Are the Scottish Professional Football League insolvency rules about to change?

Published 11 October 2013 | Authored by: Adam Lovatt

Following on from my recent blog regarding the rules which had been put in place by the newly formed Scottish Professional Football League (the "SPFL"),1 it has been reported that the SPFL are considering the implementation of a new set of rules in line with what was discussed in that blog.2

As previously outlined, the current rules do not provide an effective penalty for clubs entering into an insolvency event and do not appear to reward those clubs who are financially prudent and avoid reaching unmanageable levels of debt.

The current punishment for a club entering into administration in the four professional leagues in Scotland is an immediate fifteen point deduction.3 If the proposals being considered by the SPFL board are approved, clubs who suffer an insolvency event face the prospect of immediate relegation. The creation of this more stringent rule has been made possible by the 42 professional clubs in Scotland all being brought under the same governing body, the SPFL, during the past summer. By having one united governing body rather than the Scottish Premier League governing the top league and the Scottish Football League governing the three lower leagues, it is now much easier for clubs to be moved from one division to another through immediate relegation, without arguments ensuing between different governing bodies as to which clubs can participate in which leagues.

In the Football League in England, as Coventry City have found to their cost this season, the penalty for an insolvency event is a ten point deduction.4 Rule E.38 of the Premier League handbook for this season, provides that the penalty for one of its member clubs or its parent company entering into an insolvency event is only a nine point deduction,5 as suffered by Portsmouth in the 2009/2010 season.

Were the English governing bodies to consider an amendment to the insolvency rules which are in place, and seek to follow what is being considered in Scotland, the difficulty which such proposals would have, would be that the Premier League and Football League are two distinct organisations and it may prove problematic for the Premier League to force the immediate relegation of one of their member clubs onto a separate governing body. As the rules currently stand in England, the penalty for clubs experiencing financial difficulty are not as stringent as they are north of the border and arguably need to be tightened up. As with the position in Scotland outlined in the previous blog regarding the position of Hearts and their survival in the SPL last season, it seems somewhat unfair that clubs in England are able to live out with their financial means and find themselves with a penalty, in the case of the Premier League, which is the equivalent to losing points gained in potentially only three matches. By gaining an unfair advantage through financial mismanagement, clubs should surely be subject to stronger fixed penalties than at present.

In Scotland the position is now more flexible and the proposed new rule, despite the practical difficulties which may be associated with it, could be created with relative ease.

There are some clubs for whom the introduction of such a rule would have potentially disastrous affect in both the short and long term as a result of the difference in television and commercial revenue through the Scottish leagues and the additional money which is in place for those who compete in the Scottish Premiership. However, it can only be hoped that the severe penalty which is being proposed and the nature of the punishment which may be enforced, will help to ensure that Scottish clubs will continue to cut their cloth to prevent the potential for immediate relegation through financial mismanagement.

 


 

1 https://www.lawinsport.com/blog/adam-lovatt/item/the-scottish-professional-football-league-new-insolvency-rules

2 https://www.telegraph.co.uk/sport/football/scottish-football/10365208/SPFL-clubs-that-go-into-administration-could-be-relegated.html

3 This contrary to what is stated in the newspaper article above but is what is stated at Rule E1 in the current SPFL rules.

4 https://www.football-league.co.uk/regulations/20130704/section-3-the-league_2293633_2125717

5 https://www.premierleague.com/content/dam/premierleague/site-content/News/publications/handbooks/premier-league-handbook-2013-14.pdf

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About the Author

Adam Lovatt

Adam Lovatt

Adam is a lawyer specialising in sports law with IMG. Adam has a wide range of commercial and litigation experience from his four years as a qualified solicitor. Adam has a passion for sports law and is currently undertaking a IP Law Masters programme with the University of London. He is passionate about most sports particularly football, golf and tennis.

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Comments (1)

  • Leither

    04 July 2014 at 12:53 | #

    Rule E5 of the SPFL insolvency rules clearly states that should the clubs " insolvency process " extend into a second season , a second 15 point penalty will be applied.
    Now Hearts have exited administration but they have not completed the insolvency process .
    They are currently operating with a Voluntary Arrangement status supervised by BDO, and this part of the insolvency process will continue until all the conditions of the CVA have been fulfilled. As far as football is concerned this will be settling with the football creditors.
    If this is not complete by the start of the new season the penalty points sanction should be applied.

    reply

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