No hope of ITV Digital money for City
CHRIS LAKEY Norwich City's hopes of recouping some of the money lost from the collapse of the ITV Digital deal four years ago were dashed yesterday when the Football League won claims for professional negligence against its former legal advisers, but lost its £150m damages claim.
Norwich City's hopes of recouping some of the money lost from the collapse of the ITV Digital deal four years ago were dashed yesterday when the Football League won claims for professional negligence against its former legal advisers, but lost its £150m damages claim.
Instead, the League faces multi-million legal costs bill after being awarded just £4 - which amounts to five and a half pence for each of its 72 member clubs.
“If the League had been successful it could have been a windfall,” said City's chief executive Neil Doncaster. “It would have been very, very helpful but it is not to be and we are no worse off than we were yesterday.
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“It is clearly disappointing from the League's point of view and also the clubs' point of view. But we did not budget for anything, which was the prudent thing to do.”
The Canaries lost an estimated £4m in revenue when ITV Digital went under, but were able to keep the wolf from the door with the sale of residential land close to the ground and £2.2m from a share issue which, said Doncaster were “all part of the financial mix” at the time.
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Belts were tightened across the board, but they were not alone: many clubs had invested in players and ground improvements that they could not afford when the television money dried up.
The Football League's case had been hailed as one of the largest professional negligence claims ever made against solicitors - the firm of Edge Ellison, which advised the League over the collapsed £140 million deal.
Mr Justice Rimer found that there had been two breaches of duty. But he ruled that neither caused any substantial damages and awarded the League just a nominal £2 for each breach.
He said: "I have found that in two respects Edge Ellison breached the duties they owed to the Football League Limited in relation to the grant of the television rights.
"But I have also found that neither breach caused any substantial damage."
Mr Justice Rimer said the League had lost its claim for substantial damages and should pay Edge Ellison 90pc of its costs.
This leaves the Football League liable for most of the legal costs of the case which legal experts say could be as high as £5 million.
The League, which represents teams in the lower three divisions outside the Premiership, sued Hammond Solicitors - who at the time were known as Edge Ellison - over its failure to secure a payment guarantee from ITV Digital's backers, Carlton and Granada.
The pay-TV firm collapsed in early 2002 because it could not afford payments to the Football League.
Football League chairman Lord Mawhinney said after the verdict: “We are obviously disappointed by this verdict. Subject to considering possible grounds for appeal The League will draw a line under this matter and move on.
“The collapse of ITV Digital marked a watershed for The Football League and its clubs. In the years since, The League has re-branded and delivered a programme of good governance reforms designed to deliver financial stability and long-term sustainability to its clubs. This will continue.”
At a hearing in February this year, the League's counsel, Justin Fenwick QC, said his client had suffered a loss of £140m. The League was seeking this amount in damages plus interest, taking the figure to nearer £150 million.
OnDigital was launched in 2001 to challenge BSkyB's coverage of sport in Britain, particularly soccer, but collapsed after it was rebranded ITV Digital in 2002.