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

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...



Call for papers: Annual International Sports Law Conference of the International Sports Law Journal - 25 & 26 October - Asser Institute, The Hague

 Call for papers: Annual International Sports Law Conference of the International Sports Law Journal

Asser Institute, The Hague

25 and 26 October 2018

The editorial board of the International Sports Law Journal (ISLJ) is inviting you to submit abstracts for its second ISLJ Annual Conference on International Sports Law, which will take place on 25 and 26 October at the Asser Institute in The Hague. The ISLJ published by Springer in collaboration with Asser Press is the leading academic publication in the field of international sports law. Its readership includes academics and many practitioners active in the field. This call is open to researchers as well as practitioners. 

We are also delighted to announce that Prof. Franck Latty (Université Paris Nanterre), Prof. Margareta Baddeley (Université de Genève), and Silvia Schenk (member of FIFA’s Human Rights Advisory Board) have confirmed their participation as keynote speakers.

Abstracts could, for example, tackle questions linked to the following international sports law subjects:

  • The interaction between EU law and sport
  • Antitrust and sports regulation
  • International sports arbitration (CAS, BAT, etc.)
  • The functioning of the world anti-doping system (WADA, WADC, etc.)
  • The global governance of sports
  • The regulation of mega sporting events (Olympics, FIFA World Cup, etc.)
  • The transnational regulation of football (e.g. the operation of the FIFA Regulations on the Status and Transfer of Players or the UEFA Financial Fair Play Regulations)
  • The global fight against corruption in sport  
  • Comparative sports law
  • Human rights in sport 

Please send your abstract (no more than 300 words) and CV no later than 30 April 2018 to a.duval@asser.nl. Selected speakers will be informed by 15 May.

The selected participants will be expected to submit a draft paper by 1 September 2018. All papers presented at the conference are eligible for publication in a special edition of the ISLJ.  To be considered for inclusion in the conference edition of the journal, the final draft must be submitted for review by 15 December 2018.  Submissions after this date will be considered for publication in later editions of the Journal.

The Asser Institute will cover one night accommodation for the speakers and will provide a limited amount of travel grants (max. 300€). If you wish to be considered for a grant please justify your request in your submission. 

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...

The ISU Commission's Decision and the Slippery Side of Eligibility Rules - By Stefano Bastianon (University of Bergamo)

Editor’s note: Stefano Bastianon is Associate Professor in European 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. From the very beginning, the outcome of the ISU case was highly predictable, at least for those who are familiar with the basics of antitrust law. Nevertheless, more than twenty years after the Bosman judgment, the sports sector has shown the same shortsightedness and inability to see the forest for the trees. Even this attitude was highly predictable, at least for those who know the basics of sports governance. The final result is a clear-cut decision capable of influencing the entire sports movement. More...



Human Rights as Selection Criteria in Bidding Regulations for Mega-Sporting Events – Part II: FIFA and Comparative Overview – By Tomáš Grell

The first part of this two-part blog examined the new bidding regulations adopted by the IOC and UEFA, and concluded that it is the latter who gives more weight to human rights in its host selection process. This second part completes the picture by looking at FIFA's bidding regulations for the 2026 World Cup. It goes on to discuss whether human rights now constitute a material factor in evaluating bids to host the mega-sporting events organised by these three sports governing bodies. More...

Human Rights as Selection Criteria in Bidding Regulations for Mega-Sporting Events – Part I: IOC and UEFA – By Tomáš Grell

Editor’s note: Tomáš Grell holds an LL.M. in Public International Law from Leiden University. He contributes to the work of the ASSER International Sports Law Centre as a research intern.


It has been more than seven years since the FIFA Executive Committee awarded the 2022 World Cup to Qatar. And yet only in November 2017 did the Qatari government finally agree to dismantle the controversial kafala system, described by many as modern-day slavery. Meanwhile, hundreds of World Cup-related migrant workers have reportedly been exposed to a wide range of abusive practices such as false promises about the pay, passport confiscation, or appalling working and living conditions.[1] On top of that, some workers have paid the highest price – their life. To a certain extent, all this could have been avoided if human rights had been taken into account when evaluating the Qatari bid to host the tournament. In such a case, Qatar would not have won the bidding contest without providing a convincing explanation of how it intends to ensure that the country's poor human rights record will not affect individuals, including migrant workers, contributing to the delivery of the World Cup. An explicit commitment to abolish the kafala system could have formed an integral part of the bid.

Urged by Professor John Ruggie and his authoritative recommendations,[2] in October 2017 FIFA decided to include human rights within the criteria for evaluating bids to host the 2026 World Cup, following similar steps taken earlier this year by the International Olympic Committee (IOC) and UEFA in the context of the Olympic Winter Games 2026 and the Euro 2024 respectively. This two-part blog critically examines the role human rights play in the new bidding regulations adopted by the IOC, UEFA, and FIFA. The first part sheds light on the IOC and UEFA. The second part then takes a closer look at FIFA and aims to use a comparative analysis to determine whether the new bidding regulations are robust enough to ensure that selected candidates abide by international human rights standards.More...


Asser International Sports Law Blog | Blog Symposium: Third-party entitlement to shares of transfer fees: problems and solutions - By Dr. Raffaele Poli (Head of CIES Football Observatory)

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

Blog Symposium: Third-party entitlement to shares of transfer fees: problems and solutions - By Dr. Raffaele Poli (Head of CIES Football Observatory)

Introduction: FIFA’s TPO ban and its compatibility with EU competition law.
Day 1: FIFA must regulate TPO, not ban it.
Day 3: The Impact of the TPO Ban on South American Football.
Day 4: Third Party Investment from a UK Perspective.
Day 5: Why FIFA's TPO ban is justified.

Editor’s note: Raffaele Poli is a human geographer. Since 2002, he has studied the labour and transfer markets of football players. Within the context of his PhD thesis on the transfer networks of African footballers, he set up the CIES Football Observatory based at the International Centre for Sports Studies (CIES) located in Neuchâtel, Switzerland. Since 2005, this research group develops original research in the area of football from a multidisciplinary perspective combining quantitative and qualitative methods. Raffaele was also involved in a recent study on TPO providing FIFA with more background information on its functioning and regulation (the executive summary is available here).

This is the third blog of our Symposium on FIFA’s TPO ban, it is meant to provide an interdisciplinary view on the question. Therefore, it will venture beyond the purely legal aspects of the ban to introduce its social, political and economical context and the related challenges it faces.

 

1)    Introduction

This paper reviews the main challenges to the smooth development of football when considering the repercussions of third party entitlement to shares of transfer fees (sections 2 to 5) and formulates a non-partisan proposal to reform the transfer system as a whole (section 6).

Third parties define all other parties than the teams transferring the registration of a player: companies, holdings, investments funds, agents, club shareholders and employees, footballers and relatives, other football clubs, football academies, etc.

In the interests of accuracy and avoidance of doubt, the common terms of third-party ownership and players’ economic rights are not used in this paper. Literally speaking, the business area considered is indeed based on options rather than ownership.

Moreover, the term of ownership suggests that third-party investors “own” players as for a master with respect to a slave. TPE arrangements also raise crucial issues in terms of power between third-party investors and players. However, the stakes are hardly comparable with those in the master/slave relationship. It is thus more accurate to refer to entitlement instead of ownership.

With regard to economic rights, they are nothing more than transfer compensation as stipulated by FIFA regulations. The notion of economic rights is thus also misleading as it suggests the existence of specific rights beyond those deriving from regulations set up by football authorities. The unreflective use of this concept only adds confusion to the debate.

The common goal of actors participating in the business of third-party entitlement (hereafter TPE) is to make a financial profit through the transfer of players, or, for individuals involved in the financing of clubs, to be able to secure their investments.

 

2)    TPE and the sustainability of football clubs

The growth of TPE deals raises crucial issues for the sustainable development of clubs. This is especially true for teams that view regular investment from third parties as a key income source in their business model.

While TPE investments might initially be welcomed by clubs facing economic problems, over time, such agreements have the potential to provoke a loss of control over transfer operations and durably compromise the financial situation of teams.

Within the context of economic polarisation[1], TPE deals do not have the power to solve financial issues arising from an unfavourable position in the market. On the contrary, a difficult situation from an economic standpoint reduces considerably the bargaining power of clubs with respect to third parties.

Third-party investors promoting TPE arrangements are thus often able to acquire a favourable position within a club to minimise their risks and maximise profits over the longer term. This reinforces the dependency of clubs vis-à-vis third parties and affects their financial stability.

The TPE business model develops in parallel with the progressive takeover of clubs by groups or individuals motivated by the possibility to speculate on the transfer market. The tendency to consider teams as a launching-pad to generate profits through the transfer of players increases.

Club employees in charge of transfers also contribute to this process by using their strategic position for personal profit. Within this framework, economic stakes tend to overcome sporting objectives. This runs in the vast majority of cases contrary to the long-standing interests of clubs.

Indeed, the greed of third-party investors, the high mobility of players and the chronic financial instability of clubs engaging in TPE practices tend to have a negative impact on results. Several studies by the CIES Football Observatory have provided evidence that over-activity in the transfer market is counterproductive in the long run.[2]

In turn, poor performance levels have a negative effect on the ability to generate revenues in the transfer market and can lead to bankruptcies. It is indeed harder to find potential buyers interested in taking over a club when the latter is not entitled to potential transfer fees for players under contract.

 

3)    TPE and the development of the game

The logic of short-term profit maximisation underlying TPE practices is often not appropriate for the sporting development of players. This is above all valid for young talents transferred abroad before the acquisition of a solid experience in their home country.

The numerous transfers that many footballers at the heart of the TPE business model will be confronted with to develop or restart their career only add to the pressure which makes fulfilling their potential more difficult. In many cases, this aspect is not sufficiently taken into account by third-party investors primarily attracted by the lure of money.

The monetisation of players’ mobility within the framework of the TPE business model tends thus to have a negative effect not only for footballers, but also on football in general. Short-termism and speculation often run contrary to the personal development of players and entail greater risks of breaking careers.

Furthermore, there are serious concerns with regard to influence and bias in player selection. Indeed, the speculative nature of the TPE business model and vested interests between the various actors involved promotes favouritism.

High risks of favouritisms and insider trading also exist with regard to national team selection both at adult and youth level. Indeed, international caps can significantly increase the market value of a player and guarantee higher profits.

In addition, as the ability to produce high-quality matches is strongly linked to team cohesion, the increase in player turnover within the framework of the development of TPE arrangements is damaging to football as a spectacle.

While some well-connected clubs are able to take advantage of their privileged access to the best talent by means of TPE deals, this always takes place to the detriment of other teams within the context of a zero-sum game.

Consequently, the TPE business model prevents leagues from increasing the competitive balance between clubs and the overall performance of the league. The same holds true at international level for football as a whole.

 

4)    TPE and the transfer system

An additional concern with regard to the TPE business model relates to two founding principles underlying the transfer system of football players as agreed in 2001 by the EU, FIFA, and UEFA: contractual stability and the promotion of training.[3]

Contrary to the principle of contractual stability, the TPE business model promotes the use of the transfer system for the purpose of financial speculation. Within this framework, the trend of transferring players before the end of their contract increases.

The speculative nature of the TPE business model also has a negative impact on the promotion of training. Firstly, TPE deals are concluded without the payment of training indemnities and solidarity contributions as stipulated in FIFA regulations. Secondly, footballers having already been the subject of investment tend to be favoured above players who are locally trained.

With this in mind, it is not surprising to observe that the number of players transferred by top division clubs in 31 UEFA member associations has reached an all-time high in 2014/15. In parallel, a record low was recorded in the percentage of club-trained footballers.[4] In the long-term, these developments weaken clubs both sportingly and economically.

In addition, the TPE business model amplifies the conflicts of interest between intermediaries, fund or investment company managers and club shareholders or employees in charge of transfers. The TPE arrangements between these actors lead to the institutionalisation of conflicts of interest as the modus operandi of the transfer market.

In parallel, a process of “cartelisation” based on privileged relations develops. Established intermediaries play a crucial role in this process. The direct involvement of the most influential agents in the TPE business sphere reinforces their dominant position.[5] This further limits the competitiveness of the player representation market and the transfer market in general.

As a consequence, a few investment funds and companies collaborate on a regular basis with a close-knit group of intermediaries holding strong ties with team shareholders and managers. The key actors in these dominant networks are thus more than ever able to exercise a lasting control over more footballers and clubs.[6]

This gives them even more leverage over actors who are not part of their network. As in all economic sectors, enjoying an oligopolistic position is indeed particularly useful. Specifically in football, this drives up transfer costs for players controlled, generates ever-greater profits and consolidates the control on the market.

In addition, when TPE investors want to maintain a percentage on future transfers with the aim of maximising profits, clubs from national associations where such practices are forbidden (i.e. England) have much less bargaining power. This also leads to rising recruitment costs. From this perspective, the TPE business model is a source of inequalities between countries.

A further negative consequence of the development of the TPE business model is the creation of parallel transfer markets which are for the most part outside the scope and control of the football authorities, as well as the arbitrary justice of sporting federations.

Contrary to club officials, third-party investors do not have to respect the normal transfer windows. This gives third parties a competitive advantage over clubs. Moreover, as already mentioned, TPE agreements do not provide for the payment of solidarity or training contributions.

By sidestepping sporting regulations, the spread of the TPE business model undermines the authority of football governing bodies and the arbitrary justice of sport. This jeopardises the regulatory mechanisms agreed with public authorities to protect the interests of clubs, players and the agents wishing to operate in compliance with the existing legal framework.

 

5)    TPE and the rights of workers

By widening the number and variety of actors entitled to shares in transfer fees, TPE practices can restrict the freedom of movement of players in several ways. This situation raises important issues with regard to workers’ rights.

The existence of TPE deals generally makes negotiations more complicated. Transfers can collapse even though the clubs and the player concerned had reached an agreement. Moreover, as mentioned above, the multiplication of actors involved in transactions is likely to hinder the free movement of players by increasing transfer costs to the satisfaction of all parties involved.

From an ethical point of view, the fact that many players are kept in the dark regarding arrangements for the share of potential fees for their transfer is also problematic. Insofar as these agreements often have an impact on the rest of their career, players should at least be informed as to the identity of the actors involved, as well as to the terms of the deals.

Morally speaking, the written consent of players should also be compulsory to validate the contractual details agreed between the different parties involved. This is currently not the case. As a matter of fact, many TPE arrangements run contrary to the fundamental right of players to decide where they want to play.

TPE practices thus contribute in reducing the decision-making powers of footballers to the profit of third parties. In the least favourable scenarios, players find themselves in a situation of dependence towards third-party investors and intermediaries with little or no room to manoeuvre.

Young players from poor family backgrounds with little knowledge on the functioning of the transfer system are particularly vulnerable with respect to arrangements promoted within the context of the TPE business model.

This was notably raised by Marcelo Estigarribia in a recent interview published by an Italian magazine.[7] The Paraguayan footballer complained about the numerous transfers he had to face up (six over the last seven years) after that an investment company acquired the control of his career through TPE arrangements.

Of course, successful footballers can also take advantage of the networks set up by dominant actors through TPE arrangements. However, the opposite holds often true for the majority of less successful players who would have needed a more stable context to develop their skills or would have liked to have a greater control on their career path.

 

6)    Plea for a holistic approach

The practical functioning of the transfer market of football players and the development of the TPE business model threaten the integrity of football. A holistic approach is needed to limit the worst pitfalls of the business and reduce its profitability for third parties who do not act in the long standing interests of clubs and of football in general.

This will involve reforming the existing transfer system and making it better suited to fulfil the purpose for which it was first implemented and has since been adapted as previously described in this paper.

An efficient measure would be to entitle each team in which a player has passed through to a compensation for each fee paying transfer taking place over the course of the player’s professional career on a pro rata basis to the number of official matches played at the club.

For example, if footballer X begins as a professional in club X and plays 75 matches there before being transferred to club Y, in the event of a paying fee transfer to club Z after 25 official games played for club Y, club X is entitled to 75% of the transfer fee. And this even though club Y already paid a fee to sign the player from club X.

This reform would re-focus the transfer system back on the objectives for which it was conceived, notably with regard to contractual stability and the promotion of training. It would also have a positive impact in terms of income redistribution, a key issue in today’s football.[8]

At contractual stability level, the reform would ensure that clubs are rewarded with a substantial compensation at a later stage even if the player leaves at the end of his contract. Consequently, teams could more easily afford keeping the best talents for a longer period. This would also help tame salary inflation.

With regard to the promotion of training, such a reform would make sustainable investments in clubs or youth academies for the training of the next generation of players more interesting from a financial standpoint.

Training clubs would indeed be better compensated economically in that they would receive substantial money also in the event of a second, third or further paying fee transfer, which are generally the most profitable.

In the meantime, this would reduce the attractiveness of speculating on specific talents to obtain short-term profits with no real contribution to the smooth development of football, as it is the case with the current TPE business model.

Of course, this reform is no golden bullet. It would not solve all the problems related to corporate governance issues at club level. It would also not be able to tackle all the concerns arising from the practical functioning of the transfer market of football players as highlighted above.

However, it would have the merit to re-direct the transfer system towards the key principles underlying its creation and existence. It would also allow football governing bodies to gain a better control over its operation.

Beyond the TPE issue, all stakeholders concerned about the integrity of football should have an interest in updating the transfer system to protect the smooth development of the game. The proposed reform moves in that



[1] See UEFA 2014: The European Club Footballing Landscape, Club Licensing Benchmarking Report (http://www.uefa.org/MultimediaFiles/Download/Tech/uefaorg/General/02/09/18/26/2091826_DOWNLOAD.pdf).

[2] See Poli R., Besson R. and Ravenel L. 2015: Club instability and its consequences, CIES Football Observatory Monthly Report n° 2 (http://www.football-observatory.com/IMG/pdf/mr01_eng.pdfhttp://www.football-observatory.com/IMG/pdf/mr01_eng.pdf).

[3] See http://europa.eu/rapid/press-release_IP-02-824_en.htm.

[4] The figures are available in the CIES Football Observatory’s Digital Atlas at http://www.football-observatory.com/Digital-Atlas.

[5] See Poli, R. and Rossi, G. (2012) Football agents in the biggest five European markets. An empirical research report. CIES: Neuchâtel (http://www.football-observatory.com/IMG/pdf/report_agents_2012-2.pdf).

[6] A thorough analysis of the working of dominant networks in the transfer market of football players is available in Russo, P. (2014) Gol di rapina. Il lato oscuro del calcio globale. Edizioni Clichy, Firenze.

[7] Fabrizio Salvio, Sport Week, 27.09.2014, 34-38.

[8] See Poli R., Besson R. and Ravenel L. 2015: Transfer expenditure and results, CIES Football Observatory Monthly Report n° 3 (http://www.football-observatory.com/IMG/pdf/mr03_eng.pdf).

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