It’s no secret that gambling has become a huge part of football. With over £349 million in kit sponsorship being paid to Premier League football clubs in the 2019/20 season alone, it is clear that betting companies and the gambling sector as a whole make a significant contribution to the ongoing financial sustainability of professional football.
Because of this, there is no shortage of opportunities for those operating as intermediaries to make lucrative introductions between betting firms and football clubs. Where there are such large sums at stake, however, it is important to ensure any rights to commission for such introductions are properly protected.
Last week, sports intermediary ‘Winlink Marketing Limited’ had their claim for commission against Liverpool FC dismissed in its entirety due to what was, in essence, lack of contractual certainty.
Winlink brought a claim for breach of contract against Liverpool FC, claiming commission of £1.125 million said to be due following the introduction by Winlink of BetVictor to Liverpool who went on to sign a £15 million sponsorship agreement with the club.
Liverpool argued that, despite there being an introduction agreement in place stating that Winlink would be entitled to commission if it introduced BetVictor to Liverpool FC and Bet Victor and Liverpool FC subsequently went on to enter into a sponsorship agreement, the agreement was subject to an implied term that required Winlink not just to make the introduction but also to be an effective cause of them entering into the sponsorship agreement with BetVictor (which they argued Winlink was not).
The judge found in Liverpool’s favour and ruled that because the appointment of Winlink as an intermediary for Liverpool FC was non-exclusive, this plainly created the risk of having to pay two commissions unless the introduction agreement was subject to an effective cause qualification, not least because Winlink has a number of direct competitors in the sports intermediary market. The alternative argument, i.e. that Liverpool would want to pay commission to intermediaries for introductions that were not an effective cause of any sponsorship agreement they entered into ““ma[de] no commercial sense, [was] unreasonable to a high degree and would have made no commercial sense to either party at the time the IA became binding between them.”
The judge also ruled that the introduction agreement lacked commercial coherence if it was not taken to include an implied term to the effect that a commission would only become payable if BetVictor and Liverpool FC entered into the sponsorship agreement as a result of the introduction by Winlink. He therefore implied such a term in order to “give effect to what was so obvious that it goes without saying and so prevent it from taking effect in the entirely unreasonable and uncommercial outcome that would otherwise result.”
Having decided this issue in favour of the club, the judge went on to find that Winlink was not an effective cause of the sponsorship agreement being entered into – they had not had any involvement in the negotiations between BetVictor and the club and the effective cause was instead the long-standing, close relationship between one of Liverpool’s marketing executives and the CEO of BetVictor and certain market conditions at the time – and the claim was dismissed.
Lessons for sports rights holders and intermediaries
This judgment will be of significant interest to sports rights holders, like football clubs, who use intermediaries, and indeed to the intermediaries themselves. This case makes it clear that absent an express term which clearly sets out the mechanics of any commission, the court may imply an “Effective Cause” clause into any introduction agreement. The consequence of this will be that direct involvement in a deal will be required to be entitled to any such commission.
Whilst this was a fact-specific decision, it is useful reminder to all intermediaries (not just those in the sports industry) of the importance of contractual certainty. A clear contractual term expressly stating that commission is due upon an introduction and, importantly, stating there to be no need for the introducer to be an effective cause of any agreement entered into, will add much needed protections to prospective introducers.