Editor's note: This report compiles the most relevant legal news, events and materials on International and European Sports Law based on the daily coverage provided on our twitter feed @Sportslaw_asser. 

The Headlines

Manchester City sanctioned by UEFA’s Financial Fair Play

Manchester City has been sanctioned under UEFA’s Financial Fair Play (FFP) regulations for two seasons for ‘overstating its sponsorship revenue in its accounts and in the break-even information’ it had provided UEFA. The February 14 decision of the Adjudicatory Chamber of the Club Financial Control Body (CFCB) likely heralds the start of a long and bitter legal war between Manchester City and UEFA, which may end up settling many of the questions surrounding the legality of FFP rules. Since its introduction in 2010, the compatibility of FFP with EU law, especially in terms of free movement and competition law, has been a continued point of contention amongst the parties concerned and commentators (see discussion here, here and here). It was only a matter of time that a case would arise to test this issue and the present circumstances seem to indicate that this may go all the way.                                 

Regardless, the ban will not be enforced this season and in light of the appeal process, it is hard to predict when the CFCB’s decision will have any effect. Indeed, Manchester City has shown an incredible willingness to fighting this out in the courts and shows no signs of backing down. The next stop will be the CAS and perhaps followed by the Swiss Federal Tribunal. It should also be recalled that the CAS has already examined FFP in its Galatasaray award, where it found FFP compatible with EU law (see commentary here). There is even a decent chance that this emerging saga may end up in front of the European Commission and eventually the Court of Justice of the European Union.

Sun Yang CAS award published

After a much-anticipated public hearing, the Panel’s award in the Sun Yang case has finally been published, sanctioning Sun Yang with an eight-year period of ineligibility (see here for a detailed commentary). The decision does not reveal anything groundbreaking in terms of its legal reasoning and in many ways the case will most likely be remembered for its historical significance: the case that jumpstarted a new era of increased public hearings at the CAS.

Perhaps of some interest is the extent to which the panel took into account Sun Yang’s behavior during the proceedings in order to support its assessment of the case. For example, the panel describes how Sun Yang had ignored the procedural rules of the hearing by inviting ‘an unknown and unannounced person from the public gallery to join him at his table and act as an impromptu interpreter’. The Panel interpreted this as Sun Yang attempting ‘to take matters into his own hands’ which it found resembled the athlete’s behavior in the case (see para 358). The Panel also found it ‘striking’ that Sun Yang did not express any remorse concerning his actions during the proceedings. Since the proceedings were held publicly and have been recorded, it is possible to verify the Panel’s assessment in this regard.

In the end, it is possible that Sun Yang may seek to reduce the period of ineligibility once the 2021 WADA Code comes into force (see para 368). For now, Sung Yang may also try to appeal the award to the Swiss Federal Tribunal on procedural grounds, and has already indicated his wish to do so.

Major International Sports Law Decisions

• CAS - CAS 2019/A/6148 World Anti-Doping Agency v. Sun Yang & Fédération Internationale de Natation
• CAS – CAS 2019/A/6298 Manchester City FC v. UEFA
• CAS - CAS 2019/A/6274 Inês Henriques, Claire Woods, Paola Pérez, Johana Ordóňez, Magaly Bonilla, Ainhoa Pinedo, Erin Taylor-Talcott & Quentin Rew v. IOC
• CAS - CAS 2018/A/6040 Club Atlético Boca Juniors v. CONMEBOL & Club Atlético River Plate

Recently Released CAS Decisions (since December 2019) where FIFA is a party:

• CAS - CAS 2019/A/6278 Cruzeiro EC v. FIFA
• CAS – CAS 2019 A 6276 Eskisehir Kulübü Dernegi v. Ruud Boffin & FIFA
• CAS - CAS 2019 A 6345 Club Raja Casablanca v. FIFA
• CAS - CAS 2019 A 6406 Football Association of Penang v. FIFA
• CAS - CAS 2019 A 6268 Clube Atlético Mineiro v. FIFA
• CAS - CAS 2018 A 5560 & 5650 Kuwait FA v. FIFA
• CAS - CAS 2019 A 6027 Sociedade Esportiva Palmeiras v. FIFA 
• CAS - CAS 2019 A 6305 Club Raja Casablanca v. FIFA
• CAS - CAS 2017 O 5264 & 5265 & 5266 Miami FC & Kingston Stockade FC v. FIFA, CONCACAF & USSF
• CAS - CAS 2019 A 6239 Cruzeiro EC v. FIFA

Official Documents and Press Releases

CAS

• CAS - Sun Yang is found guilty of a doping offense and sanctioned with an 8-year period of ineligibility
• CAS - CAS procedure between the World Anti-Doping Agency (WADA) and the Russian Anti-Doping Agency (RUSADA)
• CAS - CAS upholds the appeal of Italian swimmer Filippo Magnini - annuls four-year ban
• CAS - CAS registers the appeal of Manchester City v. UEFA
• CAS - CAS reduces the suspension of Russian race walker Alexander Ivanov to two years
• CAS - CAS lifts the suspension of the Brazilian swimmer Gabriel da Silva Santos
• CAS - CAS does not have jurisdiction to rule on the appeals that sought the inclusion of a Womens 50km Race Walk at the Tokyo 2020 Olympic Games
• CAS - CAS orders Club Atlético River Plate to play its next two Copa Libertadores matches behind closed doors

FIFA

• FIFA - FIFA set to launch global fund for player salary protection
• FIFA - FIFA Disciplinary Committee sanctions four players for involvement in match manipulation
• FIFA - FIFA’s transfer report: Big 5 accounted for almost three quarters of global spending in January 2020
• FIFA – Letter: Amendments to the Regulations on the Status and Transfer of Players
• FIFA - Football stakeholders agree further steps in the reform of the transfer system

IOC

• IOC – Free Speech for Olympic Athletes
• IOC – IOC Sanctions One Athlete for Failing Anti-Doping Tests at London 2012

WADA

• WADA – WADA Compliance Review Committee update
• WADA - WADA update regarding testing of Chinese athletes in light of coronavirus
• WADA - WADA publishes Independent Observer Team Report from 2019 African Games
• WADA - WADA statement regarding CAS public hearing – WADA V. SUN YANG & FINA

Other

• Athletics Integrity Unit – First Instance Decision: Peter Kewmoi
• Athletics Integrity Unit – First Instance Decision: Ruth Jebet
• Athletics Integrity Unit – First Instance Decision: Virjilio Griggs
• Fédération Equestre Internationale (FEI) – FEI Tribunal issues Final Decisions
• Fédération Equestre Internationale (FEI) – Prohibited substance cases under FEI anti-doping rules
• FIBA - Mexican Basketball Federation suspended
• FIBA - Luxembourg Appeals Court rules in favor of FIBA Europe in Euroleague case
• FINA - FINA STATEMENT - Sun Yang (CHN)
• FIVB – Legal Commission praises the FIVB’s principles of transparency and good governance
• Global Athlete – Global Athlete Survey Results: Athlete Rights, Welfare and Representation
• Global Athlete – Athlete Groups Calling for an Open Hearing at Court of Arbitration of Sport for the RUSADA Proceedings
• Global Athlete – Weightlifting Athletes Support the Independent Investigation Being Led by Mr. Richard McLaren
• International Biathlon Union – IBU Anti-Doping Hearing Panel renders verdicts on Sleptsova and Ustyugov
• International Luge Federation (FIL) - FIL President Fendt announces penalty for Summer Britcher
• International Tennis Federation – 2019 Tennis Anti-Doping Programme testing summary
• UEFA - UEFA and CONMEBOL renew Memorandum of Understanding to enhance cooperation
• UEFA - Club Financial Control Body Adjudicatory Chamber decision on Manchester City Football Club
• World Curling - Membership of Polish Curling Association suspended

In the News

Football

• Tariq Panja - Audit Finds Suspicious Financial Dealings in African Soccer
• Martyn Ziegler - Manchester City demanded damages from ‘unlawful’ Uefa after Champions League ban recommendation, court documents reveal
• Philippe Auclair and Pål Ødegård – Out of Africa
• Tariq Panja and Rory Smith - Manchester City Banned From Champions League for 2 Seasons
• Rory Smith - Manchester City Vows to Fight, Because Losing Is Unthinkable
• Florian Soenen - Manchester City sanctionné : « Le Tribunal arbitral du sport pourrait considérer qu’il y a une inégalité avec le PSG »
• Jonathan Liew - Manchester City backers are not the sort to take Uefa's punishment lying down
• Associated Press - Soccer official challenges 10-year FIFA ban for self-dealing
• David Conn - Manchester City offer an olive branch now Uefa holds all the power
• Andrew Das - U.S. Women’s Soccer Team Sets Price for Ending Lawsuit: $67 Million
• Tariq Panja - FIFA, Seeking $1 Billion for Club World Cup, Hires U.S. Firm to Find It
• Graham Dunbar - A look at the legal issues in Man City’s appeal against UEFA

Doping

• Ali Iveson - Anti-doping testing in China suspended because of coronavirus fears
• Christoph Becker – Keine Transparenz im Anti-Doping-Kampf
• Graham Dunbar - Swimming authorities worked to protect Sun Yang from ban
• Tariq Panja - Dear CAS: With Flurry of Letters, Russia May Delay Olympic Ban
• Graham Dunbar - Olympic champion Sun Yang banned for 8 years in doping case

Other

• Eddie Pells - Survey finds Olympic, elite athletes struggling financially
• Andrew Keh and Ben Dooley - Grappling With Coronavirus, Tokyo Olympic Leaders Have No Good Options
• Alex Capstick and Rachel Nickolds - Blake Leeper: Paralympian appeals to CAS in bid to make 2020 Olympics

Academic Materials

International Sports Law Journal

• Chui Ling Goh - To what extent does the Paralympic Games promote the integration of disabled persons into society?

Other

• Steven A. Bank - FIFA, Forced Arbitration, and the U.S. Soccer Lawsuits

Blog

Asser International Sports Law Blog

• Thomas Terraz - How 2019 Will Shape the International Sports Law of the 2020s

Law in Sport

• Despina Mavromati - Riza v Turkey: European Court of Human Rights gives further guidance on establishing independent arbitral tribunals
• Christopher Flanagan - Manchester City's Financial Fair Play ban: the legal questions and consequences
• Christopher Chase - Rule 40 in the United States: new opportunities for sponsors but with strings attached
• Viktoria Tsvetanova - How competition law is shaping Olympic sponsorship: Part 1 – the origins and evolution of Rule 40
• Viktoria Tsvetanova - How competition law is shaping Olympic sponsorship: Part 2 – Germany's Competition Authority helps ease restrictions on athletes
• Celia Rooney - For the love of money: exploring the decision in the Saracens salary cap case
• Jack Anderson - A detailed review of the CAS Panel’s decision in WADA v Sun Yang & FINA

Play the Game

• Stanis Elsborg - A fist of freedom or a fist of iron? Rule 50 and the Olympic paradox

SportLegis

• Despina Mavromati - Sun Yang v. WADA & FINA – A CAS letter on the admissibility of the appeal is not an appealable decision to the Swiss Federal Tribunal

Upcoming Events

18-19 June 2020 – Sport & EU 2020 Annual Conference, Rijeka and Opatija, Croatia

Introduction: FIFA’s TPO ban and its compatibility with EU competition law.
Day 2: Third-party entitlement to shares of transfer fees: problems and solutions
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: This is the first blog of our symposium on FIFA's TPO ban, it features the position of La Liga regarding the ban and especially highlights some alternative regulatory measures it would favour. La Liga has launched a complaint in front of the European Commission challenging the compatibility of the ban with EU law, its ability to show that realistic less restrictive alternatives were available is key to winning this challenge. We wish to thank La Liga for sharing its legal (and political) analysis of FIFA's TPO ban with us.

INTRODUCTION

The Spanish Football League (La Liga) has argued for months that the funding of clubs through the conveyance of part of players' economic rights (TPO) is a useful practice for clubs. However, it also recognized that the practice must be strictly regulated. In July 2014, it approved a provisional regulation that was sent to many of the relevant stakeholders, including FIFA’s Legal Affairs Department.

Although initially we felt that FIFA would focus on strict regulation, FIFA finally tilted the balance towards the idea of an absolute ban. FIFA even put an end to the working parties it had put in place to regulate this issue. After verbal and written notices, La Liga has filed a complaint with the Competition Authorities of the European Union, since the prohibition of TPO violates the EU competition rules. In our view, apart from breaching the Treaty on the Functioning of the European Union, it also violates the rules on competition in place in other countries, such as Argentina and Brazil.

La Liga has raised the following arguments to show the disproportion of the absolute prohibition of TPO:

• FIFA now prohibits undue third-party influence on a team and on players' agents' economic rights.

• The UEFA now regulates the financial aspects of TPO in its Financial Fair Play Regulations.

• Only three professional leagues worldwide have banned TPO.

• The two independent studies commissioned by FIFA do not support the prohibition of TPO.

• The General Assembly of FIFA concluded that TPO is a complex issue that must continue to be studied in detail.

• The FIFA Working Party on TPO held only one meeting before it was banned and adapted no specific recommendations.

• The FIFA Executive Committee agreed to ban TPO with no supporting report or internal proposal.

• FIFA has not consulted governments, authorities or, in particular, the European Commission before adopting the ban.

• The arguments used to ban TPO reveal the lack of proportionality of the measure.

• Independent experts have denounced the lack of proportionality of a TPO ban.

The lack of proportionality of the measure

FIFA’s main argument is that TPO threatens the integrity of sporting competitions. In La Liga’s view, both the integrity of the competition and, where appropriate, footballers' independence could be protected by measures that do not require the full prohibition of TPO. For example, it could limit third-party economic rights to a minority percentage (>50%) together with other measures, such as limiting the number of players from the same club in which a third-party has minority economic rights.[1] Indeed, in its ENIC/UEFA decision, the European Commission took into account that the UEFA rule only prohibits the control of multiple clubs, but not the acquisition of minority stakes in them ("(T)he UEFA rule does not limit the freedom of action of investors that have shares in clubs below the level that gives them control over the club, because clubs with such ownership structure remain free to play in the same UEFA competition”).

Consideration must also be given to the fact that the risk to the integrity of competitions is much greater when two teams controlled by the same investor play against each other compared to when a certain number of players over whom a third party holds economic rights play each other. In the former case, the owner or investor of the clubs may want a team to lose if they can avoid relegation, win the championship or qualify for an international competition. In the latter case, a third-party investor's interest is for players to play as well as possible to increase their economic value, regardless of the result of the match. In fact, there is an increased risk of conflict of interest if a player has been loaned by one club to another and has to play against the club that holds the economic rights. It should be highlighted that neither FIFA nor UEFA have taken steps to regulate loans of players between clubs, despite the fact that loans account for a significant part of player transfer[2] and that independent experts recommend more restrictive regulations for loans.[3] Similarly, we fail to understand why FIFA, prohibits TPO when it is considering deregulating the profession of player agent and accepts that only a few agents represent and share economic interests with star football players.[4]

FIFA further argues that banning TPO will avoid speculation and inflation of transfer costs, preserve economic flows within football clubs, protect players' human dignity, combat economic crime, etc. La Liga is of the opinion that these arguments violate even further the principle of proportionality and are of questionable legitimacy. Therefore, they should be rejected from the outset. 

POLITICAL ASPECTS

As the Association of Spanish Football Clubs, we first and foremost defend a regulation of TPO. Banning it would be denying a fundamental tool for our clubs' funding and competitiveness

Based on the current socio-economic context of the football sector and its practical reality, it seems particularly inappropriate to reject a source of external funding used in every sector of the economy and which, when appropriately regulated, could create greater legal certainty for all concerned.

More specifically, from a political point of view, it is essential to design the regulation of TPO so that La Liga and its clubs maintain or even increase their current competitiveness.

Indeed, there is no doubt about the benefits provided by TPO/TPI since many clubs are in the position to sign players who they otherwise could not afford. Moreover, clubs also profit from the ability to anticipate revenue by selling the rights of the squad players in their team. Thus, in terms of the competitive balance, the use of TPO enables small/medium-sized clubs to maintain their competitiveness against their "bigger" rivals. For example, winning the Spanish league and reaching the Champions League final in the 2013/14 season is an achievement Atlético Madrid would probably not have reached without having recourse to TPO. Furthermore, it makes it possible to increase investment in sports facilities for better training and the development of young players.

The above shows that the private investor also "shares" a risk with the club: when investing in a specific player, the investor also assumes the negative results of the potential investment, which is then shared between the club and the investor, greatly reducing the negative impact on the accounts of the club in question.

And finally, taking into account the economic and financial difficulties currently affecting football clubs, it is necessary to support appropriate financing mechanisms in football to foster investment in the sector, since, at present, most clubs would not be able to survive on their current sources of income.

Should the absolute prohibition of TPO/TPI be maintained, as intended by FIFA and UEFA, it will be very difficult to keep the constellation of star players in our affiliated Clubs. They will most certainly leave their respective clubs for other competitions and clubs that have greater financial resources. It is clear that a large number of Spanish teams will see their competitiveness reduced and, at the same time, the competitiveness of and interest in our competition will plummet. 

In addition, proper regulation of this issue would avoid the risk of compromising the integrity of competitions, since it would provide greater legal certainty for all the involved parties. Instead, the absolute ban imposed by FIFA will lead to the creation of a "black market” that would be out of regulatory control and would therefore endanger the very integrity of the competitions. Thus, it is absolutely necessary to regulate the matter appropriately. 

LEGAL ASPECTS:

In line with the aforementioned political aspects, from a strictly legal perspective, regulating TPO is particularly advisable since:

a. It is a common practice in the football sector and it is a source of funding that promotes the competitiveness of clubs. Moreover, it stimulates competition and allows clubs to attract and retain top-level players.

In recent years, the number of investments in football players has increased. These investments were sought by Spanish clubs in order to finance the registration of the players’ federative rights. Furthermore, the investor’s remuneration is (wholly or partially) calculated depending on the positive economic results that may be obtained through future transfers of the player’s federative rights by the club that received the investment money.

La Liga believes that investments of this nature can constitute a useful alternative source of financing for clubs and investment for funds, especially now that the Spanish financial sector and the Spanish professional football sector are undergoing a profound financial crisis. Accordingly, these investments may foster the competitiveness of Spanish professional football clubs in Spain and outside. Indeed, the signing and retention of players’ federative rights cannot be secured without third-party investments.  

b. TPO requires an adequate regulatory framework to ensure legal certainty and promote the integrity of professional football competitions.

Based on the widespread use of TPO in practice, La Liga considers it appropriate to introduce certain rules and provide legal certainty to both the clubs as well as the investors. This would require imposing reasonable limitations and duties, and providing for the transparency of the TPO transactions, to protect good sportsmanship and the integrity of competitions.

La Liga’s proposal for a regulatory framework is based on the following basic principle:

Compliance with FIFA’s rules on the influence of third parties in clubs, according to which no club may enter into a contract whereby any party to said contract or third party may assume a position that could influence labour issues and transfers in relation to the independence, policies or actions taken by the teams of any club.

Based on this principle, the following regulatory measures are suggested:

• prohibition of certain transactions based on the player's age;

• maximum percentage of participation in the "economic rights";

• quantitative  limitations  on  the  maximum  number  of  players  per club;

• maximum remuneration for the investor;

• prohibition of certain clauses that may limit the independence and autonomy of the clubs; and

• prohibition of transactions depending on the investor's particular status or business (or participation in the same) such as shareholders, directors and managers of the clubs.

This regulatory framework would provide transparency through duties of information and registration of the investors (including full identification of the real owners) and the financial transactions themselves. 

CONCLUSION

There is no doubt that the use of TPO/TPI needs to be regulated in Spanish professional football. However, it is also necessary to acknowledge that the full prohibition of TPO by FIFA will only trigger a search for "creative" alternatives to fulfil the same purpose, using fraud and/or other contractual fictions. Furthermore, the prohibition of TPO will be very difficult to enforce and it will generate a great deal of conflicts, which is obviously not a desirable outcome. This is also without prejudice to the considerable loss of competitiveness and footballing talent for our clubs and our competitions.

Thus, it is necessary to devise an alternative approach to the issue by means of a specific regulation. Indeed, we consider that third-party investment in football is a legitimate financing vehicle for clubs, based on risk-sharing and productive investments through private funds. However, there are also obvious threats that need to be tackled. Therefore, in the view of La Liga, it is necessary to establish a sustainable, secure and transparent regulatory system that encourages sound investment in the sector and provides for a better control of the investors.

The benefits to be gained from regulating TPO/TPI are more than evident and would be shared by all the stakeholders that make up the ‘football family’. We believe that an adequate regulation in this area would pave the way for a secure, reliable and transparent system, allowing the ‘football family’ to safely enjoy the benefits TPO can provide.

[1] See, for example, alternatives to the total ban proposed by Luís Villas-Boas Pires, "Third Party Ownership- To ban or not to ban?, LawInSport,10.12.2013: http://www.lawinsport.com/articles/regulation-a-governance/item/third-party-ownership-to-ban-or-not-to-ban.

[2] The Economic and Legal Aspects of Transfers of Players”, KEA-CDES, December 2013, p. 193: “These operations involve a large number of transfers in Europe – 21% i.e. 1333 in 2011, according to TMS”.

[3] The Economic and Legal Aspects of Transfers of Players”, KEA-CDES, December 2013, study performed for the European Commission, pp. 253-254: "Proposal 4:Regulate the loan transfer

Abusive loan transfer practices contribute to competitive imbalance and unfairness of the competitions. We suggest regulation to limit or prevent such abusive practices. This could encompass:

-  Limiting the number of loans by the lending clubs

-  Limiting to xx the number of loans to the beneficiary clubs

-  Regulating loan contracts between clubs which pose a risk to the integrity of competition (for instance: a contractual clause that prevents a player from participating in a certain competition or a given match). Main stakeholders: International federations, national federations and leagues.”

[4] The Economic and Legal Aspects of Transfers of Players”, KEA-CDES, December 2013, pp. 128-129:

“The second feature of the upper primary segment is the concentration of superstars in the hands of a few agents (individual or agencies). It is a question of knowing what the actual market power of these agents is and what can be done to regulate their actions. For example, let us note that Gestifute, the Portuguese agency led by Jorge Mendes, has in its portfolio José Mourinho, Cristiano Ronaldo, Nani, Anderson, Pepe, Ricardo Carvalho, Raul Meireles and Miguel Veloso.  This agency has generated €369.85m in transfer rights (Poli, 2012). The role of the major sporting agents should be better known, in order to assess whether they are responsible for an increase in the dualisation of the labour market and, therefore, for a deterioration in competitive balance. Small championships can no longer hang on to their stars and the major championships are competing to attract them, thus contributing to the inflation of speculative bubbles regarding the salaries and transfer fees of these stars.

In the lower primary market, as in the higher primary market, the role of agents is decisive in transactions and we once more find the same recommendations:

An analysis of the concentration of wage

-  bills.

-  An analysis of the concentration of transactions at the agent level.”