Why the SPFL Decision to Deduct Points from Clyde FC For An administrative Error is Raising Eyebrows In Social Media and Encouraging Dancing Around The Lord Nimmo Smith Elephant in the Main Stream.
It was reported in the news that Clyde have been deducted points for fielding an ineligible player in two matches, news that has raised supporter eyebrows when a comparison is made with SFA and the then SPL treatment of ten years of imperfect players registration by the then Rangers FC and caused a bit of dancing in main stream media around the LNS Elephant.
When the existence of side letters that formed part of a players remuneration contract was revealed in March 2012, it prompted an investigation by the SPL into the eligibility to play football of players who had been provided side letters by Rangers FC that indemnified them from any loss should the ebt schemes , through which their main remuneration flowed, be deemed unlawful by HMRC.
The issue for the SPL then was were those players properly registered under SPL rules?
The common belief held until then being that incorrect registration made a player ineligible to play and any game an incorrectly registered player played in was void:
- Presumably on the basis the errant club had gained an on field advantage from incorrect registration and/or
- to act as a deterrent to clubs to deliberately conceal full registration details from the football authorities.
The result of games in which such a player played was treated as a 0-3 defeat and the 4 points gained deducted and 3 points each granted to their opponents.
To get answers the SPL, after seeking evidence of side letters accompanying any type of EBT from Rangers FC, established the Lord Nimmo Smith (LNS) Commission to identify if a breach of registration rules had occurred and what were the consequences in sanction terms.
It is interesting therefore to compare the following from the LNS Commission in respect of sanctions against Rangers FC for a breach covering ten years of incorrect registration with the sanctions against both Clyde FC over 2 games and Hearts over one game, based on what Lord Nimmo Smith said in his findings at 107 and 108 of his Decision.
Findings that 7 years later have caused social media eyebrows to raise to Roger Moore levels because of apparent contradictions arising from the justifications given for a financial sanction only in the LNS Decision.
LNS Decision basis 107 /108
We nevertheless take a serious view of a breach of rules intended to promote sporting
integrity. Greater financial transparency serves to prevent financial irregularities. There is insufficient evidence before us to enable us to draw any conclusion as to exactly how the senior management of Oldco came to the conclusion that the EBT arrangements did not require to be disclosed to the SPL or the SFA. In our view, the apparent assumption both that the side-letter arrangements were entirely discretionary, and that they did not form part of any player’s contractual entitlement, was seriously misconceived. Over the years, the EBT payments disclosed in Oldco’s accounts were very substantial; at their height, during the year to 30 June2006, they amounted to more than £9 million, against £16.7 million being that year’s figure for wages and salaries. There is no evidence that the Board of Directors of Oldco took any steps to obtain proper external legal or accountancy advice to the Board as to the risks inherent in agreeing to pay players through the EBT arrangements without disclosure to the football authorities. The directors of Oldco must bear a heavy responsibility for this. While there is no question of dishonesty, individual or corporate, we nevertheless take the view that the nondisclosure must be regarded as deliberate, in the sense that a decision was taken that the sideletters need not be or should not be disclosed.
No steps were taken to check, even on a hypothetical basis, the validity of that assumption with the SPL or the SFA. The evidence of Mr Odam (cited at paragraph  above) clearly indicates a view amongst the management of Oldco that it might have been detrimental to the desired tax treatment of the payments being made by Oldco to have disclosed the existence of the side-letters to the football authorities.
 Given the seriousness, extent and duration of the non-disclosure, we have concluded that nothing less than a substantial financial penalty on Oldco will suffice. Although we are well aware that, as Oldco is in liquidation with an apparently massive deficiency for creditors (even leaving aside a possible reversal of the Tax Tribunal decision on appeal), in practice any fine is likely to be substantially irrecoverable and to the extent that it is recovered the cost will be borne by the creditors of Oldco, we nevertheless think it essential to mark the seriousness of the contraventions with a large financial penalty. Since Issues 1 to 3 relate to a single course of conduct, a single overall fine is appropriate. Taking into account these considerations, we have decided to impose a fine of £250,000 on Oldco.
Compare this with the Clyde FC case where ineligibility was admitted from the outset so there was no question of dishonesty yet they received a sporting sanction in form of a points deduction, whilst Rangers avoided such a fate on account of the Bryson interpretation that meant that a player whilst not fully and correctly registered was nevertheless eligible to play until the errors were discovered.
What Clyde FC said in their defence of their error was
“We are deeply disappointed with the outcome of yesterday’s hearing as, despite the fact that we admitted the breach of the SPFL rules, we feel that we put forward a robust and cogent case as part of our defence. The case concerned a player, Declan Fitzpatrick, who has been registered with Clyde since September 2018 and was recently on loan at Clydebank.
“The breach occurred as a result of a genuine oversight and a gap in the administrative procedures. This error was not the fault of any individual.
“We feel that the sanction imposed was unprecedentedly harsh.
The result of Clyde honestly admitting to an administrative error was a twin football and sporting sanction of £1500 and 4 points deduction for being honest.
Hearts had a similar administrative error defence when they said:
“ Due to an administrative error on the club’s part at the end of the January transfer window, Andrew Irving entered the field of play in the 65th minute as an unregistered player. Andrew was given an extension contract in January, 2018 and his extension paperwork was all properly completed and in order. However, it was not loaded onto the online SFA registration system at the time. His official registration, therefore, ran out on 9th June, 2018. Unfortunately, this was not picked up in advance of last night’s game.”
Hearts, as a result of their honesty, were deducted two points and fined £10k.
Yet in the case of Rangers FC, LNS judged the decision to withhold side letters was deliberate and because, as a result of non-disclosures of evidence to the contrary, he was able to decide there was no question of dishonesty.
The size of the penalty £250k recognised the longevity of what he was able to treat as an administrative error, but because LNS treated it as such and because the SFA advised that a flawed registration, apparently even if deliberate dishonesty was the reason for that flaw, was accepted by a blindsided SFA, then a player was eligible to play and so no points deduction sanction was applied.
The question of the validity of a deliberate and dishonest registration was never address by LNS although he did say in para 88 of his decision:
“There may be extreme cases in which there is such a fundamental defect that the registration of a player must be treated as having been invalid from the outset. But in the kind of situation that we are dealing with here we are satisfied that the registration of the Specified Players with the SPL was valid from the outset, and accordingly that they were eligible to play in official matches.”
What exactly constitutes an extreme case?
Had LNS seen the HMRC letter of 23 February 2011 or the HMRC letter of 20th May 2011 (that incidentally should have been in the SFA’s hands immediately on receipt under UEFA FFP rules before UEFA were notified of clubs granted a UEFA licence in 2011) would he have been duty bound to consider if a fundamental defect had taken place?
In those letters HMRC justified their pursuit of the wee tax case liability of £2.8M under their Extended Limit rules on basis that when they sought evidence of side letters for DOS ebts in April 2005, Rangers had responded dishonestly and that on sight of that response Rangers QC Andrew Thornhill advised them in early March 2011 not to appeal.
Does that evidence, which was not disclosed by Rangers Administrators Duff and Phelps to then SPL lawyers in April 2012, not point to such a fundamental defect in registration that a player’s registration should be regarded as being invalid from the outset?
However regardless of the rights or wrongs in the construction of the LNS Commission and subsequent Decision based on that construction, the salient point is that Clyde FC and Hearts were deducted 4 points and 2 points respectively, after both admitted to an honest mistake in their registration process and both received twin financial and sporting sanctions. Why Hearts were not deducted the 3 points gained as a consequence of beating Cove Rangers is unclear, although a 3 point reversal would have made qualification out of the group impossible.
Hearts were able to overcome the effect of the two-point deduction and still qualify for League Cup final stages so are unlikely to want to revisit the SPFL decision of points deducted.
However a £10k fine for an honest mistake in one game might be worth appealing on the basis that if a £250k fine for every match Rangers fielded incorrectly registered players was apt in the circumstances that LNS was led to believe existed that on a pro rate back of a fag packet basis this amounts to £695 per game over 10 seasons of 36 games a season, a £10k fine is excessive but would Anne Budge budge?
Anyhoo lets compare the three cases to highlight why eyebrows were raised.
- honest mistake admitted – financial sanction and points deduction
- honest mistake admitted – financial sanction and points deduction
- Deliberate decision taken not to fully register a player’s details with SFA.
- Evidence of dishonest motivation to not fully registering a player registration concealed by Rangers
- financial penalty but no points deduction.
It was always going to be the case that what took place in 2012 under the cloak of the Lord Nimmo Smith Commission would unravel in time as it set a precedent that flew in the face of sporting integrity principles and a common held belief that incorrect registrations attracted a sporting sanction, a belief rekindled by the recent decision to deduct points from Clyde FC.
Perhaps there is a rules based difference that justifies the LNS Decision that can be used by the SFA to explain to the common man why no sporting sanction was applied, but what the common man will ask is it more or less likely that in light of the LNS Decision clubs will be honest with the SFA in future if a player falls foul of the registration process or will appeal on the basis that LNS set a precedent against which all clubs should be judged and then sanctioned.
In a nutshell if an honest mistake is admitted how can a points deduction be justified unless the SFA can show the mistake was a deliberate one carried out by a club to give them a sporting advantage.
The LNS Commission was always a can of worms waiting to be opened which is probably why the SFA rejected the SPFL’s request of September 2017 to revisit the SFA handing of Rangers use of ebts and side letters. Have the SFA introduced a moral hazard in the form of the LNS Decision that will continue to undermine the integrity of Scottish football as long as they allow it to?
Oh what a tangled web we weave eh?