Were the Premier League too lenient on Chelsea? | The Football Boardroom

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1:00Henry:Welcome to the Football Boardroom. I'm Christian Perslow.

1:03Christian Purslow:And I'm Henry Winter. Christian, good to see you. It looks fantastic out in Portugal. Nice to see a bit of sunshine. I'm in London at the moment, and there's certainly some clouds over Stamford Bridge at the moment. On Monday afternoon, the Premier League and Chelsea released a statement in which they outlined some extraordinary revelations. 36 separate undisclosed payments were made by the club. This is under the previous regime, under Roman Abramovich, to 12 persons or entities on behalf of the club. All players named, and some of them have had their names redacted in the sort of 30-page report that was released on Monday afternoon.

1:46Christian Purslow:All the players have had nothing to do with these undisclosed payments. We have to stress that. But they're fairly big names, household names. Eden Hazard, Willian, Etu, David Luiz, Schürrle and Matic as well. And first, I find it absolutely extraordinary. You can imagine, even though you're a few thousand miles away, you can imagine the anger over here at certain clubs. Fans of Everton, Nottingham Forest and Leicester City, who had points deductions, are absolutely fuming that Chelsea, who by the Premier League's own admission, and Chelsea, the current regime's own admission, were involved in deception and concealment.

2:31Christian Purslow:I use those words quoted from the Premier League statement. And they're wondering why there were no points deductions. So as someone who has worked in the game for so long, I just wanted to know immediately, what is your reaction?

2:47Henry:Well, the first thing I should say, Henry, is for our audience's benefit. I worked at Chelsea Football Club between 14 and 17 for two and a half years. And I was brought in at 14 to run their global commercial affairs. I had nothing to do with the playing side in my time at Chelsea, but I have overseen. As the chief executive at Liverpool and Villa, well, over 100 transfers in my time. And I'm absolutely shocked by what I read last night. I have never, in all my time in the game, been asked by anybody to make payments as described in this report, payments that seem to be off the books, payments that seem to be whatever euphemism you want to use, Henry, to grease the wheels of transfer activity.

3:35Henry:if an employee of mine had walked into my office at any point in the last 16 years and said we've been asked to do this and i think we should that person would have been fired on the spot but i stress anyone who thinks this isn't a particularly serious story because everybody's at it as somebody who's done well over 100 transfers in my career at two big clubs that's not my perception and that's why i am so shocked to see the scale of activity and the length of the length of the period over which it was happening, the magnitude of the payments. I think this is the most serious thing to break in the Premier League for a very, very long time.

4:12Christian Purslow:And it immediately leads to the question of why the Premier League wasn't, not necessarily aware, but examining, looking into, because there were one or two rumours down the years about this. This has only come out, this has only come to light because Bluco, Clear Lake and Todd Bowley, when they were going through due diligence buying the club, that they found certain stories, certain issues, certain deals that raised red flags. And ultimately, I mean, I think there were 200 ,000 pieces of document that were examined by the Premier League. And I think that's taken, what, three and a half years for them to get to this place.

5:01Christian Purslow:But it's only been because of Chelsea's new owners looking into and doing due diligence that this has actually been revealed. What does that say about, A, the Premier League's governance and keeping an eye on what's going on, supposedly under their roof? And also, does that then give some mitigating factor in terms of any punishment that's meted out to the current regime? because they effectively self-reported?

5:28Henry:Well, those are two very important and different questions. And let's be clear, Henry, that on the first point, the idea that somehow the League or governing bodies are asleep at the wheel. Think about that for a second. The nature of these offences is that they are designed to be concealed. You know, these are being described as off-book transactions. That's the entire point of them is that they are being, quote, concealed. And so it would be very difficult for a body not in a company to know about, let alone find evidence of such behaviour. So that's the first thing I would say.

6:15Christian Purslow:So you have some sympathy for the Premier League?

6:17Henry:Well, on that issue that you've raised, but on the second point you raise, I'd really like to dig into this because it actually seems to be a very, very significant part of yesterday's news. And that is the role of the new owners in these matters in, as you say, accurately bringing to light, firstly, initial concerns prior to the takeover. as you say, when they are in their due diligence program, they found some things they didn't like the look of and flagged that before they completed the transaction. And then not long after completing the transaction, when they're in the building with full access to whatever information there is in the building, who knows?

7:06Henry:Maybe somebody put an invoice in who was due some more money. Who knows what triggered? But about a very short period after completing the acquisition, more information came to light, which they also disclosed to the Premier League. And then between them, it was agreed that an absolutely long-term forensic investigation would take place into all of the transfer activity in that very long period where they seek suspicious documents. Now, my point that I think our audience need to think about carefully here is it's all very well saying, brilliant, well done, thank you so much, new owners, for revealing this information.

7:51Henry:To be clear, if they had not revealed that information, having become aware of it, these matters would have been even more serious. In other words, they would have been implicated in wrongdoing as the officers, directors, executives of the club, because there are wide-ranging obligations on all clubs to be completely transparent in the provision of information to the league. because the culture really is one that does rely somewhat on self-reporting, honesty and integrity. So yes, they did report it, but if they hadn't done so, that would have been wrongdoing in and of itself, which would have compounded the problem.

8:36Henry:So this whole notion that, you know, brilliant, well done, and that's why we're not giving you particularly serious sanctions, I have some questions about Henry. What, just in terms of you question their motives? No, not at all. I question the scale of mitigation. And when we get to talking about sanctions, which is the big story here, you know, let's be clear, for our audience's benefit, it seems that three elements were considered. The facts of this case are not disputed. In other words, the league and Chelsea Football Club are in agreement as to these offences that they are documented extremely clearly in the report we've read.

9:25Henry:What is an issue, I think, for many people, including me, is the sanctions. And the league have explained in some detail in this sanction document agreed with Chelsea that they considered a points deduction, they considered a transfer ban, and they considered a fine. So three different types of sanction. They ruled out a sporting sanction, and we'll come back to that. They did apply a transfer ban, and they did apply a fine. And the transfer ban of two years was then suspended. And the fine of 20 million was commuted to 10 million. So there's two levels of mitigation applied, largely when you read the report as a to recognize the role of the new owners, a, that these matters happened before their time, and b, they've cooperated to a phenomenal level in providing information to the league.

10:33Henry:indeed providing information that if it hadn't come to light, it would have been impossible to prove breach and be sanctioned.

10:43Christian Purslow:Sorry, do you understand the attitude of the Premier League in terms of how they've punished or not punished Chelsea? Do you think this mitigation actually is justified?

10:56Henry:I think it's a good question. And I think that mitigation, I think that, should I say, that the level of cooperation, complete transparency, conducting an investigation in parallel and even revealing matters that were otherwise impossible to find, these are all referred to in the report. These are not trivial factors. They are meaningful as you consider the appropriate sanctions. And I'll tell you why. because of this important point that the game does rely on honesty, integrity, and transparency. And the Premier League rulebook is quite explicit in that being an obligation of all executives and officers of all time.

11:42Henry:And think of it this way, Henry. Think of it this way. If you didn't meaningfully reduce the punishment, in other words, if you got the same punishment, whether you did or did not, reveal, cooperate, share information, then the incentive to do so would be much less. So I do think as a matter of regulation and as a matter of sanctioning policy, it does make sense to reward total and complete cooperation of this kind. But, and it's a very big but for our audience today, I have to say, I think that in total, the level of mitigation that has been applied here is way too generous. And in my opinion, very inconsistent with previous regulatory cases and sanctions, where in my reading of prior cases, and just like our audience, I'm dependent on reading the publicly available documents.

12:47Henry:I think the amount of mitigation credit given for clubs cooperating has been much less than seems to have been granted here. And that must really rankle with clubs like Everton and Nottingham Forest, who I don't think have had much credit in the past where they have cooperated.

13:09Christian Purslow:Well, let's take Everton. I mean, And I went through, as you say, the documentation when Everton were charged with a breach of PSR. And I think their initial one, I mean, the commission was stated in it and the Premier League said effectively that they were pushing for sporting sanctions, i.e. points deductions. because fines, and I'm paraphrasing them here, but fines basically aren't that significant if the club has a wealthy owner. Farhad Mishiri is a wealthy man, billionaire at Everton at the time. So where is the consistency in all this? That's what the Everton fans are saying. I mean, the Premier League, from their perspective, are saying, well, actually, it wasn't an issue of PSR because even if that£45 million had been accounted for, it wouldn't have breached PSR.

14:04Christian Purslow:So are the Premier League effectively saying that if you inflate a sponsorship deal, we're going to come down hard on that points deduction? But actually, if you get somebody to quote those words again, deception and concealment, actually it's only a fine and the fine is basically what a Chelsea star midfielder would make in a year.

14:28Henry:Well, I said I would come back to the issue of PSR mitigation. You're quite right. This report, sanctioning report, goes to great lengths. And I can visualize, literally, financial members of the Premier League executive running all sorts of computations where, in effect, they take these concealed payments, payments that did not appear in the financial reports accounts provided by Chelsea to the league in that period, and have in effect added those payments back to show that they still would have been inside their permitted loss allowance. And somehow that's a free pass for no sporting sanction.

15:20Henry:And my question about that, my concern about that is sporting sanctions first really came into the frame as an acknowledgement and recognition that sometimes punishing with a fine just didn't fit the crime. In other words, when football clubs had gained meaningful sporting advantage, you needed to sanction with sporting penalty to compensate particularly other clubs who had obviously lost out on the field of play. Now, there isn't a football fan in the land, Chelsea fan or otherwise, who wouldn't find it hard to believe that a player like Aidan Hazard deciding to join Chelsea doesn't confer massive sporting advantage.

16:12Henry:Just look at the titles, cups, trophies, medals, won. And the number of times that player was player of the year. Now, what isn't clear, and I must make this point for balance, is that we don't know the counterfactual that Aidan Hazard might have joined another club were that irregular payment not have been made. We just don't know.

16:38Christian Purslow:There are enough clubs in for him at the time. I mean, Manchester United were very much interested in him. Real Madrid, at the time that he moved, he obviously went there eventually. And there was definite murmurings from Manchester United in particular. And Sir Alex Ferguson certainly spoke in, I think, 2016, 2017. He just said, well, the figures simply were just too much. I think he went for 32 million from Lille to Chelsea in the end. But Ferguson was talking about 34 million. And he said, and then when you have to sort of factor in all the other things like agencies, paying agents and all that.

17:14Christian Purslow:And again, we stress that Eden Hassard obviously was completely unaware of the fact that there were six undisclosed payments, which added up to 6.5 million euros to a named party who's named in the report. So I think that the fact that there were other clubs in for him, Chelsea did gain a sporting advantage.

17:42Henry:It's certainly what the man on the clap of omnibus would conclude. And I think that is the point. So to be so narrow in focus and say, OK, PSR, box tipped, wouldn't have made any difference. Therefore, we're immediately ruling out a sporting sanction and focused on a transfer ban. Now, again, let me say, because it's an extremely carefully word document, and we can see unearned friends have been busy for the league and for the new Chelsea ownership group in coming up with this agreed sanctioning.

18:17Christian Purslow:It took four months from when it was signed off to when it was released.

18:21Henry:Yes, but four years to do the investigations, and that doesn't surprise me. They actually say in the report that Premier League, if Chelsea hadn't cooperated so much, it would have taken a lot longer. But yes, I wanted to make my point that I think it is punishment fitting the crime for a transfer ban to have been an element of the sanction here. This is essentially a litany of offences related to how you conduct transfer business. And so a transfer ban made sense. But to see that ban suspended in full, again, seems extremely lenient. And it's as if mitigation has been applied once, twice, maybe three times.

19:11Henry:Whereas in prior regulatory breach cases, the recent Everton and Forrest cases in particular, not only was mitigation applied maybe once, it certainly wasn't applied particularly generously in reducing the sanction. And as you are saying, Henry, and I am agreeing entirely, there's a pretty big difference between a four, six points deduction and a 10 million pound fine. And everybody has observed, and let's just make sure our audience, anyone who's missed it, you know, the£10 million is a fraction of£150 million that the new owners held back when they bought Chelsea precisely because they were concerned in the very unusual sale process that they went through.

20:07Henry:I think we should remind our audience that this was an extraordinary, unique sale where once the owner of Chelsea, Mr. Abramovich, had been sanctioned, which in effect meant there was no access to cash. The club was in danger of having no cash to meet its obligations. That could have put the club into bankruptcy. And so a sale was executed extremely quickly. a mandated sale, by the way. I think it's fair to say the sale was forced upon Abramovich. And because it therefore had to be quick and due diligence had to be quick, the winning buyer, in fact, any buyer, but the winning buyer would not have been able to conduct the level of due diligence a buyer would normally do in a£2.5 billion takeover.

20:55And so sensibly,

20:58Henry:they took the precaution of saying, look, yes, in effect, we're paying two and a half billion pounds, but we're going to keep back 150 million to cover any fines, penalties, payments that might have to be made if once we buy the club, we discover anything that isn't quite as we expected.

21:20Christian Purslow:Well, let's see the numbers. So it's 150. Take off the 10 from the Premier League. Take off eight because they've already coughed up to UEFA. The FA are still having ongoing look at this, but the suggestion or the expectation is that it will simply be another fine because the FA don't really have the leadership or the bite to get stuck into big clubs. We won't necessarily be holding our breath on that. So say it's another 10 million. My maths is terrible, but say that's 120 million.

21:58Henry:28 million off the 150. So in plain English, this isn't costing the new club owners or the club anything. It's essentially costing the selling entity, which, again, is extremely controversial and extremely topical. because those monies, the proceeds of the sale, 2.5 billion the world fought, less some debts of 1.4 billion, so about 900 million is the current, 900 to a billion pounds of cash that was supposed to be going to the victims of the war in Ukraine. That will be about 10 million pounds lighter based on this decision. In other words, the charitable pot has gone down by 10 million, not Chelsea's bank account.

22:50Henry:that will stick in a lot of people's crawls, won't it?