Wednesday, 14 July 2010

Football Creditors Rule is unfair

The Premier League and Football League in England both operate the so-called 'football creditors rule'. This rule has the effect of bringing what the league describes as football creditors, including other clubs, the manager and the players, to the front of the queue for payment when a football club becomes insolvent. It is a topical concern at the moment because of a spate of clubs going bust this summer including Southend, which is in court to answer a winding up petition for the third time in a year, and Portsmouth, the first Premiership club to go into administration.

The FA and the Football League attempt to justify their preference for football creditors by saying that they are trying to avoid a domino effect whereby the unpaid debts of one club, transfer moneys for instance, bring down another club and so on. There is some truth in this but football is by no means the only business where this is a likely scenario. Small builders are in constant danger of being let down by their debtors whilst, at the other end of the scale, one bank failure could bring down a whole banking house of cards. Why should there be one rule for football clubs and another rule for the rest of us?

The fact is that there is no such rule in law and HMRC, an unlikely hero in business, has brought a writ against the Premier League to prevent the Football Creditors Rule from being put into effect in the case of Portsmouth. Apparently the HMRC view is that the rule is 'unlawful'. It is bad enough when international sporting bodies such as FIFA and the IOC set themselves up as being above the law, and tax laws in particular, but it would be a disgrace if domestic associations could abuse their control of high profile sports to do the same.

The real injustice, of course, is that the main football creditor is usually the wages of the players. In the Premiership the payrolls are spectacularly out of proportion to ordinary life. Can anyone justify making those astronomical sums a special case whilst the taxes that the clubs and their players owe to the rest of us go unpaid?

No comments:

Post a comment