01 August 2014
The Suarez incident triggers a number of legal, governance and compliance issues
On 24 June 2014 Luis Suarez, Liverpool FC and Uruguay’s prolific striker and prized asset, bit Italy’s Giorgio Chiellini in the final Group D game of the World Cup. The day may go down in football, legal and business history as audiences around the globe witnessed the events unfold. FIFA soon launched disciplinary proceedings. Suarez subsequently received a four-month ban from all football-related activity including training and a nine-month ban from international matches.
Suarez’s behaviour may lead to various employment-related issues with his employer, Liverpool FC. His behaviour would ordinarily be viewed as gross misconduct, even though the incident took place at a time when the player was not representing the club. The issue for Liverpool FC is whether the actions of its employee have brought the business and its reputation into dispute.
The fact Suarez was not dismissed for a similar incident involving Chelsea’s Branislav Ivanovic back in 2013, following which he received a 10 match ban, also needs to be considered – not to mention a third related incident in 2010 when he was playing for Ajax in Holland.
The nature of Suarez’s ban means he is unable to perform his employee obligations in the usual way. This could mean that his contract of employment has been frustrated, leading to claims of breach by Liverpool FC. Employers in these circumstances would usually consider fining employees, or refuse to pay them during this period. Liverpool may have elected to go down the route of imposing a fine, rather than take the ultimate stance of arguing that the contract must come to an end, because this would risk the loss of the transfer fee from his recently-agreed move to Barcelona.
However, Suarez remained in Uruguay and Liverpool did nothing at all, making it more likely that this would result in claims that the club has waived any breach of contract by virtue of their lack of action. Other than to say that they wish him and his family well in their new life in Barcelona, Liverpool FC have refused to comment on the incident itself in any real depth. Given the other business considerations this may have been a tactic Liverpool FC were happy to employ.
In terms of Suarez’s own reputation, all footballing ability aside, he has potentially reduced his chances for future employment, both with other football clubs and in other opportunities when his playing career comes to an end.
That said, the football world is often an anomaly. Ex-England international Rio Ferdinand has taken a prominent role in the BBC’s coverage of the 2014 World Cup as a pundit, yet he was banned for nine months in 2003 after missing a drugs test. Perhaps the football community is more forgiving than other industries. Employees in the real world should carefully consider their actions and the reputational risks.
Convictions or punishments of varying natures in most professions are likely to result in the employee being seen as damaged goods. This will often result in having to make a career change in order to secure future employment.
What is clearer, however, is that the initial defence given by Suarez, that he lost his balance and stumbled onto his victim’s shoulder, will have done little to turn the tide of ill feeling. Such comments made in public could ultimately reflect as badly upon the employer as the individual in question.
Liverpool did state that no one player is bigger than the club – after a figure for Suarez’s sale had been greed with Barcelona. On the flip side, Liverpool will have had to assess their own reputational risk as a result of Suarez’s actions and how this can be managed internally, by virtue of any punishment that may still be handed down, and externally to the wider public.
Business fall out
Reputation and finances often go hand in hand. Liverpool’s sponsors, corporate partners and affiliates may have expected more decisive action. How should these concerns be balanced against those of its directors, shareholders and ultimate owners?
Third parties such as Sky TV may have decided not to televise Liverpool games as a stand against the player’s behaviour and the club’s lack of action. This would impact on revenue streams. Will the providers of the Champions League coverage, a competition the player will now miss the start of as a result of his ban, take a similar stance? Given the world of football seems to immediately forgive and embrace its villains as heroes when they score a winning goal this is unlikely.
There has been no indication yet that Liverpool FC has suffered any financial losses due to terminated sponsorship agreements. However online gambling firm 888poker, for whom Suarez was a worldwide ambassador, has terminated his role. There are also suggestions that Suarez’s boot deal with Adidas could be at risk as the manufacturer announced it would be considering their partnership. For the player, the financial consequences of his actions, aside from any sanctions Liverpool might impose, could be substantial.
The club has assessed the transfer value of their most lucrative asset, and how this has been affected by the fact that Suarez cannot kick a ball until October. There may be a case for Liverpool suing Suarez for the drop in any transfer fees but this will be difficult to prove and is unlikely now that a sale price has been agreed.
Speculation will remain as to whether Suarez’s ban resulted in a lower transfer fee than would otherwise have been expected, especially in light of Suarez’s excellent 2013/14 campaign that propelled Liverpool, for a time, to the highest echelons of the Premier League. Equally if Suarez’s involvement after the group stages had helped Uruguay to sustain a longer involvement in the World Cup this fee could have risen.
Given the debate the matter has caused in this country, Liverpool’s decision to sell regardless of the potentially reduced fee they received, is probably a wise one as it means that Suarez is no longer the club’s problem.
For most organisations employing someone of Suarez’s fame and stature will happen infrequently if at all, but they may employ those with similar behavioural traits or reputation. Having an awareness of these issues and the wider consequences of employee-related incidents, as well as balancing the competing interests in any given matter can be a tough task.
Glenn Hayes is Employment Partner at Irwin Mitchell