admission that they, as a club, would have operated differently over the course of the season.
They may say of course that they were “entitled to assume that the punishment would stand” but their gripe on this point is therefore with Football League directly , not with us. However you look at it though but we do seem to end up in the same place; the Football League in its defence would argue that the league clubs have not relied upon the initial judgement to their detriment; that is they have not acted or behaved any differently than had the penalty never been imposed in the first place.
A further, potential argument, might be that they were deprived of something which was “rightfully” theirs e.g. play-off place or automatic promotion, but this argument must fail absolutely on two counts; firstly Leeds have, to date, been the second best performers in the division, a full six points better than the third best performers, so no other team could claim to be second best by right. Secondly the League’s decision would have been overturned by an independent tribunal and therefore any question of what is right can only be established by looking at the circumstances created by the ruling; i.e. if the deduction is upheld, Swansea are rightfully champions; if it is overturned, we are in second place by rights.
Nonetheless even if such arguments were put forward by the other clubs, they would have to take this up with the Football League and I cannot see how this would be anything other than a claim for compensation. What other remedy could the Football League, in the circumstances, offer other than financial compensation for inconvenience caused by its flawed decision-making processes?
If the arbitration panel rules in our favour; the other clubs can do as they please in relation to the Football League! Maybe they can sue each other for the way they voted at the original appeal in August!
The Timing of the Decision is Appalling
This is the one argument it is hard to disagree with. The fact that it took the Football League so long to offer the arbitration hearing shows that the League are as willing to procrastinate when a speedy and expedient decision is required as they were quick to judge at the outset when a balanced more thoughtful approach was needed. There is in any event to my mind, no reason why the arbitration could not have been set up in October and a decision made by Christmas. Whilst I have no doubt that we would have heard the same outpourings of panic and frustration from the same sources, the matter would have been resolved long before now and there would be the certainty that the Leeds supporters, as much as if not more than anyone in this division, have craved for so long.
Having said all of this we come back again and again to the same position. So what? Apart from being inconvenienced, what difference does it make if the arbitration happens in December rather than in May?
The 15 Point Deduction Spurred Leeds On
This seems to centre around an extremely weak argument that Leeds’ rise through the league has been because of the penalty and nothing else. There is no doubt that a siege mentality was created at the club because everyone felt an enormous sense of injustice at the decision, but the argument can be easily countered when you consider that before this season no team has managed to survive in a division having suffered a points deduction so all signs pointed to League 2 rather than the Championship.
The suggestion that we would not be where we are if it weren’t for the deduction is, of course, nothing short of ridiculous. Had we been allowed more than five working days to make transfers at the start of the season the players reportedly lining up to join us wouldn’t have gone elsewhere, the squad would no doubt have looked a lot different and we would have probably been one of the favourites to go up in any event so for me the argument holds no water at all.
In the event that the arbitration concludes in our favour it will be interesting to hear the undoubted claims about the impact of the decision on the last day performances of the clubs; “our morale was shattered so we couldn’t perform”, “we cannot be expected to play to our best under these circumstances” are examples that spring to mind. Hypocrisy at its height.
Leeds Should Have Accepted the Decision
Another weak, badly thought-out argument. Why should they have accepted it? Because it was imposed on them without precedent or deliberated reasoning? That the decision was ratified by the chairmen of clubs for whom Leeds have provided the biggest pay day they have seen in years, not only from the gates at Elland Road but when our supporters have paid to visit away grounds in their thousands (at times outnumbering the home support!). No fewer than the top six attendances in the division have involved Leeds United.
Most importantly, of course, there is not a single club (unless they are totally spineless) in the entire Football League who would not have pursued every avenue of redress available to them in the face of a decision of this nature. I simply cannot believe otherwise, and anyone who makes such a claim is lying to serve a different motivation.
Leeds Acted Improperly in Using the 10 Point Penalty Last Season
Again, find me a team who wouldn’t have used the loophole in the rules to their advantage. They do not exist unless they are run by people with the intellectual capacity of a boiled potato. Furthermore, it is crystal clear that the penalty imposed at the end of the 2006-2007 season has absolutely no relation to the current penalty being disputed. So any suggestion that the motivation for the 15 point penalty was that Leeds were in effect not penalised by the 10 point deduction does nothing more than serve the argument that the 15 point deduction is completely unjustified.
Swansea Should Have the Trophy on Saturday
(for their last home game)
This of course is the latest “controversy” but actually falls squarely into line with what was discussed above about clubs arguing that they are entitled to things by right. That argument, as discussed, is without foundation. The arbitration will rule on whether the Football League’s decision is right or wrong. If it is upheld, the trophy is Swansea’s. If not, we will fight it out on 3rd May in the last game. Interestingly enough, the Swansea supporters who contend that we are bleating on about the injustice of the points deduction cannot get to their keyboards quickly enough to post on this one.
This morning in fact, the seemingly absent-minded vice-captain at Swansea City, Alan Tate, has spouted the most unbelievable drivel actually blaming Leeds directly.
Some outstanding quotes include…
“Leeds are trophy killers”(!!!!!!!!)
"They should have been given the fine and told that was that, but they probably thought 'We're Leeds, we'll get away with it’”
"It's embarrassing that it's still dragging on now and if I was a Leeds fan I'd be embarrassed about it."
“They're trying to be the big club they were a few years ago. They are a big club, but they need to realise they are in League One.”
Quite honestly I have never heard such shite.
Decision Reversal will Punish the Other Clubs who Have Done Nothing Wrong
This is quite an interesting argument but I think this can also be dismissed straight away. As mentioned the arbitration panel will rule on whether or not the original decision was correct. If it was not, it was wrong. If it was wrong, the people responsible for the decision were wrong. You see where I am going with this! My point is that the clubs who were so quick to judgement in August appear unwilling to shoulder any responsibility for making that claim. A little internet research has thrown up an interesting anomaly which might give an insight into the blame game which will follow should the panel rule in our favour.
Lord Mahwinney in The Times, 9th August 2007:-
"Leeds United presented their appeal and why they thought the board was wrong, We then had a vote which overwhelmingly endorsed the decision that there should be a sanction. In a second vote the League overwhelmingly endorsed the sanction. Overwhelmingly means the vote was over 75 per cent in support of the board.”
Cue Paul Scally, Gillingham Chairman, on the same day, in the YEP:-
'I wasn't responsible for deciding whether Leeds should be punished, or what their punishment should be. Neither were any of the clubs. The board took that decision, and we were simply asked to back one party or the other using the evidence in front of us.”
Watch this space!
Leeds are Simply Seeking Media Attention
This is the latest spouting from the Swansea chairman on the morning that I finish this piece. Apparently now we are only doing this for media attention. Whilst the urge to curse and give this man the labels he will no doubt be deservedly attracting on the message boards is overwhelming, I will restrain myself and ask some questions in reply. Does he believe the media will influence the decision of the panel? Is he scared that some unbiased reporting (see The Telegraph on 22nd April 2008) might actually allow a sense of injustice seep into the consciousness of a public who revile us? The reality is of course that this comment is unhelpful, totally irrelevant and on the basis that it adds nothing to the debate is in fact entirely hypocritical; clearly he has nothing to say of any note but needs the media attention himself.
Conclusion & The Future
So here we are awaiting the verdict and it seems to boil down to a straightforward question; was the decision to deduct points right or wrong. Whether you are a Football League board member, a Football League club chairman, manager, player or supporter, it appears that the decision when made will draw a line underneath it.
As Leeds fans we do not think it fair and just that we have been treated this way and irrespective of the outcome it can only be deemed proper that we were given the opportunity to have the arguments we presented to the kangaroo court heard by an impartial tribunal. If they reach the same verdict, the precedent is set, we must hold our hands up and accept the decision. If they overturn it, similarly the decision must be accepted by everyone.
More importantly perhaps, every club going forward must be subject to the rules as they are decided. If the penalty is ratified HMRC will continue to challenge the CVAs and the 15 point deductions will only cease when that situation is finalised. This would of course mean a time-consuming and expensive court hearing so don’t expect any club to be taking that one on in the near future. Disappointingly, also don’t expect the Football League to take this on by testing the inconsistency between its and the HMRC’s positions in court which would be the most sensible course of action to clarify the position going forward.
If the decision is upheld we must look to the play-off route which is an absolutely remarkable achievement and for which we have received absolutely no credit whatsoever this season from anyone outside the football club. There is a sense that Bates cheated, morally if not legally last season, and the club continues to remain as unpopular as ever amongst its competitors. Not that this particular point is of concern to any Leeds fan of course but internal conflicts do still remain, only this morning as we prepare for the biggest gate at Elland Road in five years and the possibility of winning League One on that day, the perpetual “Bates Out” campaign continues to gather apace.
To be honest I have had to ensure so much nonsense from the people who have unfortunately been associated with Leeds for so long; predominantly those at board and managerial level, not to mention some of the players who have been the worst in the history of the club (not necessarily in terms of raw talent but in terms of attitude, application and passion) that I am just glad that I can look forward to watching a Leeds team with some players I actually like, some who actually have ability, and a management team who genuinely want me to leave a game feeling entertained.
Turning back to the present happenings, my view is that the issue should be black and white; the decision was right or it was not. If it was not the penalty must be overturned immediately and the points reinstated in full. The clubs may seek some form of legal redress but it really is difficult to see what they would be claiming for; no-one can argue with the bare facts and the success we have had on the field this year. They say the league table doesn’t lie; for me the League One table has been fibbing since day one of the 2007-2008 season.
Wizzy
Comments
The highs and lows - league 2 or the Championship!! Here's hoping the players earn their money and do us (the supporters) proud. We don't deserve anything less.
Great article Richard.