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 Pechstein ruling of the OLG München - A Rough Translation

The Pechstein decision of the Oberlandesgericht of Munich is “ground-breaking”, “earth-shaking”, “revolutionary”, name it. It was the outmost duty of a “German-reading” sports lawyer to translate it as fast as possible in order to make it available for the sports law community at large (Disclaimer: This is not an official translation and I am no certified legal translator). Below you will find the rough translation of the ruling (the full German text is available here), it is omitting solely the parts, which are of no direct interest to international sports law.

The future of CAS is in the balance and this ruling should trigger some serious rethinking of the institutional set-up that underpins it. As you will see, the ruling is not destructive, the Court is rather favourable to the function of CAS in the sporting context, but it requires a fundamental institutional reshuffling. It also offers a fruitful legal strategy to challenge CAS awards that could be used in front of any national court of the EU as it is based on reasoning analogically applicable to article 102 TFEU (on abuse of a dominant position), which is valid across the EU’s territory.

Enjoy the read! 

Antoine

PS: The translation can also be downloaded at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2561297

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From Veerpalu to Lalluka: ‘one step forward, two steps back’ for CAS in dealing with Human Growth Hormone tests (by Thalia Diathesopoulou)

In autumn 2011, the Finnish cross-country skier Juha Lalluka, known as a “lone-wolf” because of his training habit, showed an adverse analytical finding with regard to human growth hormone (hGH). The timing was ideal. As the FINADA Supervisory Body in view of the A and B positive samples initiated disciplinary proceedings against Lalluka for violation of anti-doping rules, the Veerpalu case was pending before the CAS. At the athlete’s request, the Supervisory Board postponed the proceedings until the CAS rendered the award in the Veerpalu case. Indeed, on 25 March 2013, the CAS shook the anti-doping order: it cleared Andrus Veerpalu of an anti-doping rule violation for recombinant hGH (rhGH) on the grounds that the decision limits set by WADA to define the ratio beyond which the laboratories should report the presence of rhGH had not proven scientifically reliable.

The Veerpalu precedent has become a rallying flag for athletes suspected of use of hGH and confirmed some concerns raised about the application of the hGH test. Not surprisingly, Sinkewitz and Lallukka followed the road that Veerpalu paved and sought to overturn their doping ban by alleging the scientific unreliability of the hGH decisions limits. Without success, however. With the full text of the CAS award on the Lallukka case released a few weeks ago[1] and the new rules of the 2015 WADA Code coming into force, we grasp the opportunity to outline the ambiguous approach of CAS on the validity of the hGH test. In short: Should the Veerpalu case and its claim that doping sanctions should rely on scientifically well founded assessments be considered as a fundamental precedent or as a mere exception? More...

State Aid and Sport: does anyone really care about rugby? By Beverley Williamson

There has been a lot of Commission interest in potential state aid to professional football clubs in various Member States.  The huge sums of money involved are arguably an important factor in this interest and conversely, is perhaps the reason why state aid in rugby union is not such a concern. But whilst the sums of money may pale into comparison to those of professional football, the implications for the sport are potentially no less serious.

At the end of the 2012/2013 season, Biarritz Olympique (Biarritz) were relegated from the elite of French Rugby Union, the Top 14 to the Pro D2.  By the skin of their teeth, and as a result of an injection of cash from the local council (which amounted to 400,000€), they were spared administrative relegation to the amateur league below, the Fédérale 1, which would have occurred as a result of the financial state of the club.More...

State aid in Croatia and the Dinamo Zagreb case

Introduction

The year 2015 promises to be crucial, and possibly revolutionary, for State aid in football. The European Commission is taking its time in concluding its formal investigations into alleged State aid granted to five Dutch clubs and several Spanish clubs, including Valencia CF and Real Madrid, but the final decisions are due for 2015.

A few months ago, the Commission also received a set of fresh State aid complaints originating from the EU’s newest Member State Croatia. The complaints were launched by a group of minority shareholders of the Croatian football club Hajduk Split, who call themselves Naš Hajduk. According to Naš Hajduk, Hajduk Split’s eternal rival, GNK Dinamo Zagreb, has received more than 30 million Euros in unlawful aid by the city of Zagreb since 2006.More...

“The Odds of Match Fixing – Facts & Figures on the integrity risk of certain sports bets”. By Ben Van Rompuy

Media reports and interested stakeholders often suggest that certain types of sports bets would significantly increase the risks of match fixing occurring. These concerns also surface in policy discussions at both the national and European level. Frequently calls are made to prohibit the supply of “risky” sports bets as a means to preserve the integrity of sports competitions.

Questions about the appropriateness of imposing such limitations on the regulated sports betting, however, still linger. The lack of access to systematic empirical evidence on betting-related match fixing has so far limited the capacity of academic research to make a proper risk assessment of certain types of sports bets. 

The ASSER International Sports Law Centre has conducted the first-ever study that assesses the integrity risks of certain sports bets on the basis of quantitative empirical evidence. 

We uniquely obtained access to key statistics from Sportradar’s Fraud Detection System (FDS). A five-year dataset of football matches worldwide, which the FDS identified as likely to have been targeted by match fixers, enabled us to observe patterns and correlations with certain types of sports bets. In addition, representative samples of football bets placed with sports betting operator Betfair were collected and analysed. 

The results presented in this report, which challenge several claims about the alleged risks generated by certain types of sports bets, hope to inform policy makers about the cost-effectiveness of imposing limits on the regulated sports betting offer.More...

The Pechstein ruling of the Oberlandesgericht München - Time for a new reform of CAS?

Editor's note (13 July 2015): We (Ben Van Rompuy and I) have just published on SSRN an article on the Pechstein ruling of the OLG. It is available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2621983. Feel free to download it and to share any feedback with us!


On 15 January 2015, the earth must have been shaking under the offices of the Court of Arbitration for Sport (CAS) in Lausanne when the Oberlandesgericht München announced its decision in the Pechstein case. If not entirely unpredictable, the decision went very far (further than the first instance) in eroding the legal foundations on which sports arbitration rests. It is improbable (though not impossible) that the highest German civil court, the Bundesgerichtshof (BGH), which will most likely be called to pronounce itself in the matter, will entirely dismiss the reasoning of the Oberlandesgericht. This blogpost is a first examination of the legal arguments used (Disclaimer: it is based only on the official press release, the full text of the ruling will be published in the coming months).More...



In blood we trust? The Kreuziger Biological Passport Case. By Thalia Diathesopoulou

Over the last twenty years, professional cycling has developed the reputation of one of the “most drug soaked sports in the world”.[1] This should not come as a surprise. The sport’s integrity has plummeted down due to an unprecedented succession of doping scandals. La crème de la crème of professional cyclists has been involved in doping incidents including Tyler Hamilton, Floyd Landis, Alejandro Valverde and Lance Armstrong. The once prestigious Tour de France has been stigmatized as a race of “pharmacological feat, not a physical one”.[2]

In view of these overwhelming shadows, in 2008, the International Cycling Union (UCI), in cooperation with the World Anti-Doping Agency (WADA) took a leap in the fight against doping. It became the first International Sports Federation to implement a radical new anti-doping program known as the Athlete Biological Passport (ABP).[3] More...

A Question of (dis)Proportion: The CAS Award in the Luis Suarez Biting Saga

The summer saga surrounding Luis Suarez’s vampire instincts is long forgotten, even though it might still play a role in his surprisingly muted football debut in FC Barcelona’s magic triangle. However, the full text of the CAS award in the Suarez case has recently be made available on CAS’s website and we want to grasp this opportunity to offer a close reading of its holdings. In this regard, one has to keep in mind that “the object of the appeal is not to request the complete annulment of the sanction imposed on the Player” (par.33). Instead, Suarez and Barcelona were seeking to reduce the sanction imposed by FIFA. In their eyes, the four-month ban handed out by FIFA extending to all football-related activities and to the access to football stadiums was excessive and disproportionate. Accordingly, the case offered a great opportunity for CAS to discuss and analyse the proportionality of disciplinary sanctions based on the FIFA Disciplinary Code (FIFA DC).  More...

The International Sports Law Digest – Issue II – July-December 2014

I. Literature


1. Antitrust/Competition Law and Sport

G Basnier, ‘Sports and competition law: the case of the salary cap in New Zealand rugby union’, (2014) 14 The International Sports Law Journal 3-4, p.155

R Craven, ‘Football and State aid: too important to fail?’ (2014) 14 The International Sports Law Journal 3-4, p.205

R Craven, ‘State Aid and Sports Stadiums: EU Sports Policy or Deference to Professional Football (2014) 35 European Competition Law Review Issue 9, 453


2. Intellectual Property Rights in Sports law / Betting rights/ Spectators’ rights/ Sponsorship Agreements

Books

W T Champion and K DWillis, Intellectual property law in the sports and entertainment industries (Santa Barbara, California; Denver, Colorado; Oxford, England: Praeger 2014)

J-M Marmayou and F Rizzo, Les contrats de sponsoring sportif (Lextenso éditions 2014) 

More...






Time to Cure FIFA’s Chronic Bad Governance Disease

 After Tuesday’s dismissal of Michael Garcia’s complaint against the now infamous Eckert statement synthetizing (misleadingly in his eyes) his Report on the bidding process for the World Cup 2018 and 2022, Garcia finally decided to resign from his position as FIFA Ethics Committee member. On his way out, he noted: “No independent governance committee, investigator, or arbitration panel can change the culture of an organization”. It took Garcia a while to understand this, although others faced similar disappointments before. One needs only to remember the forgotten reform proposals of the Independent Governance Committee led by Prof. Dr. Mark Pieth. More...

Asser International Sports Law Blog | Financial Fair Play: Lessons from the 2014 and 2015 settlement practice of UEFA. By Luis Torres

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

Financial Fair Play: Lessons from the 2014 and 2015 settlement practice of UEFA. By Luis Torres

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)

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