Asser International Sports Law Blog

Our International Sports Law Diary
The Asser International Sports Law Centre is part of the T.M.C. Asser Instituut

Investment in Football as a Means to a Particular End – Part 1: A non-exhaustive Typology - By Rhys Lenarduzzi

Editor's note: Rhys is currently making research and writing contributions under Dr Antoine Duval at the T.M.C. Asser Institute with a focus on Transnational Sports Law. Additionally, Rhys is the ‘Head of Advisory’ of Athlon CIF, a global fund and capital advisory firm specialising in the investment in global sports organisations and sports assets.

Rhys has a Bachelor of Laws (LL.B) and Bachelor of Philosophy (B.Phil.) from the University of Notre Dame, Sydney, Australia. Rhys is an LL.M candidate at the University of Zurich, in International Sports Law. Following a career as a professional athlete, Rhys has spent much of his professional life as an international sports agent, predominantly operating in football.

Rhys is also the host of the podcast “Sportonomic”.


Introduction

In the following two-part blog series, I will start by outlining a short typology of investors in football in recent years, in order to show the emergence of different varieties of investors who seek to use football as a means to a particular end. I will then in a second blog, explore the regulatory landscape across different countries, with a particular focus on the regulatory approach to multi-club ownership. Before moving forward, I must offer a disclaimer of sorts.  In addition to my research and writing contributions with the Asser Institute, I am the ‘Head of Advisory’ for Athlon CIF, a global fund and capital advisory firm specialising in the investment in global sports organisations and sports assets. I appreciate and hence must flag that I will possess a bias when it comes to investment in football.

It might also be noteworthy to point out that this new wave of investment in sport, is not exclusive to football. I have recently written elsewhere about CVC Capital Partners’ US$300 million investment in Volleyball, and perhaps the message that lingers behind such a deal.  CVC has also shown an interest in rugby and recently acquired a 14.3 per cent stake in the ‘Six Nations Championship’, to the tune of £365 million.  New Zealand’s 26 provincial rugby unions recently voted unanimously in favour of a proposal to sell 12.5 per cent of NZ Rugby’s commercial rights to Silver Lake Partners for NZ$387.5 million.  Consider also the apparent partnership between star footballer’s investment group, Gerard Pique’s Kosmos, and the International Tennis Federation.  Kosmos is further backed by Hiroshi Mikitani’s ecommerce institution, Rakuten, and all involved claim to desire an overhaul of the Davis Cup that will apparently transform it into the ‘World Cup of Tennis’. Grassroots projects, prizemoney for tennis players and extra funding for member nations are other areas the partnership claims to be concerned with. As is the case with all investment plays of this flavour, one can be certain that a return on the capital injection is also of interest.

So, what are we to conclude from the trends of investment in sport and more specifically for this blog series, in football? A typology elucidates that a multiplicity of investors have in recent years identified football as a means to achieve different ends. This blog considers three particular objectives pursued; direct financial return, branding in the case of company investment, or the branding and soft power strategies of nations.

From Associations and Member Owned Clubs, to Corporate Structures

It is important to point out that the ability to use football as an investment tool is only possible due to the ways in which football has transformed from associations to corporations over recent decades. For the purpose of this short blog, I will give the simplistic and short story, though I would urge those interested to go beyond this blog on the history of football ownership models and trends.

Essentially what I hope to emphasise, is the influx of private ownership and the advent of substantial television rights deals cannot be divorced. At this pivotal turn for football ownership, private ownership had been taking place in some forms, often a hybrid model with members, and often the case was a private owner coming in and saving or at least supporting a club financially.  Whereas at the start of the 1990s when broadcast deals made headlines, private owners saw a commercial opportunity as football moved into a generation where broadcasting rights were the main source of revenue for clubs.  By the early 2010s in Europe, “approximately three of four professional clubs were majority owned by private investors, and one in six clubs were owned by foreign investors”.[1] Football club owners hence quickly became more business orientated and more market-driven due to the opportunities that broadcasters presented and the benefits leagues and organisers were able to conjure up. “The growing prize money of the UEFA Champions League, the escalating TV revenues for premium competitions, and the internationalization of marketing measures have strengthened the incentives”.[2]

Private owners saw member owned clubs as unable to maximise commercial opportunities, and it is the same kind of sentiment that is aimed towards the less commercially mature sports by Private Equity groups and other institutional players today.  That being, yes, you may know your sport, but you do not know how to take it to the heights it could achieve in the commercial sense.

Investing for Direct Return: Private Equity

Private Equity firms are notorious for being able to identify undervalued businesses that they can further improve the value of by trimming unnecessary or wasteful expenses, as well as reconstruct operations and other inefficiencies. The priority of course is to make money and a return for investors. 

A variety of Private Equity groups have found football appealing in recent years as clubs look for non-traditional means of funding and in some extreme instances, rescuing from bankruptcy. Larger Private Equity groups have come to be known to accrue a portfolio of football clubs and other sports asset investments in order to diversify their sports investment wings, and to maximise returns for investors.  For the boutique firms, the strategies might be more considered and to the observer less audacious, identifying undervalued and underperforming smaller clubs with a history at the top tiers of football or the potential to get there. There may of course be other commercial motivations for specific acquisitions, such as the location of clubs, though in a nutshell, these Private Equity plays are a matter of identifying undervalued football clubs with scope to grow in value, in turn providing an opportunity to make investments and acquisitions at a low entry point and to deliver substantial results for investors. 

Whilst examples of Private Equity investment into football are a plenty, conder the following few for the purpose of this short blog. As an example of a multi-club ownership portfolio, New City Capital, fronted by Chinese American, Chien Lee, now boasts investment and ownership in Barnsley F.C. (England), FC Thun (Switzerland), K.V. Oostende (Belgium), AS Nancy (France), Esbjerg fB (Denmark), and is the former owner of OGC Nice (France); selling the club at the time for a record price in the French context. Lee and his multiple co-investors bring strategies and philosophies to these clubs akin to the “Moneyball” strategies made famous by Billy Beane. With a business background, the investors involved clearly fancy their abilities to maximise value of the clubs, but Lee is additionally conscious of his ability to grow the value of the clubs by the ways in which he has been able to tap into Asia and create new fans and revenue streams based on these connections. “We will try to ‘internationalize’ Barnsley, as we did with Nice. Before we invested in Nice, not many people in Asia had heard of them. Now in Asia -- in China -- people know the club.”

In terms of opportunistic timing strategies, as well as funding arrangements in order to complete an acquisition, one may consider another noteworthy example in the Private Equity space, that of ALK Capital’s takeover of Burnley. A leveraged buyout play, the sports investment arm of ALK, Velocity Sports Partners, acquired majority and controlling shareholding of 84% late 2020. For its part, Redbird Capital has made a variety of investments into football, in a variety of ways. They took a direct stake into Toulouse FC, but have also made an interesting investment into the Fenway Sports Group that owns Liverpool FC. This ultimately highlights an overarching view that football is a good bet for the firm, yet also showing that investment into the world game may come in many shapes and sizes.

It is the case that with the aforementioned examples, the investments have been a success insofar as the assets and portfolios of these firms have experienced growth in value, for example New City Capital sold OGC Nice for a handsome return. However, one must also point at investment failures such as King Street Capital with Girondins Bordeaux. Some of the identifiable distinctions between those firms able to achieve their objectives or at least stay the course, and the King Street Capital debacle, appears to be among other things, a fractured relationship with local government and the distance between the firms ambitions, control over that ambition and those running the club (COVID-19 to an extent as well).

Investing for Nation Branding: Qatar & UAE, Soft Power & Sports Diplomacy

Insofar as football remains the world game, nations are acutely conscious of the consequent power in nation branding via football investment. Nation branding according to Dinnie’s summary, consists of three key objectives; to attract tourists, to stimulate inward investments and to boost exports.[3] For a nation like Qatar, it is additionally about security and standing on the international scene.  To attain such objectives though of course requires certain image and branding achievements. In recent years, it is notable that a variety of states have been using their financial power to invest in football, not for the sake of profit, but in order to improve their image internationally.

State branding via soft power strategies like investment in football has come to be known widely as sports diplomacy. A variety of nations have identified sports diplomacy as way in which to be viewed favourably by other nations and to create positive imagery around an investment that in turn reflects positively on the nations image. Soft power and sports diplomacy has been endorsed by scholars as legitimate strategies, given it is a non-military instrument to compete with much larger and militarily capable states.[4] This is of course key to a nation like Qatar, that desires to move away from oil dependency and has to compete with much larger neighbouring nations. Branding is to make a distinction between one brand and another. For Qatar, it is perhaps it’s ultimate struggle to differentiate and distinguish itself from its neighbouring countries.

One of Qatar’s headline soft power through investment in football strategies is the acquisition of, and post-acquisition operation of European giants, Paris Saint-Germain (PSG). It is almost impossible however to disconnect Qatar’s sports diplomacy strategies with PSG, from its strategies with BeIN Sports the broadcaster, along with being awarded World Cup 2022.  

The Qatari’s acquired PSG in a less than ideal state but have since managed to turn the club into one of the richest and most successful on the planet. PSG’s image remains a priority, because in turn it is seen that Qatar’s image is the beneficiary. The importance of this for Qatar might be best measured by the size of the spend on players since taking over the club. Putting the likes of David Beckham and Zlatan Ibrahimovic aside for the moment, PSG paid both the number one and number two world record transfer fees for Brazilian superstar Neymar (a reported 220 million Euro) and French wonderkid, Kylian Mbappe (a reported 180 million Euro). One media report said “The colossal Neymar deal, funded by Qatar Sports Investments, shows how far governments will go to secure global influence.” That article was headlined - “A £198m transfer is not about football. It’s about soft power”

Now consider the United Arab Emirates (UAE) and how it yields power through the following subsidiaries and stakes therein: Manchester City F.C. (100%), Melbourne City FC (100%), Montevideo City Torque (100%), Lommel S.K. (99%), New York City FC (80%), Mumbai City FC (65%), Girona FC (44.3%), Sichuan Jiuniu F.C. (29.7%), Yokohama F. Marinos (20%), Troyes AC (100%), City Football Academy, City Football Marketing, City Football Services, City Football Japan, City Football Singapore, City Football China, City Football India, CFG Stadium Group, Goals Soccer Centers.

Manchester City FC is certainly the golden child of the group and much like PSG for Qatar, the successful imagery around Manchester City cannot be disconnected from the desired branding in a global sense for the UAE. The growing list of investments of CFG highlights that the UAE is intent on soft power strategies and using sports diplomacy to brand itself widely as a legitimate and well organised nation. Was it a coincidence that just as the City Football Group was arranging its stake in the Chengdu based football club, Sichuan Jiuniu, the UAE’s national airline Etihad announced it “would be enhancing its links with Chengdu’s airport”? That is to say nothing of the Chinese investment into CFG.

Questions remain about whether these soft power strategies have been successful in light of for instance, the widely reported atrocious treatment and deaths of migrant workers in Qatar, or the ongoing reports of slavery in the case of the UAE. In an ugly sense, the success of the soft power investments of these nations in football, is whether they are loud enough to drown out the noise of the atrocities associated with their nations. The paradox for Qatar, is that before using football as a diplomatic tool and winning the right to host the World Cup, the exploitation of migrant workers was not making headlines. Ironically, it is this active use of football as a diplomatic instrument that has shone a light on the issue and effected Qatar’s image substantially.

Black and Peacock point out, when it comes to soft power sports diplomacy one ought to be aware that the values publicly portrayed and associated with an investment in football (i.e. success, courage, commerciality, aspiration) will often not be the actual values of a state but rather merely the values with which a state would preferred to be associated with to fulfil wider objectives.[5]

Investing for Company Branding: Red Bull

The other type of investment aimed primarily at improving the image of the investor (and not recouping a profit directly from the club as an entity) is company branding. In a way, it is the ultimate move of a sponsor, instead of paying an annual yearly contribution to the club, the sponsor takes control of the management of the club in order to maximise the image return for its brand. The paramount example of such a strategy is embodied by Red Bull’s investment in football clubs around the world. The regulatory complexities will be left for blog 2, but it is Red Bull’s stake and influence in four clubs (Red Bull Salzburg, RB Leipzig, Red Bull New York, Red Bull Brasil) that renders it the ultimate example of a company that found investing in football as way to brand at scale. Despite the success that Red Bull football clubs have experienced, sporting and commercial, the purpose for Red Bull investing in football is of course to further promote the brand and sell energy drinks.

Red Bull had previously and in a revolutionary way, tapped into branding via sport and had worked out a way to brand at large using the content production arm of the company. Utilising extreme sports, Red Bull campaigns focussed on associating itself with elite sport, perhaps thus conflating the alleged performance enhancing capabilities of its beverages or at least that its product was trendy and fashionable to drink in the context of sport.

When it came to football, Red Bull followed an ownership strategy rather than a traditional sponsorship method, opening up both the benefits of the ownership over traditional sponsorship models, and, the size, scale and reach of football as opposed to the more niche extreme sports.

Branding through football is seen as almost more covert, as the consumer is less aware that when they watch a branded club in a branded stadium, they are being advertised to;

“the consumer does not perceive that the content is branded. Sport content is predestined for branded entertainment. Engaging sports fascinate and attract people and have proven to be capable of transferring positive images… many niche sports still lack the attention of sport consumers or sponsors and are not covered extensively by the media. Branded entertainment, therefore, can provide niche sport enterprises, athletes, and teams as well as sponsors with consumer attention and prosumer engagement.”[6]

Conclusion & a note on Member Owned Clubs

Per the title of this blog, the typology of investors listed above is not exhaustive, though perhaps the most relevant as I segue into the regulations around multi club ownership. However, a short note on the membership model clubs is worthwhile. Member owned clubs still exist widely and some are in fact popping up in protest over a perceived hyper commercialisation of football. SV Austria Salzburg is a newer member owned club, established in response and in protest to the Red Bull ownership of the former SV Austria Salzburg, that Red Bull subsequently changed the name and colours of. Member owned clubs can be funded by paid memberships and more traditional revenue streams like ticket sales and sponsorship.  Control wise however, the members maintain the controlling stake and more importantly perhaps, the controlling vote. The hybrid model between private ownership and member ownership remains interesting, given what can be maintained in terms of history and culture, and what can be brought in in terms of commercial expertise and the reality that the need and desire for profits can drive success of a football Club.

As is hopefully apparent from the above, the types of investors and indeed the motivations come in all shapes and sizes. It is also worth pointing out, when it comes to the Private Equity groups and the nations and companies concerned with branding, the main reasons for investment does not render it the exclusive reason. Qatar will take the commercial benefits of PSG, BeIN sports and the World Cup. Part owners of CFG, China Media Capital/CITIC Capital (12%) and Silver Lake (10%) would not have invested with such alacrity based on the soft power strategies and state branding aspirations of the UAE, and rather those groups are of course more interested in the commercial benefits. Separate from selling more energy drinks than ever, Red Bull is undoubtedly pleased with taking RB Leipzig from the 5th tier to the Bundesliga, and now valued at EUR560 million, Red Bull has an extremely valuable asset. Likewise, the big funds and institutional players are aware of the positive branding that sport affords them when their football investments are successful.

In the next blog, I consider the current regulatory landscape regarding investment in football with a particular focus on regulations that address multi-club ownership.


[1] Marc Rohde and Christoph Breuer, “The market for football club investors: a review of theory and empirical evidence from professional European football Institute of Sport Economics and Sport Management”, (German Sport University Cologne, Köln, Germany) European Sport Management Quarterly, 2017 VOL. 17, NO. 3, 265–289.

[2] Ibid P267.

[3] Keith Dinnie, “Nation Branding, Concepts, Issues, Practices”, Butterworth-Heinemann, 2008.

[4] Romain Herbreteau, “The use of a football club as a means of state branding: The mixed results of Qatar’s promotion in France” Leiden University - Master Thesis, Master of Arts International Relations, Supervisor: Dr Camillo Erlichman (2018)

[5] David Black and Byron Peacock. "Sport and Diplomacy." Oxford Handbooks Online (2013) 1-21

[6] Reinhard Kunz & Franziska Elsässer & James Santomier, “Sport-related branded entertainment: the Red Bull phenomenon” (2016)  Sport, Business and Management: An international Journal, 6, 520-541.

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Asser International Sports Law Blog | International Sports Law Commentaries

Asser International Sports Law Blog

Our International Sports Law Diary
The Asser International Sports Law Centre is part of the T.M.C. Asser Instituut

The proportionality test under Art. 101 (1) TFEU and the legitimacy of UEFA Financial fair-play regulations: From the Meca Medina and Majcen ruling of the European Court of Justice to the Galatasaray and AC Milan awards of the Court of Arbitration for Sport – By Stefano Bastianon

Editor’s note: Stefano Bastianon is Associate Professor in EU Law and EU sports law at the University of Bergamo and lawyer admitted to the Busto Arsizio bar. He is also member of the IVth Division of the High Court of Sport Justice (Collegio di Garanzia dello sport) at the National Olympic Committee.

 

1. On the 20th July 2018, the Court of Arbitration for Sport (hereinafter referred to as “CAS”) issued its decision in the arbitration procedure between AC Milan and UEFA. The subject matter of this arbitration procedure was the appeal filed by AC Milan against the decision of the Adjudicatory Chamber of the UEFA Financial Control Body dated 19th June 2018 (hereinafter referred to as “the contested decision”). As many likely know, the CAS has acknowledged that, although AC Milan was in breach of the break-even requirement, the related exclusion of the club from the UEFA Europe League was not proportionate. To date, it is the first time the CAS clearly ruled that the sanction of exclusion from UEFA club competitions for a breach of the break-even requirement was not proportionate. For this reason the CAS award represents a good opportunity to reflect on the proportionality test under Art. 101 TFEU and the relationship between the landmark ruling of the European Court of Justice (hereinafter referred to as “ECJ”) in the Meca Medina and Majcen affair and the very recent case-law of the CAS. More...

The “Victory” of the Court of Arbitration for Sport at the European Court of Human Rights: The End of the Beginning for the CAS

My favourite speed skater (Full disclosure: I have a thing for speed skaters bothering the ISU), Claudia Pechstein, is back in the news! And not from the place I expected. While all my attention was absorbed by the Bundesverfassungsgericht in Karlsruhe (BVerfG or German Constitutional Court), I should have looked to the European Court of Human Rights in Strasbourg (ECtHR). The Pechstein and Mutu joint cases were pending for a long time (since 2010) and I did not anticipate that the ECtHR would render its decision before the BVerfG. The decision released last week (only available in French at this stage) looked at first like a renewed vindication of the CAS (similar to the Bundesgerichtshof (BGH) ruling in the Pechstein case), and is being presented like that by the CAS, but after careful reading of the judgment I believe this is rather a pyrrhic victory for the status quo at the CAS. As I will show, this ruling puts to rest an important debate surrounding CAS arbitration since 20 years: CAS arbitration is (at least in its much-used appeal format in disciplinary cases) forced arbitration. Furthermore, stemming from this important acknowledgment is the recognition that CAS proceedings must comply with Article 6 § 1 of the European Convention of Human Rights (ECHR), in particular hearings must in principle be held in public and decisions freely available to all. Finally, I will criticise the Court’s finding that CAS complies with the requirements of independence and impartiality imposed by Article 6 § 1 ECHR. I will not rehash the  well-known facts of both cases, in order to focus on the core findings of the decision. More...

Football Intermediaries: Would a European centralized licensing system be a sustainable solution? - By Panagiotis Roumeliotis

Editor's note: Panagiotis Roumeliotis holds an LL.B. degree from National and Kapodistrian University of Athens, Greece and an LL.M. degree in European and International Tax Law from University of Luxembourg. He is qualified lawyer in Greece and is presently working as tax advisor with KPMG Luxembourg while pursuing, concomitantly, an LL.M. in International Sports Law at Sheffield Hallam University, England. His interest lies in the realm of tax and sports law. He may be contacted by e-mail at ‘p.roumeliotis@hotmail.com’.


Introduction

The landmark Bosman Ruling triggered the Europeanization of the labour market for football players by banning nationality quotas. In turn, in conjunction with the boom in TV revenues, this led to a flourishing transfer market in which players’ agents or intermediaries play a pivotal role, despite having a controversial reputation.

As a preliminary remark, it is important to touch upon the fiduciary duty of sports agents towards their clients. The principal-agent relationship implies that the former employs the agent so as to secure the best employment and/or commercial opportunities. Conversely, the latter is expected to act in the interest of the player as their relationship should be predicated on trust and confidence, as much was made clear in the English Court of Appeal case of Imageview Management Ltd v. Kelvin Jack. Notably, agents are bound to exercise the utmost degree of good faith, honesty and loyalty towards the players.[1]

At the core of this blog lies a comparative case study of the implementation of the FIFA Regulations on working with intermediaries (hereinafter “FIFA RWI”) in eight European FAs covering most of the transfers during the mercato. I will then critically analyze the issues raised by the implementation of the RWI and, as a conclusion, offer some recommendations. More...



Seraing vs. FIFA: Why the rumours of CAS’s death have been greatly exaggerated

Rumours are swirling around the decision (available in French here) of the Court of Appeal of Brussels in the case opposing RFC Seraing United to FIFA (as well as UEFA and the Belgian Football Federation, URSBFA) over the latter’s ban on third-party ownership. The headlines in various media are quite dramatic (see here and here), references are made to a new Bosman, or to a shaken sport’s legal system. Yet, after swiftly reading the decision for the first time on 29th August, I did not have, unlike with the Pechstein ruling of the Oberlandesgericht München, the immediate impression that this would be a major game-changer for the Court of Arbitration for Sport (CAS) and the role of arbitration in sports in general. After careful re-reading, I understand how certain parts of the ruling can be misunderstood or over-interpreted. I believe that much of the press coverage failed to accurately reflect the reasoning of the court and to capture the real impact of the decision. In order to explain why, I decided to write a short Q&A (including the (not water-proof) English translations of some of the key paragraphs of the decision).

 More...

Human Rights Protection and the FIFA World Cup: A Never-Ending Match? - By Daniela Heerdt

Editor’s note: Daniela Heerdt is a PhD candidate at Tilburg Law School in the Netherlands. Her PhD research deals with the establishment of responsibility and accountability for adverse human rights impacts of mega-sporting events, with a focus on FIFA World Cups and Olympic Games. She recently published an article in the International Sports Law Journal that discusses to what extent the revised bidding and hosting regulations by FIFA, the IOC and UEFA strengthen access to remedy for mega-sporting events-related human rights violations.


The 21st FIFA World Cup is currently underway. Billions of people around the world follow the matches with much enthusiasm and support. For the time being, it almost seems forgotten that in the final weeks leading up to the events, critical reports on human rights issues related to the event piled up. This blog explains why addressing these issues has to start well in advance of the first ball being kicked and cannot end when the final match has been played. More...



Stepping Outside the New York Convention - Practical Lessons on the Indirect Enforcement of CAS-Awards in Football Matters - By Etienne Gard

Editor’s Note: Etienne Gard graduated from the University of Zurich and from King's College London. He currently manages a project in the field of digitalization with Bratschi Ltd., a major Swiss law firm where he did his traineeship with a focus in international commercial arbitration.

1. Prelude

On the 10th of June, 1958, the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, widely known as the “New York Convention”, was signed in New York by 10 countries.[1] This rather shy figure progressively grew over the decades to now reach 157 signatory countries, turning the New York Convention into the global recognition and enforcement instrument it is today. As V.V. Veeder’s puts it, “One English law lord is said to have said, extra judicially, that the New York Convention is both the Best Thing since sliced bread and also whatever was the Best Thing before sliced bread replaced it as the Best Thing.”[2]

However, among the overall appraisal regarding the New York Convention, some criticisms have been expressed. For instance, some states use their public policy rather as a pretext not to enforce an award than an actual ground for refusal.[3]  A further issue is the recurring bias in favor of local companies.[4] Additionally, recognition and enforcement procedures in application of the New York Convention take place in front of State authorities, for the most part in front of courts of law, according to national proceeding rules. This usually leads to the retaining of a local law firm, the translation of several documents, written submissions and one, if not several hearings. Hence, the efficiency of the New York Convention as a recognition and enforcement mechanism comes to the expense of both money and time of both parties of the arbitral procedure.

In contrast with the field of commercial arbitration, where the New York Convention is often considered the only viable option in order to enforce an award, international football organizations, together with the Court of Arbitration for Sport (“CAS”), offer an effective enforcement alternative. This article aims at outlining the main features of the indirect enforcement of CAS awards in football matters in light of a recent case. More...



The International Partnership against Corruption in Sport (IPACS) and the quest for good governance: Of brave men and rotting fish - By Thomas Kruessmann

Editor's note: Prof. Thomas Kruessmann is key expert in the EU Technical Assistant Project "Strengthening Teaching and Research Capacity at ADA University" in Baku (Azerbaijan). At the same time, he is co-ordinator of the Jean-Monnet Network "Developing European Studies in the Caucasus" with Skytte Institute of Political Studies at the University of Tartu (Estonia).


The notion that “fish rots from the head down” is known to many cultures and serves as a practical reminder on what is at stake in the current wave of anti-corruption / integrity and good governance initiatives. The purpose of this blog post is to provide a short update on the recent founding of the International Partnership against Corruption in Sport (IPACS), intermittently known as the International Sports Integrity Partnership (IPAS), and to propose some critical perspectives from a legal scholar’s point of view.

During the past couple of years, the sports world has seen a never-ending wave of corruption allegations, often followed by revelations, incriminations and new allegation. There are ongoing investigations, most notably in the United States where the U.S. Department of Justice has just recently intensified its probe into corruption at the major sports governing bodies (SGBs). By all accounts, we are witnessing only the tip of the iceberg. And after ten years of debate and half-hearted reforms, there is the widespread notion, as expressed by the Council of Europe’s (CoE’s) Parliamentary Assembly (PACE) Resolution 2199/2018 that “the sports movement cannot be left to resolve its failures alone”. More...



International and European Sports Law – Monthly Report – January 2018 - By Tomáš Grell

Editor's note: This report compiles all relevant news, events and materials on International and European Sports Law based on the daily coverage provided on our twitter feed @Sportslaw_asser. You are invited to complete this survey via the comments section below, feel free to add links to important cases, documents and articles we might have overlooked. 


The Headlines 

Anti-doping whereabouts requirements declared compatible with the athletes' right to privacy and family life

On 18 January 2018, the European Court of Human Rights rendered a judgment with important consequences for the world of sport in general and the anti-doping regime in particular. The Strasbourg-based court was called upon to decide whether the anti-doping whereabouts system – which requires that a limited number of top elite athletes provide their National Anti-Doping Organisation or International Federation with regular information about their location, including identifying for each day one specific 60-minute time slot where the athlete will be available for testing at a pre-determined location – is compatible with the athletes' right to private and family life under Article 8 of the European Convention on Human Rights and their freedom of movement pursuant to Article 2 Protocol No. 4 of the Convention. The case was brought by the French cyclist Jeannie Longo and five French athlete unions that had filed their application on behalf of 99 professional handball, football, rugby, and basketball players.

While acknowledging that the whereabouts requirements clash with the athletes' right to private and family life, the judges took the view that such a restriction is necessary in order to protect the health of athletes and ensure a level playing field in sports competitions. They held that ''the reduction or removal of the relevant obligations would lead to an increase in the dangers of doping for the health of sports professionals and of all those who practise sports, and would be at odds with the European and international consensus on the need for unannounced testing as part of doping control''. Accordingly, the judges found no violation of Article 8 of the Convention and, in a similar vein, ruled that Article 2 Protocol No. 4 of the Convention was not applicable to the case.

 

Football stakeholders preparing to crack down on agents' excessive fees

It has been a record-breaking January transfer window with Premier League clubs having spent an eye-watering £430 million on signing new acquisitions. These spiralling transfer fees enable football agents, nowadays also called intermediaries, to charge impressive sums for their services. However, this might soon no longer be the case as the main stakeholders in European football are preparing to take action. UEFA, FIFPro, the European Club Association and the European Professional Football Leagues acknowledge in their joint resolution that the 2015 FIFA Regulations on Working with Intermediaries failed to address serious concerns in relation to the activities of intermediaries/agents. They recognise in broad terms that a more effective regulatory framework is needed and call among other things for a reasonable and proportionate cap on fees for intermediaries/agents, enhanced transparency and accountability, or stronger provisions to protect minors.

 

The CAS award in Joseph Odartei Lamptey v. FIFA 

On 15 January 2018, FIFA published on its website an arbitral award delivered on 4 August 2017 by the Court of Arbitration for Sport (CAS) in the dispute between the Ghanian football referee Joseph Odartei Lamptey and FIFA. The CAS sided with FIFA and dismissed the appeal filed by Mr Lamptey against an earlier decision of the FIFA Appeal Committee which (i) found him to have violated Article 69(1) of the FIFA Disciplinary Code as he unlawfully influenced the 2018 World Cup qualifying match between South Africa and Senegal that took place on 12 November 2016; (ii) as a consequence, banned him for life from taking part in any football-related activity; and (iii) ordered the match in question to be replayed. In reaching its conclusion, the CAS relied heavily on multiple reports of irregular betting activities that significantly deviated from usual market developments.  More...


Towards a Suitable Policy Framework for Cricket Betting in India - By Deeksha Malik

Editor's note: Deeksha Malik is a final-year student at National Law Institute University, India. Her main interest areas are corporate law, arbitration, and sports law. She can be reached at dkshmalik726@gmail.com.


In 2015, while interrogating cricketer Sreesanth and others accused in the IPL match-fixing case, Justice Neena Bansal, sitting as Additional Sessions Judge, made the following observations as regards betting on cricket matches.

“Cricket as a game of skill requires hand-eye-coordination for throwing, catching and hitting. It requires microscopic levels of precision and mental alertness for batsmen to find gaps or for bowlers to produce variety of styles of deliveries’ (medium pace, fast, inswing, outswing, offspin, legspin, googly). The sport requires strategic masterminds that can select the most efficient fielding positions for piling pressure on the batsmen. Based on above description, cricket cannot be described anything, but as a game of skill.”

The debate on the issue of betting in sports has since resurfaced and gained the attention of sportspersons, media, sports bodies, policymakers, and the general public. In April 2017, the Supreme Court bench comprising of Justices Dipak Misra and AM Khanwilkar agreed to hear a public interest litigation (PIL) seeking an order directing the government to come up with an appropriate framework for regulating betting in sports. The arguments put forth in the PIL present various dimensions. One of these pertains to economic considerations, a submission that regulated betting would be able to generate annual revenue of Rs. 12,000 crores by bringing the earnings therefrom within the tax net. As for policy considerations, it was submitted that a proper regulation in this area would enable the government to distinguish harmless betting from activities that impair the integrity of the game such as match-fixing. Further, betting on cricket matches largely depends on the skill of the concerned players, thereby distinguishing it from pure chance-based activities.

The issue of sports betting witnesses a divided opinion till this day. This is understandable, for both sides to the issue have equally pressing arguments. Aside from its regulation being a daunting task for authorities, sports betting is susceptible to corruption and other unscrupulous activities. At the same time, it is argued that it would be better for both the game and the economy if the same is legalised. More...


International and European Sports Law – Monthly Report – December 2017. By Tomáš Grell

Editor's note: This report compiles all relevant news, events and materials on International and European Sports Law based on the daily coverage provided on our twitter feed @Sportslaw_asser. You are invited to complete this survey via the comments section below, feel free to add links to important cases, documents and articles we might have overlooked.

 

The Headlines 

The International Skating Union's eligibility rules declared incompatible with EU competition law

On 8 December 2017, the European Commission announced that it had rendered a decision in the case against the International Skating Union (ISU). The Commission upheld the complaint lodged in October 2015 by two Dutch professional speed skaters Mark Tuitert and Niels Kerstholt, represented in this case by Ben Van Rompuy and Antoine Duval (you can read their joint statement here), and ruled that the ISU's eligibility rules preventing athletes from participating in speed skating competitions not approved by the ISU under the threat of severe penalties are in violation of EU competition law. In particular, the Commission held that these rules restrict the commercial freedom of (i) athletes who may be deprived of additional source of income as they are not allowed to participate in speed skating competitions other than those authorised by the ISU; and (ii) independent organisers who are unable to attract top athletes. And while the Commission recognised that sporting rules with restrictive effects might be compatible with EU law if they pursue a legitimate objective such as the protection of athletes' health and safety or the protection of the integrity and proper conduct of sport, it found that the ISU's eligibility rules pursue only its own commercial interests to the detriment of athletes and independent organisers of speed skating competitions. The ISU eventually escaped financial sanctions, but it must modify or abolish its eligibility rules within 90 days; otherwise it would be liable for non-compliance payments of up to 5% of its average daily turnover. For more information on this topic, we invite you to read our recent blog written by Professor Stefano Bastianon.

 

The International Olympic Committee bans Russia from the upcoming Winter Olympic Games

The world has been waiting impatiently for the International Olympic Committee's (IOC) decision on the participation of Russian athletes in the upcoming 2018 Winter Olympic Games in Pyeongchang. This was finally communicated on 5 December 2017. Having deliberated on the findings of the Schmid Commission, the IOC Executive Board decided to suspend the Russian Olympic Committee with immediate effect, meaning that only those Russian athletes who demonstrate that they had not benefited from the state-sponsored doping programme will be able to participate in the Games. Such clean athletes will be allowed to compete under the Olympic Flag, bearing the name 'Olympic Athlete from Russia (OAR)' on their uniforms. Further to this, the IOC Executive Board sanctioned several officials implicated in the manipulation of the anti-doping system in Russia, including Mr Vitaly Mutko, currently the Deputy Prime Minister of Russia and formerly the Minister of Sport. Mounting public pressure subsequently forced Mr Mutko to step down as head of the Local Organising Committee for the 2018 FIFA World Cup.

Meanwhile, 21 individual Russian athletes were sanctioned (see here, here, here, and here) in December (in addition to 22 athletes in November) by the IOC Oswald Commission that is tasked with investigating the alleged doping violations by Russian athletes at the 2014 Winter Olympic Games in Sochi. The Oswald Commission also published two full decisions in the cases against Evgeny Belov and Aleksandr Tretiakov who were both banned from all future editions of the Games. It is now clear that the Court of Arbitration for Sport will have quite some work in the coming weeks as the banned athletes are turning to this Swiss-based arbitral tribunal to have their sanctions reviewed (see here and here).

 

Universal Declaration of Player Rights

14 December 2017 was a great day for athletes all over the globe. On this day, representatives of the world's leading player associations met in Washington D.C. to unveil the Universal Declaration of Player Rights, a landmark document developed under the aegis of the World Players Association that strives to protect athletes from ongoing and systemic human rights violations in global sport. The World Players Association's Executive Director Brendan Schwab emphasised that the current system of sports governance ''lacks legitimacy and fails to protect the very people who sit at the heart of sport'' and stated that ''athlete rights can no longer be ignored''. Among other rights, the Declaration recognises the right of athletes to equality of opportunity, fair and just working conditions, privacy and the protection of personal data, due process, or effective remedy.

 

Chris Froome failed a doping test during the last year's Vuelta a España

The world of cycling suffered yet another blow when it transpired that one of its superstars Chris Froome had failed a doping test during the last year's Vuelta a España, a race he had eventually emerged victorious from for the first time in his career. His urine sample collected on 7 September 2017 contained twice the amount of salbutamol, a medication used to treat asthma, than permissible under the World Anti-Doping Agency's 2017 Prohibited List. Kenyan-born Froome has now hired a team of medical and legal experts to put forward a convincing explanation for the abnormal levels of salbutamol in his urine and thus to avoid sanctions being imposed on him. More...