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 entitlement to Training Compensation of “previous” clubs under EU Competition Law. By Josep F. Vandellos Alamilla

Editor’s note: Josep F. Vandellos is an international sports lawyer associated to RH&C (Spain). He is also a member of the Editorial Board of the publication Football Legal and a guest lecturer in the ISDE-FC Barcelona Masters’ Degree in Sports Management and Legal Skills.


Article 6 of Annexe IV (Training compensation) of the FIFA-RSTP (Ed. 2016) contains the so-called “Special Provisions for the EU/EEA” applicable to players moving from one association to another inside the territory of the European Union (EU) or the European Economic Area (EEA).
The provisions regarding training compensation result from the understanding reached between FIFA and UEFA with the European Union in March 2001[1], and subsequent modifications introduced in the FIFA-RSTP revised version of 2005 to ensure the compatibility of the transfer system with EU law.[2]
This blog will focus on the exception contained in article 6(3) Annexe IV of the FIFA-RSTP. According to this article, when “the former club” fails to offer a contract to the player, it loses its right to claim training compensation from the players’ new club, unless it can justify that it is entitled to such compensation. Instead, the right of “previous clubs” to training compensation is fully preserved irrespective of their behaviour with the player.[3] From a legal standpoint, such discrimination between the “former club” and the “previous clubs” raises some questions that I will try to address in this paper. More...



The EU State aid and sport saga: The Real Madrid Decision (part 2)

This is the second and final part of the ‘Real Madrid Saga’. Where the first part outlined the background of the case and the role played by the Spanish national courts, the second part focuses on the EU Commission’s recovery decision of 4 July 2016 and dissects the arguments advanced by the Commission to reach it. As will be shown, the most important question the Commission had to answer was whether the settlement agreement of 29 July 2011 between the Council of Madrid and Real Madrid constituted a selective economic advantage for Real Madrid in the sense of Article 107(1) TFEU.[1] Before delving into that analysis, the blog will commence with the other pending question, namely whether the Commission also scrutinized the legality of the operation Bernabeú-Opañel under EU State aid law. By way of reminder, this operation consisted of Real Madrid receiving from the municipality the land adjacent to the Bernabéu stadium, while transferring in return €6.6 million, as well as plots of land in other areas of the city. More...

Resolution of Disputes Arising From Football Contracts in Turkey. By N. Emre Bilginoglu

Editor’s note: N. Emre Bilginoglu[1] is a lawyer based in Istanbul. His book entitled “Arbitration on Football Contracts” was published in 2015.


Introduction

With a total market value of approximately 911 million EUR, the Turkish Super League ranks as one of the prominent football leagues in Europe. Five of the eighteen teams that make up half of the total market value are based in Istanbul, a busy megalopolis that hosts a population of fifteen million inhabitants.[2] As might be expected, the elevated market value brings forth a myriad of disputes, mainly between the clubs and the players. However, other crucial actors such as coaches and agents are also involved in some of the disputes. These actors of the football industry are of all countries, coming from various countries with different legal systems.

One corollary of rapid globalisation is the development of transnational law, which is quite visible in the lex sportiva.[3] Like foreign investors, foreign actors of the sports industry look for some legal security before signing a contract. FIFA does protect these foreign actors in some way, providing players and coaches legal remedies for employment-related disputes of an international dimension. But what if the legal system of the FIFA member association does not provide a reasonable legal remedy for its national actors?[4] More...


The World Anti-Doping System at a Crossroads

“One day Alice came to a fork in the road and saw a Cheshire cat in a tree. ‘Which road do I take?’ she asked. ‘Where do you want to go?’ was his response. ‘I don’t know,’ Alice answered. ‘Then,’ said the cat, ‘it doesn’t matter.”

Tomorrow the Foundation Board of the World Anti-Doping Agency (WADA) will gather in Glasgow for its most important meeting since the creation of the Agency. Since the broadcasting of a documentary alleging systematic doping in Russian athletics by the German public broadcaster in December 2014, the anti-doping world has been in disarray. The various independent investigations (the Pound Report and the McLaren Report) ordered by WADA into doping allegations against Russian athletes have confirmed the findings of the documentary and the truth of the accusations brought forward by Russian whistle-blowers. Undeniably, there is something very rotten in the world anti-doping system. The current system failed to register a widespread, and apparently relatively open, state-sponsored scheme aimed at manipulating any doping test conducted in Russian territory. Moreover, it was not WADA that uncovered it, but an independent journalist supported by courageous whistle-blowers. More...


The EU State aid and sport saga: The Real Madrid Decision (part 1)

Out of all the State aid investigations of recent years involving professional football clubs, the outcome of the Real Madrid case was probably the most eagerly awaited. Few football clubs have such a global impact as this Spanish giant, and any news item involving the club, whether positive or negative, is bound to make the headlines everywhere around the globe. But for many Spaniards, this case involves more than a simple measure by a public authority scrutinized by the European Commission. For them, it exemplifies the questionable relationship between the private and the public sector in a country sick of never-ending corruption scandals.[1] Moreover, Spain is only starting to recover from its worst financial crisis in decades, a crisis founded on real estate speculation, but whose effects were mostly felt by ordinary citizens.[2] Given that the Real Madrid case involves fluctuating values of land that are transferred from the municipality to the club, and vice versa, it represents a type of operation that used to be very common in the Spanish professional football sector, but has come under critical scrutiny in recent years.[3] More...

International and European Sports Law – Monthly Report – October 2016. By Kester Mekenkamp.

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
We are looking for an International Sports Law Intern (with a particular interest in the CAS)! More information can be found here.


The (terrible) State of the World Anti-Doping System

The fight against doping is still on top of the agenda after the Russian doping scandal. The national anti-doping organizations (NADOs) have reiterated their call for an in depth reform of the World Anti-Doping Agency at a special summit in Bonn, Germany. These reforms are deemed urgent and necessary to “restore confidence of clean athletes and those who value the integrity of sport” and secure “the public’s desire for a fair and level playing field”. The NADOs propose, amongst others things, to separate the investigatory, testing and results management functions from sports organizations, and to remove sports administrators from crucial anti-doping executive functions. More...




Taking the Blue Pill or the Red Pill: Should Athletes Really Check their Medications against the Prohibited List Personally? - A Comment by Marjolaine Viret (University of Neuchâtel )

Editor's Note:  Marjolaine is an attorney admitted to the Geneva bar (Switzerland) who specialises in sports and life sciences.   She currently participates as a scientific collaborator at the University of Neuchâtel on a research project to produce the first article-by-article legal commentary of the 2015 World Anti-Doping Code. Her latest book Evidence in Anti-Doping at the Intersection of Science & Law was published in 2016 in the International Sports Law Book Series of T.M.C. ASSER Press.


INTRODUCTION

On 30 September 2016, a panel of the Court of Arbitration for Sport (“CAS”) rendered its award in the matter opposing high-profile tennis player Maria Sharapova to the International Tennis Federation (“ITF”). Maria Sharapova was appealing the two-year ban imposed on her by the ITF Tribunal in June 2016 for her use of Meldonium, a substance newly added to the WADA Prohibited List 2016[1]. Since neither the ITF nor WADA had chosen to challenge the Tribunal’s decision, the stakes of the case were rather simple: would the player convince the CAS panel that she should benefit from a finding of “No Significant Fault or Negligence”[2], thereby allowing for a reduction of the sanction down to a minimum of one year, or should the decision of the Tribunal be upheld? In its award, the CAS panel decided to grant such finding and reduced the sanction to 15 months.

This blog does not purport to be a ‘comment’ on the CAS award. Rather, it seeks to place the Sharapova matter into a broader context with respect to a specific issue: the expectations on Athletes when it comes to their awareness of the prohibited character of a substance, specifically when taking a medication[3]. In July 2016, I presented at the T.M.C Asser Institute in The Hague various current challenges of anti-doping that the Meldonium cases exposed (see the video here). One of these challenges concerned the modalities for including new substances onto the Prohibited List. This blog represents a follow-up on my presentation, in the light of the findings contained in the CAS award. More...



Case note: State aid Decision on the preferential corporate tax treatment of Real Madrid, Athletic Bilbao, Osasuna and FC Barcelona

On 28 September 2016, the Commission published the non-confidential version of its negative Decision and recovery order regarding the preferential corporate tax treatment of Real Madrid, Athletic Bilbao, Osasuna and FC Barcelona. It is the second-to-last publication of the Commission’s Decisions concerning State aid granted to professional football clubs, all announced on 4 July of this year.[1] Contrary to the other “State aid in football” cases, this Decision concerns State aid and taxation, a very hot topic in today’s State aid landscape. Obviously, this Decision will not have the same impact as other prominent tax decisions, such as the ones concerning Starbucks and Apple

Background

This case dates back to November 2009, when a representative of a number of investors specialised in the purchase of publicly listed shares, and shareholders of a number of European football clubs drew the attention of the Commission to a possible preferential corporate tax treatment of the four mentioned Spanish clubs.[2]More...



International and European Sports Law – Monthly Report – September 2016. By Kester Mekenkamp

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

September hosted the very last bit of the sport summer 2016, most notably in the form of the Rio Paralympic Games. Next to the spectacular achievements displayed during these games, in the realm of sports law similar thrilling developments hit town. The first very much expected #Sportslaw highlight was the decision by the German Bundesgerichtshof in the case concerning SV Wilhelmshaven. The second major (less expected) story was the Statement of Objections issued by the European Commission against the International Skating Union.More...


De- or Re-regulating the middlemen? The DFB’s regulation of intermediaries under EU law scrutiny at the OLG Frankfurt. By Antoine Duval and Kester Mekenkamp.

Football intermediaries, or agents, are again under attack in the news. For some, corrupt behaviour has become endemic in football’s culture. It is always dangerous to scapegoat a whole profession or a group of people. Many intermediaries are trying their best to lawfully defend the interests of their clients, but some are not. The key focus should be on providing an adequate legal and administrative framework to limit the opportunities for corrupt behaviour in the profession. This is easier said than done, however. We are dealing with an intrinsically transnationalized business, often conducted by intermediaries who are not subjected to the disciplinary power of federations. Sports governing bodies are lacking the police power and human resources necessary to force the intermediaries to abide by their private standards. In this context, this blog aims to review a recent case in front of the regional court of Frankfurt in Germany, which highlights the legal challenges facing (and leeway available to) national federations when regulating the profession. More...

Asser International Sports Law Blog | Image Rights in Professional Basketball (Part II): Lessons from the American College Athletes cases. By Thalia Diathesopoulou

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

Image Rights in Professional Basketball (Part II): Lessons from the American College Athletes cases. By Thalia Diathesopoulou

In the wake of the French Labour Union of Basketball (Syndicat National du Basket, SNB) image rights dispute with Euroleague and EA Games, we threw the “jump ball” to start a series on players’ image rights in international professional basketball. In our first blogpost, we discussed why image rights contracts in professional basketball became a fertile ground for disputes when it comes to the enforcement of these contracts by the Basketball Arbitral Tribunal (BAT). Indeed, we pointed out that clubs might take advantage of the BAT’s inconsistent jurisprudence to escape obligations deriving from image rights contracts.

In this second limb, we will open a second field of legal battles “around the rim”: the unauthorized use of players’ image rights by third parties. We will use as a point of reference the US College Athletes image rights cases before US Courts and we will thereby examine the legal nature of image rights and the precise circumstances in which such rights may be infringed. Then, coming back to where we started, we will discuss the French case through the lens of US case law on players’ image rights. 


Source: http://philadelphia.cbslocal.com/2013/09/27/ea-sports-settles-college-likeness-case/ 


The American College Athletes image rights cases in a nutshell

The legal qualification of image rights varies in different jurisdictions. In the USA, image rights refer to the right of publicity: an intellectual property right, which gives the player an exclusive right on his image. The commercial exploitation of this image without permission constitutes an offence and practice of unfair competition.[1] Although the right of publicity is a creation of the common law not recognized under Federal law, many state courts and legislatures have embraced it.

The US legal system as a “true forerunner of marketing applied to sport”[2] considers, contrary to other legal systems, that image rights extends to the exploitation of players’ image rights linked to college championships. Indeed, the National Collegiate Athletic Association (NCAA) Basketball has acquired a monopoly power in the college sports entertainment market, with broadcast and cable television serving as powerful handmaidens.[3] This financially massive industry exploits the free labour of student-athletes’ due to their so-called amateur status.[4]  In fact, as a precondition to participate in NCAA Championships, student-athletes have to sign the ‘Form 08-3a’ authorizing NCAA to use their “name and picture to generally promote NCAA championships or other NCAA events, activities or programs”.[5]

The NCAA’s exploitation of players’ image rights generates millions of dollars of profits through licensing agreements for their use in e.g. television broadcasts, advertising, DVDs or video games. The fact that student-athletes are not compensated for the use of their rights has given rise to a wave of lawsuits filed by former student athletes against the NCAA and video game makers. O’Bannon’s, Sam Keller’s and other former student athletes’ image is still making money for the NCAA through licensed merchandizing.

As a result of the NCAA’s exploitation of players’ image rights, an unprecedented legal battle started in 2009 before the Federal Courts of the US. In May 2009, Sam Keller, a former football player of the Arizona University sued NCAA and EA Games for unlawfully using his image and likeness in a video game. The case continued before the 9th Circuit Court of Appeals in California which dismissed the appeal of EA Games on the grounds that EA was not protected by the First Amendment, which offers a shield to video games via freedom of speech. In fact, the Court concluded that the EA’s use of the player recreates him in the very setting in which he has achieved fame.[6] Similarly, in Ryan Hart’s case, a former Rutgers football player, the Federal Court of Appeals, overturning the district court’s ruling, concluded that players in video games are renditions of actual players who should be compensated.

Undoubtedly, the O’Bannon case is to be considered a milestone. It is the widest-ranging anti-trust lawsuit before US Courts with regards to college athletes’ image rights. On 21 July 2009, Ed O’Bannon, one of the most recognized collegiate basketball players of the last 30 years, along with another 19 former college athletes, filed a class action against EA Games, NCAA, and the Collegiate Licencing Company, the nation’s leading collegiate trademark licensing and marketing firm, seeking compensation from the unauthorized use of their image rights. Their claim implicated two core areas of law: (1) federal antitrust law and (2) intellectual property rights law. By requiring athletes to relinquish in perpetuity their image rights through the ‘Form 08-3a’ and fixing at zero the amount of compensation athletes could receive from the share of revenues, they contended that the NCAA has restrained trade and, thus, acted in violation of the Sherman Act, i.e. federal antitrust law. The athletes that signed this form had been deprived of their right to negotiate on their own with licensing firms after leaving college. Furthermore, they argued that they had been deprived of their right of publicity and their subsequent right to the commercial exploitation of their image, name, likeness or voice.

Following a contentious five years trial proceeding and thousands of pages of filings, on 8 August 2014, the US District Judge Claudia Wilken in a 99-page decision shook the basketball world by ruling in favour of O’Bannon and the other plaintiffs.[7] The injunction issued allows college athletes to get a share of the licensing revenues via the creation of a trust fund available to them once they leave college.


The O’Bannon landmark ruling: What the French (and Europe) can learn?

The O’Bannon ruling, while under appeal, has been ground-breaking in that it questions the ‘sacrosanct’ NCAA notion of amateurism. Judge Wilken was clear: maintaining amateurism is not legitimate sufficient justification for implementing anticompetitive labour rules, which bar players from being compensated for the use of their image rights. The collapse of NCAA’s amateurism defence and the resulting establishment of an equitable bargaining relationship between student-athletes and NCAA could blow up the entire college basketball system. Nonetheless, this not the only important lesson we can derive from the O’Bannon ruling and the American cases.

The link between amateurism and image rights, which deprives student-athletes from any compensation, is a unique phenomenon of US college sports system and lies at the heart of the American cases. In Europe, as we extensively explained in our fist blogpost, some professional basketball players assign to their clubs the commercial use of their image rights and they receive an adequate compensation through an image rights contract concluded with a third party, an image rights contract. However, this sum cannot be deemed as an actual compensation for the use of their image, but rather it constitutes a part of their remuneration under the employment contract. Therefore, at the European level, the question that could be raised is whether basketball players can request further compensation, i.e. a compensation proportionate to the revenues generated by the exploitation of their image rights. In this light, the O’Bannon ruling has the potential to create an important precedent for image rights disputes in European professional basketball as well:

(1) The license agreement of image rights between players and basketball associations

The issue at heart of the O’Bannon case regarding the ownership of the student-athletes image and likeness is the NCAA ‘Form 08-3a’. By means of this form, student-athletes authorize the NCAA to use their image rights for the promotion of its activities.[8] O’Bannon strongly argued that this form is illegal for the following reasons: First and foremost, the language of Part IV, which provides that the NCAA can use their “name and picture to generally promote NCAA championships or other NCAA events, activities or programs”, is vague and ambiguous. It does not define when, where, for how long, and how the NCAA may ‘generally’ promote events or activities. Secondly, as a result of student-athletes’ amateur status, this form is signed without representation. This can be considered as exploitative, since student-athletes’ are usually unaware of the legal consequences of signing such forms. Finally, this form is illegal, because it is coerced from student-athletes in exchange for their eligibility to play in the championship. Doug Szymul, former star football player at Northwestern University puts it clearly: “I had to sign it to be able to play, so it’s not like I’m going to argue about it”.[9]

Let’s transpose these arguments to the European professional basketball world and more particularly to the potential French case at hand. In fact, in the contracts between professional basketball players and National or European Basketball Associations, there is an image rights provision according to which players or their union agree, without further compensation, to the use of players’ image rights by the Club, the National or European League.[10] In this regard, the reference to the use of players’ image rights “in any manner” is quite ambiguous.[11]

In the French case, players transfer their image rights to the French Labour Union of Basketball (SNB). But, when players sign their contract with their club, they license the use of their image rights to their Club, French Basketball League and Euroleague, without further compensation. Can this agreement be interpreted as giving carte blanche to the Clubs, National Leagues or Euroleague to use basketball players’ image rights for an indefinite time period and indefinite manner, without further compensation? Well, if we follow the reasoning used in the O’Bannon ruling, this question should be answered in the negative: players and subsequently their labour union should have a share of licensing revenues. 

(2) The ‘without further compensation’ provision

A key issue raised during the O’Bannon trial was whether image rights (as well as name and likeness rights) even exist for the purposes of licencing agreements. The NCAA argued and provided supporting evidence[12] that although image rights are included in the contractual language, in practice, during the negotiation of broadcasting or licencing deals, they are not valued separately. The contractual provisions on image rights refer only to their use in event promotions and they play no further role during the licencing dealing.

Plaintiff’s witness, Edwin Desser, who was formerly the NBA head of broadcasting, disputed this argument by stating the ‘obvious’ from a commercial point of view: “ it’s simply impossible to conceive of sports telecast without being able to show the images of the participants”.[13] In other words, players’ image rights are a quid pro quo requirement of every broadcasting or licencing agreement.

This argument, which stems from commercial law practice, could serve as the perfect pick-n-roll in other image rights cases, including the French case. True, when, for example, EA Games negotiates with Euroleague for the conclusion of a licencing agreement, image rights are not separately calculated. However, in practice, the package of entitlements conveyed to video makers by the Clubs and Euroleague in exchange for exclusive licensing rights is essential for the deal. Realistically speaking, would it be possible for EA Games to create the NBA 2K 15 with Strasbourg and Nanterre playing, without including their players’ image rights? Clubs and Euroleague license players’ image rights and it goes without saying that they get significant revenues from the licencing agreement, while some players receive only a compensation which has been fixed in advance as part of their overall remuneration. It is this ‘without further compensation’ use of image rights provided by the contracts signed by players, therefore, that infringes their right to the commercial exploitation of their own image rights. 


Conclusive Remarks

In our previous blogpost, we cited the SNB’s president words: the SNB motion against EA Games is not about the money, but rather to defend basketball players’ rights.[14] Undoubtedly, image rights are also about the money, even if in the European context the monetary compensation is limited. We have shown that the unauthorized use of players’ image rights or the loss of their exclusive use may deprive them from a fair share of the club’s lucrative endorsement contracts. Furthermore, the existence of products bearing a player’s image without his authorization can in some cases seriously damage the value of his licensing rights.[15] Moreover, irrespectively of the legal qualification of image rights as ‘right of publicity’ or ‘right to personality’, this is a right gained through hard work on the basketball courts and the player should in any events get a share of the licensing revenues it generates.

The ‘David against Goliath’ American college sports crusade shows the way for European professional basketball players: a ‘without further compensation’ use of image rights or the denial of liability of the Clubs for non-payment of image rights contracts can be (and should be) successfully fought against.


[1] L Colantuoni and C Novazio, ‘Intellectual Property Righs in Basketball’ (2011) 1-2 International Sports Law Journal, 59.

[2] Ibid, 58.

[3] http://economics.stanford.edu/files/Theses/RobertLemonsHonorsThesis-May2014.pdf

[4] For an interesting insight on NCAA practice, see: B Starkey, ‘College Sports Aren't Like Slavery. They're Like Jim Crow’ where the author compares college athletes’ status to the status of “blacks after slavery”.

[5] Form 08-3a, Part Iv

[6] United States Courts of Appeals for the Ninth Circuit, NCAA Student-Athlete name & likeness litigation (No 10-15387)

[7] Edward O’Bannon et al v National Collegiate Athletics Association, Electronic Arts Inc and Collegiate Licensing Company (US District Court, 08.08.2014)

[8] M Zylstra, Ed. O’Bannon vs. NCAA: An examination of O’Bannon’s legal claim that the NCAA illegally uses the likeness and image of former student-athletes (2009) 205 Business Law, 5.

[9] Ibid, 6.

[10] See for example, Article 69  of the Euroleague Bylaws 2012-2013: “The Company and EP have the right to use the image of the club’s players, the players’ likeness (photograph, caricature, etc), name, number, or any combination thereof for any and all commercial and promotional purposes solely in connection with the Euroleague and provided that the image of the player appears linked to the club, the player wearing its apparel and footwear, or when the player participates in public events organised by the club or by the Company”.

[11] See, Standard Player Contract of SIG BASKET SAEMSL , Clause 9.1 :The Player agrees, without further compensation, to allow the Club or the National League or Euroleague Basketball and their respective sponsors to take pictures of the Player, during game action or posed, as necessary, alone or together with others, for still photographs, motion pictures, internet, TV or any other form of media whether presently known or unknown, at such times as the Club or the National League or Euroleague Basketball may designate. Such pictures may be used, without further compensation, in any manner desired by either the Club or the National League or Euroleague Basketball or their respective sponsors only for publicity or promotional purposes. The rights in any such pictures taken by the Club or by the National League or by Euroleague Basketball shall belong to the Club or to the National League or to Euroleague Basketball as their interests may appear.”

[12] Reporter’s Transcript of Proceedings, Testimony of the NCAA’s lead expert Neal Pilson (vol 4) 715-815

[13] Reporter’s Transcript of Proceedings, Testimony of Edwin Desser (vol 4), 618-708.

[14] Johan Passave-Ducteil, the president of SNB remarks in l’Equipe:"Ce n’est pas une histoire d’argent, on défend le droit des joueurs".

[15] L Colantuoni and C Novazio (n1), 60

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