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.

FIFA: 2026 World Cup

About the host selection process

The United States, Mexico, and Canada together on the one side and Morocco on the other are bidding to host the 2026 World Cup. The bidders must now prepare and submit their Bid Books to FIFA by no later than 16 March 2018, providing the world's governing body of football with information regarding their hosting vision and strategy, the country's political system and economic situation, technical matters, other event-related matters, or human rights and environmental protection.[1] FIFA will then commission a Bid Evaluation Task Force,[2] composed of the chairman of the Audit and Compliance Committee, the chairman of the Governance Committee, one member of the Organising Committee for FIFA Competitions, and certain members of the General Secretariat with relevant expertise, to prepare a written report evaluating each bid. This report will be split into three sections, namely (i) compliance assessment; (ii) an assessment of the risks and benefits of each bid, including the risks of adverse impacts on human rights; and (iii) an assessment of key infrastructural and commercial aspects of each bid, including stadiums, transport infrastructure, organising costs, or estimated media and marketing revenues.[3] The Bid Evaluation Task Force will apply a scoring system that might eventually lead to the exclusion of a bid from the host selection process in the event of its failure to reach a required minimum score.[4] It is critical to note, however, that this scoring system will only be used to evaluate infrastructural and commercial aspects of each bid.[5] In other words, human rights or environmental protection are not subject to this scoring system.

The Bid Evaluation Task Force will forward its report to the members of the FIFA Council who will determine whether or not each bid qualifies to be voted on by the FIFA Congress.[6] While until now the decision on the venue for the FIFA's flagship event has been taken by the Council (formerly the Executive Committee), the host of the 2026 World Cup will be elected for the first time by the members of the Congress.[7] The Congress will meet for this purpose in June 2018 and it may either award the right to host the tournament to one of the candidates or reject all bids designated by the Council.[8] In the latter case, FIFA will launch a new procedure that will culminate with a final decision in May 2020.[9] It is also worthwhile noting that the entire host selection process will be overseen by an independent audit company.[10]

Human rights as selection criteria

A number of human rights requirements could be found across different bidding documents relating to the host selection process for the 2026 World Cup. This section takes a closer look at the content of these requirements. 

First, each member association bidding to host the tournament must undertake to respect all internationally recognised human rights in line with the United Nations Guiding Principles on Business and Human Rights (UN Guiding Principles).[11] Importantly, this commitment covers not only the member association's own activities, but also the activities of other entities that are in a business relationship with the member association, be it for the production of goods or provision of services. In this respect, FIFA acknowledges that ''a significant part of human rights risk may be associated with the activities of third parties''.[12]

Second, FIFA requires that each bidder provide a human rights strategy outlining how it is going to honour its commitment mentioned above.[13] While a similar requirement also appears in the UEFA's bidding documentation for the Euro 2024, FIFA is much more specific in defining the essential elements of this strategy. Accordingly, the strategy shall include a comprehensive report ''identifying and assessing any risks of adverse human rights impacts […] with which the member association may be involved either through its own activities or as a result of its business relationships''.[14] Perhaps the most remarkable aspect of the entire host selection process is the follow-up requirement that this report be complemented by an independent study carried out by an organisation with recognised expertise in the field of human rights.[15] This independent expert organisation will examine to what extent does the national context, including the national legislation, influence the member association's capacity to respect all internationally recognised human rights.[16] As part of their strategy, the bidders should further explain what measures they intend to take in order to mitigate any human rights risks identified in the comprehensive report.[17] Moreover, the strategy should contain information about the implementation of an ongoing due diligence process, the plans for meaningful community and/or stakeholder dialogue and engagement,[18] the protection of human rights defenders' and journalists' rights, or grievance mechanisms.[19]

Third, each bidder must provide a report summarising its ''stakeholder engagement process implemented as part of the development of the […] human rights strategy''.[20] Fourth and last, the government of each country bidding to host the 2026 World Cup shall express its commitment to: (i) respecting, protecting, and fulfilling human rights in connection with the hosting and staging of the tournament; and (ii) ensuring that victims of human rights abuses will have access to effective remedies.[21] To this effect, each of the involved governments is required to sign a separate declaration.

A comparative overview

It remains to be seen whether the new bidding regulations will help reduce the number and severity of adverse human rights impacts linked to mega-sporting events. For the time being, it is essential to identify the strong and weak points of these regulations.

When discussing strengths, FIFA and UEFA come to mind. Both organisations should be applauded for demanding that the bidders pledge to respect and protect internationally recognised human rights independently of the locally recognised human rights.[22] FIFA moreover extends this obligation to the activities of third parties that are in a business relationship with the bidding member association. Both FIFA and UEFA also ask for a human rights strategy that should include some crucial information such as evidence of meaningful consultation with potentially affected communities. Again, FIFA goes one step further by requiring that this strategy be accompanied by an independent expert study.

All three sports governing bodies reserve the right to assign a role to independent human rights experts in evaluating or preparing bids.[23] And while this is in itself commendable, it should be noted that such a role is limited because it does not entail decision-making competences. For instance, the expert institution responsible for developing an independent study in the host selection process for the 2026 World Cup will not have the power to exclude a bid if it ascertains that the national context significantly undermines the member association's capacity to respect internationally recognised human rights. This expert institution will certainly put more pressure on FIFA in the sense that any action contrary to the institution's recommendations will have to be publicly justified by compelling reasons, but FIFA may nevertheless decide to consider a bid even if it entails serious human rights risks. Moreover, it is difficult to understand why only infrastructural and commercial aspects of a bid are subject to the scoring system applied by the Bid Evaluation Task Force. If the main reason for this is the fact that the members of the Bid Evaluation Task Force lack expertise in the field of human rights, then the assessment of human rights aspects should perhaps be left to independent experts only. It would be crucial to give these human rights experts some power to decide whether or not a bid qualifies for the next stages of the host selection process. A greater role for independent human rights experts in evaluating bids to host mega-sporting events could come with the establishment of an independent Centre for Sport and Human Rights in 2018. However, this will probably not affect the host selection processes that are currently underway.

Conclusion 

Including human rights within the criteria for evaluating bids to host mega-sporting events may deter many countries, especially those with a negative human rights record, from launching a bid. However, as Professor John Ruggie makes clear, human rights requirements in bidding regulations for mega-sporting events are not aimed at ''peremptorily excluding countries based on their general human rights context''.[24] Indeed, a country where human rights abuses occur can nevertheless deliver an abuse-free event. To do so, it will need to develop an effective strategy and, if selected, guarantee the implementation of this strategy from day one.

[1]    FIFA, Structure, Content, Presentation, Format and Delivery of Bid Book for the 2026 FIFA World Cup.

[2]    FIFA, Bidding Registration regarding the submission of Bids for the hosting and staging of the 2026 FIFA World Cup, pp. 23-28.

[3]    Ibid. pp. 24-25. See also FIFA, Guide to the Bidding Process for the 2026 FIFA World Cup, p. 7.

[4]    FIFA, Bidding Registration, pp. 25-27.

[5]    Ibid.

[6]    Ibid. p. 31. See also FIFA Statutes, Article 69(2)(d).

[7]    FIFA, Bidding Registration, pp. 31-32. See also FIFA Statutes, Article 69(1).

[8]    FIFA, Bidding Registration, p. 31.

[9]    FIFA, Guide to the Bidding Process, p. 13.

[10]   FIFA, Bidding Registration, pp. 22-23.

[11]   FIFA, Structure, Content, Presentation, Format and Delivery of Bid Book, Section 23 – Human Rights and Labour Standards. In addition to international treaties and instruments mentioned in Principle 12 of the UN Guiding Principles, FIFA concedes that ''the scope […] of internationally recognised human rights may be enlarged to include, for instance, the United Nations instruments on the rights of indigenous peoples; women; national or ethnic, religious and linguistic minorities; children; persons with disabilities; and migrant workers and their families''. See FIFA, Bidding Registration, p. 74.

[12]   FIFA, Structure, Content, Presentation, Format and Delivery of Bid Book, Section 23 – Human Rights and Labour Standards.

[13]   Ibid.

[14]   Ibid.

[15]   Ibid.

[16]   Ibid.

[17]   Ibid.

[18]   The community and/or stakeholder dialogue and engagement should be in line with relevant authoritative standards such as the AA1000 Stakeholder Engagement Process.

[19]   FIFA, Structure, Content, Presentation, Format and Delivery of Bid Book, Section 23 – Human Rights and Labour Standards.

[20]   Ibid.

[21]   FIFA, Overview of Government Guarantees and the Government Declaration, pp. 11-12.

[22]   In this regard, FIFA also notes that ''where the national context risks undermining FIFA's ability to ensure respect for internationally recognised human rights, FIFA will constructively engage with the relevant authorities and other stakeholders and make every effort to uphold its international human rights responsibilities''. See FIFA's Human Rights Policy, para. 7.

[23]   IOC, Report of the IOC 2024 Evaluation Commission, p. 7. UEFA, Bid Regulations for the UEFA Euro 2024, Article 14. As mentioned earlier in this blog, FIFA demands that the bidders put forward a human rights strategy complemented by an independent expert study.  

[24]   John G. Ruggie, For the Game. For the World. FIFA and Human Rights, p. 32.

UEFA announced on 8 May that it had entered into Financial Fair Play settlement agreements with 10 European football clubs. Together with the four other agreements made in February 2015, this brings the total to 14 FFP settlements for 2015 and 23 since UEFA adopted modifications in its Procedural rules and allowed settlements agreements to be made between the Clubs and the Chief Investigator of the UEFA Club Financial Control Body (CFCB).[1] 

In the two years during which UEFA’s FFP regulations have been truly up and running we have witnessed the centrality taken by the settlement procedure in their enforcement. It is extremely rare for a club to be referred to the FFP adjudication chamber. In fact, only the case regarding Dynamo Moscow has been referred to the adjudication chamber. Thus, having a close look at the settlement practice of UEFA is crucial to gaining a good understanding of the functioning of FFP. Hence, this blog offers a detailed analysis of this year’s settlement agreements and compares them with last year’s settlements.

The two tables below provide an overview of last year’s nine settlement agreements (table 1) and this year’s settlement agreements (tables 2 and 3).  

Table2014.jpg (310KB)

Table2015(1).jpg (259.6KB)

Table2015(2).jpg (228.4KB)

DIFFERENCES WITH LAST YEAR’S SETTLEMENTS

The financial contribution (fines)

In 2015, the financial “sanctions” have been much lower than last year, especially with regard to the highest penalties. In 2014, Paris Saint-Germain and Manchester City agreed to pay an overall of €60 million (€40 million, subject to the fulfilment of the conditions imposed by UEFA to the club). This year, the two highest financial contributions will be those of FC Internazionale (€20 million) and AS Monaco (€13 million). Moreover, the contributions imposed on FC Internazionale and AS Monaco have a conditional element: should the clubs fulfil UEFA’s requirements, they will get €14 million and €10 million returned to them respectively.

Last year, the revenues derived by the clubs from participating in European competitions were withheld by UEFA in every settlement agreement. However, this year, UEFA will withhold revenue from the UEFA competitions in only some cases, namely for FC Krasnodar, FC Lokomotiv Moscow, Besiktas, AS Roma, AS Monaco and FC Internazionale.

Moreover, another difference concerns the way the club may pay the ‘conditional amount’ provided in the settlements. Last year, the conditional amounts were “withheld and returned” to the club, provided it fulfilled the “operational and financial measures agreed with the UEFA CFCB”. This year, however, these conditional amounts “may be withheld in certain circumstances depending on the club’s compliance”. This means that there is no a priori retention of the money by UEFA that is subject to the achievement of the objectives agreed.  

The deficit limits

As can be seen from the tables above, UEFA limits the total deficit that clubs are allowed to have. The clubs must comply with this UEFA obligation for one or two seasons, depending on the settlement agreement. This condition was imposed in both the 2014 and 2015 agreements. Yet, some differences arise with regard to the deficit allowed for clubs.

These differences become apparent when comparing FC Rubin Kazan (2014) with AS Roma (2015). Both clubs agreed to a three seasons duration of the settlement, a €6 million fine, a reduction of the squad (22 players for AS Roma and 21 for FC Rubin Kazan), and a limitation on the number of player registrations. However, the maximum allowed deficit for each club is different. As regards AS Roma, UEFA restricted the deficit authorized to €30 million. It should be noted that, according to UEFA’s own regulations, the maximum acceptable deviation is €30 million.[2] In other words, this is not a real sanction imposed on AS Roma, since every European club has the duty to comply with the maximum acceptable deviation rule. In its agreement with FC Rubin Kazan, on the other hand, UEFA imposed a deficit limit of €30 million for the first season and full break-even compliance for the following season. This is a harsher sanction than in the agreements found in 2015, in which a specific deficit is permitted for the second season of the settlements (see the FC Krosnodar, AS Roma, Besiktas and AS Monaco agreements).    

The salary cap

This salary cap measure is regulated in Article 29(1)(g) of the Procedural Rules Governing the UEFA Club Financial Control Body. According to this provision, a salary cap is a “restriction on the number of players that a club may register for participation in UEFA competitions, including a financial limit on the overall aggregate cost of the employee benefits expenses of players registered on the A-list for the purposes of UEFA club competitions”.

In 2014, every settlement reached by the clubs with UEFA prohibited the increase in salary expenses for the first season following the agreement. In 2015, this condition was not stipulated in all of the agreements. More concretely, the agreements settled with Ruch Chorzów, Panathinaikos, Hapoel Tel Aviv, and Hull City, do not include a salary cap.

Changes have also occurred regarding the structure of the salary cap imposed. In 2014, a unitary interpretation of the salary cap provision was used by UEFA. In the case of Manchester City, for of example, UEFA stated that “employee benefit expenses cannot be increased during two financial periods”.[3]

In 2015, however, UEFA used two different ways to ‘cap’ salaries:

1. In the cases of the FC Rostov, CSKA Sofia and Kardemir Karabükspor settlements, it held that “the total amount of the Club’s aggregate cost of employee benefits expenses is limited”.

2. With regard to FC Internazionale and Besiktas, the settlements hold that “the employee benefit expenses to revenue ratio is restricted and that the amortisation and impairment of the costs of acquiring players’ registration is limited.”

The first alternative is similar to the solution adopted in 2014 to cap players’ wages. As UEFA releases only some elements of the settlements, the precise levels of the cap imposed remain unknown, as was the case last year. The mechanism used by UEFA in the case of Besiktas and FC Internazionale is different. It is based on a fixed ratio between employee benefit-expenses and the clubs revenue. The cap becomes more dynamic, as it is coupled to another variable, the revenue of the club, but also less predictable. 

Is the settlement a sanction or an agreement?

According to UEFA’s regulations, the UEFA CFCB Investigatory Chamber has the power to negotiate with clubs who breached the break-even compliance requirement as defined in Articles 62 and 63 UEFA Club Licensing and Financial Fair Play Regulations. If a settlement is not reached, the CFCB Adjudicatory Chamber will unilaterally impose disciplinary sanctions to the respective clubs.

The ‘settlement procedure’ allows for a certain degree of negotiation between the parties. Settlements are likely to be in the interest of both parties. Firstly, by agreeing to UEFA’s terms, the club secures its participation in European competitions which, in many cases, are one of its main sources of revenue. Not agreeing to the terms would entail risking a much bigger sanction. Naturally, such a sanction can be appealed in front of the Court of Arbitration for Sport (CAS), but such a procedure would be expensive, time consuming and does not guarantee a better outcome. To UEFA, a settlement is a guarantee that the case ends there, that its FFP regulations do not get challenged in front of the CAS, but also that it does not need to invest resources to fight a long and costly legal battle. Moreover, the settlement procedure provides the flexibility needed for a case-by-case approach to the sanctions. 

CONCLUSION 

The settlement procedure is a key element to the current implementation process of the UEFA FFP regulations. UEFA is still in the learning phase concerning FFP and the recourse to settlements is a way to provide for much needed regulatory flexibility. Even if the settlements have many advantages for all the parties involved, they also have detrimental effects. It is regrettable that they are not published in full, even if slightly redacted, so that clubs may enjoy a higher legal certainty when facing an FFP investigation. This lack of transparency makes it harder to predict and rationalize the sanctions imposed and exposes UEFA to the risk of being criticized for the arbitrariness of its settlement practice.

This year’s settlement harvest was undoubtedly more lenient than in 2014. UEFA has apparently decided to water down its FFP sanctions, maybe to make sure that FFP survives the many legal challenges ahead. The balance between under-regulation, that would render FFP toothless, and over-regulation, that would make it difficult for clubs to invest and take risks, is indeed very difficult to find. UEFA’s settlement practice is a soft way to walk this complex line. 

[1] Article 14(1)(b) and Article 15 of the Procedural Rules Governing the UEFA Club Financial Control Body – Edition 2014.

[2] Article 61 UEFA Club Licensing and Financial Fair Play Regulations

[3] Decision of the Chief Investigator of the CFCB Investigatory Chamber: Settlement Agreement with Manchester City Football Club Limited (2014)