UK Sport bosses say British athletes will suffer if Jess Varnish wins legal case

UK Sport boss Liz Nicholl has denied threatening Jess Varnish with bankruptcy in their legal dispute, but warned there would be "significant implications" if the former track cyclist wins.

Earlier this month at a hearing in Manchester, Varnish defeated a UK Sport attempt to have her case against the elite funding agency and British Cycling thrown out at the first hurdle.

The judge is understood to have also rejected UK Sport's applications for costs and deposit orders, which Varnish's camp say would have forced her to drop her case for detriment for whistle-blowing, sex discrimination, unfair dismissal and victimisation.

Speaking to reporters at Manchester's National Cycling Centre, however, Nicholl said UK Sport had not used such an aggressive tactic.

" There's been no deposit order or anything other than our legal advisers corresponding with her side to say if the case, if heard, is found to be unreasonable, we will have incurred costs," Nicholl said.

"So it was alerting them, as a courtesy, there would be a decision on whether costs could be claimed - my understanding is this was a courtesy from one legal adviser to another about where costs might fall."

Having won the first round in court, Varnish must persuade another preliminary hearing in April that she worked for British Cycling and UK Sport, and her grievance should be heard in an employment tribunal.

Under the current regime, British athletes are treated as freelancers and their funding is provided as a tax-free grant.

What might seem like a technicality is, in fact, the crux of a case that could transform the British Olympic and Paralympic system which UK Sport funds with National Lottery and exchequer money - a system that has propelled Team GB and ParalympicsGB up the medal table since its creation in 1997.

Varnish started her action after she was dropped from the British team in April 2016, only four months before the Rio Games. She later accused the team's ex-technical director Shane Sutton of doing this as revenge for criticising coaches and said he used sexist language towards her.

When those allegations were combined with further claims from other athletes of bullying and discrimination, Sutton was suspended and then resigned, with an investigation later criticising his behaviour and the governing body's handling of her case, although it did clear him of most of the allegations.

The 27-year-old Varnish is adamant she is not doing this for financial reasons and wants to change the system so athletes can enjoy the same protection, under law, as other employees. Nicholl, on the other hand, sees it very differently.

"There are implications and they are quite significant," she said on Monday.

"If it is decided it's an employment scenario, there are other costs that will be incurred - National Insurance, tax, pensions and so on - and managed within a fixed budget.

"I don't think it's a debate we need to have. The principle of athletes feeling as well supported as employees is the fundamental point here, and that's what the duty of care work we are doing - and focusing on - should address ."

Unsurprisingly, UK Sport's new chair, former Olympic rower Dame Katherine Grainger, agrees.

Grainger, in Manchester for this week's World Class Performance Conference, explained she can remember the pre-Lottery era and knows the impact UK Sport funding has had on British sporting fortunes.

"With a limited amount of money - public money we have to be accountable for - how much should be put aside for athletes when they stop competing against what we do for athletes in the system now? Where are the priorities?" she asked.

"My general feeling is athletes would be reluctant to change what they have at the moment."