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Wednesday, 15 May, 2002, 12:30 GMT 13:30 UK
Battling on after ITV Digital's demise
David Burns, chief executive of the Football League
The Football League will have its day in court
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Analysis

By Mary Gahan
BBC News Online business reporter
line

The argument between the Football League and ITV Digital's owners over millions of pounds of TV cash could be heading for the High Court as soon as next month.

But the two sides might have to wait until after the start of the football season for a final settlement.

The only way the Football League can get some of the money it is owed more quickly is if it can persuade the media companies Carlton and Granada to get back to the negotiating table.

The Football League was owed 178.5m for television broadcasting rights fees when ITV Digital collapsed.

But its owners, Carlton and Granada, have refused to pay up, saying they are not liable.

Financial crisis

Lawyers for the League have applied for "a speedy trial" because, they say, the financial security of 72 football clubs is at risk.

This seems to me to be one last gasp. I suspect the case will be thrown out of court

Mark Stephens, lawyer

On 1 August, ITV Digital was due to pay 89.25m of the money owed to the league and its clubs.

Many clubs have said that without that payment, they will collapse.

For that reason the case will reach the courts more quickly than usual, and lawyers expect it to be heard in June or July.

Appeal

The stakes are high.

If the Football League wins it will get the cash it was owed under the terms of the ITV Digital contract from Carlton and Granada.

If it loses it will get nothing.

If that happens, the League will immediately appeal.

Carlton and Granada are so bullish about their case they say they have not even discussed whether or not they would appeal.

But any appeal would not take place until the autumn, after the start of the football season.

And there would then be the right of a second appeal to the House of Lords.

Deadlock

At any time the two sides could try to negotiate a settlement outside the courts.
Mark Stephens, partner at Finers, Stephens, Innocent
Stephens says Football League case is weak

It seems almost unthinkable that the Football League would resume talks with Carlton and Granada because both sides are so entrenched.

But some observers believe that the league has launched the court case as a tactic to try to get the media companies to see sense.

One lawyer told BBC News Online: "If Carlton and Granada have as watertight a case as they say then the only way they'd settle is if the case was hurting their share price or impeding a merger".

Grabbing headlines

Mark Stephens, of Finers, Stephens, Innocent, specialises in media law.

It is possible the judge would be sympathetic to a sports body

Legal expert

He told BBC News Online he was surprised the Football League had launched proceedings and he thought their case was "terribly, terribly weak".

"It seems calculated to grab headlines rather than to deal with the legal niceties.

"This seems to me to be one last gasp. I suspect the case will be thrown out of court." he said.

If the court case does go ahead it will hinge on the contract between ITV Digital and the Football League.

Strong case

The League says that Carlton and Granada are liable for the TV rights contract because their joint venture agreement stated that any commitment of more than 10m would require the unanimous approval of ITV Digital's owners.

But some lawyers say that is a typical investment protection measure in relation to joint ventures and would be irrelevant in this case.

What is more important is that the two media companies say there was only one legally-binding short-term contract which was signed by ITV Digital, and did not contain any guarantees from Carlton or Granada.

And last December, when it was obvious there were problems, the Football League wrote to ITV Digital saying that they would now like guarantees from Carlton and Granada - these were not provided.

Save face

As well as considering any contracts - signed or unsigned - the court will want to hear evidence about what sort of verbal contracts existed between the two sides.

One legal expert said: "It is possible the judge would be sympathetic to a sports body, especially with a number football clubs affected further down the line".

The Football League turned down a 75m settlement offered by ITV Digital in April.

There are many who believe the Football League should have accepted that offer, and that its fight with Carlton and Granada is a forlorn attempt to save face.

See also:

08 May 02 | TV and Radio
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