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 EU State aid and Sport Saga: Hungary revisited? (Part 2)

On 18 May 2016, the day the first part of this blog was published, the Commission said in response to the Hungarian MEP Péter Niedermüller’s question, that it had “not specifically monitored the tax relief (…) but would consider doing so. The Commission cannot prejudge the steps that it might take following such monitoring. However, the Commission thanks (Niedermüller) for drawing its attention to the report of Transparency International.”

With the actual implementation in Hungary appearing to deviate from the original objectives and conditions of the aid scheme, as discussed in part 1 of this blog, a possible monitoring exercise by the Commission of the Hungarian tax benefit scheme seems appropriate. The question remains, however, whether the Commission follows up on the intent of monitoring, or whether the intent should be regarded as empty words. This second part of the blog will outline the rules on reviewing and monitoring (existing) aid, both substantively and procedurally. It will determine, inter alia, whether the State aid rules impose an obligation upon the Commission to act and, if so, in what way. More...

The Rise and Fall of FC Twente

Yesterday, 18 May 2016, the licensing committee of the Dutch football federation (KNVB) announced its decision to sanction FC Twente with relegation to the Netherland’s second (and lowest) professional league. The press release also included a link to a document outlining the reasons underlying the decision. For those following the saga surrounding Dutch football club FC Twente, an unconditional sanction by the licensing committee appeared to be only a matter of time. Yet, it is the sanction itself, as well as its reasoning, that will be the primary focus of this short blog.More...

The EU State aid and Sport Saga: Hungary’s tax benefit scheme revisited? (Part 1)

The tax benefit scheme in the Hungarian sport sector decision of 9 November 2011 marked a turning point as regards the Commission’s decisional practice in the field of State aid and sport. Between this date and early 2014, the Commission reached a total of ten decisions on State aid to sport infrastructure and opened four formal investigations into alleged State aid to professional football clubs like Real Madrid and Valencia CF.[1] As a result of the experience gained from the decision making, it was decided to include a Section on State aid to sport infrastructure in the 2014 General Block Exemption Regulation. Moreover, many people, including myself, held that Commission scrutiny in this sector would serve to achieve better accountability and transparency in sport governance.[2]

Yet, a recent report by Transparency International (TI), published in October 2015, raises questions about the efficiency of State aid enforcement in the sport sector. The report analyzes the results and effects of the Hungarian tax benefit scheme and concludes that:

“(T)he sports financing system suffers from transparency issues and corruption risks. (…) The lack of transparency poses a serious risk of collusion between politics and business which leads to opaque lobbying. This might be a reason for the disproportionateness found in the distribution of the subsidies, which is most apparent in the case of (football) and (the football club) Felcsút.”[3]

In other words, according to TI, selective economic advantages from public resources are being granted to professional football clubs, irrespective of the tax benefit scheme greenlighted by the Commission or, in fact, because of the tax benefit scheme. More...

International and European Sports Law – Monthly Report – April 2016. By Marine Montejo

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

This month saw the conflict between FIBA Europe and the Euroleague (more precisely its private club-supported organizing body, Euroleague Commercial Assets or ‘ECA’) becoming further entrenched. This dispute commenced with FIBA creating a rival Basketball Champions League, starting from the 2016-2017 season with the hope to reinstate their hold over the organization of European championships. The ECA, a private body that oversees the Euroleague and Eurocup, not only decided to maintain its competitions but also announced it would reduce them to a closed, franchise-based league following a joint-venture with IMG. In retaliation, FIBA Europe suspended fourteen federations of its competition (with the support of FIBA) due to their support for the Euroleague project.More...


The boundaries of the “premium sports rights” category and its competition law implications. By Marine Montejo

Editor’s note: Marine Montejo is a graduate from the College of Europe in Bruges and is currently an Intern at the ASSER International Sports Law Centre.

In its decisions regarding the joint selling of football media rights (UEFA, Bundesliga, FA Premier league), the European Commission insisted that premium media rights must be sold through a non-discriminatory and transparent tender procedure, in several packages and for a limited period of time in order to reduce foreclosure effects in the downstream market. These remedies ensure that broadcasters are able to compete for rights that carry high audiences and, for pay TV, a stable number of subscriptions. In line with these precedents, national competition authorities have tried to ensure compliance with remedy packages. The tipping point here appears to be the premium qualification of sport rights on the upstream market of commercialization of sport TV rights.

This begs the question: which sport TV rights must be considered premium? More...

Guest Blog - Mixed Martial Arts (MMA): Legal Issues by Laura Donnellan

Editor's note: Laura Donnellan is a lecturer at University of Limerick. You can find her latest publications here.


Introduction

On Tuesday the 12th of April, João Carvalho passed away in the Beaumont Hospital after sustaining serious injuries from a mixed martial arts (MMA) event in Dublin on the previous Saturday. The fighter was knocked out in the third round of a welterweight fight against Charlie Ward. Aside from the tragic loss of life, the death of Carvalho raises a number of interesting legal issues. This opinion piece will discuss the possible civil and criminal liability that may result from the untimely death of the Portuguese fighter.

It is important to note at the outset that MMA has few rules and permits wrestling holds, punching, marital arts throws and kicking. MMA appears to have little regulation and a lack of universally accepted, standardised rules. There is no international federation or governing body that regulates MMA. It is largely self-regulated. MMA is not recognised under the sports and governing bodies listed by Sport Ireland, the statutory body established by the Sport Ireland Act 2015 which replaced the Irish Sports Council. MMA is considered a properly constituted sport so long as the rules and regulations are adhered to, there are appropriate safety procedures, the rules are enforced by independent referees, and it appropriately administered.

The Acting Minister for Sport, Michael Ring, has called for the regulation of MMA. Currently there are no minimum requirements when it comes to medical personnel; nor are there any particular requirements as to training of medical personnel. The promoter decides how many doctors and paramedics are to be stationed at events. In February 2014 Minister Ring wrote to 17 MMA promoters in Ireland requesting that they implement safety precautions in line with those used by other sports including boxing and rugby.

Despite this lack of regulation, this does not exempt MMA from legal liability as the discussion below demonstrates.More...



Guest Blog - The Role of Sport in the Recognition of Transgender and Intersex Rights by Conor Talbot

Editor's note: Conor Talbot is a Solicitor at LK Shields Solicitors in Dublin and an Associate Researcher at Trinity College Dublin. He can be contacted at ctalbot@tcd.ie, you can follow him on Twitter at @ConorTalbot and his research is available at www.ssrn.com/author=1369709. This piece was first published on the humanrights.ie blog.

Sport is an integral part of the culture of almost every nation and its ability to shape perceptions and influence public opinion should not be underestimated.  The United Nations has highlighted the potential for using sport in reducing discrimination and inequality, specifically by empowering girls and women.  Research indicates that the benefits of sport include enhancing health and well-being, fostering empowerment, facilitating social inclusion and challenging gender norms.

In spite of the possible benefits, the successful implementation of sport-related initiatives aimed at gender equity involves many challenges and obstacles.  Chief amongst these is the way that existing social constructs of masculinity and femininity — or socially accepted ways of expressing what it means to be a man or woman in a particular socio-cultural context — play a key role in determining access, levels of participation, and benefits from sport.  This contribution explores recent developments in the interaction between transgender and intersex rights and the multi-billion dollar industry that the modern Olympic Games has become.  Recent reports show that transgender people continue to suffer from the glacial pace of change in social attitudes and, while there has been progress as part of a long and difficult journey to afford transgender people full legal recognition through the courts, it seems clear that sport could play an increasingly important role in helping change or better inform social attitudes.More...



Unpacking Doyen’s TPO Deals: The Final Whistle

Footballleaks is now operating since nearly half a year and has already provided an incredible wealth of legal documents both on TPO (and in particular Doyen’s contractual arrangements) and on the operation of the transfer system in football (mainly transfer agreements, player contracts and agents contracts). This constant stream of information is extremely valuable for academic research to get a better grip on the functioning of the transfer market. It is also extremely relevant for the shaping of public debates and political decisions on the regulation of this market. As pointed out on the footballleaks website, it has triggered a series of press investigations in major European news outlets.

In this blog, I want to come to a closure on our reporting on Doyen’s TPO deals. In the past months, we have already dealt with the specific cases of FC Twente and Sporting Lisbon, reviewed Doyen’s TPO deals with Spanish clubs, as well as discussed the compatibility of the TPO ban with EU law. In the Sporting Lisbon case, Doyen has since earned an important legal victory in front of the CAS (the ensuing award was just published by Footballleaks). This victory should not be overstated, however, it was not unexpected due to the liberal understanding of the freedom of contract under Swiss law. As such it does not support the necessity of TPO as an investment practice and does not threaten the legality (especially under EU law) of FIFA’s ban.

In our previous blogs on Doyen’s TPO deals we decided to focus only on specific deals, Twente and Sporting Lisbon, or a specific country (Spain). However, nearly six months after the whole footballleaks project started, we can now provide a more comprehensive analysis of the TPO deals signed by Doyen. Though, it is still possible that other, yet unknown, deals would be revealed, I believe that few of Doyen’s TPO agreements are still hidden. Thanks to footballleaks, we now know how Doyen operates, we have a precise idea of its turnover, its return on investments and the pool of clubs with which it signed a TPO agreement. Moreover, we have a good understanding of the contractual structure used by Doyen in those deals. This blog will offer a brief synthesis and analysis of this data.More...





Unpacking Doyen’s TPO Deals: TPO and Spanish football, friends with(out) benefits?

Update: On 14 April footballleaks released a series of documents concerning Sporting de Gijón. Therefore, I have updated this blog on 19 April to take into account the new information provided.  

Doyen Sports’ TPO (or TPI) model has been touted as a “viable alternative source of finance much needed by the large majority of football clubs in Europe". These are the words of Doyen’s CEO, Nélio Lucas, during a debate on (the prohibition of) TPO held at the European Parliament in Brussels last January. During that same debate, La Liga’s president, Javier Tebas, contended that professional football clubs, as private undertakings, should have the right to obtain funding by private investors to, among other reasons, “pay off the club’s debts or to compete better”. Indeed, defendants of the TPO model continuously argue that third party investors, such as Doyen, only have the clubs’ best interests in mind, being the only ones capable and willing to prevent professional football clubs from going bankrupt. This claim constitutes an important argument for the defendants of the TPO model, such as La Liga and La Liga Portuguesa, who have jointly submitted a complaint in front of the European Commission against FIFA’s ban of the practice.[1]

The eruption of footballleaks provided the essential material necessary to test this claim. It allows us to better analyse and understand the functioning of third party investment and the consequences for clubs who use these services. The leaked contracts between Doyen and, for example, FC Twente, showed that the club’s short term financial boost came at the expense of its long-term financial stability. If a club is incapable of transferring players for at least the minimum price set in Doyen’s contracts, it will find itself in a financially more precarious situation than before signing the Economic Rights Participation Agreement (ERPA). TPO might have made FC Twente more competitive in the short run, in the long run it pushed the club (very) close to bankruptcy.

More than four months after its launch, footballleaks continues to publish documents from the football world, most notably Doyen’s ERPAs involving Spanish clubs.More...

International and European Sports Law – Monthly Report – March 2016. By Marine Montejo

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. 

Marine Montejo is a graduate from the College of Europe in Bruges and is currently an Intern at the ASSER International Sports Law Centre.


The Headlines

The Belgian Court of Appeal released its judgment this month regarding Doyen’s legal battle against the FIFA TPO ban. The Appeal Court confirmed the first instance decision and ruled out any provisional measures to block the ban’s implementation (for an in depth review, see our blog post). More importantly, the Court reaffirmed that Swiss based sport federations are liable in front of EU Members’ States courts when EU competition law is involved. That means the next important step for this legal battle is whether or not the European Commission is going to open a formal proceeding (Doyen already lodged a complaint) to assess the compatibility, and more importantly, the proportionality of the TPO ban with EU law. Only a preliminary ruling by the CJEU could hasten the decision if one of the European national courts, hearing a case brought by Doyen (France or Belgium), decided to refer a preliminary question.More...


Asser International Sports Law Blog | EU Law is not enough: Why FIFA's TPO ban survived its first challenge before the Brussels Court

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

EU Law is not enough: Why FIFA's TPO ban survived its first challenge before the Brussels Court


Star Lawyer Jean-Louis Dupont is almost a monopolist as far as high profile EU law and football cases are concerned. This year, besides a mediatised challenge against UEFA’s FFP regulations, he is going after FIFA’s TPO ban on behalf of the Spanish and Portuguese leagues in front of the EU Commission, but also before the Brussels First Instance Court defending the infamous Malta-based football investment firm Doyen Sport. FIFA and UEFA’s archenemy, probably electrified by the 20 years of the Bosman ruling, is emphatically trying to reproduce his world-famous legal prowess. Despite a first spark at a success in the FFP case against UEFA with the Court of first instance of Brussels sending a preliminary reference to the Court of Justice of the EU (CJEU), this has proven to be a mirage as the CJEU refused, as foretold, to answer the questions of the Brussels Court, while the provisory measures ordered by the judge have been suspended due to UEFA’s appeal. But, there was still hope, the case against FIFA’s TPO ban, also involving UEFA and the Belgium federation, was pending in front of the same Brussels Court of First Instance, which had proven to be very willing to block UEFA’s FFP regulations. Yet, the final ruling is another disappointment for Dupont (and good news for FIFA). The Court refused to give way to Doyen’s demands for provisional measures and a preliminary reference. The likelihood of a timely Bosman bis repetita is fading away. Fortunately, we got hold of the judgment of the Brussels court and it is certainly of interest to all those eagerly awaiting to know whether FIFA’s TPO ban will be deemed compatible or not with EU law.


I.               Facts and Procedure

The case was introduced in March 2015 by Doyen Sports Investments Limited, the Maltese investment fund specialised in football and an obscure Belgium football club, the RFC Seresien/Seraing United, against the Belgium federation (URBSFA), FIFA and UEFA. For its part, FIFPro decided to voluntarily intervene in the debates.

Seraing United plays in the Proximus League, the Belgium Second Division, and signed a specific collaboration contract with Doyen Sports on 30 January 2015. This collaboration contract foresees that Doyen and Seraing United will collaborate to select at least two players in each summer transfer window to be recruited by Seraing via a TPI (Third-Party Investment). In return, Doyen will contribute 300 000€ for the 2015/2016 season to Seraing’s budget and own 30% of rights of the players it has picked. For example, during this summer’s transfer window Seraing and Doyen have concluded a TPI contract to finance the recruitment of Ferraz Pereira. It is this contract that led to the present dispute. Indeed, as Seraing indicated in its filing for registration that Ferraz Perreira was recruited via a TPI contract, the URBSFA decided to block the registration of the player in the FIFA TMS system. The procedure regarding the release of an International Transfer Certificate is still on-going in front of FIFA’s internal bodies.

The claimants demanded that the judge blocked any attempt of FIFA, UEFA and the Belgium federation to implement the TPO ban (in the form of FIFA Circular 1464) and, if necessary, to send a preliminary reference to the CJEU.


II.             Jurisdiction of the Brussels Court

The first key question, as in the FFP case, was whether the Brussels Court had jurisdiction over the matter. This was unproblematic as far as the demands against the Belgium federation are concerned, as it is seated in Belgium and a potential arbitration clause does not hinder the demand of provisory measures to the national judge under Belgium law.

As far as UEFA and FIFA are concerned, however, the question is more complex. The Brussels Court quickly side-lined the objection based on a putative CAS arbitration clause, but it went into greater details concerning its international jurisdiction on the basis of the Lugano Convention. Under article 6 par. 1 of the Lugano Convention a defendant can be sued in the court of a place where one of the defendants is domiciled if “the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings”. In the FFP case, it is this close connection between the claims raised against UEFA and the Belgium Federation that could not be decisively proven and that led the Court to declare itself incompetent to deal with the matter. In the present case, the Court clearly distinguishes between FIFA and UEFA.

Concerning the claims raised against FIFA, the Court considers that:

“The relations between FIFA and the URBSFA are characterized by the fact that FIFA is the association adopting the international regulations which national federations, members of FIFA, including the URBSFA, have the duty to respect and enforce against their own members, i.e. the football clubs.” (para.42 of the judgment)

It deduces from this consideration that the URBSFA will have to implement FIFA’s TPO ban. However, this close connection exists only insofar as the claims raised are connected with provisory measures to be applied on the Belgian territory. In the eyes of the Court, FIFA’s objections to its jurisdiction based on article 22.2 of the Lugano Convention are not relevant, insofar that the case does not involve primarily a question of company or association law. The Court, contrary to the FFP case against UEFA, concludes that it has jurisdiction to deal with the claims raised against FIFA. This is a first, clear, legal victory for Jean-Louis Dupont. Yet this does not apply to UEFA as it did not adopt the regulations challenged, nor is the Belgium federation implementing its rules when enforcing the TPO ban. Thus, a close link in the sense of article 6 par. 1 of the Lugano Convention is missing[1]. Neither is article 31 of the Lugano Convention suitable to ground the Court’s jurisdiction against UEFA[2]. Hence, the Court declares itself incompetent to deal with the claims raised against UEFA.

The Court’s recognition that it has jurisdiction to deal with the claims directed against FIFA’s TPO ban insofar as FIFA’s rules have to be implemented by the URBSFA on the Belgium territory meant that this time Dupont could hope for a viable preliminary reference. Yet, as we will see, this did not lead to the award of the provisory measures hoped by the claimants.

 

III.           The conditions for awarding provisory measures under Belgium law

Under Belgium law two main conditions need to be fulfilled to lead to the granting of provisory measures: there need to be urgency and “appearance of right” (condition de l’apparence), which is analogous to the likelihood to prevail. There is urgency when it is feared that harm of certain intensity, or the likelihood of a serious inconvenience, make an immediate decision preferable. In the present case, the Court considers that Doyen is necessarily negatively affected by the TPO ban, as it is unable to exercise its economic activity[3]. The ban prejudices also Seraing United, which is deprived of an opportunity to finance its activities in a difficult context (URBSFA’s new regulations restricting the conditions to be considered a professional club). Thus, the Court finds that the urgency of the matter is given.

However, and this is the crux of the case, the judge refuses to consider that there is an appearance of right. In other words, he denied that the claimants are likely to prevail on the substance of the application of EU competition law. This is the most important part of the judgment, as it is the first time that a judicial authority adopts a legally binding (though provisional) opinion on the potential compatibility of the TPO ban with EU competition law (the much-cited Spanish’s Competition Authority opinion is advisory and does not cover the application of EU competition law). The claimants argued that the TPO ban is contrary to EU competition law (Article 101 and 102 TFEU) and to the EU free movement rights (Article 63, 56 and 45 TFEU). While, FIFPro, to which the Court recognized the privilege of expressing the collective opinion of professional players, FIFA and UEFA considered that it is compatible with EU law. 

The Court, first, refers to the Piau ruling of the CJEU to affirm that FIFA has a dominant position on the market for the services of players’ agents[4]. This is not surprising. In fact the judge insists that the key legal question is whether there is an abuse of this dominant position. In this regard it considers that both abuses of dominant position under article 102 TFEU and restrictions on free competition under article 101 par. 1 TFEU must be analysed with due consideration to the specific sector in which FIFA is active and to the legitimate objectives it claims to pursue.[5] Subsequently, the judgment lists a number of factors highlighted by FIFA and FIFPro underlying the legitimate objectives of the ban:

·      These practices are mainly the deed of investment firms

·      From which we do not know the shareholders

·      Which conclude contracts with different clubs, potentially directly competing against each other on the field

·      These contracts are opaque as they are not registered

·      They can be easily transferred

·      The third-party investors are interested in the players’ quick transfers, in short sequences, as they will then reap their benefits

·      This is contradictory with the objective of contractual stability during the players contract with their club

·      If the transfer is not effectuated before the end of the employment contract (knowing that at this time the player recovers his full contractual freedom), the clubs are due to pay compensation […].[6]

The Court concludes that it is likely that third-party investors/owners will be in a conflict of interest, with equally important risks of manipulations and match-fixing arising, all of this in a totally opaque environment. Thus, though the TPI/TPO practice is apparently of financial nature, it is deemed to have important sporting consequences. Moreover, the Court remarks that the ban on the influence of third parties on clubs introduced by FIFA a few years ago via article 18 bis of the FIFA RSTP has proven ineffective. This hints at the necessity of a total ban. Additionally, it referred to the legitimate objectives of the ban invoked by FIFPro as representative of the point of view of the players.

In fine, the Court concluded that the likelihood that FIFA’s TPO ban would fail the tests of proportionality and necessity is not proven “with the force necessary” to warrant awarding provisional measures and, subsequently, rejects the demands of the claimants.


Conclusion: EU law is no magic bullet against FIFA’s regulations

Jean-Louis Dupont lost a new battle, but as far as FIFA’s TPO ban is concerned it is only the beginning of a long legal war. He still has a case to defend in the main proceedings and the opening of an investigation of the EU Commission to hope for (as well as a potential appeal to the CJEU in case the complaint on behalf of Doyen and the Iberian leagues is rejected). Nevertheless, this decision is no good omen for the future of his case. It is a worthy reminder that EU law is no magic bullets against the regulations of Sports Governing Bodies (SGBs), and FIFA in particular. The Meca-Medina/Wouters inherency test prevailing in competition cases and the similar proportionality test applied in the context of free movement rights ensure that the legitimate objectives of the regulatory practices of the SGBs are duly taken into account in the judicial or administrative review process. In fact, despite the recurrent complaints voiced by SGBs against EU law’s deregulatory bias and insensitivity to sports’ specificity, in reality the case law of the CJEU and the decisional practice of the Commission has been rather (too?) accommodating with sport’s specificities, regulatory needs and ideals. What EU law imposes is a duty to properly justify private regulations that find no sufficient legitimacy, to say the least, in the democratic nature of their legislative process[7]. Yet, especially when the diverse set of stakeholders active in a specific sporting field converge in favour of a particular policy orientation, as is the case with the TPO ban, which is supported by ECA and FIFPro, there is a strong presumption that the regulations concerned will be deemed proportionate and in the general interest. The implicit presumption of legitimacy and necessity of FIFA’s TPO ban can only be rebutted with extremely thorough arguments from the part of the claimants and will probably require that they convincingly demonstrate the easy availability of a less restrictive alternative system to deal with the perceived risks resulting from the widespread recourse to TPO/TPI agreements. As the Belgium Court aptly put it, the EU free movement rights are not absolute; if necessary they can, and will, be restricted in the name of the general interest[8].

 

[1] Ordinance, Brussels Court of First Instance, n°15/67/C, 24.07.2015, para.53-54

[2] Ibid, para. 55-57

[3] Ibid, para. 87.

[4] Ibid, para.94

[5]« L’existence d’un éventuel abus de position dominante (article 102 TUE) mais également celle d’une éventuelle restriction de la concurrence (article 101.1 TUE) sont notamment analysées au regard du secteur spécifique dans lequel la Fifa est active et des objectifs légitimes qui sous-tendent l’interdictiom nouvelle des TPI/TPO », Ibid, para.95.

[6] My translation of the bullet points included at para.95 of the decision.

[7] On this important role of EU law, see B. Van Rompuy, ‘The Role of EU Competition Law in Tackling Abuse of Regulatory Power by Sports Associations’, Maastricht Journal of European and Comparative Law, Vol.22, Issue 2, 2015 pp.179-208.

[8] « Ces droits ne sont pas absolus, mais peuvent connaître des limites nécessitées par l’intérêt général ». Para.99 of the decision.

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