Asser International Sports Law Blog

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

FIFA and FIFPro sign landmark agreement

A six-year cooperation agreement concluded between FIFA and FIFPro on 6 November 2017 puts an end to protracted negotiations which began after the latter had filed in September 2015 a complaint with the European Commission, challenging the validity of the FIFA transfer system under EU competition law. This agreement, together with an accord reached between FIFA, FIFPro, the European Club Association, and the World Leagues Forum under the umbrella of the FIFA Football Stakeholders Committee, should help streamline dispute resolution between players and clubs, avoid abusive practices in the world of football, or contribute to the growth of professional women's football. In addition, the FIFA Football Stakeholders Committee is now expected to establish a task force to study and conduct a broader review of the transfer system. As part of the deal, FIFPro agreed to withdraw its EU competition law complaint.

FIFA strengthens its human rights commitment amid reports of journalists getting arrested in Russia

It is fair to say that human rights have been at the forefront of FIFA's agenda in 2017. Following the establishment of the Human Rights Advisory Board in March and the adoption of the Human Rights Policy in June this year, in November FIFA published the bidding regulations for the 2026 World Cup. Under these new regulations, member associations bidding to host the final tournament shall, inter alia, commit themselves to respecting all internationally recognised human rights in line with the United Nations Guiding Principles on Business and Human Rights or present a human rights strategy on how they intend to honour this commitment. Importantly, the human rights strategy must include a comprehensive report that is to be complemented and informed by a study elaborated by an independent expert organisation. Moreover, on 9 November 2017, the Human Rights Advisory Board published its first report in which it outlined several recommendations for FIFA on how to further strengthen its efforts to ensure respect for human rights.

While all these attempts to enhance human rights protection are no doubt praiseworthy, they have not yet produced the desired effect as reports of gross human rights abuses linked to FIFA's activities continue to emerge. Most recently, Human Rights Watch documented how Russian police arrested a newspaper editor and a human rights defender whose work focused on exposing World Cup-related corruption and exploitation of migrant construction workers. On a more positive note, a bit of hope comes with the announcement by a diverse coalition, including FIFA, UEFA, and the International Olympic Committee, of its intention to launch a new independent Centre for Sport and Human Rights in 2018.

More than 20 Russian athletes sanctioned by the Oswald Commission for anti-doping rule violations at the Sochi Games

November has been a busy month for the International Olympic Committee, especially for its Oswald Commission. Established in July 2016 after the first part of the McLaren Independent Investigation Report had been published, the Oswald Commission is tasked with investigating the alleged doping violations by Russian athletes at the 2014 Winter Olympic Games in Sochi. Its first sanctions were handed down last month. As of 30 November 2017, the Commission chaired by the IOC Member Denis Oswald sanctioned 22 athletes (see here, here, here, here, here, and here) who competed at the Sochi Olympics in the following sports: biathlon, bobsleigh, cross country skiing, skeleton, and speed skating. The Commission published its first full decision on 27 November 2017 in the case against the cross country skier Alexander Legkov, a gold and silver medallist from the Sochi Olympics, who was ultimately banned for life from attending another Olympics.More...

Editor's note: We (Ben Van Rompuy and Antoine Duval) are at the origin of today's decision by the European Commission finding that the International Skating Union's eligibility rules are contrary to EU competition law. In 2014, we were both struck by the news that ISU threatened lifetime ban against speed skaters wishing to participate in the then projected Icederby competitions and convinced that it was running against the most fundamental principles of EU competition law. We got in touch with Mark and Niels and lodged on their behalf a complaint with the European Commission. Three years after we are pleased to see that the European Commission, and Commissioner Vestager in particular, fully embraced our arguments and we believe this decision will shift the tectonic structure of sports governance in favour of athletes for years to come.

Here is our official statement:

Today is a great day for Mark Tuitert and Niels Kerstholt, but more importantly for all European athletes. The European Commission did not only consider the International Skating Union's eligibility rules contrary to European law, it sent out a strong message to all international sports federations that the interests of those who are at the centre of sports, the athletes, should not be disregarded. This case was always about giving those that dedicate their lives to excelling in a sport a chance to compete and to earn a decent living. The majority of athletes are no superstars and struggle to make ends meet and it is for them that this decision can be a game-changer.

However, we want to stress that this case was never about threatening the International Skating Union’s role in regulating its sport. And we very much welcome the exceptional decision taken by the European Commission to refrain from imposing a fine which could have threatened the financial stability of the International Skating Union. The International Skating Union, and other sports federations, are reminded however that they cannot abuse their legitimate regulatory power to protect their economic interests to the detriment of the athletes.

We urge the International Skating Union to enter into negotiations with representatives of the skaters to devise eligibility rules which are respectful of the interests of both the athletes and their sport.

Since the summer of 2014, it has been our honour to stand alongside Mark and Niels in a 'David versus Goliath' like challenge to what we always perceived as an extreme injustice. In this fight, we were also decisively supported by the team of EU Athletes and its Chance to Compete campaign.

Finally, we wish to extend a special thank you to Commissioner Vestager. This case is a small one for the European Commission, but Commissioner Vestager understood from the beginning that small cases do matter to European citizens and that European competition law is there to provide a level playing for all, and we are extremely grateful for her vision.

Dr. Ben Van Rompuy (Leiden University) and Dr. Antoine Duval (T.M.C. Asser Instituut)

Editor's Note: Ryan Gauthier is Assistant Professor at Thompson Rivers University in Canada. Ryan’s research addresses the governance of sports organisations, with a particular focus on international sports organisations. His PhD research examined the accountability of the International Olympic Committee for human rights violations caused by the organisation of the Olympic Games.

Publicly Financing a Stadium – Back in the Saddle(dome)

Calgary, Canada, held their municipal elections on October 16, 2017, re-electing Naheed Nenshi for a third term as mayor. What makes this local election an interesting issue for sports, and sports law, is the domination of the early days of the campaign by one issue – public funding for a new arena for the Calgary Flames. The Flames are Calgary’s National Hockey League (NHL) team, and they play in the Scotiabank Saddledome. More...

Editor’s Note: Oytun Azkanar holds an LLB degree from Anadolu University in Turkey and an LLM degree from the University of Melbourne. He is currently studying Sports Management at the Anadolu University.

Introduction

On 19 October 2017, the Turkish Professional Football Disciplinary Committee (Disciplinary Committee) rendered an extraordinary decision regarding the fixing of the game between Manisaspor and Şanlıurfaspor played on 14 May 2017. The case concerned an alleged match-fixing agreement between Elyasa Süme (former Gaziantepspor player), İsmail Haktan Odabaşı and Gökhan Sazdağı (Manisaspor players). The Disciplinary Committee acknowledged that the evidence relevant for proving the match-fixing allegations was obtained illegally and therefore inadmissible, and the remaining evidence was not sufficient to establish that the game was fixed. Before discussing the allegations, it is important to note that the decision is not only significant for Turkish football but is also crucial to the distinction between disciplinary and criminal proceedings in sports. More...

Close to 100 participants from 37 different countries attended the first ISLJ Annual International Sports Law Conference that took place on 26-27 October 2017 in The Hague. The two-day programme featured panels on the FIFA transfer system, the labour rights and relations in sport, the protection of human rights in sport, EU law and sport, the Court of Arbitration for Sport, and the world anti-doping system. On top of that, a number of keynote speakers presented their views on contemporary topics and challenges in international sports law. This report provides a brief summary of the conference for both those who could not come and those who participated and would like to relive their time spent at the T.M.C. Asser Institute.More...

Introduction

The first part of this two-part blog on multi-club ownership in European football outlined the circumstances leading to the adoption of the initial rule(s) aimed at ensuring the integrity of the UEFA club competitions (Original Rule) and retraced the early existence of such rule(s), focusing primarily on the complaints brought before the Court of Arbitration for Sport and the European Commission by the English company ENIC plc. This second part will, in turn, introduce the relevant rule as it is currently enshrined in Article 5 of the UCL Regulations 2015-18 Cycle, 2017/18 Season (Current Rule). It will then explore how the UEFA Club Financial Control Body (CFCB) interpreted and applied the Current Rule in the Red Bull case, before drawing some concluding remarks. More...

Editor’s note: Tomáš Grell holds an LL.M. in Public International Law from Leiden University. He contributes to the work of the ASSER International Sports Law Centre as a research intern.

Introduction

On 13 September 2017, more than 40,000 people witnessed the successful debut of the football club RasenBallsport Leipzig (RB Leipzig) in the UEFA Champions League (UCL) against AS Monaco. In the eyes of many supporters of the German club, the mere fact of being able to participate in the UEFA's flagship club competition was probably more important than the result of the game itself. This is because, on the pitch, RB Leipzig secured their place in the 2017/18 UCL group stage already on 6 May 2017 after an away win against Hertha Berlin. However, it was not until 16 June 2017 that the UEFA Club Financial Control Body (CFCB) officially allowed RB Leipzig to participate in the 2017/18 UCL alongside its sister club, Austrian giants FC Red Bull Salzburg (RB Salzburg).[1] As is well known, both clubs have (had) ownership links to the beverage company Red Bull GmbH (Red Bull), and therefore it came as no surprise that the idea of two commonly owned clubs participating in the same UCL season raised concerns with respect to the competition's integrity. More...

The Headlines

2024 and 2028 Olympic Games to be held in Paris and Los Angeles respectively

On 13 September 2017, the Session of the International Olympic Committee (IOC) held in Lima, Peru, elected Paris and Los Angeles as host cities of the 2024 and 2028 Olympic Games respectively. On this occasion, the IOC President Thomas Bach said that ''this historic double allocation is a 'win-win-win' situation for the city of Paris, the city of Los Angeles and the IOC''. The idea of a tripartite agreement whereby two editions of the Olympic Games would be awarded at the same time was presented by a working group of the IOC Vice-Presidents established in March 2017. Both Paris and Los Angeles have pledged to make the Olympic Games cost-efficient, in particular through the use of a record-breaking number of existing and temporary facilities. In addition to economic aspects, it will be worthwhile to keep an eye on how both cities will address human rights and other similar concerns that may arise in the run-up to the Olympic Games. More...

Editor’s note: Josep F. Vandellos Alamilla is an international sports lawyer and academic based in Valencia (Spain) and a member of the Editorial Board of the publication Football Legal. Since 2017 he is the Director of the Global Master in Sports Management and Legal Skills FC Barcelona – ISDE.

I think we would all agree that the reputation of players’ agents, nowadays called intermediaries, has never been a good one for plenty of reasons. But the truth is their presence in the football industry is much needed and probably most of the transfers would never take place if these outcast members of the self-proclaimed football family were not there to ensure a fluid and smooth communication between all parties involved.

For us, sports lawyers, intermediaries are also important clients as they often need our advice to structure the deals in which they take part. One of the most recurrent situations faced by intermediaries and agents operating off-the-radar (i.e. not registered in any football association member of FIFA) is the risk of entering in a so-called multiparty or dual representation and the potential risks associated with such a situation.

The representation of the interests of multiple parties in football intermediation can take place for instance when the agent represents the selling club, the buying club and/or the player in the same transfer, or when the agent is remunerated by multiple parties, and in general when the agent incurs the risk of jeopardizing the trust deposited upon him/her by the principal. The situations are multiple and can manifest in different manners.

This article will briefly outline the regulatory framework regarding multiparty representation applicable to registered intermediaries. It will then focus on provisions of Swiss law and the identification of the limits of dual representation in the light of the CAS jurisprudence and some relevant decisions of the Swiss Federal Tribunal.More...

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...

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...

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

On 3 June 2015, Sepp Blatter resigned as President of FIFA after another corruption scandal inside the world’s football governing body was brought to light by the American authorities supported by the Swiss prosecutor office. Two months after Michel Platini announced he would be a candidate for the next FIFA Presidential election, on 25 September 2015, the Swiss prosecutor opened an investigation against S. Blatter on an alleged disloyal payment he authorised to M. Platini. On 8 October 2015, the FIFA Ethics Committee announced both of them were provisionally suspended upon their hearings, a suspension that was later confirmed by CAS. In the end, M. Platini was sanctioned with an eight years ban from all football activities, later reduced to a six years ban by FIFA Appeal Commission on 24 February 2016. In the meantime, he withdrew his candidacy to become the next FIFA President. On 9 May 2016, after M. Platini appealed this sanction, the CAS confirmed the suspension but reduced it to four years, leading to his resignation from the UEFA presidency and the announcement of his intention to challenge the CAS award in front of the Swiss Federal Tribunal.

On 19 September, the CAS finally published the full text of the award in the dispute between M. Platini and FIFA. The award is in French as M. Platini requested that the procedure be conducted in that language. You will find below a summary of the ‘highlights’ of the 63-page decision. More...

Editor's note: This is the (belated) fifth part/act of our blog series on the Russian eligibility cases at the CAS ad hoc Division in Rio. The other acts are available at:

Act V: Saving the last (Russian) woman standing: The Klishina miracle

Darya Klishina is now an Olympic celebrity. She will enter the history books not because she won a gold medal or beat a world record. Instead, her idiosyncrasy lies in her nationality: she was the sole Russian athlete authorized to stand in the athletics competitions at the Rio Olympics. And yet, a few days before the start of the long jumping contest in which she was due to take part, the IAAF surprisingly decided to revoke her eligibility (‘And Then There Were None’). But Klishina appealed the decision to the CAS ad hoc Division and, as all of you well-informed sports lawyers will know, she was allowed to compete at the Olympics and finished at a decent ninth place of the long jump finals.

Two important questions are raised by this case:

Why did the IAAF changed its mind and decide to retract Klishina’s authorization to participate?
Why did the CAS overturn this decision? More...

Editor's note: This is the fourth part/act of our blog series on the Russian eligibility cases at the CAS ad hoc Division in Rio.

Act IV: On Bringing a sport into disrepute

Paragraph 2 of the IOC Decision: “The IFs will also have to apply their respective rules in relation to the sanctioning of entire NFs.”

In paragraph 2 of its Decision, the IOC mentioned the possibility for IFs to “apply their respective rules in relation to the sanctioning of entire NF's”.This is exactly what the International Weightlifting Federation (IWF) did when it decided on 29 July 2016 to exclude the whole Russian Weightlifting Federation (RWF) from the Rio Olympics for having brought the sport into disrepute. Indeed, Article 12. 4 of the IWF Anti-doping Policy, foresees that:

“If any Member federation or members or officials thereof, by reason of conduct connected with or associated with doping or anti-doping rule violations, brings the sport of weightlifting into disrepute, the IWF Executive Board may, in its discretion, take such action as it deems fit to protect the reputation and integrity of the sport.”More...

Editor's note: This is the third part/act of our blog series on the Russian eligibility cases at the CAS ad hoc Division in Rio.

Act III: On being sufficiently tested

Paragraph 2 of the IOC Decision: “The IFs should carry out an individual analysis of each athlete’s anti-doping record, taking into account only reliable adequate international tests, and the specificities of the athlete’s sport and its rules, in order to ensure a level playing field.”

Daniil Andienko and 16 other members of the Russian rowing team challenged the decision of the World Rowing Federation (FISA) to declare them ineligible for the Rio Olympics. The FISA Executive Committee took the decision on 24 July 2016 because they had not “undergone a minimum of three anti-doping tests analysed by a WADA accredited laboratory other than the Moscow laboratory and registered in ADAMS from 1 January 2015 for an 18 month period”.[1] In their submissions, the Russian applicants did not challenge the IOC Decision, and thus the criteria enshrined in paragraph 2, but only its application by FISA.[2] The Russian athletes argued that FISA’s decision deviated from the IOC Decision in that it was imposing as an additional requirement that rowers must “have undergone a minimum of three anti-doping tests analysed by a WADA accredited laboratory other than the Moscow laboratory and registered in ADAMS from 1 January 2015 for an 18-month period”.[3] The Panel acknowledged that “the IOC Executive Board decision does not refer explicitly to the requirement of three tests or to a period of 18 months”.[4] Nonetheless, it “finds that the Challenged Decision is in line with the criteria established by the IOC Executive Board decision”.[5] Indeed, the IOC’s Decision “provides that in order to examine whether the level playing field is affected or not (when admitting a Russian athlete to the Rio Olympic Games), the federation must look at the athlete's respective anti-doping record, i.e. examine the athlete's anti-doping tests” and that “[i]n doing so, the IOC Executive Board decision specifies that only "reliable adequate international tests" may be taken into account”.[6] In this regard, the Panel, and FISA, share the view that “a reliable adequate international test can only be assumed if the sample has been analyzed in a WADA-accredited laboratory outside Russia”.[7]More...

Editor's note: This is the second part/act of our blog series on the Russian eligibility cases at the CAS ad hoc Division in Rio.

Act I: Saved by the Osaka Déjà-Vu

Act II: On being implicated

Paragraph 2 of the IOC Decision: “The IFs to examine the information contained in the IP Report, and for such purpose seek from WADA the names of athletes and National Federations (NFs) implicated. Nobody implicated, be it an athlete, an official, or an NF, may be accepted for entry or accreditation for the Olympic Games.”

The second, and by far largest, wave of complaints involved Russian athletes barred from the game under paragraph 2 of the IOC Decision. None of those were successful in their appeals as the CAS sided with those IFs which took a tough stance with regard to the Russian State doping system. The first set of cases turned on the definition of the word “implicated” in the sense of paragraph 2 of the IOC Decision. In this regard, on 2 August the IOC sent a communication to the IFs aiming at providing some general guidelines. It reads as follows:

"In view of the recent appeals filed by Russian Athletes with CAS, the IOC considers it necessary to clarify the meaning of the notion "implicated" in the EB Decision.

The IOC does not consider that each athlete referred to in the McLaren Lists shall be considered per se "implicated. It is for each International federation to assess, on the basis of the information provided in the McLaren lists and the Independent Person Report, whether it is satisfied that the Athlete in question was implicated in the Russian State-controlled doping scheme.

To assist the International Federations in assessing each individual case, the IOC wishes to provide some information. In the IOC's opinion, an athlete should not be considered as "implicated" where:

· The order was a "quarantine".

· The McLaren List does not refer to a prohibited substance which would  have given rise to an anti-doping rule violation or;

· The McLaren List does not refer to any prohibited substance with respect  to a given sample."

The CAS went on to address this question concretely in three cases analysed below. More...

Since it was first introduced at the Atlanta Games in 1996,[1] the CAS ad hoc Division has never been as crowded as it was during this year’s Rio Olympics. This is mainly due to the Russian doping scandal, which has fuelled the CAS with Russian athletes challenging their ineligibility to compete at the Games. The CAS recently revealed that out of 28 awards rendered, 16 involved Russian athletes challenging their ineligibility. This Russian ballet is a direct result of the shocking findings of Richard McLaren’s Independent Person (IP) Report ordered by the World Anti-Doping Agency (WADA). McLaren’s investigation demonstrated that the Russian State was coordinating a sophisticated doping system. The revelation triggered an outrage in the media and amongst other competitors. Numerous calls (especially by WADA and various National Anti-Doping Organisations) were heard urging the IOC to ban the entire Russian delegation from the Olympics. The IAAF decided to exclude the whole Russian athletics team, [2] with the exception of Darya Klishina, but, to the disappointment of many, the IOC refused to heed these calls and decided, instead, to put in place a specific procedure to assess on a case-by-case basis the eligibility of Russian athletes.

The IOC’s Decision (IOC Decision) of 24 July foresees that the International Federations (IFs) are competent to determine whether each Russian athlete put forward by the Russian Olympic Committee (ROC) to participate in the Olympics meets a specific set of conditions. Moreover, the ROC was also barred from entering athletes who were sanctioned for doping in the past, even if they have already served their doping sanction. In the end, a majority of the Russian athletes (278 out of 389 submitted by the ROC) cleared the IOC’s bar relatively easily, but some of them did not, and many of the latter ended up fighting for their right to compete at the Rio Olympics before the CAS ad hoc Division.[3] In the following blogs, I will analyse the ten published CAS awards related to Russian athletes.[4] It is these legal fights that I suggest to chronicle in the following parts of this blog. To do so, I have divided them in five different (and analytically coherent) Acts:

The Headlines

For the world of Sport, the elsewhere known “sleepy month” of August turned out to be the total opposite. Having only just recuperated from this year’s Tour de France, including a spectacular uphill sprint on bicycle shoes by later ‘Yellow Jersey’ winner Chris Froome, August brought another feast of marvellous sport (and subsequent legal drama): The 2016 Olympic Games in Rio de Janeiro.More...

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

On 14 July 2016, the Belgian competition authority refused to grant provisional measures to the White Star Woluwe Football Club (“The White Star”), which would have allowed it to compete in the Belgian top football division. The club was refused a licence to compete in the above mentioned competition first by the Licences Commission of the national football federation (“Union Royale Belge des Sociétés de Foootball Association” or “URBSFA”) and then by the Belgian court of arbitration for sports (“Cour Belge d’Arbitrage pour le Sport” or “CBAS”). The White Star lodged a complaint to the national competition authority (“NCA”) and requested provisional measures. The Belgian competition authority rendered a much-overlooked decision (besides one commentary) in which it seems to accept the reviewability of an arbitral award’s conformity with EU competition law (articles 101 and 102 TFEU). More...

This is the second part of a blog series on the Real Madrid State aid case. In the previous blog on this case, an outline of all the relevant facts was provided and I analysed the first criterion of Article 107(1) TFEU, namely the criterion that an advantage must be conferred upon the recipient for the measure to be considered State aid. Having determined that Real Madrid has indeed benefited from the land transactions, the alleged aid measure has to be scrutinized under the other criteria of Article 107(1): the measure must be granted by a Member State or through State resources; the aid granted must be selective; and it must distorts or threatens to distort competition. In continuation, this blog will also analyze whether the alleged aid measure could be justified and declared compatible with EU law under Article 107(3) TFEU.

The aid is granted by the State or through State resources

In its decision to launch a formal investigation, the Commission concluded that Real Madrid “enjoyed an advantage which derives from State resources, as the State forgoes possible revenues”.[1] Given that the Commission argued in 2002 that a requalification of a terrain does not entail State aid because there was no transfer of State resources and given that the facts regarding the requalification show some striking similarities with the current case, it is surprising that the Commission provided such a limited analysis. This might leave open the possibility for Real Madrid or the Council to argue that they could have legitimately expected that the land transactions concerned were free of a transfer of State resources. Therefore, it would have been more prudent for the Commission to further highlight the differences between the case in question and its decision not to start an investigation in 2002.

As regards land sale transactions, the land that is sold under market value by the public authorities is to be considered a State resource. The agreements to (1) compensate Real Madrid for the terrain in “Las Tablas” by providing the club other terrains and (2) to provide Real Madrid the land between the stadium and the “Paseo de la Castellana” are both imputable to the Council of Madrid and imply a loss of State resources. As regards the ad hoc modification of the PGOU, even though the modification provides a selective advantage to Real Madrid, this measure is unlikely to qualify as State aid, because no State resource has been transferred.

The selectivity of the aid granted

With regard to whether the agreements favoured Real Madrid over its competitors, the Council could hold that both agreements could only be made with Real Madrid and not with any other football club. The first agreement involved a compensation for the impossibility to transfer a land from the Council to Real Madrid and the second agreement concerned further land transactions between Real Madrid and the council that, due to the location of several of the terrains in question, could not be offered to another football club.

Nonetheless, both measures at hand can most definitely be considered selective, thereby favouring Real Madrid over its competitors. The agreement of 29 July 2011 is selective because it only involves Real Madrid. Not only does the compensation include an economic advantage for the club, Real Madrid will also have the acquired terrains at full disposal, allowing it to sell, rent, swap or construct in any way it pleases.

Moreover, despite that the Council stated that Real Madrid had to bear all the costs for the construction of the hotel, the parking space and the shopping centre, it is also true that all the benefits of the exploitation will go directly to the football club and not to any of its competitors. The competitors, in this sense, should be interpreted wider than just being other football clubs. The Council has not given any reasons why a hotel and shopping centre in one of the main streets of Madrid has to be exploited by the undertaking Real Madrid. The “Bernabéu-Opañel” plan is therefore also selective in that it favours Real Madrid over competitors that exploit hotels and shopping centres.

The aid has an effect on inter-State trade and distorts competition

In order for the measures to fall within the prohibition of Article 107(1), there must be an effect on competition and inter-State trade. For this condition to be fulfilled, it is sufficient that the Commission can establish a link between the measures in question and a potential effect on competition and trade. The recipient, Real Madrid, is an undertaking that operates in the European football sector. The 29 July 2011 Agreement could have allowed Real Madrid to receive a higher compensation than what it should have gotten, had the Council used the market values of the terrains in question. The economic advantage obtained by Real Madrid could be used to strengthen its position in the football sector. The same can be said for the operation “Bernabéu-Opañel”. A possible economic advantage deriving from this measure enables the football club to generate profits from the exploitation of a hotel and a shopping centre. This extra income could enable them to strengthen their team by buying new players. A strengthened Real Madrid would distort competition since other football clubs have not enjoyed the same support.

Secondly, the fact that the measure facilitates Real Madrid to run and exploit a hotel in one of the most important streets of Madrid, distorts competition in the hotel sector as well. Other hotels might generate less money because Real Madrid is exploiting an indirectly publicly subsidized hotel.

All the four criteria of Article 107(1) TFEU are fulfilled. The land transactions have created an advantage to the recipient, Real Madrid. Furthermore, the lands provided by the Council are to be regarded as State resources and, given that the measures were selective, competition has been distorted.

Can the aid be justified?

The moment an aid measure fulfils all the criteria of Article 107(1), it will be seen as constituting State aid. However, the measure could still be deemed justified under certain conditions in accordance with EU Law. There are no EU Regulations or Commission guidelines on the application of State aid rules to commercial sporting activities. Therefore, the question whether the aid can be justified needs to be based on the conditions set in Article 107(3)(c) TFEU.[2] Article 107(3)c) provides that aid may be compatible if it facilitates the development of certain economic activities or of certain economic areas, where such aid does not adversely affect trading conditions to an extent contrary to the common interest. The Commission understands that the specific nature of sport needs to be taken into account when dealing with State aid cases, as sport fulfils educational, public health, social and recreational functions. Furthermore, it is established Commission practice that a measure may be declared compatible if it is necessary and proportionate and if the positive effects for the common objective outweigh the negative effects on competition and trade.[3] In a Hungarian State aid case dating from 2011, the Commission approved an aid measure for the Hungarian sport sector, since the general objective of the measure (“increase the participation of the general public in youth activities”) took into account Hungary’s commitments that the benefits would be distributed to the widest possible beneficiaries, and is therefore in line with the common market. [4]

Furthermore, over the last two years the Commission has reached several final decisions involving State aid granted for the construction of football stadiums. For example, in a decision dating from 20 November 2013, the Commission decided not to raise objections regarding the plan of the Flemish government to subsidize the renovation and the construction of multifunctional football stadiums as the State aid contained therein was deemed compatible with Article 107(3)(c) TFEU. Even though all the criteria of Article 107 (1) were fulfilled, the Commission acknowledged that the social, cultural and educational return of football stadiums plays a central role in the decision whether the aid could should be declared compatible. Since all the stadiums in question would have a clear multifunctional character and different players could use the stadiums for different events, the Commission found that the general public would benefit from the aid and that the positive effects would outweigh the negative effects.[5]

When applying the balancing test to the possible aid measures involving Real Madrid, firstly, as regards the 29 July 2011 Agreement, there does not appear to be an objective of common interest. The agreement was made with the sole objective of compensating Real Madrid and was not beneficial for the general public.

As regards the “Bernabéu-Opañel” on the other hand, the Council held that the operation would create additional “green zones” for the city and that the hotel and shopping centre would provide work to around 600 people. The question remains, however, whether the positive effects derived from the creation of 600 jobs outweigh the negative effects on competition and trade.

In its decision, the Commission considered that it did not appear to pursue an objective of common interest, which could justify an economic advantage to one of the biggest and most successful operators in a highly competitive economic sector. [6] Indeed, the only player in the football sector that will benefit from the operation “Bernabéu-Opañel” is Real Madrid. The fact that Real Madrid could generate profits from the hotel and shopping centre will not be beneficial to other football clubs operating in the football sector, nor will it be beneficial to the football sector in general. Therefore, it seems unlikely that the positive effects of the operation “Bernabéu-Opañel” outweigh the negative effects on competition and trade.

The recovery of the aid and possible consequences of a negative decision

A measure which constitutes State aid in the meaning of Article 107(1) TFEU and which is declared incompatible with the internal market, is unlawful. Therefore, should the Commission find that the agreements between the Council of Madrid and Real Madrid constitute unlawful aid, it will order Spain to recover the aid provided to the club.

The Recovery of the aid

The purpose of recovery is to re-establish the situation existing before aid was unlawfully granted.[7] The procedural rules on the recovery of unlawful aid are laid down in in Council Regulation 659/1999. Article 14(1) of the Regulation provides that “the Commission shall decide that the Member State concerned shall take all necessary measures to recover the aid from the beneficiary”. Not only is the Commission exclusively competent to decide whether or not a measure constitutes unlawful State aid, it is also exclusively competent to request from a Member State to recover the unlawful State aid. Importantly, however, the recovery itself shall be done in accordance with the procedures under the law of the Member State concerned, provided that they allow the immediate and effective execution of the Commission’s decision.[8] As regards the quantification of the aid, there is no provision of Union law that requires the Commission to quantify the exact amount of aid to be recovered.[9] Nonetheless, the Commission may include information in its recovery decision enabling the addressee of the decision to work out that amount itself without overmuch difficulty.[10]

To establish the amount of aid to be recovered, one needs to firstly determine the total advantage obtained by Real Madrid and the exact moment in which Real Madrid started obtaining the advantage. At this stage in time it is difficult to determine what the Commission could consider as possible advantage. It is neither known whether the Commission takes all land transactions into account, nor is it clear what the exact value of each parcel is due to the complexity of the case and the lack of relevant information. However, once a total advantage is established, and with that the total amount of aid to be recovered, this amount would also probably include interest at an appropriate rate fixed by the Commission.[11] Interest would be payable from the date the unlawful aid was put at the disposal of Real Madrid until the date of effective recovery. The aid can be recovered by means of a cash payment. However, alternative measures are allowed provided that the Member State ensures that the measure chosen is transparent and eliminates the distortion of competition caused by the unlawful aid.

The consequences of a negative decision

The direct consequence of a negative decision for Real Madrid is that the situation existing before the aid was unlawfully granted would have to be re-established. Whether this situation concerns the time before the agreement of 1998, the Agreement of 29 July 2011 or before the operation “Bernabéu-Opañel” was conducted will depend on the Commission’s decision. An analysis of other Commission decisions involving land transactions in which the Commission ordered recovery of the aid indicates that the Commission does not simply undo the land transaction itself. The Commission decision that led to the Konsum Nord case included the order directed to the Swedish authorities to recover an amount equal to the difference between the amount offered for a land by the supermarket “Lidl” and the amount paid by the supermarket “Konsum”.[12] With regard to a Dutch case on an alleged sale of land below market price, the Commission established that the amount to be recovered consisted of the difference of the price paid by the undertaking “SJB” and the price initially agreed between the “SJB” and the local authorities. A third very recent example concerned unlawful forest swap transactions in Bulgaria. The Commission ordered Bulgaria to either recover the incompatible State aid granted or undo the swaps concerned. In other words, undoing the land transaction is merely an option and never an obligation.

Keeping the Commission practice in mind, in case of a negative Commission decision, the most likely scenario is that the Commission will oblige Spain to recover the advantage Real Madrid obtained from the transactions, but that the transactions themselves will not be undone. Therefore, the obvious direct consequences for the football club will constitute in paying a lump sum to the Spanish authorities equal to the difference between the valuation of the parcels as established by the Commission and as valued by the Council of Madrid.

A more far-reaching consequence, such as an unlimited suspension of the operation “Bernabéu-Opañel”, are rather unlikely. The recovery will be done under national law[13], thus further recovery actions mainly depend on Spanish national law. The ad hoc modification of the Plan General de Ordenación Urbana de Madrid de 1997 (PGOU) that opened up the possibility of constructing on the terrain between the stadium and the “Paseo de la Castellana” can, therefore, only be challenged under national law.

If the consequences of a negative decision are only limited to paying a lump sum and, given the fact that Real Madrid is possibly financially the most powerful football club in the world, one could legitimately ask the question what the fuss is all about. Indeed, why would Real Madrid worry about paying a lump sum of, say, €20 million when its turnover exceeds €600 million per year, and when it is capable of spending more than €100 million in summer transfer fees? In my opinion, the aspects that make the Real Madrid case unlike any other State aid case are not to be found in the amount that constitutes the total financial advantage for the club nor, consequentially, the amount that would have to be recovered. What makes this case special is the very specific role played by citizens and the position Real Madrid has in the football sector. A negative State aid decision involving one of the richest and most successful football clubs in the world would serve as a warning to the entire European football sector that the Commission is serious regarding unlawful State aid granted to football clubs.

To be continued….

[1] SA.33754 (2013/C) (ex 2013/NN) – Spain Real Madrid CF, §36

[2] Article 107(2) and Articles 107(3)a), b) and d) are also justifications, but are not relevant to the case at hand

[3] Community framework for State aid for research and development and innovation, OJ C 323, 30.12.2006, p. 1, point 1.3.

[4] SA.31722 Supporting the Hungarian sport sector via tax benefit scheme, §85-90

[5] SA.37109 (2013/N) – Belgium Football stadiums in Flanders, §28-34

[6] SA.33754 (2013/C) (ex 2013/NN) – Spain Real Madrid CF, §38-40

[7] Commission Regulation (EC) No 794/2004 implementing Council Regulation (EC) No 659/1999 laying down detailed rules for the application of Article 93 of the EC Treaty, Recital 10

[8] Council Regulation (EC) No 659/1999 laying down detailed rules for the application of Article 93 of the EC Treaty, Article 14(3)

[9] Case C-480/98 Spain v Commission [2000] ECR I-8717, §25

[10] Commission Decision SA.24123 Alleged sale of land below market price by the Municipality of Leidschendam-Voorburg, §107

[11] Council Regulation (EC) No 659/1999 laying down detailed rules for the application of Article 93 of the EC Treaty, Article 14(2)

[12] Commission Decision No C 35/2006 – implemented by Sweden for Konsum Jämtland Ekonomisk Förening, §74-77

[13] Council Regulation (EC) No 659/1999, Article 14(3)

Florentino Perez
9/30/2014 11:12:08 PM |

Nice description but I do believe that you are underestimating the consequences of a decision against Real Madrid. Whilst the Commission may or may not order the recovery of the aid in the form of paying the difference as a lump sum as opposed to unravelling the transactions, the Spanish courts (Tribunal Superior de Justicia de Madrid) are already looking at the issue and may order that unravelling. As a matter of fact that court has already halted the Bernabeu redevelopment until the Commission adopts its decision to avoid that the construction works could go ahead in the pieces of land that were exchanged in the 2011 agreements thus preventing the unravelling of the July 2011 agreement (see as.com/.../1406899063_287580.html). It is therefore very likely that, should the Commission confirm that the July 2011 was done at a too favourable price for Real Madrid, the Spanish courts will abort the July 2011's transfer of the land, thus preventing the Bernabeu from being redeveloped and presumably forcing the club to either stick to his old stadium or build a new stadium in the Valbebebas area near its new training grounds if it wanted to increase its match-day revenue. Real Madrid is in deeper trouble than one may think both in this case (Florentino recently said that he was giving his life to get the stadium redeveloped) and in the Spanish Sports Law case but they will not admit it.

In addition to this, the Commission also expressed doubts in its decision regarding the prices of the second exchange of land (land in the poorer Carabanchel district being exchanged against prime land in La Castellana, probably Madrid's most expensive area) and the price difference could be much bigger than €20 million (probably in the region of €60m although it is difficult to quantify).

Kind regards
- Oskar van Maren
  10/1/2014 2:32:14 PM |
  
  Thank you for your comment. My predictions were purely based on previous Commission decisions ordering the recovery of aid regarding land transactions. You are however right in saying that in addition, the national court could impose other and more far-reaching sanctions. As regards the decision by the Tribunal Superior de Justicia de Madrid to suspend all the construction works on the stadium until the Commission reaches a final decision, I would like to stress that one of its arguments was to protect all interested parties, including Real Madrid itself, in case the Commission were to order such a sanction as the unraveling of the land transaction. The damages would be much higher for the football club in case the construction works have already started.
  Personally, I do not deem it likely that the Spanish courts would undo the agreements leading to the construction works for two reasons: Firstly, because the same Tribunal Superior de Justicia de Madrid has allowed the project under Spanish law in July 2012 (futbol.as.com/.../1342592815_850215.html). Secondly, since I don't think the Commission would oblige Spain to unravel the land transactions, I cannot see a reason why the Spanish court would take such a politically charged measure. I would be glad to hear your opinion on this matter.
  Lastly, as to the current financial numbers of Real Madrid, it is true that several media reports have been saying that they are in trouble. However, other press reports show that the club is in fact not so economically unhealthy as estimated (as.com/.../1411600377_994920.html).
  Either way, let's hope that the Commission's final decision answers many of these questions, because I am very eager to find out.
  
  Kind regards
  
  Florentino Perez
  10/2/2014 1:11:26 PM |
  
  Many thanks for your response. In terms of the Tribunal Superior de Justicia de Madrid (TSJM) protecting the interests of all parties (including Real Madrid) and whilst this may be in theory the case, the reality though is that this was a huge blow for Real Madrid's plans since both Real Madrid (RM) and Madrid City Council (MCC) were very keen to start the construction works as soon as possible to follow a strategy of fait accompli that would make more difficult that the July 2011 agreement could be unravelled thus ensuring that RM would only have to pay the difference (otherwise as you rightly point out there would be damages for the club for having to stop the construction works and MCC could argue that if the transaction had to be unravelled, RM could sue MCC for damages). This strategy is no longer possible due to TSJM's decision and MCC (acting as always as instructed by RM) immediately challenged that decision with no luck so far.
  
  TSJM has already adopted a number of politically difficult decisions in the past and the case for declaring the July 2011 null and void under Spanish law is very very strong since the amount owed by RM to MCC for RM's failures to comply with the 1991 agreement (parking lot, etc.) greatly exceeds the amount owed by MCC to RM for the Las Tablas property (which should not exceed €1.5m even under the most favourable valuations for RM) and there was simply no need to include any piece of land in the July 2011 agreement. The only logical solution is that RM pays the difference to MCC and that no land is transferred to RM.
  
  By the way, Florentino Perez promised back in December that he would hold a press conference to explain all the issues surrounding the EU cases as soon as they were communicated to RM ("Cuando nos llegue una comunicación oficial, daré una rueda de prensa para clarificar esto" www.cadenaser.com/.../Tes) but ten months later we are still awaiting that press conference .
  
  The reason is that the problems are much deeper than he originally thought and that he has realised that, once the issue hit the public domain, the EU authorities are not as easy to influence as their Spanish counterparts. So far he has been comfortable under the protection of Almunia and his Spanish team that includes some hardcore RM supporters but the situation will change significantly at the end of October when the new commission takes over. As Juan Varela rightly points out, the trust in the commission state aid policies needs to be restored and I do not see any reason why the new commission would not apply the law and simply order Spain to unravel the agreement. Any other solution would set a very dangerous precedent and be very damaging for the reputation of the EU (plus expose the EU unnecessarily to litigation from RM's competitors).
  
  Keep up the good work, your articles are very enjoyable.
  
  Best
  
  Florentino Perez
  10/16/2014 8:33:56 PM |
  
  TSJM has confirmed earlier today that, despite Real Madrid's and Madrid City Council's appeals, the Bernabeu redevelopment will continue to be halted pending the EC's decision: www.elmundo.es/.../543faf3922601db7658b4590.html
  Things do not look good for Perez.

Juan Varela
10/1/2014 12:29:14 PM |

I agree with the previous comment, but I would go a step further:

The Commission Decision underlines that there was no reason to undo the land exchange in Las Tablas and compensate Real Madrid in the first place. This, in my opinion, complicates very much Real Madrid's position, since they did not take any legal action to demand the ownership of the Las Tablas plot, and by now probably the available legal actions have expired.

The compensation being undue, a normal Market Economy Investor(?) would not pay a compensation which he is not legally obliged to pay.

Besides, the aim of state aid recovery is to re-establish the situation in the market prior to the granting of the aid.

The benefits that Real Madrid has derived from the series of land exchange operations (which are all marred from the outset) are obviously greater than the mere - although substantial - difference in price between the plots given and the plots received.

In my opinion, it would go clearly against the aim of State aid control to allow Real Madrid to retain the plot by paying a more or less small or large amount of money, since the exchanges are flawed not only by the unbalanced values, but by the ceasing to exist of the basis of the transactions. I think this fact distinguishes this case from the Konsum or the Bulgarian cases.

Will the European Commission take this into account? It is doubtful, considering the reluctance it has shown so far to investigate Spanish football. But such a decision obliging to undo the land swaps would definitely help to restore trust in the European Commission's neutrality.

Florentino Perez
10/20/2014 4:54:34 PM |

Diario As informs that Real Madrid will now hire lawyers specialised in competition law to deal with the club's ever growing amount of competition cases.

futbol.as.com/.../1413592348_489006.html

Bring them on!

sultan
1/25/2015 12:40:49 PM |

how long will it take for the European commission to decide this case?
- Oskar van Maren
  1/26/2015 10:20:57 AM |
  
  Good question! I wish I could tell you, but unfortunately I do not know. A Commission decision was already expected not only for this case, but for the other State aid cases in sport (i.e. Valencia, Spanish tax advantages and aid granted to Dutch football clubs) as well. Hopefully we don't have to wait too long anymore.

Anonymous complainant
2/11/2015 1:18:39 AM |

Bye bye New Bernabeu!

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as.com/diarioas/2015/02/10/english/1423606995_940982.html

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Florentino Perez

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