Editor’s note:Pedro is an intern at the Asser Institute and currently studying the Erasmus Mundus Master Degree in Sports Ethics and Integrity (KU Leuven et al.) He was one of the participants of the first edition of the Summer Programme on Sports Governance and Human Rights.

In early September, the first Summer Programme on the Governance of Sport and Human Rights took place at the Asser Institute. During one week, various experts in the field presented different lectures to a very diverse group of participants with a wide range of professional backgrounds. Being a participant myself, I would like to reflect on this one-week course and share what I learned.

Day I – Sport and human rights, more than a current debate

Over the last few years, social media, newspapers and academia have increasingly paid attention to the relationship between sport and human rights. On this first day of the course, we had the opportunity to understand the roots of this debate and its importance. Stephen Cockburn, Head of Economic and Social Justice at Amnesty International and also lead on sport and human rights, took us back to the 1978 FIFA World Cup in Argentina, when various civil society organisations (CSOs) were already advocating respect for human rights in the context of the tournament or even calling for a boycott of it. Stephen underlined the critical role that CSOs have played in pushing for greater respect for human rights in sport and how forty years after the World Cup in Argentina, the same situations and demands are often replicated. In this context, William Rook, Deputy Chief Executive and Chief Operational Officer of the Centre for Sport and Human Rights (CSHR) introduced the work of his organisation. Reviewing the background of the organisation’s establishment, as well as its vision for and mission in the sports industry, we were able to understand the importance of this type of institution to exert pressure and serve as a convening point between the different stakeholders. Finally, Dr Jörg Krieger closed the day with an overview of the history of the human rights movement in sport. Dr Krieger explained to us the fundamental role that human rights have played since the birth of sport and the Olympic movement and how understanding this evolution can help us to overcome the challenges we face today. Because as Winston Churchill wrote, “those that fail to learn from history are doomed to repeat it”.

At the end of this first day, all participants, speakers, and colleagues of the Asser Institute were able to connect more during an opening reception in a café in The Hague.

Day II – Integrating human rights in the governance of sport

How are sports organisations integrating human rights considerations and commitments into their governance? This was the central question of the second day of the course, where Rachel Davis, Co-founder and Vice President of Shift, brilliantly introduced the role that the UN Guiding Principles on Business and Human Rights (UNGPs) are playing in the development of human rights policies in sports organisations and especially in the organisation of sports events; aspects that were later developed by Alison Biscoe, from CSHR, who explained the process of creating a human rights policy and the challenges that come with it. Before that,  David Grevemberg, Chief Innovation and Partnerships Officer of the CSHR, introduced the ecosystem of sport, providing an overview of the different types of actors involved and interacting with each other. These talks helped us to understand the complexity behind sport governance and the obstacles that this ecosystem itself poses to the protection of human rights. Finally, both Gijs de Jong, Secretary-General of the Royal Netherlands Football Association (KNVB) and Dr Andreas Graf, Head of Human Rights & Anti-Discrimination at FIFA, explained how both institutions are working to address the human rights risks and impacts associated with their activities. De Jong explained how the KNVB focuses on advocacy and social media campaigns to raise awareness and Graf outlined how FIFA has focused its efforts on the development of a human rights policy and the implementation of human rights due diligence for the bidding, preparation and hosting of FIFA tournaments.

This day served to outline that although some organisations such as FIFA or the KNVB are taking action with varying degrees of success, there is still a long way ahead for most sport governing bodies to adequately address their human rights impacts and live up to their responsibility to respect human rights. The adoption of human rights policies is only the first step and subsequent steps are necessary for the implementation of these policies and to ensure that these policies are fully integrated by the members of these organisations, whether at an international or national level.

Day III – Human rights, Mega-Sporting Events (MSEs) and Qatar 2022

If we talk about human rights and sport, the first thing that comes to mind for many people is the FIFA World Cup Qatar 2022 and the situation of migrant workers building the infrastructure for the tournament. Therefore, the Qatar World Cup served as a case study on day three, which was dedicated to mega-sporting events.  An introduction to MSEs, their organisation and their human rights impacts was given by Dr Daniela Heerdt, which served as a basis for the following presentation by Natasha da Silva, Senior Policy Executive at the Australian Human Rights Commission. She presented the work that the Commission did for the human rights risk assessment for the 2023 Women’s World Cup. The result was a complex document that illustrates the different risks involved in organising this event. The afternoon’s case study on the Qatar 2022 World Cup included presentations by Mahmoud Qutub (Supreme Committee for Delivery and Legacy), Ambet Yuson (BWI), Mustafa Qadri (Equidem) and Dr Andreas Graf (FIFA). It was an enriching experience to listen in the same room the differing points of view and the approaches that each one uses to minimise (somehow) the negative impacts of the World Cup organisation.

Day IV – Athletes’ rights at FIFPro

After three days on the premises of the Asser Institute, we headed to the city of Hoofddorp, where FIFPro’s headquarters are located. There, different representatives of FIFPro presented the work of the organisation, how it is structured and functioning, as well as the different projects they have been involved in to advance the rights of professional football players. The topics varied, but always with athletes’ rights as the red thread. Andrea Florence, director of the Sports and Rights Alliance, also presented on the issue of child athletes and abuse in the sporting context. In my view, the most interesting part of the day came in the afternoon. Alexandra Gomez-Bruinewoud presented several cases that FIFPro has worked on or is currently working on. Afterwards, the participants were divided into groups and were asked to work on these cases and propose solutions to vindicate the rights of the players concerned. Thanks to this exercise, we realised how difficult it is to defend athletes’ rights and the complex institutional constraints and legal intricacies that must be navigated to uphold their rights. The day ended with a reception in FIFPro’s lounge, where we could chat with members of the organisation and share experiences and contacts.

Day V – Access to remedy

The three pillars of the UNGPs are “respect, protect and remedy”. For four days, we paid attention to the first two concepts, so the last day of the programme was logically focused on the remedy pillar. Both Dr Daniela Heerdt and Dr Antoine Duval introduced and defined the concept of remedy, as well as the deficiencies of the current sport system in order to address sport-related human rights harms. Including the ineffective role of the Court of Arbitration for Sports (CAS) in remedying sport-related human rights harms. To illustrate this, Patrick Bracher, director of Norton Rose Fulbright South Africa, illustrated the problems and difficulties involved in defending the rights of South African athlete Caster Semenya at the CAS and the Swiss Federal Tribunal. Finally, Florian Yelin, Head of Policy and Research at the World Player Association, presented the work that World Players has been doing and its proposal for an arbitration system outside the CAS. This mechanism attempts to alleviate the deficits of the CAS and serve as an alternative. However, it is still in the development phase, and it remains to be seen whether it will be able to become a real alternative in the future.

In a final and informal session of the course, all participants could freely share with the main coordinator of the course, Dr Daniela Heerdt, our opinion on the past days, what we have learned, what we enjoyed and what aspects of the course could be improved.

Final thoughts

News, conferences, tweets, academic articles... different are the sources that tell us about the role of human rights in sport. During years of studying this subject, I always missed a course that addressed this subject from both a theoretical and practical point of view. Being able to participate in the Summer Programme has been an enriching opportunity for me. I am not just talking about intellectual enrichment, as the amount of information and lessons learned has exceeded my expectations. I go beyond that. Sharing a week of learning with people from different nationalities, ages, cultures or professional backgrounds brings much more than hours of reading in front of the screen. When a group of individuals share the same interests and decide to invest their time and resources in learning about human rights and sport, the likelihood of learning increases exponentially. Over the course of five days, a community was created at the Asser Institute where people could discuss any topic, contrast different positions, challenge the speakers and, of course, share moments of laughter and anecdotes. And the latter is what the programme has given me the most. Meeting a magnificent group of professionals who, in their day-to-day work, fight for sport to have a positive impact on the human rights of all those who are part of its ecosystem.

On Wednesday 20 January 2021 from 16.00-17.30 CET, the Asser International Sports Law Centre, in collaboration with Dr Marjolaine Viret, is organising a Zoom In webinar on the recent judgment of the General Court in the case International Skating Union (ISU) v European Commission, delivered on 16 December 2016. The Court ruled on an appeal against the first-ever antitrust prohibition decision on sporting rules adopted by the European Commission. More specifically, the case concerned the ISU’s eligibility rules, which were prohibiting speed skaters from competing in non-recognised events and threatened them with lifelong bans if they did (for more details on the origin of the case see this blog). The ruling of the General Court, which endorsed the majority of the European Commission’s findings, could have transformative implications for the structure of sports governance in the EU (and beyond).

We have the pleasure to welcome three renowned experts in EU competition law and sport to analyse with us the wider consequences of this judgment.

Guest speakers:

• Dr. Ben Van Rompuy (Leiden University & representative of the complainants before the EC)
• Dr. Katarina Pijetlovic (Manchester Metropolitan University)
• Prof. Stephen Weatherill (Oxford University)

Moderators:

• Dr Antoine Duval (Asser Institute)
• Dr Marjolaine Viret
  

Registration HERE

Zoom In webinar series

In December 2020, The Asser International Sports Law Centre in collaboration with Dr Marjolaine Viret launched a new series of zoom webinars on transnational sports law: Zoom In. You can watch the video recording of our first discussion on the arbitral award delivered by the Court of Arbitration for Sport (CAS) in the Blake Leeper v. International Association of Athletics Federations (IAAF) case on the Asser Institute’s Youtube Channel. Click here to learn more about the Zoom In webinar series.

The European Commission’s decisions of 4 July 2016 to order the recovery of the State aid granted to seven Spanish professional football clubs[1] were in a previous blog called historic. It was the first time that professional football clubs have been ordered to repay aid received from (local) public authorities. Less attention has been given to five other decisions also made public that day, which cleared support measures for five football clubs in the Netherlands. The clubs in question were PSV Eindhoven, MVV Maastricht, NEC Nijmegen, FC Den Bosch and Willem II.

Given the inherent political sensitivity of State aid recovery decisions, it is logical that the “Spanish decisions” were covered more widely than the “Dutch decisions”. Furthermore, clubs like Real Madrid and FC Barcelona automatically get more media attention than FC Den Bosch or Willem II. Yet, even though the “Dutch decisions” are of a lower profile, from an EU State aid law perspective, they are not necessarily less interesting.

A few days before entering the quiet month of August, the Commission published the non-confidential versions of its decisions concerning PSV Eindhoven, Willem II and MVV Maastricht (hereinafter: “MVV”). The swiftness of these publications is somewhat surprising, since it often takes at least three months to solve all the confidentiality issues. Nonetheless, nobody will complain (especially not me) about this opportunity to analyze in depth these new decisions.

In the case of PSV, the Dutch State argued successfully that the measure implemented by the city of Eindhoven was in line with the so-called ‘Market Economy Investor Principle’ (MEIP), thereby not constituting a selective advantage to PSV. In other words, the measure did not fulfill the criteria of Article 107(1) TFEU and was not considered State aid. The aid measures granted by the cities of Tilburg and Maastricht to Willem II and MVV respectively were considered compatible State aid under Article 107(3)c) TFEU. Interestingly enough, in the Willem II and MVV cases, the Dutch authorities also argued that the respective measures did not confer any selective advantage to the clubs, but they failed to convince the Commission.

A comparison between the PSV decision on the one hand, and the other “Dutch” decisions on the other, taking into account the definition and operation of the MEIP in the (professional) football sector, will be left for a future blog. This two-part blog, instead, will focus on the compatibility assessment under Article 107(3)(c) done by the Commission in the Willem II and MVV cases and explain why it considered the State aid measure justified.

Part one will serve as an introduction on the two cases. It will provide background information on the compatibility assessment. In part two, the compatibility assessment conducted by the Commission in the two decisions will be analyzed. As will be argued, the conditions set out by the Commission can serve as a blueprint for all public authorities within the EU willing to grant State aid to football clubs in financial difficulties.  

Background

Willem II

In 2004, the municipality of Tilburg and football club Willem II concluded a contract, by which Tilburg became the owner of Willem II’s stadium and the club obtained a lease for the use of the stadium.[2] The annual rent of the stadium was established at €1 million, based on a depreciation period of 30 years, investment costs and an interest rate of 5.5%.[3]

In May 2010, Willem II found itself on the verge of bankruptcy. The municipality was quick to realize the potential negative effects a bankruptcy could have for Tilburg. These negative effects consisted of (1) the loss of rental income; (2) the absence of a tenant for the stadium; (3) the absence of professional football in Tilburg; and (4) the necessity to demolish the stadium and all the costs it would entail.[4] As a result, on 31 May 2010 the municipality decided to lower the rent to €905,000 per year and to decrease the variable costs. Both measures were taken with retroactive effect till 1 July 2004, which resulted in Willem II receiving a total of €2.4 million from the municipality.[5]

Tilburg’s rescue operation of Willem II was never notified to the Commission.[6] Instead, a citizen informed DG Competition shortly after the measure was implemented by means of a letter. This prompted the Commission to send a request for information to the Netherlands on 14 March 2011.[7]

In response to the Commission, the Dutch authorities argued that the new rent agreement was in conformity with the current municipal calculation methods and that the basic principles of the 2004 agreement were still respected. Moreover, the costs Tilburg would suffer for letting Willem II go bankrupt would be higher than the rescue costs. Consequently, the municipality believed it acted in accordance with the so-called ‘Market Economy Investor Principle’ (MEIP).[8] Moreover, the municipality imposed a restructuring plan that aimed at restoring the club’s long-term viability. The conditions of this plan included finding a way to clean up its balance sheet and the need to respect the national football association's norms for salaries of players.[9]

In its decision to open a formal investigation, the Commission counter argued that the depreciation of the stadium’s rent was already adjusted in 2007, and would not justify the retroactive application until 2004. Additionally, the lowering of the variable costs with retro-active effects ended up to be lower than the actual maintenance costs for that period, and should therefore be considered as State aid in accordance with Article 107(1) TFEU.[10] Finally, at the time the Commission launched the formal investigation, it nourished doubts whether the aid measure could be considered compatible with the internal market pursuant Article 107(3)(c). Having received no notification of the rescue measure, the Commission was unable to carry out a proper compatibility assessment. 

MVV

In 2010, football club MVV was facing severe financial difficulties: its total debt amounted to €6.5 million, including €1.7 million to the municipality of Maastricht. As a means of aiding its local football club, the municipality decided to waive its claim of €1.7 million and bought the stadium for €1.85 million.[11] The municipality held that the purchase was done in accordance with the MEIP and that the stadium would be used for multifunctional purposes. The parties agreed that MVV would use the €1.85 million to finance preferential claims, such as taxes and pensions.[12] 

The Commission opened a formal investigation procedure, because it was unable to conclude on the basis of the available information (the rescue measures were not notified[13]) that the behaviour of the municipality had been that of the typical creditor in a market economy.[14] Firstly, it doubted whether a total remission of the claim (€1.7 million) was entirely necessary, since other creditors transformed their claim into a claim on future income from transfer payments or “only” waived 50% of their claim. Secondly, according to the Commission, the purchase price of the stadium was estimated on the basis of replacement value rather than the real market value. It further raised doubts as to whether the municipality acted in accordance with the MEIP since investing in a football stadium depending on one captive user entails a very high risk, even when claiming that you want to make it multifunctional.[15] Similar to the Willem II case, no compatibility assessment of the aid measure in favour of MVV was carried out, because the measure was not notified.[16] 

The rules on compatibility

Pursuant to Article 107(3)(c) TFEU, aid to facilitate the development of certain economic activities, where such aid does not adversely affect trading conditions to an extent contrary to the common interest, may be considered compatible with the internal market. Only the Commission has the competence (subject to control by the EU Courts) to determine whether or not certain aid merits derogation from the general prohibition of Article 107(1).[17] However, it is settled case law that it is up to the Member State to invoke possible grounds of compatibility and to demonstrate that the conditions for such compatibility are met.[18] Due to its own wide discretion to assess the compatibility, the Commission has developed its own methodologies and approaches over the years, found in the decisional practice, policy documents[19] and sector specific guidelines.[20] 

The Rescue and Restructuring Guidelines

The Community Guidelines of 1 October 2004 on State aid for rescue and restructuring firms in difficulty (hereinafter: “Rescue and Restructuring Guidelines”) primarily serve as a tool for the Commission to assess similar cases in a similar way.[21] The criteria and conditions laid down in the Guidelines are mostly based on the Commission’s own experience in dealing with cases involving State aid in favour of firms in difficulty and case law by the Court of Justice of the EU. Due to the continuous developments in the area of EU State aid law, the Guidelines are regularly updated.[22] In the Guidelines, the Commission sets out the conditions under which State aid for rescuing and restructuring undertakings in difficulty may be considered compatible with the internal market. These conditions include the notification obligation for the Member State,[23] as well as demonstrating that the firm qualifies as ‘a firm in difficulty’. As is stipulated in point 11 of the Guidelines, a firm is considered to be in difficulties where the usual signs of a firm being in difficulty are present, such as increasing losses, diminishing turnover and mounting debt.

In order to rescue a firm from bankruptcy, the Member State has to show that it limits the amount of aid provided to that which is strictly necessary to keep the firm in business.[24] Section 3.2 of the Guidelines requires that the grant of the aid must be conditional on the implementation of a restructuring plan that restores the long term viability of the firm.[25] The restructuring plan needs to be approved by the Member State concerned and communicated to the Commission.[26]

The Member States granting the restructuring aid will have to limit the amount and intensity of the aid to the strict minimum of the restructuring costs necessary to enable restructuring to be undertaken in the light of the existing financial resources of the firm. This also means that the beneficiaries are expected to make a significant contribution to the restructuring plan from their own resources.[27] The Commission will normally consider the following contributions to the restructuring to be appropriate: at least 25 % in the case of small enterprises, at least 40 % for medium-sized enterprises and at least 50 % for large firms.[28]

The Guidelines also stipulate that, in case the firm in difficulty is considered a medium-sized enterprise or larger[29], compensatory measures must be taken by the Member State that grants the rescue and/or restructuring aid in order to ensure that the adverse effects on trading conditions are minimized as much as possible, so that the positive effects pursued outweigh the adverse ones.[30] These last two conditions (i.e. limiting the aid to what is strictly necessary and introducing compensatory measures) have the aim of ensuring that the State aid measure is proportionate to the objective tackled, namely rescuing and/or restructuring a firm in difficulty.

Last but not least, the so-called ‘one time, last time’ principle has to be applied. According to this principle, rescue aid should only be granted once.[31] 

In the coming days, the key part of the Commission’s decisions, the compatibility assessment, will be discussed in part two of this blog.

[1] Real Madrid (twice), FC Barcelona, Valencia CF, Athletic Bilbao, Atlético Osasuna, Elche and Hércules.

[2] Commission Decision on State Aid SA.40168 of 4 July 2016 implemented by the Netherlands in favour of the professional football club Willem II in Tilburg, para. 10.

[3] Commission Decision SA.33584 of 6 March 2013 – The Netherlands Alleged municipal aid to the Professional Dutch football clubs Vitesse, NEC, Willem II, MVV, PSV and FC Den Bosch in 2008-2011, para. 29.

[4] Ibid, para. 30.

[5] Ibid.

[6] Ibid, para. 67.

[7] Ibid, paras. 3-4. To find out how a citizen’s letter can instigate a preliminary State aid investigation, see Ben Van Rompuy and Oskar van Maren, “EU Control of State Aid to Professional Sport: Why Now?” In: “The Legacy of Bosman. Revisiting the relationship between EU law and sport”, T.M.C. Asser Press, 2016.

[8] The essence of this principle is that when a public authority invests in an enterprise on terms and in conditions that would be acceptable to a private investor operating under normal market economy conditions, the investment is not State aid.

[9] SA.40168, para. 12.

[10] SA.33584, paras. 29-31 and 51-53.

[11] Ibid, para. 32.

[12] Ibid, para. 57.

[13] Ibid, para. 67.

[14] Commission Decision on State Aid SA.41612 of 4 July 2016 implemented by the Netherlands in favour of the professional football club MVV in Maastricht, para. 12.

[15] SA.33584, paras. 54-57.

[16] SA.41612, para. 11.

[17] According to settled case law, national courts do not have the power to declare a State aid measure compatible with the internal market. See e.g. C-354/90, Fédération Nationale du Commerce Extérieur des Produits Alimentaires and Syndicat National des Négociants et Transformateurs de Saumon v French Republic, ECLI:EU:C:1991:440, para. 14.

[18] SA.41612, para. 42; see also Case C-364/90, Italy v Commission, ECLI:EU:C:1993:157, point 20.

[19] See for example Communication from the Commission COM(2012) of 8 May 2012 to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions – EU State Aid Modernisation (SAM), para. 12.

[20] See for example the Communication from the Commission OJ C25/01 of 26 January 2013 on the EU Guidelines for the application of State aid rules in relation to the rapid deployment of broadband networks, paras. 32-34.

[21] In July 2014, the Commission published new Guidelines on State aid for rescuing and restructuring undertakings in difficulty, but they are not applicable to aid granted in 2010.

[22] The Rescue and Restructuring Guidelines published in 2014 are the fourth of its sort after earlier versions published in 1994, 1999 and 2004.

[23] Communication from the Commission of 1 October 2004 (2004/C 244/02) Community Guidelines on State Aid for Rescuing and Restructuring firms in difficulty, point 25(c).

[24] Ibid, point 25(d).

[25] Ibid, poins 34-37.

[26] Ibid, point 59. In this regard, it should be noted that the Commission does not need to endorse the restructuring plan.

[27] By “own resources” the Commission also understands funding from external financiers at market conditions.

[28] Guidelines on State Aid for Rescuing and Restructuring firms in difficulty, points 43-44.

[29] The Commission’s definition of Small and Medium-Sized enterprises (SMEs), as stipulated in the Annex of the Commission Recommendation concerning the definition of micro, small and medium-sized enterprises, is also used in the Rescue and Restructuring Guidelines. Pursuant to Article 2 of the SME Recommendation, a small enterprise is defined as an enterprise which employs fewer than 50 persons and whose annual turnover and/or annual balance sheet total does not exceed €10 million, whereas a medium-seized enterprise is defined as an enterprise which employs fewer than 250 persons and which has an annual turnover not exceeding €50 million, and/or an annual balance sheet total not exceeding €43 million.

[30] Guidelines on State Aid for Rescuing and Restructuring firms in difficulty, point 38.

[31] Ibid, point 25(e) and section 3.3. In practice, this actually means that rescue or restructuring aid can only be granted once every 10 years.