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Thursday, 1 August, 2002, 21:02 GMT 22:02 UK
League loses football cash battle
ITV Digital
The Football League has failed in its attempt to recoup 131.9m in unpaid broadcast fees it claimed it was owed by the owners of failed pay TV firm ITV Digital.

The High Court ruled that ITV Digital's owners, Carlton and Granada, were under no legal obligation to honour their collapsed subsidiary's debts.


The result today will put in jeopardy the finances of many of the football clubs

Football League
This was because neither company had given financial guarantees to that effect, said Mr Justice Langley.

"In my judgement the Football League's case falls at this first and fundamental hurdle," he said.

The verdict might force some of the 72 lower division football clubs that make up the League into insolvency, commentators said.

The League said it was disappointed at the judgement and would now consider an appeal.

"There's no doubt that the result today will put in jeopardy the finances of many of the football clubs," said chief executive David Burns.

Delia Smith, major shareholder of the Nationwide First Division club Norwich City, added: "Today's decision means we have been left with a 2m hole in our budget for each of the next two years."

Carlton and Granada welcomed the ruling.

Parental guarantees

The court's decision followed a four-day hearing during which Carlton and Granada rejected liability, arguing that ITV Digital's final contract with the League did not include guarantees that they would bail their subsidiary out.

The League had argued that the two broadcast giants did guarantee ITV Digital's initial bid for the rights to screen its games.

And it said the final deal went through on the understanding that Carlton and Granada would continue to support their pay TV subsidiary financially.

Shutdown

ITV Digital went into administration in April just one year into a three-year contract to screen Football League games, owing it a total of 178.5m in unpaid fees.

The digital broadcaster had signed the broadcast contract, worth a total of 315m, in the hope that showing League games would help drive up its dwindling viewing figures.

But the hoped-for increase in viewing figures never materialised.

Satellite broadcaster BSkyB last month bought the rights to screen League games for the next four years for 95m, but the League and its clubs are still facing a dire cash shortage.

Sue the law firm?

The League sued Carlton and Granada for a total of 131.9m - the outstanding 178.5m minus payments it is due to receive from BSkyB over the next two years.

There has been speculation that the court case might lead to a flurry of further legal action.

Many commentators expect the League will now sue the law firm that helped it draw up the original contract with ITV Digital.

The law firm - Hammond Suddards Edge, formerly known as Edge Ellison - did not represent the League in its battle with Carlton and Granada.

Another possibility is that the League will itself be sued by one or more of the clubs now suffering substantial loss of income.

Fallout from the case could also extend to the resignation of Mr Burns, who was strongly criticised by several clubs over the new deal with Sky.

 WATCH/LISTEN
 ON THIS STORY
Football League chief executive David Burns
"We are naturally disappointed"
BBC Five Live's Rob Nothman
"The future of David Burns is now uncertain"
York chairman John Batchelor
"Carlton and Granada have behaved in a deplorable way"

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Analysis

Football feels pinch
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05 Oct 01 | Business
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