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KEVIN KEEGAN V NEWCASTLE UNITED FOOTBALL CLUB LIMITED AND ALAN CURBISHLEY V WEST HAM UNITED FOOTBALL CLUB PLC: MANAGERS MUST HAVE THE FINAL SAY ON TRANSFERS INTO AND OUT OF THE CLUB

Introduction
Two recent high profile cases involving former Premier League managers have established the principle that the right for a manager to have the final say on the transfer of players into and out of their club is a fundamental term of the manager's service contract with that club. The breach of such a fundamental term was held in both cases to repudiate the manager's service contract, entitling him to resign and bring a successful claim for constructive dismissal. Both cases raise the importance for clubs and managers to expressly specify which aspects of a manager's role are to be included within his duties, and which aspects are to be excluded. This is especially important when complicated management structures are in place at clubs, such as the one used during Keegan's second reign as manager of Newcastle United.

Kevin Keegan v Newcastle United Football Club Limited

Background
On 30 August 2008, the Director of Football, Dennis Wise, informed Keegan that he had a great player for the club to sign in the name of Ignacio Gonzalez. Keegan's studying of the player was limited to video clips on 'You Tube'. Keegan found the clips to be of poor quality and provided no proper basis for signing a player. Furthermore, no one at the club had ever seen Gonzalez play. On this basis, Keegan made it clear not only to Wise but, also to the club's Vice President (Player Recruitment), Tony Jiminez, and the owner, Mike Ashley, that he very strongly objected to the signing of Gonzalez. Nevertheless, on 31 August 2008, the club signed the player on loan with an option to purchase.

Although Keegan had concerns about the nature of the deal (it was a favour to two influential South American agents who, in return, would look favourably on the club in the future), his main objection was that it breached a term of his contract which stated that he, as manager, would have the final say on transfers into the club. He therefore concluded that he had no choice but to leave the club, as his employer had breached a fundamental term of his contract, thereby repudiating it, meaning he was entitled to resign i.e. he had been constructively dismissed.

Keegan claimed loss of salary and benefits in the sum of £8,607,534, and "stigma damages" on the basis that, as a consequence of his resignation, he had found and would continue to find it difficult to obtain work as a top flight manager up to his 65th birthday, in the sum of £16,500,000.

Constructive Dismissal
In considering Keegan's claim, the Tribunal decided that the starting point was his service contract, which stated that he would perform "the duties as may be usually associated with the position of a Manager of a Premier League Football Team".

The pertinent question was, therefore, what are these duties. The Tribunal did not consider that it was implicit in the proposed structure of the club that Keegan would not have this final say. To evidence this, it was noted that Keegan's successor, Joe Kinnear, asked for and was given this final say, yet the 'continental' structure referred to was still in place during Kinnear's reign. The Tribunal also concluded that Keegan would not have accepted the job as manager if it had been implicit in what he was told that he would not have this final say.

Furthermore, none of the club's witnesses could identify a scenario from which it would have been implicit that Keegan would not have this final say. In fact, public statements by the club to the media stated expressly that Keegan would have this final say, and an explanation by the club that these statements were simply public relations exercises was found to be profoundly unsatisfactory.

The Tribunal considered it probable that Keegan reasonably and genuinely inferred from a meeting he had to discuss his potential appointment that he would have this final say, since his contract stated that he should perform the usual duties of a Premier League manager, and nothing was said expressly in contrast to this by the club's representatives.

The Tribunal therefore concluded that Keegan's contractual duties included the right to have the final say as to transfers into the club. The removal of this right by signing a player against Keegan's wishes was held to be a fundamental breach of contract, meaning the contract was rescinded and Keegan could bring a claim for constructive dismissal.

The important points for clubs to take away from this finding are that, if they do not want their manager to have the final say on transfers, this should be expressly stated in their service contract, and no public statement to the contrary should be made. The inner workings of continental management structures such as those in place at Newcastle United during Keegan's reign, should be made clear to the manager, preferably in his service contract. Otherwise, the club is opening itself up to the risk of certain aspects of the manager's role being implied into the usual duties of a Premier League manager, with the removal of such aspects allowing the manager to resign and bring a successful claim for constructive dismissal.

Restrictive Covenant
Keegan asserted that the contractual restriction on him working or being employed by any other Premier League football club for a period of six months following the termination of his contract, was unreasonably wide and, therefore, an unlawful restraint of trade, as it would prevent him from working or being employed by such a club in any capacity.

The Tribunal concluded that the prospect of Keegan being employed by such a club in a role other than as manager, coach or director of football, was more theoretical than real.

Furthermore, it decided that the restriction was not, in any event, unreasonable. Keegan would have been of value to another Premier League club, to the detriment of Newcastle United, in some capacity other than as manager, coach or director of football, and he would have taken with him knowledge about Newcastle United which would have been valuable to another Premier League club, such as whether certain players were unsettled.

Finally, the restriction did not prevent him from taking up such a role with clubs outside of the Premier League, nor did it prevent him from negotiating to enter into such a role at a Premier League club after the expiry of these 6 months.

The Tribunal therefore concluded that the clause was valid and enforceable. This sets a precedent for other clubs to rely on similar clauses in their manager's service contract, and offers some comfort to Newcastle United in this case. Managers should, however, be aware that such clauses are enforceable (provided that they are reasonable), and that they should seek to negotiate these points at the outset of their appointment to ensure that they are only subject to the least onerous restrictions possible.

Payment in Lieu
Clause 14.8.1 of Keegan's service contract stated that:
"In the event that the Club terminates this Agreement or requires Kevin Keegan to cease being the Manager of the Club at any time during the Term, other than where the Club has grounds to dismiss Kevin Keegan pursuant to Clause 14.1, the Club shall pay to Kevin Keegan pursuant to Clause 14.8.4 a sum of £2 million…("Payment in Lieu)".

The Tribunal concluded that this clause was intended by the parties to be wide enough to include constructive dismissal, and was, therefore, applicable in this case.

Keegan contended that the sum of £2 million was unenforceable because it was not a genuine, pre-estimate of loss but, instead, was a penalty clause. The Tribunal considered that it would have been impossible for the parties to estimate precisely what this figure should be. The approach taken, to provide Keegan with the equivalent of six months' salary (£1,500,000) plus a further £500,000 in order to give him a cushion in the event that he did not take up other employment as soon as the six month period expired, was held to represent a reasonable pre-estimate of the loss as far as was at all possible. This clause was, therefore, enforceable.

This, again, offered some comfort to Newcastle United, and should be of note to both clubs and managers. The fact that a pre-estimated cap on compensation can be legally binding may result in more clubs adding such a clause to the service contract of its future managers. This is, therefore, another point which managers should seek to negotiate in order to be entitled to the maximum level of compensation upon termination of their appointment in certain circumstances.

In order to claim damages beyond such a cap, it seems that managers will have to prove that their reputation has been damaged significantly by the actions of the club, and that this will make it difficult for the manager to obtain alternative employment in the future. This point was argued without success by Keegan.

Alan Curbishley v West Ham United Football Club plc

Alan Curbishley was appointed as West Ham's manager in December 2006. In September 2008, he resigned from his position following the sale of Anton Ferdinand and George McCartney to Sunderland against his wishes, and claimed constructive dismissal.

Curbishley's claim appears more clear cut then Keegan's. Rather than relying on a clause in his contract stating that he shall perform "the duties as may be usually associated with the position of a Manager of a Premier League Football Team", and then arguing that these duties included having the final say on transfers out of the club, as Keegan had to in relation to transfers into the club, there was a specific clause in Curbishley's contract stating that "the Manager alone shall select players for [the Club] to transfer to and from the Club".

West Ham denied that Curbishley had been constructively dismissed and, instead, contended that Curbishley himself was in breach of his service contract, and counterclaimed compensation.

The Tribunal found that West Ham had acted in breach of the above clause, and this amounted to a repudiation of Curbishley's contract, therefore entitling him to resign and be awarded compensation for his constructive dismissal. It was held that Curbishley was not in breach of the service agreement, and the counterclaim was dismissed.

Interestingly, the Tribunal further noted that there was in fact a clause in Curbishley's contract specifically designed to avoid this situation arising, namely that the Manager had to carry out a reasonable order or direction given to him by the Board or given to him by the Board through the Deputy Chief Executive. Instead of exercising this power, the executive directors attempted to override Curbishley's right to the final say on transfers by selling players against his wishes.

Conclusion
As the amount of money in football has continued to increase in recent years, more and more people have become involved in running clubs on and off the pitch. The influence of hands on owners and continental management structures appear to have diluted the authority of arguably the most important person at every club: the manager.

Managers will, therefore, take comfort in these decisions, which respect their right to have the final say on one of the most important aspects of their job, and one by which they often live or die - transfers into and out of the club.

However, clubs will take reassurance from the conclusion in the Keegan case that a payment in lieu clause, in which the figure in question is a genuine pre-estimate of the relevant loss, will be valid in the event of a constructive dismissal, as will a reasonable restrictive covenant.

Following the outcome of the Curbishley case, Richard Bevan, the chief executive of the League Managers' Association, said that "The findings of the tribunal demonstrate the critical importance of respecting contracts which need to set out the roles and responsibilities of the parties in clear and unequivocal terms." In other words, if a club want to ensure that its manager undertakes specific tasks or, more importantly, does not want its manager to undertake certain tasks, then this must be expressly stated in the manager's service contract. The contractual rights of both parties must then be exercised and respected, in order to avoid similar public fallouts in the future.