FREQUENTLY ASKED QUESTIONS
WHY WAS THE LMC INCORPORATED?
The LMC was birthed to prevent the almost total collapse of the Nigerian Premier League (NPL) which was plagued by legal, contractual, administrative and financial impediments.
The Nigerian Football League (NFL) managing the premier league (NPL), having been declared an illegal body by the Federal High Court in Abuja in the matter of Dr. Sam Jaja v. the Nigerian Football League and 4 others (Defendants) Suit No. FHC/ABJ/CS/179/2010), just awaits the formality of liquidation/striking off the register of the Corporate Affairs Commission. The troubled Nigerian Football League (NFL) which it operated would likewise be liquidated with it, being one of its assets.
As a responsible group mandated to reform the league, the Interim Management Committee (IMC) which was inaugurated and empowered by the football governing body with the support of the Nigerian Sports Commission (NSC), cannot perpetuate illegality, nor can it run football in a vacuum. It therefore seized the opportunity of that vacuum to initiate the process of running our football league according to best practice known all over the world, e.g. the English Premier League, the Bundesliga, the South African Premier Soccer League, to the Kenyan League etc., which was to incorporate a company (properly) and procure the license of the Football governing body, the NFA, to run a transparent and ultimately commercially viable professional premier league.
The IMC therefore, supervised the formation and incorporation of the League Management Company (LMC), especially in light of the fact that the Federal High Court in Abuja had declared both the NFL and NPL as illegal bodies and so not competent to further manage the league.
What is the vision of the LMC?
To introduce a corporate governance culture which will guide its internal management style and coordinate the smooth running of the league;
To restore the integrity of the beautiful game in the professional and elite class;
To strengthen the developmental process of young footballers who will feed into the professional teams;
To bring transparency and credibility to the management of the league;
To return professionalism to the premier league thereby bringing it in line with international best practices resulting in optimum commercial benefits for the premier league and Nigerian Football;
To enhance the commercial potentials of the premier league and ensure an equitable distribution of the derived income therefrom, as well as creating employment across the country.
WHAT HAS THE LMC DONE SINCE ITS INCORPORATION?
The LMC has literally hit the ground running. In its quest to restructure the league, its first task was to systematically navigate the legal minefield left by the NPL to enable the clubs play football in the premier league this season. They have started to play in this league and are now enjoying the benefits of a transparent and well organized league.
Private funds have under the auspices of the LMC been advanced to ensure the current league commenced and has been kept running after a near five-month delay occasioned by crisis of confidence precipitated by off-the-field management issues. The clubs have already benefitted from this funding and do not need to pay the emoluments of the match officials as they did in the past.
The LMC is in the concluding phase of re-negotiating the terms and conditions of the Title Sponsorship Contract as well as the Broadcast Rights Contract, both of which remain veritable sources of robust income for the participating clubs in the league, but unfortunately, has seen its true value eroded by petty squabbles and poor business judgment calls. The LMC has now brought these contracts more in line with equitable commercial terms that not only benefit the league but also are in compliance with the laws of the land.
This process of restructuring the league is ongoing. A new league rules framework which includes criteria for the qualification and licensing of clubs within the premier league to bring participating clubs in line with what they have always been meant to be, that is, responsible employers of labour able to meet all statutory obligations to its employees including paid holidays, annuities, health schemes and ensure transparent accounting standards to assure investor confidence. The new rules will guarantee that 5% of the income of the LMC is dedicated to a robust youth development program to identify more exciting new talents for the participating clubs and the country.
New windows of opportunities aligned for increased income for the participating clubs, referees and local broadcasters to partake in the robust financial fair that is envisaged.
WHAT BECOMES OF THE NIGERIAN FOOTBALL LEAGUE/NIGERIAN PREMIER LEAGUE?
The judgment of the Abuja Federal High Court mentioned earlier, erodes completely the identity and legal capacity of both the NFL (or NPL as it was sometimes referred to) critical to the organization and management of professional football in Nigeria.
At page 51 of the judgment, Hon Justice D.U. Okorowo, declared as follows concerning the NFL:
“3. That the incorporation of the 1st Defendant (NFL) as a company with the 1st and 2nd Defendant as the only subscribers to its Memorandum and Articles of Association is tantamount to incorporation by one person and thus illegal and void in so far as the 1st Defendant was not a legal person at the time of the subscription to the Memorandum and Articles of Association.”
Finally, at page 52, the Court specifically directs the Corporate Affairs Commission (CAC) (5th Defendant) as follows concerning NFL Ltd,
“7. That the 5th Defendant (the Corporate affairs Commission) is hereby mandatorily directed to immediately commence steps for winding up of the 1st Defendant (NFL) for infraction of the provisions of Companies and Allied Matters Act.”
In summary, the Federal High Court declared that:
1. the Nigeria Football League Ltd is an illegal body. Having been incorporated in contravention of the law of the land, the Court ordered its winding up because it has no corporate personality and is unknown to Nigerian law.
2. Nigeria Premier League (a creation of the illegal NFL) has no corporate personality and is unknown to Nigerian law.
3. No aspect of the administration or management of football in Nigeria can be conducted in the names of either NFL of NPL.
4. This judgment has not been overturned on appeal and remains valid.
THE ROLE OF NPL/NFL CONGRESS TODAY?
The existence of a congress is an aberration in the management of a limited liability company. The Abuja Federal High Court judgment, amongst other things, also ruled that elections to the Board of the NFLL (an illegal and non-juristic body), can only have been conducted in accordance with the Memorandum and Articles of Association of the company and the provisions of the Companies and Allied Matters Act, rather than by guidelines issued by a purported electoral committee. What this means is that the electoral committee which constituted a Congress for the NFLL was not competent to issue election guidelines and qualify candidates for the Board of the NFLL and thus the so-called Congress was an invalidly constituted body.
The LMC is preparing a Code of Governance which would govern the day-to-day operations of the company. In the Code, there would be a Board of Directors to which different stakeholders reflecting a wide spectrum of the public may be elected and guide a board of Executive Directors employed from relevant industries.
WHO OWNS THE LMC?
The Nigeria Football Association Act, 1990, gives the sole power to organize football in Nigeria to the NFA, statutorily making the NFA the single body allowed to regulate football in Nigeria. Consequently, the League is owned by the NFA. The NFA has issued a license to the LMC to manage the Nigerian Professional Football League (the Premier League), for the purpose of developing our league to international standards.
The League Management Company will be owned by four categories of interests, namely: the Nigerian Football Association; Participating Clubs; Institutional Investors and the general Nigerian Public.
Only clubs which qualify for membership under the new guidelines and rules will be admitted to participate in the Nigerian Professional Football League -The Premiere League. As of now, the LMC is developing the modalities of including willing Nigerians, the true owners of our football, in its ownership.
In compliance with the provisions of the Companies and Allied Matters Act, 1990, 25% of the shares of the company were allotted to the promoters of the company. Thus, the NFA Chairman, as the representative of the NFA holds 5% of the allotted shares, whilst the Rt. Hon. Nduka Irabor, as Chairman of the caretaker League Management Committee (LMC) holds 20% of the shares. All these shares, totaling 25% are held in trust. The shares held by Rt. Hon. Nduka Irabor on behalf of the LMC, will be relinquished as soon as the board of the company is constituted. A sworn affidavit to this effect has been deposited at the rightful public depository.
Also, shares held by the participating clubs will be held only by clubs in the NPFL. Upon relegation from the premier league, a relegated club will give up its shares and transfer them to a club taking it’s place in the league.
In summary, the LMC is an institutional body that will manage and regulate the top tier of Nigerian Football. Aside from the NFA which holds 5% preferential shares of the company, the LMC does not belong to any particular persons or group of people. The football clubs who are the main shareholders of the company, will change from football season to season depending on their standing in the league table and their compliance with other license conditions.
How would the Board of the LMC be constituted?
The plan is to have a Board of not more than six persons made up of the Chairman of the Board who must be a fit and proper person and is conversant with fiduciary responsibilities and corporate governance ethics.
Other members of the Board will be the appointed the Chief Executive Officer of the company, two persons representing the interests of all the participating Clubs on the Board, the NFA (more commonly known as the NFF) who own 5% preferential shares of the LMC and whose seat on the Board is to ensure compliance with football rules, one person representing the general public interest upon invitation and finally, a member representing the investing publics.
WHAT IS THE CRITERIA FOR ADMISSION TO THE NIGERIAN PROFESSIONAL FOOTBALL LEAGUE (THE PREMIER LEAGUE)
The LMC is developing a Rules Book which outlines, amongst other things, the criteria for participation of clubs in the NPFL. Some of these criteria include: financial strength which would require bank certified evidence of ability to meet certain minimum conditions and obligations to club employees, ownership or long term access to FIFA standard stadia, subscription to an acceptable Corporate Governance Code, a verified youth development program within the first two years of admission to the NPFL, etc.
The clubs would be expected to be legally incorporated entities who may or may not include government or its agencies as members but with limited ownership by government or its agents to a maximum of 30%. The reason for limiting government’s ownership involvement is to prevent over-reliance on government funding which appears to have stifled creativity and vigorous marketing efforts.
What are the essential features of the LMC’s Corporate Governance Code?
The Corporate Governance Code of the LMC will set outs guidelines and standards which must be observed by the company for the sustainability of long term high quality company performance in relation to accountability, leadership, effectiveness, remuneration and the company’s relationship with football stakeholders.
Being a private limited liability company, the LMC is not required by law to observe a Corporate Governance Code, but in full appreciation that the true ownership of football in Nigeria belongs to the Nigerian people, has chosen to adopt a code in line with best international practices.
When will the NPFL start to run profitably?
Realistically, we do not envisage to break-even before the 2015/2016 season. This is because existing sponsorship contracts and other existing earning streams have limited the ability of the league to reach its full earning potentials before that time.
The LMC must however, use this period to develop the league, sensitize the public and football stakeholders, encourage subscription and expressions of interest. We believe that institutional investors will develop interests in the league once they see a properly managed and governed league run with integrity, transparency and professionalism. These we are convinced will be achieved by showing credibility of match outcomes, sustainable moral persuasion, criminalizing unethical conducts, enhancing match officials emoluments, closer monitoring and enforcement of rules and observing a corporate governance code.
We expect the LMC to generate income in excess of N3 Billion Naira from the end of the 2014/2015.