COVID-19: Impact on the UK’s sports sector/media/files/insights/... · COVID-19: IMPACT O TE S SPORTS SECTOR 3 • 14 April 2020 Introduction Sporting events around the world are

COVID-19: Impact on the UK’s sports sector

COVID-19 ALERTS

COVID-19: IMPACT ON THE UK’S SPORTS SECTOR

2 • 14 April 2020 WWW.DLAPIPER.COM

Table of contents

Introduction .......................................................................................................................... 3

Availability of financial support in the UK for businesses affected by COVID-19 .......................................................................................................... 4

State aid implications in the context of European sport regulations ....................... 6

Competition law ................................................................................................................... 6

Directors’ duties and insolvency considerations ........................................................... 7

Impact on sports .................................................................................................................. 9

Football ................................................................................................................................10

Horse racing ........................................................................................................................11

Rugby union ........................................................................................................................12

Relief efforts by governing bodies .................................................................................13

How we can help: DLA Piper’s sports credentials .......................................................14

Key contacts ........................................................................................................................16

Contributors ........................................................................................................................16



Introduction

Sporting events around the world are being postponed or cancelled by governing bodies in a bid to prevent the spread of coronavirus. A range of sports have taken action, with the Football Association suspending the 2019-2020 professional football season, UEFA delaying Euro 2020 until the summer of 2021 and Formula 1 postponing a number of races with a view to announcing new race dates later on in the 2020 season. Similarly, The Championships, Wimbledon was cancelled for the first time since 1945 and the International Olympics Committee has decided to postpone the Olympic Games Tokyo 2020 to the summer of 2021.

This will have a profound impact on the governing bodies of the sports and their respective participants in particular as the measures remove matchday revenues (such as ticketing, food and beverage, car parking and VIP/corporate hospitality revenues) and adversely affect commercial and broadcasting revenues as some broadcasters elect not to pay their broadcasting rights instalments. There are some estimates that UEFA will suffer a loss of EUR 300 million as a result of postponing Euro 2020 meanwhile the Premier League recently warned that the league could lose as much as GBP 1 billion in revenue because of the indefinite postponement to the season. Similarly, the Rugby Football Union (“RFU”) is facing estimated revenue losses in the region of GBP 45-50 million as a result of the disruption from COVID-19 and losses in horseracing are estimated at GBP 50 million a month as a result of unexpected falls in the Levy – racing’s central funding system.

The effects of COVID-19 is likely to have a more profound impact on sports clubs that are heavily reliant on matchday revenues as their main source of income. Unless those clubs use government support, employee wages will continue as a significant expenditure meanwhile losing their main source of income. It is therefore of critical importance for these clubs to understand how to act and the options that are available to them before encountering financial difficulties. This note sets out the position as at the date of publication and we continue to monitor the situation as it develops and the measures implemented by the Government, regulators of the sport and clubs which are evolving on a daily basis.


Availability of financial support in the UK for businesses affected by COVID-19

By a series of recent announcements, the UK Government has confirmed that HM Treasury will provide an unprecedented level of support for UK corporates in response to the economic impact of COVID-19. The total value of the package initially made available was GBP 330 billion, 15% of UK GDP, however additional measures continue to be announced, such as the Coronavirus Self-Employment Income Support scheme to assist the self-employed and the new Coronavirus Large Business Interruption Loan Scheme, details of which were publicised on 3 April 2020.

The UK Government’s package now includes three principal mechanisms for businesses to access finance. The two most likely to be utilised by those in the sports sector are:

• Coronavirus Business Interruption Loan Scheme (“CBILS”) – loans for smaller businesses (turnover below GBP 45 million) have been made available through the CBILS which will be delivered by the British Business Bank (“BBB”) (a government owned business development bank) from 23 March 2020. The maximum facility amount is set at GBP 5 million and may be in the form of a term facility, an overdraft, invoice finance facility or an asset finance facility. A term loan facility or an asset finance facility under the scheme will be for a maximum term of up to six years where as an overdraft or an invoice finance facility made available under this scheme will be for a maximum term of up to three years. The first twelve months of the facility will be interest-free for borrowers as the UK Government will cover that first twelve months’ interest for them.

• Coronavirus Large Business Interruption Loan Scheme (“CLBILS”) – to ensure that more firms are able to benefit from government-backed support during this difficult time, the UK Government announced the CLBILS which will provide a government guarantee of 80% to enable banks to make loans of up to GBP 25 million to firms with an annual turnover of between GBP 45 million and GBP 500 million. The Treasury has stated that loans backed by a guarantee under CLBILS will be offered at commercial rates of interest. Lenders will still be expected to conduct their usual credit risk checks. This scheme allows lenders to specifically support businesses that were viable before the COVID-19 outbreak but now face significant cash flow difficulties that would otherwise make their business unviable in the short term. The new scheme is expected to support a wide range of businesses to access finance products including short term loans, overdrafts, invoice finance and asset finance. Businesses will remain responsible for repaying any facility they may take out. It is expected that the scheme will be delivered through commercial lenders. Following consultation with businesses, further details of the scheme will be announced later this month and it may be that some of its original features (ie lending threshold) are revised.



Eligibility criteria:CBILS:Broadly, in order to be eligible for the CBILS your business must:

• be UK based in its business activity;

• have an annual turnover of no more than GBP 45 million;

• generate more than 50% of its turnover from trading activity;

• have a borrowing proposal which the lender would consider viable, were it not for the COVID-19 pandemic;

• self certify that it has been adversely impacted by COVID-19; and

• not be a bank, building society, insurer, reinsurer or public sector organisation.

There are 40 accredited lenders able to offer the scheme, including all major banks.

CLBILS:To be eligible for the CLBILS, your business must:

• be UK based in its business activity;

• have an annual turnover of between GBP 45 million and GBP 500 million;

• be unable to secure regular commercial financing;

• have a borrowing proposal which the lender:

• would consider viable, were it not for the COVID-19 pandemic;

• believes will enable the business to trade out of any short-term to medium-term difficulty; and

• not be a bank, building society, insurer, reinsurer or public sector organisation.

The new scheme will launch later this month. We anticipate it will be available through a range of accredited lenders.

The UK Government package also includes business rates relief for retail, hospitality and leisure businesses and grants for small business and businesses in the retail, hospitality and leisure sector. We would expect that rates relief is likely to be the most common and tangible relief for those businesses.

The UK Government has also announced the Covid Corporate Financing Facility ("CCFF") for larger investment grade businesses pursuant to which the CCFF will purchase commercial paper of up to one-year maturity, issued by firms making a material contribution to the UK economy. It is likely that only a handful of businesses operating in the sports sector will be eligible for the CCFF.

In addition to these financing measures, the UK Government has devised the Coronavirus Job Retention Scheme ("CJRS"). Under the CJRS, UK employers with a PAYE payroll scheme as at 28 February 2020 will be able to 'furlough' employees (i.e. place them on leave of absence) and claim from HMRC a grant of 80% of their monthly wage cost, up to a maximum of GBP 2,500, plus the associated employer National Insurance Contributions and minimum automatic enrolment employer pension contributions. The guidance states that the CJRS will cover employees who have been on the payroll since 28 February

2020 on any type of contract, including full-time and part-time employees, employees on agency contracts and employees on flexible or zero-hour contracts. The scheme will cover employees who have been made redundant since 28 February, provided they are re-hired and then furloughed. Certain football clubs and Premiership rugby clubs have begun to take measures to reduce their employee liabilities by making pay reductions and placing some of their playing and non-playing staff on furlough.

Although the CBILS and CLBILS will provide welcome support to a large number of businesses, it is still the case that there is no meaningful equivalent financial support for lending to businesses with turnover above GBP 500 million which are below investment grade and unable to access the CCFF. It remains to be seen whether further measures will be introduced to help support these businesses. The Chancellor indicated that he would take further action as the situation evolves and additional powers are intended to allow the UK Government to provide whatever further support for businesses it thinks is needed. Given the unprecedented scale of this pandemic and the uncertainty that it brings, it may be that additional financial stimuli are introduced to help keep UK businesses alive.



State aid implications in the context of European sport regulationsFurther support for clubs and leagues under financial pressure beyond that generally available is likely to require State aid notification and clearance by the European Commission under the terms of the UK’s Withdrawal Agreement, which continues to apply to the State aid rules in the UK until the end of the implementation period.

The Commission already has in place a tried and tested framework for State aid for the rescue and restructuring aid for businesses in difficulty. This has previously been applied to bail-outs of sports teams in difficulty: for example, the 2016 bail-outs of Dutch football clubs FC Den Bosch and NEC. This framework allows for a one-off grant of State aid to a

beneficiary in difficulty, provided that (among other things) the aid is kept to a minimum, restores long-term viability and avoids distortions of competition.

Given that the disruption caused by COVID-19 is likely to apply equally to clubs in the same leagues, it is likely that if the UK Government does wish to provide support, it will most likely seek to create single schemes which apply across a league or an entire sport, with little scope for tailoring the package for an individual club. This may prove problematic for certain clubs which were already in financial difficulty prior to the COVID-19 outbreak and may require support above and beyond their contemporaries.

Competition lawThe competition rules prohibit anticompetitive agreements and abuses of dominance. In the current crisis, the UK Government has passed statutory instruments loosening the application of competition law in certain key sectors (groceries, health services and Isle of Wight ferries) but not sport. However, there may be coordination between sports clubs acceptable in the present circumstances which would not be permissible at other times.

Examples could include common rules for restricting spectator numbers, or for the allocation of staff and players. Clubs may also wish to apply a common approach to sponsorship and/or season ticket issues arising from fewer games being played during the current season. Care must be taken to ensure that any communications between clubs adhere to the competition rules: a “crisis cartel” (i.e. one formed in response to an existential threat to an industry) is a very common form of enforcement case for competition authorities.



Directors’ duties and insolvency considerationsUnder solvent circumstances, directors are generally obliged to consider their duties by reference to the company’s shareholders. Once the directors know, or should know, that the company is or is likely to become insolvent, the interests of the company’s creditors need to be taken into account. In certain circumstances, failure to do so can lead to personal liability being imposed upon the directors to reflect the loss caused to creditors by such failure – most often via a wrongful trading action. The weight that must be given to such interests is difficult to pinpoint – prudent directors will err on the side of caution.

It is often challenging for directors to determine precisely when they must switch their focus to the interests of creditors, and the weight that must be given to such interests at a particular point in time. This task will be made more difficult given the rapidly evolving nature of the COVID-19 crisis. Given that a failure to protect creditors could result in directors facing personal liability, it is important that the directors seek professional advice as soon as there is any concern regarding the solvency of the company.

Directors need to carefully consider how to address the risks of the COVID-19 outbreak within their business, given its unexpected impact on the global economy. As many companies now face significant, and increasing, cashflow pressure, directors should carefully consider their actions in the context of the legal framework. As stated above, current public policy seems designed to inject liquidity into the economy, but directors should be mindful of the implications of taking on additional credit and whether adding additional burden to the balance sheet will ultimately benefit its stakeholders:

• Do they have a realistic expectation that the business can recover once the crisis is over?

• Failing that, does their strategy ultimately minimise loss to creditors?

This is often a difficult decision to make at the best of times, but is likely to be particularly challenging during this period given the uncertainty over market conditions and when the current restrictions on social contact will be relaxed or removed.

Much of the UK regime revolves around directors acting “reasonably”. What may or may not be considered “reasonable” will in any case be considered by reference to the prevailing circumstances. In the current extraordinary climate, directors may ultimately be afforded more latitude given the uncertainties that businesses face. We note that certain overseas jurisdictions have relaxed their insolvency regimes in response to the current crisis and on 28 March 2019 the UK Government announced that it was “suspending” the law on wrongful trading for a period of three months, with retrospective effect from 1 March 2020. The Business Secretary says that legislation will be brought forward at the earliest opportunity. Until then, there is limited visibility on the precise scope of the “suspension”. The Business Secretary, Alok Sharma, said “the measures taken will … [give] bosses much needed breathing space to keep their workers employed and their companies going.” This doesn’t, however, change the steps that a director should take when assessing the financial position of the company and considering the steps needed to continue trading. Directors’ actions will remain subject to scrutiny and the risk of personal liability remains, most notably under the directors’ disqualification regime and laws on misfeasance and fraudulent trading. As such, decisions to trade on must be carefully justified and require careful navigation with the aid of expert advice from lawyers and insolvency practitioners.

In any case, directors should still carefully consider whether the actions that they are taking are in the best interests of their stakeholders.


We strongly recommend that directors take practical steps to protect their business as follows:

Governance Hold regular board meetings with the benefit of professional and legal advice to consider the company’s financial position and directors’ duties. Ensure comprehensive minutes are taken.

Consider viable alternatives Directors should ensure they have considered all available options and carefully analyse their respective merits and cost.

Liquidity and creditors Prepare up to date cash flow statements, management accounts and projections, consider availability of existing facilities; consider alternative means of support (e.g. stakeholders, government backed facilities, disposals of assets – though keep in mind the relevant regulatory structure, touched on below; and consider whether outflow of cash to creditors can be managed or delayed).

Operations Analyse the basis on which business can continue to operate. Is workforce size sustainable?

Customers/suppliers Trading partners are to be faced with their own challenges. Take into account the likely size of future orders and robustness of supply chain.

Seek professional advice From your lawyers, your accountants and potentially from a licensed insolvency practitioner; and

Plan Early indications are that key creditors (including lenders, HMRC and landlords) are demonstrating a willingness to grant “breathing space” to companies facing a liquidity squeeze due to the current crisis. Directors will be best placed to take advantage of this assistance if they can present a clear plan as to how their business will weather the storm.

Experience demonstrates that a proactive and consensual approach, with early engagement, presents the best prospect of a successful resolution, protecting directors and preserving value for stakeholders.


Impact on sports

The primary distinguishing feature of financial distress in the sports industry is the influence of, and impact on, a number of non-financial stakeholders in the process.

Key stakeholders include:

• regulators and governing bodies;

• players/athletes (often as both the club's biggest assets and largest liability);

• fans/supporters trusts;

• owners;

• media and broadcasters;

• politics;

• HMRC; and

• sponsors.

The sports sector has seen a number of high profile insolvencies in recent times, most notably Portsmouth Football Club in 2010 and 2012 and Bury Football Club and Bolton Football Club in 2019. 2010 also saw three rugby union clubs enter administration, Bradford Bulls was liquidated in 2017, and the Caterham and Marussia Formula 1 teams both entered administration in 2014.

The governing bodies of various sports have taken steps to protect the integrity of the competitions they oversee and to protect fans and the communities in which those clubs are embedded. In the football sector in particular, the English Premier League ("Premier League") and the English Football League ("EFL") have introduced rules relating to the insolvencies of clubs. Similarly, in rugby, the RFU has detailed provisions, including a requirement for clubs to submit financial information to the governing body each year.



FootballThere are a number of regulatory considerations for English football clubs experiencing financial difficulties arising from the impact of COVID-19. For football clubs that end up in an insolvency process, consideration should be given to the football creditors’ rule.

The football creditors’ rule is specific to insolvency events affecting a football club (or its parent undertaking) which is a member of the Premier League or a football club (or its parent undertaking or subsidiary of its parent undertaking) which is a member of the EFL. The football creditors’ rule effectively prioritises payments to certain football related creditors ahead of other creditors by requiring these football

creditors to be paid before any suspension of the club’s playing licence may be lifted. The respective provisions are set out in the Premier League Handbook 2019/2020 (the “PL Rules”) and the English Football League Rules (the “EFL Rules”) and essentially seek to provide protection for the football creditors of a club following an “Event of Insolvency” (for the PL Rules) or “Insolvency Event” (for the EFL Rules). The football creditors consist of (without limitation) the Football Association and any of its member clubs, the English Premier League, the Football League and other professional football leagues in the UK, any employee or former employee of the relevant football club and any pension scheme related to the relevant club.

An "Event of Insolvency" or "Insolvency Event" includes: a company voluntary arrangement; lodging notice of an intention to appoint an administrator; appointment of an administrative receiver; passing a resolution to voluntarily wind up a company; meeting of the company's creditors is passed under sections 95 or 98 of the Insolvency Act 1986;

a winding up order is made against it; it ceases to carry on its business; it enters into any insolvency regime outside of England and Wales analogous to any of the foregoing; and/or (for the EFL Rules only) any proceeding, step taken or court order is made in any jurisdiction which has a substantially similar effect to any of the foregoing.

The consequences for a club (or its parent undertaking (or a subsidiary of its parent undertaking for EFL clubs)) suffering an Event of Insolvency or an Insolvency Event are different. Following an Event of Insolvency, the Premier League may suspend the club's licence to play in the Premier League. Following a suspension a club may not acquire any players or play any league games. In addition, while the suspension is in effect, the Premier League may use the club's share of the Premier League's media revenue (comprising UK and overseas broadcasting monies, commercial contract monies and radio contract monies) to pay the club's football creditors. Once the club has settled its liabilities to its football creditors then the Premier League may decide to lift the suspension on the club.

Following an Insolvency Event, the EFL has the power to impose upon the club a 12 point deduction. However, an element which is particularly relevant to the circumstances relating to the impact of COVID-19 is that a club may appeal a points deduction on the ground the relevant Insolvency Event arose as a result of a "Force Majeure" event. A "Force Majeure" event shall be an event that, having regard to all of the circumstances, was caused by and resulted directly from circumstances, other than normal business risks, over which the club and/or parent undertaking and/or subsidiary of the parent undertaking (as the case may be) could not reasonably be expected to have control and its officials had used all due diligence to avoid the happening of that event. The EFL Rules identify certain circumstances which would fall

under the "Force Majeure" category and includes (1) where a club suffers material adverse effects upon the loss of anticipated income streams which mean that it is unable to meet its liabilities when they fall due and (2) where its insolvency event is caused by the default of another football club. The loss of income as a result of the impact of COVID-19 would appear to fall within this provided that the club's officials have taken all possible measures to avoid such a scenario.

Football clubs may also be contemplating whether to obtain shareholder funding to make up the loss of income streams as a result of COVD-19. Football clubs should consider the regulations relating to financial fair play in the applicable PL Rules, EFL Rules and/or UEFA – Club Licensing and Financial Fair Play Regulations 2018. Each of the aforementioned rules provide for varying restrictions on the aggregate amount of losses a participating club is permitted to make over a prescribed period of time. Under those rules, clubs are required to demonstrate they have satisfactory shareholder funding in place to cover the losses in the event they reach a certain threshold. Both the PL Rules and EFL Rules prescribe how the shareholder funding should be structured for it to be able to qualify to cover the losses of the relevant club. Penalties for non compliance include, among other things and as applicable, exclusion from UEFA competitions, suspension from playing league matches and points deductions.



Horse racingOn 17 March 2020, the British Horseracing Authority (the “BHA”) announced that all British racing would be suspended until the end of April 2020 (including the Grand National which was due to take place on 4 April but was replaced with a virtual race) to “protect essential emergency services and the health and welfare of staff working in the racing industry.”

On 30 March 2020, the BHA published its plan for the racing industry’s response to the COVID-19 pandemic (an iterative document which will be updated as the response progresses) which currently anticipates a resumption of racing from 1 May (as referenced in a letter by Brant Dunshea (BHA’s chief regulatory officer) to racing industry stakeholders). The plan includes provision for the cutting of costs to the racing industry by up to GBP 1 million a month whilst the COVID-19 crisis persists. Under the plan, agreed by the BHA Board, nearly 80% of BHA’s staff (including race day officials) will be stood down from work using the CJRS. In addition, the BHA announced that entry fees have been refunded and other fees to participants dropped where possible.

The plan makes reference to the fact that about 20,000 people are directly employed in racing and that every pound spent in the industry, two more are generated in the wider economy, making racing worth an estimated GBP 4.1 billion to the UK economy. The plan details the value to the taxpayer and UK PLC of a resumption of economic activity. Racing proposes to work with the UK Government to develop creative solutions to resume when that is possible. The plan also makes reference to the fact that responding to the crisis will use resources which will include funds which can be made available from the Racing Foundation. The Horserace Betting Levy Board also holds reserves and the plan makes reference to the fact that discussions are underway about how these should best be used.

The main priority of the plan is to assess and focus on the conditions which will be required to ensure resumption of racing at the earliest opportunity.

The plan sets out the following priorities:

• to develop a resumption plan that appropriately reflects government advice in place at the time, including the pressures on the health service and public services generally, offering a range of options that can be adapted as required;

• to coordinate detailed operational planning for a return to racing;

• to maintain the resilience of regulatory services – stewarding, veterinary and integrity, to prepare for resumption;

• to ensure that an appropriate fixture and race programme is in place for racing's resumption;

• to liaise with the betting industry and ensure they are engaged around the revised fixture programme and integrated into planning for the resumption of racing;

• to ensure that the needs of broadcasters are recognised at an industry level and can be factored into the redesign of the racing programme;

• to ensure racing's administrative systems and processes are able to resume racing at the earliest possible opportunity; and

• to engage the HBLB around the fixture programme, to identify prize money requirements; and coordinate these in concert with the money workstream above.

Brant Dunshea, Chief Regulatory Officer of the BHA, anticipates that the initial return to racing is likely to be phased and "almost certainly behind closed doors…this reflects the likelihood that any easing of the COVID-19 situation, and any associated restrictions

and pressures on medical services, will also happen progressively. With that in mind, we also expect any return to racing to begin, at least initially, with Flat racing, principally for reasons of safety and to minimise demands on emergency services."



Rugby unionSimilar to the English Football Leagues, there are regulatory matters set out in the RFU Handbook 2019- 2020 (the “Handbook”) for the RFU clubs to consider if they were to experience financial difficulties.

Under the Handbook, if a club suffers an “Insolvency Event” it must immediately notify the RFU in writing.

An insolvency Event means in relation to a club (and including a holding company, parent undertaking, subsidiary undertaking, subsidiary or associate of the club or an entity which in the RFU's opinion is connected or associated with the club in such a way that is seen to be party of the Club): (i) the suspension of payments, a moratorium of indebtedness, winding-up, dissolution, administration or reorganisation (by way of voluntary arrangement, scheme of arrangement or otherwise) of the club; (ii) a composition, compromise, assignment or arrangement with its creditors; (iii) the appointment of

a liquidator, provisional liquidator, receiver, administrator, administrative receiver, compulsory manager or other similar officer in respect of the club or any of its assets; (iv) enforcement of any security over any assets of any member of the group of companies which the club falls within; (v) any analogous event in any jurisdiction, or in relation to a club that is unincorporated, an event that is considered by the RFU, in its absolute discretion to be similar to one of the events above in relation to the club's owner or owners, member or members, sole trader or partners of the club.

If an Insolvency Event occurs in relation to a club during the season, the club will receive a points deduction equal to 20% (for a Premiership club) or 25% (for clubs at Level 2 or below) of the total number of available points (including bonus points) to a club in the league in which that club plays. Further points deductions may also apply for the following season depending on the league position of the club at the end of that season. If a club not playing in a league or in the Premiership suffers an Insolvency Event during the course of a season, it will be subject to whatever penalty the RFU deems appropriate. If the Insolvency Event occurs outside the season, the relevant points deduction will apply either to the previous season or the next season at the RFU's discretion. If the Insolvency Event occurs before the fixture list for the next season is published, the deduction will typically be from the previous season.

In any event, clubs that suffer an Insolvency Event will also not be eligible for promotion either following the season just commenced or in the next season. Various financial thresholds will also be imposed in relation to the payment of players.

There will be no points deductions applied if: (i) the club's creditors are fully paid; or (ii) the club exits administration within six weeks of the Insolvency Event occurring. The points deduction will apply to any new club that is established to take over the assets of an insolvent club.

Other relevant provisions in the Handbook include the power of the RFU to publish the name(s) of directors (or other persons concerned with the management) of the club for a period of up to 12 months immediately preceding the occurrence of the Insolvency Event. Those individuals will not be permitted to be concerned with the management of a club for three years from the date of the Insolvency Event unless the RFU are convinced that they are fit to do so.

In response to the global disruption caused by COVID-19, the RFU has ended its season for all levels below the Premiership, including the Premier 15s top division of Women's Rugby in England. The long term financial implications of this development are stark, a sentiment echoed by RFU Chief Executive Bill Sweeney, who said this year will be a "loss making year" for the RFU. It may be some time before the full extent of the financial impact of COVID-19 on the RFU and its clubs will be known.


Relief efforts by governing bodiesWith revenue streams disrupted by the suspension or cancellation of matches and competitions, many governing bodies are continuing to monitor developments to see whether they can provide support. The RFU, for example, is investigating options to provide support to clubs and are in close contact with the UK Government to obtain further details on how recent measures might benefit rugby clubs. Other governing bodies have taken quicker action. The EFL are putting measures in place to immediately assist clubs with cashflow problems by setting up a GBP 50 million short term relief package. The fund consists of the remaining Basic Award payments being advanced to clubs immediately with the remainder made through interest free loan facilities available to clubs.

The RFU has also announced a GBP 7 million loan package for community clubs to help them through the financial difficulties that will come due to the outbreak of COVID-19. Additionally, for any club with outstanding debt, quarterly loan repayments of GBP 335,000 have been suspended until August. Similarly, the England and Wales Cricket Board recently announced a GBP 61 million package to help cricket (from elite to grassroots) with the financial impact of COVID-19. It remains to be seen how effective these measures will be in relieving the financial impact of COVID-19 and governing bodies continue to monitor developments and their relief efforts as the situation develops.



How we can help: DLA Piper’s sports credentialsThe situation surrounding COVID-19 and its impact on the sports sector continues to develop at a fast pace. As such, it is critical now to understand your business’ financial position, the relevant sporting and regulatory rules in place and your rights and obligations under key contracts and financing agreements to prepare your business as robustly as possible for developments over the next few months and thereafter.

DLA Piper has a wide range of experience of advising lenders, sports clubs and key stakeholders in financing, regulatory and insolvency related work, both nationally and with our global network internationally. Our experience includes:

• advising ASR Media and Sponsorship S.p.A. in connection with its issuance of EUR 275 million 5.125% senior secured notes due 2024 relating to AS Roma’s media rights;

• advising the initial purchasers in connection with its issuance of EUR 300 million 4.875% senior secured notes due 2022 relating to Inter Milan’s media rights;

• acting for Goldman Sachs Bank USA, HSBC Bank plc and Bank of America Merrill Lynch International Limited on their GBP 425 million financing of Tottenham Hotspur’s new, multi purpose, 61,500 seat stadium;

• advising AS Roma and its affiliates in connection with all aspects (including real estate, finance and construction) of the new “Stadio della Roma” project, located at the Tor di Valle site in Rome, Italy;

• advising a top tier European football club on the receivables financing of various player transfers;

• advising the British Horseracing Association on the UK Government’s State aid notification and clearance of the Horserace Betting Levy, an GBP 840 million State aid scheme supporting British horseracing through a levy on gambling and betting activities;

• advising Football Dataco, a business owned by the FA Premier League and English Football League, on its licensing of the right to collect in stadia live league match data used for in play betting, including on a claim in the Competition Appeal Tribunal brought by Sportradar for alleged breaches of competition law resulting from these licensing arrangements;

• acting for Edinburgh businesswoman Ann Budge on her takeover of Hearts of Midlothian plc, thereby saving it from liquidation and expulsion from the Scottish Football League. The deal involved the acquisition of the 79% shareholding held

by a bankrupt Lithuanian entity and release of security held by a different Lithuanian entity as well as complex issues under the Takeover Code Complex Ownership Arrangements with the Supports Trust. The Institute for Turnaround honoured us in 2014 by awarding us with the accolade of Listed Turnaround of the Year (IFT Award Turnaround of the Year 2014);

• advising the administrators of Crystal Palace FC resulting in a successful exit via a CVA in accordance with the requirements of the Football League and sale of the club’s business and assets to new management;

• advising Barclays Bank Plc and Mark Fry and David Hudson as administrators of Southampton Lei sure Holdings plc. This was a high profile matter which required an imaginative approach to secure the football club’s survival under extremely challenging conditions;

• advising the FA Premier League in relation to security and financing arrangements in respect of broadcast rights granted to Setanta and in particular the rights of the licensor in the event of Setanta’s breach and subsequent insolvency;

• acting for the administrators of Leicester City FC and advising the administrators on the successful administration, CVA restructuring, disposal to New Fox and the sale and leaseback of the Walkers Stadium to a US entity with a complex put and call option purchase arrangements to enable New Fox to meet its playing fixtures and acquire the stadium in due course;

• advising Leeds United on a GBP 120 million debt restructuring, multiple player transfer arrangements and the club business reorganisation;

• advising a league body in issues arising out of the administration of one its members, including on the interpretation of the league’s insolvency policy and approach to sporting sanctions;

• acting for the administrators of Ipswich Town FC;

• advising Europe’s largest golf retailer operating from 132 stores in the UK and Ireland. Accelerated M&A process followed by a pre packaged administration sale to a private equity investor resulted in 112 of American Golf’s stores continuing to trade, saving over 900 jobs;

• acting for a bank in respect of a financial restructuring of a motorsports supplier, advising the bank on a number of successful financial restructurings, group re-organisations and taking new security;



• acting for Portsmouth City Council in dealings with the administrators of the football club, and particularly in the Council’s funding assistance to the supporter’s trust who ultimately purchased the club in the biggest community football club purchase to date;

• advising Sheffield United FC on restructuring and merger options;

• advising Bradford City AFC on CVA;

• representing Abengoa SA in connection with their Chapter 15 filing and its indirect subsidiaries Abengoa Bioenergy US Holding LLC and Abeinsa Holding Inc. in their Chapter 11 filings in the US Bankruptcy Courts. A high profile, cross border restructuring one of the most complex multi jurisdictional restructurings (Spain, UK and US) in recent years;

• representing the administrators of Lehman Brothers in a four day hearing at the Supreme Court in the Waterfall I (W1) litigation. LBL is one of the three Lehman appellants in the W1 application, which commenced in 2013 and is primarily concerned with the question of how an approximately GBP 7-8 billion surplus in Lehman Brothers International (Europe) (in Administration) (LBIE) should be distributed amongst its creditors;

• advising Philip Duffy and Ben Wiles of Duff & Phelps as the administrators of the BHS Group of companies, DLA Piper deployed the full strength of its UK and international Restructuring practice to support the Administrators in dealing with the largest and most high profile high street insolvencies for many years;

• advising beverage group Conviviality on the sale of its retail business, which includes the Bargain Booze and Wine Rack brands, to the grocery wholesaler Bestway. The transaction saved approximately 1,700 jobs. We also advised on the sale of Conviviality’s wholesale business to the C&C Group, a deal that saved nearly 2,000 jobs;

• advising on the sale and restructure of Homeform Group Limited (turnover GBP 150 million) trading under the Moben Kitchens, Dolphin Bathrooms, Sharps Bedrooms and Kitchens Direct brands;

• advising JJB Sports PLC, JD Sports and Manchester United on all aspects of the OFT’s high profile investigation into price fixing of replica football shirts;

• advising the England and Wales Cricket Board Limited in relation to its recent tender process and appointment of major match venues;

• advising a governing body of an Olympic Sport with an investigation of alleged ethics violations by directors of a national governing body;

• advising The Football Association Premier League Limited on investigations into the transfer of young players between academies;

• representing Abu Dhabi United Group and Manchester City FC in connection with the acquisition, together with the New York Yankees, of rights to a new soccer team, New York City Football Club, MLS’ 20th expansion club;

• advising on the sale of its 25% interest in Leeds United FC to Eleonora Sport Limited (the investment vehicle of majority owner Massimo Cellino). The deal also involved the restructuring of GFH Capital’s debt and the implementation of an Islamic compliant Murabaha facility;

• representing Mr Dejphon Chansiri, whose family owns John West and Chicken of the Sea company Thai Union Group in Sheffield and in London, in the acquisition of Sheffield Wednesday Football Club, from Milan Mandaric;

• advising the Mike Burton Group on its joint venture with Sodexo in relation to the official corporate hospitality and travel programmes for Rugby World Cups 2015 and 2019;

• advising the RFU on the sale of its domestic and international live audio visual rights (and associated commercial partnership rights) to Sky for 2015-2020 in relation to QBE Internationals, World Cup warm up matches and other RFU controlled properties and on the tender process and subsequent award to the BBC of highlights and radio rights to QBE Internationals and World Cup warm up matches for 2015-2020;

• advising The Football Association Premier League Limited on all aspects of its domestic and international audiovisual rights sales strategy;

• advising the England & Wales Cricket Board on the sale and distribution of international media rights;

• advising Rakuten on its shirt sponsorship arrangements with Barcelona FC;

• advising the English Football League on its sponsorship by Skybet;

• advising Manchester City and Roma on sponsorship arrangements, including MCFC’s arrangements with Nike; and

• advising the Football Association Premier League on arrangements for the supply of technology to facilitate the operation of Hawkeye and other player tracking services.


Key contacts

Contributors

Robert [email protected]

Peter [email protected]

Paul [email protected]

Nick [email protected]

Sam [email protected]

Lewis GautSenior [email protected]

Samuel ChurneySenior [email protected]

Richard JenkinsonSenior [email protected]

Joe [email protected]

Rob [email protected]

Alasdair [email protected]

DLA Piper is a global law firm operating through various separate and distinct legal entities. Further details of these entities can be found at www.dlapiper.com.This publication is intended as a general overview and discussion of the subjects dealt with, and does not create a lawyer-client relationship. It is not intended to be, and should not be used as, a substitute for taking legal advice in any specific situation. DLA Piper will accept no responsibility for any actions taken or not taken on the basis of this publication. This may qualify as “Lawyer Advertising” requiring notice in some jurisdictions. Prior results do not guarantee a similar outcome.Copyright © 2020 DLA Piper. All rights reserved. | APR20 | A05360

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