Editor's note: Rusa Agafonova is a PhD Candidate at the University of Zurich, Switzerland   

The Olympic Games are the cornerstone event of the Olympic Movement as a socio-cultural phenomenon as well as the engine of its economic model. Having worldwide exposure,[1] the Olympic Games guarantee the International Olympic Committee (IOC) exclusive nine-digit sponsorship deals. The revenue generated by the Games is later redistributed by the IOC down the sports pyramid to the International Federations (IFs), National Olympic Committees (NOCs) and other participants of the Olympic Movement through a so-called "solidarity mechanism". In other words, the Games constitute a vital source of financing for the Olympic Movement.

Because of the money involved, the IOC is protective when it comes to staging the Olympics. This is notably so with respect to ambush marketing which can have detrimental economic impact for sports governing bodies (SGBs) running mega-events. The IOC's definition of ambush marketing covers any intentional and non-intentional use of intellectual property associated with the Olympic Games as well as the misappropriation of images associated with them without authorisation from the IOC and the organising committee.[2] This definition is broad as are the IOC's anti-ambush rules.

Rule 40 of the Olympic Charter

The famous Rule 40[3] of the Olympic Charter was introduced in 1991 prohibiting competitors[4] from any use of name, image or sports performances for advertising purposes during the Olympic Games and since then has been critised for its disproportionality.

The blanket ban covered all types of advertising during the "blackout" ("frozen") period of almost a month, starting nine days before the Opening Ceremony and ending three days after the Closing of the Games. Any Olympic-related terms varying from quite specific "Olympia" and "games" to more generic "medal", "gold", "pedestal" and to very questionable "summer", "challenge" and "victory" were banned from use in an advertising context. These restrictions are even more drastic knowing that violation of the Olympic Charter can entail temporary or permanent ineligibility or exclusion from the Olympic Games.[5]

Legal challenges

While companies still managed to find loopholes in the regulations,[6] a legal challenge was expected on both sides of the Atlantic. In the US, the antitrust lawsuit against the USA Track and Field and the US Olympic Committee (USOC) brought to the U.S. District Court by a runner Nick Symmonds[7] was dismissed on the basis of the 1978 Amateur Sports Act, which granted an implied antitrust immunity to the USOC.

In Europe, however, the complaint filed with the German Competition Authority (Bundeskartellamt) by the German Athlete Commission and the Federal Association of the German Sports Goods Industry was successful and resulted in a series of commitments undertaken by the German NOC (DOSB) and the IOC, but only German athletes could benefit from it.

Bundeskartellamt refers to the ISU and Kristoffersen cases admitting the protection of the solidarity mechanism as a potential justification for a measure restricting competition, but only "if the financial support granted by the system is sufficiently transparent for the participants who contributed their performance", i.e. when they are "in a position to understand and assess the volume of income generated" and "whether this income, or at least most of it, has in fact been spent to the benefit of those athletes who are disadvantaged in terms of opportunities to participate in the Olympic Games". The Olympic solidarity plan does not attain this high standard of "sufficient transparency".[8] Hence, Rule 40 and its German analogue were preliminarily assessed as violating Art. 102 of the Treaty on the Functioning of the European Union (TFEU) (abuse of dominant position) and Sections 18 and 19 GWB (German Competition Act).

The German decision gave the green light to advertising campaigns by non-Olympic sponsors during the frozen period and replaced the authorisation procedure by the requirement to notify the NOC of the intended campaigns. The list of protected terms was narrowed down, and only sanctions of economic nature, i.e. contractual damages and/or penalties, became admissible.

Reconsidering Rule 40

In summer 2019, the IOC amended Rule 40 for the first time in many years. Its new wording was akin to a 180-degree turn and allowed competitors, team officials and other team personnel to use their person, name, picture, and sports performances for advertising purposes during the Olympic Games as far as the principles determined by the IOC Executive Board were respected.  

NOCs should concretise the rule for their Olympic team in accordance with the Key Principles on the application of by-law 3 to Rule 40 of the Olympic Charter (Tokyo 2020 Key Principles) which give the NOCs some guidance but also leave them a considerable leeway.

In terms of substance, non-Olympic sponsors can now undertake "generic advertising", i.e., campaigns launched at least 90 days before the Event, which create association with the Olympic Games only through an athlete's image, and which should avoid any unusual activity during the Games. What is considered unusual is to be determined on a case-by-case basis.

Regarding the procedure, non-Olympic partners must now only notify in advance the IOC or the respective NOCs of their advertising plans. The NOCs are free to decide on the form and modalities of this notification. It can be a simple notice, such as in Switzerland, a two-step notification (i.e. a pre-registration and a further notification) as in South Africa, or a more complex legal structure consisting of a notification accompanied by a personal sponsor commitment agreement (PSC) concluded by and between an athlete's sponsor and the NOC, as is the case in the USA or in Ireland. In the latter case, the NOC obtains additional contractual guarantees in case of a violation of the Rule 40.[9]

All these discrepancies put athletes on an unequal footing. The commercial rights of those sportspeople who already struggle to find sponsors due to the limited exposure of their sports disciplines might be curtailed even further by the non-attractiveness of their NOCs' regimes in respect to Olympic sponsorship.

Finally, the IOC recommends that NOCs adopt monetary rather than sporting measures to sanction violations.[10] But recommendations are non-binding, while it seems that such a crucial issue as sanctions should be covered by a uniform rule more than anything else.

Conclusion

Athletes have, at times in history, been precluded from fully monetising their economic potential during the most important - and the most marketable - moments  of their careers, which themselves are relatively short. The amended Rule 40 has been welcomed as a big achievement and fits well with the overall trend for athletes' growing engagement in policy-making processes and the increasing role of competition law in shaping sports governance. However, it seems that Rule 40 is not yet at its final destination. To get there, it should find the balance between the individual athlete’s right to generate income in relation to their sporting career and the collective interest in protecting the solidarity model. It is indeed important to remember that there are many athletes, including those at the grassroots level, who are supported by the solidarity mechanism rather than by sponsors' financial backing.

Conversely, while the concept of the Olympics has not been distorted by allowing professionals to compete in the Games, why would it be inadvisable to reconsider the idea of commercialisation of sport? The outbreak of COVID-19 and the postponement of the 2020 Tokyo Olympic Games drew attention to the insecurity of athletes in many senses, and the relationship between an athlete and a sponsor acquired a deeper significance: despite the uncertainties of the sports calendars, epidemiologic regimes, and impossibility of long-term planning, the parties - or rather the partners - maintained mutual support and shared common values. 

All regulatory instruments should be adjusted accordingly. Rule 40 as it existed before 2019 appeared archaic. When it entered into force, neither the internet nor social media existed. As of today, Twitter and especially Instagram have shaped a new paradigm of hashtags, likes, reposts, and followers.[11] 

Rule 40, as it exists in 2021, leaves a risk of unequal implementation due to the fact that NOCs and athletes' associations have different degrees of bargaining power across the globe and, in the absence of a uniform clause imposed by the international regulator, give divergent interpretations to the scope of the rule. The country-to-country approach can sometimes allow for necessary flexibility in order to ensure optimal implementation of the regulations, in particular, regarding compliance with the national legislation of each state. However, some issues, such as the sanctioning regimes, should be handled in a centralised and harmonised way.

The German example has set the trend, but many NOCs may be reluctant to follow it. In this respect, the European Commission may play an important role in reconciling athletes' economic interests and the SGBs' interests with due consideration to the specificity of sport. It remains to be seen how the situation will be resolved outside the European Union. Meanwhile, during the period from 13 July to 10 August 2021, we will most likely witness a dramatic change in advertising as the new Rule 40 will be applied. It is possible that the focus on sports competitions will be slightly diluted by additional commercial ads, but even this scenario seems appealing after the silence of quarantine. 

[1] The geographic market for the organisation and exploitation of the Olympic Games has been defined as worldwide. See Bundeskartellamt, Decision pursuant to Section 32b GWB Public version, B-226/17 (25 February 2019), para. 56. The version in English is available at https://www.bundeskartellamt.de/SharedDocs/Entscheidung/EN/Entscheidungen/Missbrauchsaufsicht/2019/B2-26-17.pdf?__blob=publicationFile&v=2. Accessed on 30 May 2021.

[2] Brand Protection Guidelines, Tokyo Organising Committee of the Olympic and Paralympic Games, Version 5.0. February 2020, Pt. 6. Ambush Marketing.

[3] Here and hereafter: Rule 40 refers to Bye-law 3 to Rule 40 of the Olympic Charter.

[4] In 2003, the rule was expanded to coaches and officials.

[5] Olympic Charter, Rule 59 (2.1).

[6] For example, in the pre-London-2012 campaign “Find Your Greatness”, Nike shows athletes from the towns named London situated in the US, Canada, Jamaica, and Nigeria and never mentions London in the UK. 

[7] Gold Medal LLC v. USA Track & Field, 187 F. Supp. 3d 1219, 1222 (D. Or. 2016).

[8] Bundeskartellamt, Decision pursuant to Section 32b GWB Public version, B-226/17, 25 February 2019, para. 103.

[9] McKelvey Steve, Grady John, Moorman Anita M., Ambush Marketing and Rule 40 for Tokyo 2020: A Shifting Landscape for Olympic Athletes and Their Sponsors, Journal of Legal Aspects of Sport, 2021, 31, pp. 94 – 122.

[10] Commercial Opportunities for Athletes. Rescheduled Olympic Games Tokyo 2020 (in 2021), p. 14. Frequently Asked Questions for Athletes.

[11] It is, for example, the key tool for fans' engagement. See Ennis Sean (2020) Understanding Fans and Their Consumption of Sport. In: Sports Marketing. Palgrave Macmillan, Cham, pp 75-100.

Reforming FIFA, or Not

 Antoine Duval

Book Review: Mark Pieth (ed.), Reforming FIFA, Dike Verlag, St. Gallen, 2014, 28.00 CHF, p.178

This book looks back at the work of the Independence Governance Committee (IGC). This Committee, constituted in 2011, had as primary objective to drive a reform process of FIFA initiated by its President Sepp Blatter. After ordering from the Swiss anti-corruption expert Mark Pieth, a report on the state of FIFA’s governance, FIFA decided to mandate him with the leadership of a consulting body composed of a mix of independent experts and football insiders, which would be accompanying and supervising the internal reform process of FIFA. The IGC was officially dissolved at the end of 2013, after completing its mandate. The book is composed of eight chapters, written by former members of the IGC, including former chairman Mark Pieth. In addition to the chapters, it includes the different reports (available here, here and here) submitted by the IGC to FIFA across the years. In the words of Pieth, this account is “fascinating because it gives a hands-on, realistic perspective of the concrete efforts, the achievements and the remaining challenges in the struggle for the reform of this organization [FIFA], avoiding the usual glorification or vilification.”[1] This review will first summarize the core of the account of the FIFA reform process provided by the book, before critically engaging with the outcome of the process and outlining the deficiencies that culminated on 29 May 2015 with the re-election of Sepp Blatter as FIFA president.

I.               Reforming FIFA…

In his introduction to the book, Mark Pieth provides a compelling account of the reasons why FIFA needs a reform process in the first place. He talks of the ““old boys” suddenly becoming rich”[2] and of the lack of “public accountability”[3] of FIFA. This narrative is similar to the one provided by Guillermo Jorge later in the book. He highlights the fact that FIFA relies on a “solide patronage network”, creating “incentives for member associations to engage in rent seeking – which means: spend time and efforts in obtaining such funds – and, at the same time, creates incentives for incumbents to request the favour back at the ballot box.”[4] Jorge’s detailed account of the institutional features of FIFA underlying this “patronage system” is in itself of great value.

It is further argued that with the scandals triggered by the Bin Hammam affair, in 2011, “Mr Blatter, realized that the governance structure needed to be adapted to the new challenges.”[5] In other words, it “was a product of the personal ambition of its president.” [6] All along the book, Pieth and other members of the IGC, consider Blatter as a key supporter of the reform process and shift the blame for its incompleteness on UEFA’s shoulders amongst others.[7]. UEFA, it is claimed, has been instrumental in blocking a centralized integrity check on FIFA officials (especially the members of the ExCo). Blatter, for his part, is said to have understood “sooner than many of his colleagues”, that “the system” was falling apart”[8] and that a “self-controlled reform seemed to be a rational response to pre-empt or delay external regulation and mitigate the risk for future, more uncertain investigations.”[9]

The substance of the reform triggered by the IGC is not discussed in great detail, nor is its implementation in practice assessed in depth. To be fair, the book chapters were probably written early 2014 and could hardly have done so. The core changes highlighted by the members of the IGC concern the function and structure of the Ethics Committee and the Audit and Compliance Committee. As claimed by Pieth, “the most tangible changes are the institutional changes in the area of the Ethics Committee and the Audit and Compliance Committee.”[10] In particular, “the independent permanent chairs and deputy chairs of the Ethics Committee and the Audit and Compliance Committee.”[11] Pieth praises the fact that “[t]he investigator and his deputy have full discretion which cases they take on and decide to investigate.”[12] Moreover, the “investigation is independent both from the FIFA administration and from the judicial chamber.”[13] This is also underlined by the contribution of Lord Peter Goldsmith focusing on the investigatory process.[14] Damian Heller discusses the core changes introduced to the Audit and Compliance Committee (ACC) in a separate chapter.[15] After the reform, the ACC has gained new important competences, e.g. drawing up the Organisation Regulation (governing the rights and obligations of FIFA’s organs), controlling the compensation policy of FIFA executives, monitoring the bidding process for the World Cup and auditing the use of the development funds. In addition to this, the independence of the Committee members has been reinforced. Thus, Pieth expect “that these independent agents within FIFA will make a big difference in the culture of the organization during their tenure.”[16]

The members of the IGC are not all positive about the changes triggered by the reform process engaged by FIFA. For Leandro Grosso, the member of IGC representing FIFPro, the football players’ union, the reform is clearly a failure.[17] Pieth himself is cautious enough to remind in his introduction “that pure self-regulation is a slow and uncertain process.”[18] He insists, that “[t]o be successful it has to change the culture of the whole organization, it needs to reach the associations in particular and it has to permeate the everyday life of the organization.”[19] Yet, throughout the book, there is still a clear sentiment that the FIFA reform process was a success. Indeed, Pieth considers that “[w]ith the new independent chairs in place, a first essential step has been taken.”[20] He adds: “it must be acknowledged that, overall, the last three years have been rather successful in bringing the regulations up to a certain standard.”[21] As another IGC member puts it “[t]he IGC has largely succeeded in its efforts to reform FIFA’s governance.”[22] After the reform, “there are far greater systems and controls and far greater ethical standards within FIFA.”[23] In short, “FIFA is today much closer to public and corporate governance standards than it was two years ago.”[24] Is this true?

II.             …Or Not

The IGC’s members’ optimism might go a bit too far. The recent events surrounding the investigation of the bidding process for the World Cup 2018 and 2022 seem to call for a critical assessment of the scope of progress made. Independent investigatory personnel make little difference if a final report is later shelved without allowing for external scrutiny of its findings as happened with the by now infamous Garcia report on the attribution of the 2018 and 2022 World Cup. Similarly, having a competent check on FIFA’s compensation policy is of little use if those rigorous accounts are not made freely available for journalists and the public to peruse them. The institutional changes celebrated by the members of the IGC are not negligible, but to gain real currency they must be coupled with a duty of transparency and the new Committees must be able to dispose of their findings independently. The resignation of Michael Garcia, who was deemed a token figure of the success of the reforms supported by the IGC, is there to remind us that even the, allegedly, best individuals are powerless if the institution is in a position to block their work. With his scorecard (see also here and the response of FIFA) on the reform process, Roger Pielke had convincingly quantified the limited nature of FIFA’s reforms. His findings are now corroborated in practice; even the few reform proposals FIFA actually implemented did not fundamentally change the institution. This is critical stance is shared by a recent report on ‘The reform of football governance’ adopted by the Parliamentary Assembly of the Council of Europe, urging FIFA to reinforce transparency and accountability across the board.

The IGC’s members were probably blinded by Blatter’s apparent goodwill. In fact, Blatter may even have held these good intentions, though his new stint at the head of FIFA is there to remind us that however enlightened, he remains a power-hungry monarch. Moreover, Blatter is truly accountable to only one forum: the FIFA Congress. Thus, it is doubtful that the “patronage system” put in place to control it will go away without resistance. In fact, Blatter would probably have never been re-elected in 2015 if he had imposed a radical clean up of past (and maybe present) FIFA practices relating to the use of development funds and vote buying. In that regard, the recent decision to give to the FIFA Congress the responsibility for the election of the host state of the FIFA World Cups is a potentially dangerous move that could enhance the risk of vote-buying. It shifts even more the decisive power away from the biggest Confederations to the small peripheral FAs.

All in all, it is naturally difficult for the members of a body that was invested with the responsibility to guide FIFA’s latest reform to recognize their failure to really change the way FIFA works. Some members of the IGC have done so; Alexandra Wrage resigned in protest against FIFA's “rotten reform record”. Even though one can criticize the independence of the IGC, the IGC’s members were probably genuinely committed to changing FIFA. But the main lesson one can draw from their very limited success in doing so is that sheer commitment and expertise is not enough to transform an institution grounded on a political system that promotes inertia and to some extent corruption. The illusion of an enlightened reform of FIFA driven by insiders, especially by Mr. Blatter, has been shattered. In the case of FIFA, a revolution is needed, heads need to roll, and a radically new political system needs to be put in place. Those are not easy tasks. Triggering a revolution will take time and energy. It will involve the appliance of extreme political pressure, either through the open threat of secession of UEFA or through criminal proceedings initiated by public authorities. In the end, Pieth himself is right: “self-regulation alone rarely works”[25]. This points to ‘[t]he responsibility of the host country’.[26] The “lax regulatory attitude”[27] of the Swiss government is certainly a key disincentive to a true FIFA reform. It is Switzerland’s duty to “define the minimum standard for organizations, in particular in the areas of democracy, accountability and financial controls.”[28] As the recent raid by the Swiss Police has proven, if there is the will to intervene, there is no insurmountable legal obstacle to do so. It is true, as many members of the IGC argue, that States are not in an easy position. The power of the FIFAs and IOCs of this world is extremely strong. Through their exit option, they can blackmail national States, and in particular Switzerland, into adopting an accommodating stance. But, it is simply not true that “ISOs [International Sporting Organisations] have extensive privileges and immunities, and are not governed by national laws – so cannot generally be reached by such prosecutors and regulators”[29], as Lord Goldsmith states. Still, it makes sense that the most far-reaching interventions to date that triggered reforms of Sports Governing Bodies (SGBs) were made by the EU and the US.[30] Both are strong enough to confront the political strength of the SGBs. Hence, the recent indictment of a number of FIFA officials on various criminal grounds in the US might be the first necessary step towards truly reforming FIFA.

This book is a valuable testimony of a process that has unfortunately failed to fundamentally change FIFA for the time being. One should not radically undermine the progress done, the new institutions put in place and rules adopted might serve as a basis for an overhaul of FIFA in the future, though for that to happen it will most likely need an assist from the EU or the US.

[1] M. Pieth, ‘Reforming FIFA’ in M. Pieth (ed.) Reforming FIFA, Dike Verlag, St. Gallen, 2014, p.1

[2] M. Pieth, ‘Introduction’ in M. Pieth (ed.) Reforming FIFA, p.8. In similar terms see M. Hershman, ‘The need for reform’ in M. Pieth (ed.) Reforming FIFA, p.17-18.

[3] M. Pieth, ‘Introduction’, p.9

[4] Guillermo Jorge, ‘From Patronage to managerial accountability’ in M. Pieth (ed.) Reforming FIFA, p.53

[5] M. Pieth, ‘Introduction’, p.9

[6] G. Jorge, ‘From Patronage to managerial accountability’, p.56

[7] M. Pieth, ‘Beyond changing the code: reforming culture’, in M. Pieth (ed.) Reforming FIFA, p.60

[8] G. Jorge, ‘From Patronage to managerial accountability’, p.57

[9] Ibid.

[10] M. Pieth, ‘Introduction’, p.15

[11] M. Pieth, ‘Beyond changing the code: reforming culture’, p.61

[12] Ibid.

[13] Ibid.

[14] See in particular the contribution by Lord Peter Goldsmith, ‘How to investigate misbehaviour in international sports organizations’ in M. Pieth (ed.) Reforming FIFA, p.31-38

[15] D. Heller, ‘The role of the Audit & Compliance Committee’ in M. Pieth (ed.) Reforming FIFA, p.63-69

[16] M. Pieth, ‘Beyond changing the code: reforming culture’, p.61

[17] Leonardo Grosso, ‘The reform’s impact on stakeholder involvement from the players’ perspective’ in M. Pieth (ed.) Reforming FIFA, p.39-48

[18] M. Pieth, ‘Introduction’, p.16

[19]Ibid and M. Pieth, ‘Beyond changing the code: reforming culture’, p.59-62 . In similar terms, see G. Jorge, ‘From Patronage to managerial accountability’, p.58

[20] M. Pieth, ‘Introduction’, p.16

[21] M. Pieth, ‘Beyond changing the code: reforming culture’, p.59

[22] M. Hershman, ‘The need for reform’, p.20

[23] M. Pieth, ‘Introduction’, p.16

[24] G. Jorge, ‘From Patronage to managerial accountability’, p.57

[25] M. Pieth, ‘The responsibility of the host country’ in M. Pieth (ed.) Reforming FIFA, pp.23-30, p.26

[26] Ibid, pp.23-30.

[27] Ibid, p.25.

[28] Ibid, p.26

[29] Lord Peter Goldsmith, ‘How to investigate misbehaviour in international sports organizations’, p.32

[30] See for the EU, A. Geeraert & E. Drieskens, ‘The EU controls FIFA and UEFA: a principal–agent perspective’, Journal of European Public Policy, 03/2015. See for the US, R. Pielke, ‘How can FIFA be held accountable?’, Sport Management Review 16 (2013) 255–267.