State Aid... (2 Viewers)

Skyblueweeman · Apr 21, 2015

http://www.theguardian.com/football/2015/apr/20/west-ham-compensation-risk-state-aid-olympic-stadium

Saw this article, although didn't read it in detail. If proven, could this open up the door for some compo for CCFC? Is the situation similar? Did CCC gain sign off from the EC? Did/Do they need to?

Discuss....

lapsed_skyblue · Apr 21, 2015

This is what the JR is all about.
One important difference in CCFC's case. CCC had a share in the lease holding company, ACL, and could argue that they were acting to protect their existing investment against a predator. The judge agreed.

Skyblueweeman · Apr 21, 2015

I don't have the time or patience for the finite detail but what you've said above makes sense.

duffer · Apr 21, 2015

lapsed_skyblue said:
This is what the JR is all about.
One important difference in CCFC's case. CCC had a share in the lease holding company, ACL, and could argue that they were acting to protect their existing investment against a predator. The judge agreed.

I'm not quite sure the Judge used those terms, but he certainly said the council had a right to protect their commercial interests.

Funnily enough though, having sold their stake in ACL to Wasps I don't think that argument is quite as strong if there's another JR about that deal and the effective loan to Wasps of £14.4m. The council has no commercial interest in ACL now, but the loan remains in place.

I wonder if this is why there's talk about Wasps paying it off early.

skybluetony176 · Apr 21, 2015

£2.5M a year with a share of the catering revenues! They clearly havent spoken to every football financing expert in the gallery like Mr Fisher has.

Being serious though it sounds like a recipe for disaster. Especially if they get relegated from the premier league and cant make an instant return. Time will tell I guess.

Noggin · Apr 21, 2015

duffer said:
I'm not quite sure the Judge used those terms, but he certainly said the council had a right to protect their commercial interests.

Funnily enough though, having sold their stake in ACL to Wasps I don't think that argument is quite as strong if there's another JR about that deal and the effective loan to Wasps of £14.4m. The council has no commercial interest in ACL now, but the loan remains in place.

I wonder if this is why there's talk about Wasps paying it off early.

There is no argument now, the changing situation is irrelevant, either they were justified in making the agreement at the time (and the judge says they were) or they weren't, it can't become state aid after the fact. You can't change whether or not a decision was reasonable at the time using hindsight. Not to mention the fact that if you did do this then it's even less state aid than before because while the interest rate originally was probably too low for the risk that is now not the case and the loan is commercially attractive.

If they are going to pay it off early it will be because they feel they can get a better deal not because it's best for CCC (in fact while I know you disagree with this, I think the deal is now attractive for ccc and they wouldn't want it paid off early, they are getting what 11% interest (I forget) with security, good deal.

Godiva · Apr 21, 2015

Skyblueweeman said:
http://www.theguardian.com/football/2015/apr/20/west-ham-compensation-risk-state-aid-olympic-stadium

Saw this article, although didn't read it in detail. If proven, could this open up the door for some compo for CCFC? Is the situation similar? Did CCC gain sign off from the EC? Did/Do they need to?

Discuss....

They did not and that was my main point as to why I believed CCC could be in trouble in the legal battle. But I don't think sisu lawyers pursued this point?

skybluetony176 · Apr 21, 2015

Godiva said:
They did not and that was my main point as to why I believed CCC could be in trouble in the legal battle. But I don't think sisu lawyers pursued this point?

Serious question. What did the EC have to sign of exactly on the Ricoh?

Godiva · Apr 21, 2015

skybluetony176 said:
Serious question. What did the EC have to sign of exactly on the Ricoh?

If CCC recognised the loan fell under state aid regulation then they would have an obligation to apply for approval through the EU system.
But maybe they didn't believe it was state aid or they realised they didn't have the time to wait (usually takes about 6 months).

As reported in the article in the OP, CCC is open for legal challenges in 10 years simply because they didn't apply through the proper channels.

oldskyblue58 · Apr 21, 2015

Godiva said:
They did not and that was my main point as to why I believed CCC could be in trouble in the legal battle. But I don't think sisu lawyers pursued this point?

Doesn't the signing off only come in to play as far as SISU vs CCC is concerned if the transaction was deemed to be state aid though? The Judge was specific in saying the transaction was not state aid at all and therefore no signing off by the EU was relevant. The case never got as far as challenging the prior signing off by EU because of that

skybluetony176 · Apr 21, 2015

Godiva said:
If CCC recognised the loan fell under state aid regulation then they would have an obligation to apply for approval through the EU system.
But maybe they didn't believe it was state aid or they realised they didn't have the time to wait (usually takes about 6 months).

As reported in the article in the OP, CCC is open for legal challenges in 10 years simply because they didn't apply through the proper channels.

Which begs the questions. How did SISU's lawyers miss this? Or did they? Maybe they simply new there was no milage in this? Was this one of their points they dropped on the first morning of the JR?

skybluetony176 · Apr 21, 2015

oldskyblue58 said:
Doesn't the signing off only come in to play as far as SISU vs CCC is concerned if the transaction was deemed to be state aid though? The Judge was specific in saying the transaction was not state aid at all and therefore no signing off by the EU was relevant. The case never got as far as challenging the prior signing off by EU because of that

That makes sense. Have it deemed state aid first in a court of law and then start a fresh legal battle based on it being state aid and not been signed of by the EC/EU.

Godiva · Apr 21, 2015

oldskyblue58 said:
Doesn't the signing off only come in to play as far as SISU vs CCC is concerned if the transaction was deemed to be state aid though? The Judge was specific in saying the transaction was not state aid at all and therefore no signing off by the EU was relevant. The case never got as far as challenging the prior signing off by EU because of that

It's already too long ago for my memory, but I think the ruling was 'not unlawful state aid'. Anyway, you're right, it's all about if it was state aid or not. Isn't that what the appeal is about?
I really don't fancy going through the transcripts one more time

skybluetony176 · Apr 21, 2015

Godiva said:
It's already too long ago for my memory, but I think the ruling was 'not unlawful state aid'. Anyway, you're right, it's all about if it was state aid or not. Isn't that what the appeal is about?
I really don't fancy going through the transcripts one more time

They haven't got one yet have they? I thought that they were appealing the appeal for the right to appeal which they dont currently have.

Ashdown · Apr 21, 2015

Godiva said:
It's already too long ago for my memory, but I think the ruling was 'not unlawful state aid'. Anyway, you're right, it's all about if it was state aid or not. Isn't that what the appeal is about?
I really don't fancy going through the transcripts one more time

Don't bother, nobody gives a shit if SISU's lawyers are trying to make them a quick buck, the issue is whether CCFC can stand another summer of their mishandling and lies.

oldskyblue58 · Apr 21, 2015

What has happened since with Wasps will not affect the first JR case appeal application. The Judge will only consider what was known at the time the deal was done January/February 2013.

The second JR case is based on the Wasps deal but if the loan was at commercial rates ie 11% over 20 years with an upfront £1m payment then it will be hard to prove state aid. One of the main remedies is to order immediate repayment of the loan - if it no longer exists then that's one remedy that is gone. So where does it go from there

There is no contractual agreement between SISU/CCFC and CCC in respect of the second case other than a day rent agreement which has not been altered by the deal with Wasps. So no clear case for compensation it would appear

rupert_bear · Apr 21, 2015

Godiva said:
But I don't think sisu lawyers pursued this point?

Is that a serious statement or a wind up ? One thing you can be assured of with these sisu lawyers who to quote a certain Coventry City chairman "batter" people in court, they will have pursued every knuck and cranny to win the day. This latest court case was always in the pipeline something to do with oral evidence another desperate throw of the dice in my opinion, lets wait and see what July 7th brings

torchomatic · Apr 21, 2015

That's what undid us,wasn't it? The rent was so high at the Ricoh because the idiots who ran our club (and ACL) presumed we would get promoted back to the promise land. Within months it became clear to everyone at the Club what a disaster it was. And continues to be. West Ham could be in big, big trouble.

skybluetony176 said:
Being serious though it sounds like a recipe for disaster. Especially if they get relegated from the premier league and cant make an instant return. Time will tell I guess.

oldskyblue58 · Apr 21, 2015

What the Judge said in his statement......

“Whilst I accept that the council were put to some hard decision-making over this commercial enterprise in 2012, in all of the circumstances and given the wide margin properly allowed in such matters, I simply cannot say that the loan extended by the council to ACL would not have been entered into, on the terms in fact agreed, by any rational private market operator in the circumstances of the case.
“In my judgment, the transaction fell within the wide ambit extended to public authorities in this area; and clearly so. It was not State aid.”

What the club said .....

The Judgement by Hickinbottom J, that the Council's (CCC) decision to provide a £14.4 million loan to private stadium management company Arena Coventry Limited (ACL) was not an unlawful subsidy, is unfortunate.
The football club and its owners believe that the loan, which exceeded the value of the stadium by almost 200%, was neither lawful nor in the interests of the supporters, taxpayers, stadium operators or the Club.
ACL will now remain burdened with debt for the next 43 years, removing any prospect of a long term return to the stadium by the Club. With this level of debt there is no realistic prospect of any sports franchise or ACL being able to generate sufficient revenue to be commercially viable.
We will apply for leave to appeal this decision. Now, more than ever, the new stadium is the only viable commercial option. The owner's primary objective remains building a long term sound financial platform for the future growth of the Club.

no I didn't re read it all...... google can be useful....

rupert_bear · Apr 21, 2015

West Ham will be okay because the powers that be will make sure they are, the domino affect should the shit really hit the fan re. West Ham and their dealings with this stadium could be massive. Government, whoever it is won't allow it.

skybluetony176 · Apr 21, 2015

torchomatic said:
That's what undid us,wasn't it? The rent was so high at the Ricoh because the idiots who ran our club (and ACL) presumed we would get promoted back to the promise land. Within months it became clear to everyone at the Club what a disaster it was. And continues to be. West Ham could be in big, big trouble.

Without knowing the full details of the West Ham deal it sounds to me like we actually had a better deal initially as our's included 50% of the management company and therefore a share of non matchday revenue, it doesn't sound like West Ham have that. They'll probably be OK with all the TV money in the Premier league but if they go down and stay down as you say that could be big, big trouble.

duffer · Apr 21, 2015

Noggin said:
There is no argument now, the changing situation is irrelevant, either they were justified in making the agreement at the time (and the judge says they were) or they weren't, it can't become state aid after the fact. You can't change whether or not a decision was reasonable at the time using hindsight. Not to mention the fact that if you did do this then it's even less state aid than before because while the interest rate originally was probably too low for the risk that is now not the case and the loan is commercially attractive.

If they are going to pay it off early it will be because they feel they can get a better deal not because it's best for CCC (in fact while I know you disagree with this, I think the deal is now attractive for ccc and they wouldn't want it paid off early, they are getting what 11% interest (I forget) with security, good deal.

I think you're missing the point here Noggin - as I understand it the second JR (if it happens) will be about the sale of ACL to Wasps, and whether it's appropriate to continue the loan to ACL with Wasps effectively as the guarantor, and CCC having no commercial interest remaining. Without a commercial interest in ACL at least one of the planks of the original JR defence fails.

There's clearly an argument to be had, hence the pending court case - whether you think it's likely to be successful or not is a matter of opinion.

And you're absolutely right, I wouldn't agree that having a £14.4 million loan guaranteed by a business entirely reliant on one man's genorisity, with the only security being the reversion of a lease that you may not be able to sell to another customer (or for anything like the same amount), is in any way a good deal for the council.

Clearly if cheaper commercial funding for the mortgage was available elsewhere Wasps would avail themselves of it. They're not here to prop up the council. The fact that it isn't should point to the risk involved and that commercial banks would likely steer well clear of it at the rates the council is offering.

Edit: Actually, it's not a continuation of the existing loan, because the terms have been altered too. So in effect it's either an amended or new loan. I'm not saying the JR will succeed by the way, but clearly there's a case to present.

duffer · Apr 21, 2015

Regardless of all of the ACL/SISU/CCC opinions, I hope West Ham fans don't end up in the same boat as us, wishing they'd never left their home...

Deleted member 5849 · Apr 21, 2015

duffer said:
Regardless of all of the ACL/SISU/CCC opinions, I hope West Ham fans don't end up in the same boat as us, wishing they'd never left their home...

I fear they will however. To me it looks worryingly similar to us, hopping elsewhere for a short term cash influx (allowing Gold and Sullivan to flog the club at a big profit?) and then wondering what to do after that cash is used up.

lordsummerisle · Apr 21, 2015

oldskyblue58 said:
The second JR case is based on the Wasps deal but if the loan was at commercial rates ie 11% over 20 years with an upfront £1m payment

Is that what the loan terms are?

Hobo · Apr 21, 2015

You don't have to get it signed off if it does not constitute state aid. The EU guidelines state that if their is any doubt it might be state aid that is when you put it to the commission to get it signed off. As CCC were adamant it wasn't State Aid (and they work in this arena with businesses all the time) they obviously felt it wasn't necessary.

so far the courts have supported them in that it was not state aid. Even if a court in the future decided it was state aid compensation is not necessarily a given outcome, but could be a possibility.

fernandopartridge · Apr 21, 2015

As far as I'm aware the EC doesn't proactively 'sign off' state aid. It leaves the member states through their own authorities to notify them if they believe it is state aid. The council didn't believe it was state aid and therefore didn't notify.

Edit - hadn't read Hobo's post above

fernandopartridge · Apr 21, 2015

duffer said:
Regardless of all of the ACL/SISU/CCC opinions, I hope West Ham fans don't end up in the same boat as us, wishing they'd never left their home...

They most certainly will

Skyblueweeman · Apr 21, 2015

Ok, so to summarise, the council didn't believe it to be state aid so assumed no sign off was necessary, either by the EC or the member states authority (which in this case I assume was the UK Govt/Dept CM+S)?

The courts agreed with the council so all hunky-dory, right?! In our case anyway...

Deleted member 5849 · Apr 21, 2015

As an aside, still not entirely sure what's wrong with a bit of state aid myself.

Had the Ricoh had some when it was built, the football club might not have had to be tied into such a horrible deal, after all!

And the ensuing commercial struggle may not have ever happened...

Sky Blue Dal · Apr 21, 2015

oldskyblue58 said:
Doesn't the signing off only come in to play as far as SISU vs CCC is concerned if the transaction was deemed to be state aid though? The Judge was specific in saying the transaction was not state aid at all and therefore no signing off by the EU was relevant. The case never got as far as challenging the prior signing off by EU because of that

This is what I thought? The judge in some words said that it was not classified as state aid.

I remember asking this question during the JR hearing of whether the CCC had got permission from the EC to use state aid in which I got a reply from someone who has knowledge on this that if the judge agreed it was state aid was used then it would be illegal.

chiefdave · Apr 21, 2015

State aid seems a bit arbitrary to me. CCC claimed we couldn't own 50% of the freehold, which was the original plan, as it would constitute state aid. Yet loaning ACL millions to purchase a lease on that freehold is not state aid. Where does that line get drawn. Strikes me that some of it is a judgement call and SISU are going to keep going in the hope they get the right judge in the right mood for things to go their way.

oldskyblue58 · Apr 21, 2015

certainly not a straight forward area of law

When the CCC said that they couldn't own it were they being asked to sell 50% to CCFC or were they being to give it to CCFC? One would be state aid the other not. The club could not afford to buy it could they?

I know people will say CCFC paid out for the initial development but there were amounts owed against that that were netted off. The overall cost to CCFC was around £300k and most of that was interest on debt

skybluetony176 · Apr 21, 2015

chiefdave said:
State aid seems a bit arbitrary to me. CCC claimed we couldn't own 50% of the freehold, which was the original plan, as it would constitute state aid. Yet loaning ACL millions to purchase a lease on that freehold is not state aid. Where does that line get drawn. Strikes me that some of it is a judgement call and SISU are going to keep going in the hope they get the right judge in the right mood for things to go their way.

I think you're getting ahead of yourself there. They've got to find a judge first to overturn the decision that they don't have the right to appeal before they can appeal. IIRC the count of judges to say no is four, five if you include the judge who said that they didn't have grounds to pursue the JR in the first place. Didn't another judge also say there was no grounds for JR2 (J hardeR) until JR1 appeal process was completed? I have no idea how many judges there are in the UK but SISU are going through them at a fair old rate.

oldskyblue58 · Apr 21, 2015

Think the SISU tactic is more basic than that..... I think they will keep going until they get some sort of settlement to go away

I also think there is a difference between a legal opinion and an everyday one. The facts of the case or the timeline it covers is not going to change. In arriving at his legal opinion the judge has to apply the law to the facts at the time of the events. Very few appeals are successful there is a good reason for that I feel

an interesting law term is "SLAPP action" in this respect

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