Southampton sponsors could sue over £170m Spygate verdict
Southampton could face legal action from sponsors for reputational damage after they were kicked out of the Championship play-off final over “Spygate”, lawyers have warned.
An arbitration panel dismissed Southampton’s appeal against their expulsion from the £170m Wembley showdown after the club admitted multiple counts of spying on opponents.
Leading sports lawyers believe the Saints could now face a litany of claims from sponsors, who could seek to terminate their partnerships with the club.
BCLP partner Andrew Street said: “Commercial partners of Saints are likely to look at their options, including termination or claims for breach of any reputational damage clauses that sponsors often insist upon.”
Southampton’s main sponsors include P&O Ferries, kit maker Puma, Starling Bank, Garmin and bookmaker Midnite.
Players and other clubs could also seek damages for financial losses caused by missing out on promotion to the Premier League, which is worth at least £170m in extra revenue, Street said.
Could Southampton players take legal action?
“The Saints players will also be considering their legal positions,” he added. “Many will be entitled to promotion bonuses, and some may have agreed to salary increases upon promotion (particularly if they agreed to wage reductions after Saints’ last relegation from the Premier League).
“The players may seek to argue that the club’s regulatory breaches have caused them to lose those additional earnings and to recover those losses from the club.
“Other clubs who finished just outside the playoffs may also seek to argue that Saints’ repeated breaches caused them a sporting advantage which resulted in a loss of opportunity to qualify for a playoff place.
“Those claims seem more challenging given the points gap to Wrexham in seventh [place] and since qualifying for the play-offs is no guarantee of winning at Wembley.”
Fred Snowball, a partner at Macfarlanes, said: “Southampton could face compensation claims from other Championship clubs, whether or not those clubs themselves were also spied on.
“Those claims would be complex and both Southampton’s conduct, and the loss suffered by another club as a result, would need to be established.
“However, there is precedent for these claims. When West Ham faced similar follow-on claims over the Carlos Tevez registration scandal in 2006, the costs were substantial and it took years to agree a settlement.
“There are also rumours that Southampton’s players are considering a class action against the club. There is very little precedent for that.
“Those claims would be challenging but they are not impossible. They would be for the loss of the chance of promotion and the financial rewards for players of that. The players would have to show that they would have otherwise been promoted had the ‘spying’ not taken place.
“In other words, they would have to argue that the ‘spying’ itself made no difference to their chances of promotion.”
Level Law partner Alastair Campbell said: “The players are feeling particularly aggrieved, having been denied the chance not only to win financial rewards and bonuses, but also to ply their trade at the highest level.
“I wouldn’t be surprised if claims are threatened against the club, but I think the club will try to find a solution to those claims or risk losing the dressing room entirely.”
How Hull could ask for play-off final to be axed
Hull, who will now meet Middlesbrough instead in Saturday’s play-off final, could argue that they should be promoted automatically since Boro had already been knocked out by Southampton.
“The rules of the play-offs are, quite understandably, silent on this sort of scenario, which is likely to be a recipe for a possible further dispute,” Street said.
Campbell added: “It remains to be seen how many of those potential claims will ultimately be pursued, but Southampton will have their hands full off the pitch, as well as on it, for the foreseeable future.”
Either way Southampton look to have exhausted all their legal options, with the courts unlikely to be willing to delay the play-off final while the decision is challenged again.
And the south coast club could yet face further punishment after the Football Association said it too would now open an investigation into the spying scandal.