Editor’s note: Thomas Terraz is a fourth year LL.B. candidate at the International and European Law programme at The Hague University of Applied Sciences with a specialisation in European Law. Currently he is pursuing an internship at the T.M.C. Asser Institute with a focus on International and European Sports Law.

Since its inception, the Olympic Movement, and in particular the IOC, has tirelessly endeavored to create a clean bubble around sport events, protecting its hallowed grounds from any perceived impurities. Some of these perceived ‘contaminants’ have eventually been accepted as a necessary part of sport over time (e.g. professionalism in sport),[1] while others are still strictly shunned (e.g. political protest and manifestations) and new ones have gained importance over the years (e.g. protection of intellectual property rights). The IOC has adopted a variety of legal mechanisms and measures to defend this sanitized space.  For instance, the IOC has led massive efforts to protect its and its partners’ intellectual property rights through campaigns against ambush marketing (e.g. ‘clean venues’ and minimizing the athletes’ ability to represent their personal sponsors[2]). Nowadays, the idea of the clean bubble is further reinforced through the colossal security operations created to protect the Olympic sites.

Nevertheless, politics, and in particular political protest, has long been regarded as one of the greatest threats to this sanitized space. More recently, politics has resurfaced in the context of the IOC Athletes’ Commission Rule 50 Guidelines. Although Rule 50 is nothing new, the Guidelines stirred considerable criticism, to which Richard Pound personally responded, arguing that Rule 50 is a rule encouraging ‘mutual respect’ through ‘restraint’ with the aim of using sport ‘to bring people together’.[3] In this regard, the Olympic Charter aims to avoid ‘vengeance, especially misguided vengeance’. These statements seem to endorse a view that one’s expression of their political beliefs at the Games is something that will inherently divide people and damage ‘mutual respect’. Thus, the question naturally arises: can the world only get along if ‘politics, religion, race and sexual orientation are set aside’?[4] Should one’s politics, personal belief and identity be considered so unholy that they must be left at the doorstep of the Games in the name of depoliticization and of the protection of the Games’ sanitized bubble? Moreover, is it even possible to separate politics and sport?  

Even Richard Pound would likely agree that politics and sport are at least to a certain degree bound to be intermingled.[5] However, numerous commentators have gone further and expressed their skepticism to the view that athletes should be limited in their freedom of expression during the Games (see here, here and here). Overall, the arguments made by these commentators have pointed out the hypocrisy that while the Games are bathed in politics, athletes – though without their labor there would be no Games – are severely restrained in expressing their own political beliefs. Additionally, they often bring attention to how some of the most iconic moments in the Games history are those where athletes took a stand on a political issue, often stirring significant controversy at the time. Nevertheless, what has not been fully explored is the relationship between the Olympic Games and politics in terms of the divide between the ideals of international unity enshrined in the Olympic Charter and on the other hand the de facto embrace of country versus country competition in the Olympic Games. While the Olympic Charter frames the Games as ‘competitions between athletes in individual or team events and not between countries’, the reality is far from this ideal.[6] Sport nationalism in this context can be considered as a form of politics because a country’s opportunity to host and perform well at the Games is frequently used to validate its global prowess and stature.

To explore this issue, this first blog will first take a historical approach by investigating the origins of political neutrality in sport followed by an examination of the clash between the ideal of political neutrality and the reality that politics permeate many facets of the Olympic Games. It will be argued that overall there has been a failure to separate politics and the Games but that this failure was inevitable and should not be automatically viewed negatively. The second blog will then dive into the Olympic Charter’s legal mechanisms that attempt to enforce political neutrality and minimize sport nationalism, which also is a form of politics. It will attempt to compare and contrast the IOC’s approach to political expression when exercised by the athletes with its treatment of widespread sport nationalism.

1.     Constructing the Political Neutrality of the Olympics

The roots of political neutrality in many ways can be traced back to the Olympic Truce, a tradition that started in Ancient Greece.[7] The idea of creating a temporal space where nations are at peace is in a way an attempt to separate Games from the political squabbles of the world, and this tradition has continued to the modern day.  Pierre de Coubertin envisioned a space ‘to bring the youth of all countries periodically together for amicable trials of muscular strength and agility’.[8] In accomplishing this goal, the Olympic Movement  applies a principle of political neutrality,[9] which includes that the IOC must ‘promote its political neutrality’,[10] ‘oppose any political or commercial abuse of sport and athletes’,[11] requires new members of the IOC to ‘act independently of commercial and political interests’,[12] and NOCs must ‘resist’ political pressures that ‘may prevent them from complying with the Olympic Charter’.[13] Lastly, international sport is deeply grounded in the idea of universality in which a sport, regardless of where it is played, is played by the same rules, meaning that the sport rules (the rules of the game) are not influenced by the politics or decisions of a particular state (i.e. sport autonomy).[14]

Coubertin also saw the Games as a ‘sacred enclosure’ for the athletes of the world,[15] symbolizing the conceptual genesis of the sanitized space within the modern Games. In these early days of the Games, Coubertin also believed that protecting the ‘sacred enclosure’ also meant keeping women out.[16] While women were first able to participate in the 1900 Olympic Games, albeit in a limited way and resistance to their participation continued,[17] politics remained a black sheep. Avery Brundage, IOC President (1952-1972), also persisted in advocating to keep women out of the Games but was especially a staunch defender of ‘two major Olympic ideals, i.e. amateurism and the non-politicisation of sport’.[18] For him it was not just necessary to keep politics out, but to also ‘actively combat the introduction of politics in the Olympic movement’ and was ‘adamant against the use of the Olympic Games as a tool or as a weapon by an organization’.[19] With Brundage leading the IOC, political neutrality was placed front and center and thus Olympic rules began to reflect this new priority. The 1956 Olympic Charter was the first to include the ‘Information for cities which desire to stage the Olympic Games’ which specifically required that invitations ‘must state that no political demonstrations will be held in the stadium or other sport grounds, or in the Olympic Village, during the Games, and that it is not the intention to use the Games for any other purpose than for the advancement of the Olympic Movement’. This would slowly evolve into the current Rule 50: ‘No kind of demonstration or political, religious or racial propaganda is permitted in any Olympic sites, venues or other areas’. It is interesting to note that the only earlier explicit mention of politics in the Olympic Charter was the 1946 Olympic Charter which was concerned by ‘the nationalization of sports for political aims’ where there would be ‘a national exultation of success achieved rather than the realization of the common and harmonious objective which is the essential Olympic law’.[20] As will be further elaborated in the second blog, it seems as though the IOC has now placed greater priority on enforcing Rule 50 compared to its rules concerning sport nationalism. All things considered, the IOC perceives and projects itself as a neutral entity, which is further confirmed through its governing rules[21] and even its seat in Switzerland further reflects this self-perception.[22]

2.     Failing to Keep Politics Out of the Games

At this point, it is worth exploring some examples that elucidate how politics have continually found a way into the ‘clean’ Olympic bubble through a variety of agents: be it the general public, the athletes, the IOC or states (both the host and participants).

While perhaps often overlooked when discussing politics in the Games, public protests are important to study, especially because there have been many instances of host nations suppressing such public gatherings. For example, in the 2008 Beijing Games, after great international pressure, the Chinese government had set specific zones for Olympic protests. However, protesters were required to submit an application and could be rejected if the protest would ‘harm national, social and collective interests or public order’. In the end, all seventy-seven applications were denied and some of those who applied were arrested, detained and/or put into forced labor.[23] Similarly, at the 2014 Sochi Olympic Games, the IOC proudly welcomed the announcement of special protest areas, despite the fact the zones were placed ‘20 minutes by train from the nearest Olympic venue’ and ultimately only attracted a handful of protesters.[24]

Moreover, in the months leading to the Sochi Games, anti-LGBT laws were passed and a ‘crackdown on civil society unprecedented in the country’s post-Soviet history’ ensued. Despite these repressive measures, athletes stood defiant, and after the IOC made an exception to Rule 50 allowing political expression during press conferences, many athletes used this platform to take a stand.[25] This shows how athletes can sometimes be a critical source for political protest and dissent amidst an atmosphere of suppression, and history has repeatedly demonstrated how athletes can have a vital role in promoting human rights and raising awareness concerning sensitive issues. One simply has to point to the infamous moment when Tommie Smith and John Carlos raised their fists on the podium in protest or when Vera Caslavska turned her head away while the Soviet anthem played. There is little doubt that there has been an extensive history of athlete protest at the Games, and athletes will likely continue raising the problems close to their hearts irrespective of the restrictions they face.

Politics also permeate the Games through the IOC itself as it is continually faced with political decisions, including the recognition of national Olympic committees,[26] decisions concerning participation of athletes,[27] and the awarding of the Games to a city. The latter has often embroiled the Games in controversies, such as the Salt Lake City bid scandal in which a ‘Special US Senate commission found some 1,375 separate expenditures totaling nearly $3 million’ to try and ‘sway individual IOC members’.[28] The scandal prompted several internal investigations in which ten IOC members ‘either resigned or were expelled’. The current Tokyo Games have not been without controversy as a Japanese businessman admitted to giving gifts to IOC members while lobbying for the Games after having received $8.2 million dollars from the Tokyo bid committee. Taken together, it could be argued that this is a real source of ‘dirty’ politics and a greater threat to the concept of a clean or ‘sacred’ space for the Games. Finally, you’ll find a lot of politics inside the IOC, where some commentators have described the rise to power of IOC Presidents as resembling ‘the ascent of a conventional politician’.[29]

Lastly, countries participating and hosting the Games are also able to introduce politics to the Games through boycotts,[30] hosting the Games to promote internal and geo-political interests, and using one’s performance at the Games for political gain and geo-political posturing. Concerning the first, a decision to boycott is always tied to some political goal, as a boycott usually seeks to instigate political change or send a specific political message, such as disapproval of certain political decisions or even an entire political system. For instance, the 1980 Moscow Olympics had 60 countries, led by the US, boycotting the Games in response to the USSR’s invasion of Afghanistan.[31] Indeed, this kind of political wrangling and posturing heavily plagued the Cold War period. It was also during this time that the ‘Soviet Union and the United States attempted to proclaim the superiority of their political and socioeconomic systems by winning the most Olympic gold medals’.[32] A country’s performance at the Games became an indication of one’s geo-political power status, and the idea that ‘sport for sport’s sake is not a goal; rather it is the means to obtaining other goals’ gained more traction. [33] It could be argued that this trend started even before the Cold War. For instance, at the 1936 Berlin Olympics, the Nazis were obsessed with trying to demonstrate ‘German superiority’, which included the incredibly calculated efforts to make the Games into a propaganda spectacle.[34] In this sense, hosting the Games is a unique way to boost a nation’s image and send political messages on a world stage as a sort of ‘soft power strategy’.[35] This kind of sport nationalism is pure politics, and the IOC has long recognized it, as first enshrined in the 1946 Olympic Charter, as a threat to the fundamental goals of the Olympic Games.

3.     Conclusion

Despite the IOC’s attempts to create a ‘clean’ apolitical bubble, politics are structurally embedded within the Games due to the array of actors representing a variety of interests that are involved in its planning and execution. In this sense, the Games can never truly take place within an impenetrable bubble that is somehow separated from the societal context in which it takes place.  The ‘opposite assumptions, that sport was both “above and below” the political dimensions of social life’ is simply untenable.[36] In spite of this, the IOC maintains strict restrictions, through Rule 50, on the free speech of athletes and of the fans and continues to pedal the myth of a pure and sanitized Olympic Games. Instead, I believe political expression should not be regarded as a sly specter infiltrating itself within the Games, defiling the ‘sacred enclosure’ but rather something innate to any free society. Perhaps, in the end, a more genuine ‘mutual respect’ could be achieved if individuals were authorized to openly express their identity and convictions without fear of reprisal even in the face of deep rooted differences.[37]  Regardless, politics and the Games remain naturally entangled, and the next blog in this series will unravel the double standard of the IOC when addressing sport nationalism and athletes’ political expression at the Games.

[1] For many years, amateurism was a key criterion in order to participate in the Olympics.

[2] See my recent blog on Rule 40 Olympic Charter.

[3] Richard Pound also views the idea of the Games as a sort of ‘bubble’ in which the Games create ‘ a special phenomenon during which, even if the world as a whole is not working well, there is an oasis at which the youth of the world can gather for peaceful competition, free from the tensions which their elders have created and with which they will be required to cope before and after the Games’ (emphasis added).

[4] The full quote is as follows: ‘First, this is not a new rule and, second, it is one wholly consistent with the underlying context of the Olympic Games, during which politics, religion, race and sexual orientation are set aside.’ Richard Pound, ‘Free Speech for Olympic Athletes’ (IOC, 11 February 2020) <www.olympic.org/news/free-speech-for-olympic-athletes> accessed 1 April 2020.

[5] See book written by Richard Pound, ‘Inside the Olympics: A Behind-the-Scenes Look at the Politics, the Scandals and the Glory of the Games’ (Wiley 2006).

[6] Rule 6 Olympic Charter.

[7] Although the extent of this truce is disputed. See Kristine Toohey and Anthony James Veal, The Olympic Games: A Social Science Perspective (CAB International 2007) 19-20.

[8] ‘Peace Through Sport’ (IOC) <https://www.olympic.org/pierre-de-coubertin/peace-through-sport> accessed 1 April 2020.

[9] Fundamental Principles of Olympism, Olympic Charter, point 5.

[10] Rule 2 Olympic Charter.

[11] ibid.

[12] Rule 16 Olympic Charter.

[13] Rule 27 Olympic Charter.

[14] Christopher H Hill, Olympic Politics (Manchester University Press 1996).

[15] Jules Boykoff, Power Games: A Political History of the Olympic Games (Verso 2016) 13.

[16] ‘The Olympic Games must be reserved for men’ – Coubertin quoted in Boykoff (n 15) 17; ‘as to the admission of women to the Games, I remain strongly against it’ – Coubertin quoted in Dikaia Chatziefstathiou and Ian P. Henry, Discourses of Olympism: From the Sorbonne 1894 to London 2012 (Springer 2012) 124.

[17] Boykoff (n 15) 59.

[18] ‘Avery Brundage’ (IOC 2011) <https://stillmed.olympic.org/AssetsDocs/OSC%20Section/pdf/LRes_19E.pdf> accessed 1 April 2020.

[19] Boykoff (n 15) 83.

[20] This was also one of Brundage’s greatest concerns. Boykoff (n 15) 84.

[21] See Rule 2 (5) and (11) Olympic Charter and Rule 16 (1.3) Olympic Charter.

[22] See why Lausanne hosts so much of the Olympic Movement: Rebecca Ruiz, ‘Swiss City Is ‘the Silicon Valley of Sports’’ (The New York Times, 22 April 2016) <www.nytimes.com/2016/04/23/sports/olympics/switzerland-global-sports-capital-seeks-new-recruits.html> accessed 1 April 2020.

[23] Boykoff (n 15) 170; See also ‘China: Police Detain Would-Be Olympic Protesters’ (Human Rights Watch, 13 August 2008) <www.hrw.org/news/2008/08/13/china-police-detain-would-be-olympic-protesters> accessed 1 April 2020.

[24] It is also worth noting that of the two protests, one concerned the difficulties Russians faced who were born into World War Two, and the other was a pro-Putin demonstration. On the protest zone see also David Herszenhorn, ‘A Russian Protest Zone Where Almost No One Registers a Complaint’ (The New York Times, 13 February 2014) <www.nytimes.com/2014/02/14/world/europe/a-russian-protest-zone-where-almost-no-one-registers-a-complaint.html> accessed 1 April 2020.

[25] Boykoff (n 15) 204.

[26] Hill (n 14) 36. For example, concerning the recognition and naming of the Chinese Taipei Olympic Committee.

[27] For example, decisions that affect participation of transgender and intersex athletes definitely have a political element. Simply by taking into account the discrepancy in jurisdictions concerning gender identity, the guidelines acknowledge the international political context in which the guidelines operate. See point 1 (b).

[28] Boykoff (n 15) 151.

[29] Hill (n 14) 2 and 60.

[30] Boykoff (n 15) 128.

[31] ibid 127-128.

[32] Andrew Strenk, ‘What Price Victory? The World of International Sports and Politics’ [1979] 445 The Annals of the American Academy of Political and Social Science 128; James Nafziger, 'International Sports Law: A Replay of Characteristics and Trends’ [1992] 86 The American Journal of International Law 489; J. Weston Phippen, ‘The Olympics Have Always Been Political’ (The Atlantic, 28 July 2016) <www.theatlantic.com/news/archive/2016/07/putin-olympic-ban/492047/> accessed 1 April 2020; Boykoff (n 15) 82.

[33] Quoting Erich Honnecker (GDR’s head of state - 1971-1989), Strenk (n 31).

[34] Boykoff (n 15) 69.

[35] Jonathan Grix, ‘Sport Politics and the Olympics’ [2013] 11 Political Studies Review 15.

[36] Lincoln Allison, The Changing Politics of Sport (Manchester University Press 1993) 5.

[37] ‘Rule 50 is a reminder that, at the Olympic Games, restraint is an element of that mutual respect.’ Pound (n 4).

Editor's Note: Christopher is an editor of the Asser International Sports Law Blog. His research interests cover a spectrum of sports law topics, with a focus on financial regulatory disputes, particularly in professional football, a topic on which he has regularly lectured at the University of the West of England.

It is five years since the Union of European Football Associations (UEFA) formally introduced ‘Financial Fair Play’ (FFP) into European football through its Club Licensing and Financial Fair Play Regulations, Edition 2012. With FFP having now been in place for a number of years, we are in a position to analyse its effect, its legality, and how the rules have altered over the last half decade in response to legal challenges and changing policy priorities. This article is split into three parts: The first will look at the background, context and law applicable to FFP; Part Two will look at the legal challenges FFP has faced; and Part Three will look at how FFP has iteratively changed, considering its normative impact, and the future of the rules.

Background

Certain aspects of FFP were incredibly controversial from the outset. To a neutral observer, this might seem confusing: FFP is, ostensibly, a set of rules designed to make sure clubs pay their bills on time, stay solvent, and do not need to look to external benefactors to cover their losses. Leading sports economist Stefan Szymanski described insolvency as “a chronic problem in the world of professional Association football”, so, superficially at least, a regulatory response to this would seem natural and appropriate. Where the market fails, it is the regulator’s duty to respond.

UEFA’s President at the time, Michel Platini, said “You, we, the fans and football lovers, have no interest in seeing clubs, the real heritage of European football, disappear due to risky management”. This is a sentiment with which most fans would agree.

Accordingly, UEFA incorporated FFP into its existing licensing requirements, meaning any club that wished to compete in a UEFA competition would be required to meet the financial standards set by FFP. These standards would be overseen and enforced by a new body within UEFA’s administration called the ‘Club Financial Control Body’. The Club Financial Control Body would be further segregated into an Investigatory Chamber and an Adjudicatory Chamber.

So, why the controversy? The contentious aspect of FFP was its ‘break even’ requirement. The ‘break even’ requirement is a de facto soft salary cap, tying the maximum amount a club can spend (with defined exceptions) to its revenue generation. An overview of the break even requirement as originally conceived can be found here. In essence, “The break-even result for a reporting period is calculated as relevant income less relevant expenses’’.^[1] “Income” includes receipts such as gate receipts, sponsorship, broadcasting rights, commercial activities and player sales; “expenses” includes wages, the cost of purchasing players and the cost of finance.^[2]

Crucially, when FFP was first introduced, losses could not be met or offset by equity participants (i.e. owners). This was pertinent to the prevailing financial climate in football, in which certain clubs across Europe were spending unprecedented sums with the support of wealth benefactors, who would cover the clubs’ losses. Such spending was seen at clubs such as Chelsea, Manchester City, Paris Saint Germain, Monaco, Malaga and Anzhi Makhachkala, with mixed results on and off the pitch.

Thus FFP was accused of calcifying football’s competitive hierarchy^[3] and foreclosing smaller clubs from sporting and consequent business success. This debate has been played out over the last five years in the academic literature^[4] and in various legal fora. The rules and the mechanisms for enforcing the rules have become increasingly sophisticated as the years have passed. UEFA, perhaps in response to these challenges, has made gradual, iterative changes to FFP that have seen the rules soften to accommodate exogenous equity input in defined permissible circumstances. These changes will be looked at in greater depth in Part Three.

The challenge of EU law

FFP has been described ‘legally fragile’, which is an apt description. This is because the rules cannot be said to be unquestionably permissible under European Union (EU) law; nor can they be said to be categorically in breach of EU law. The rules exist in a regulatory ‘grey’ area – FFP, in its particularly in its original, more restrictive, guise, may or may not have been illegal. This is a question for a competent (judicial) authority to decide; however, as will be discussed in more detail in Part Two, the route to such a decision has been far from straight forward, and in the intervening years, FFP has changed substantially.

The essential legal questions to determine the legality of FFP are:

1. Does FFP breach EU competition law?
2. Does FFP breach EU free movement law?
3. Is there a sanctuary for any breach of EU law under the doctrine of the specificity of sport?

EU competition law

Article 101 of the Treaty of the Functioning of the European Union (TFEU) prohibits agreements that have as their object or effect “prevention, restriction or distortion of competition within the internal market”.^[5] This puts regulatory associations such as UEFA in a difficult position. It is the very nature of regulation that competition is restricted or distorted; indeed, it is the very purpose of regulatory rules that participants subject to those rules alter their behaviour accordingly, which has an inevitable consequence on the competitive landscape.

Consideration should also be given to Article 102 TFEU, which prohibits undertakings (and in some circumstances collections of undertakings, i.e. oligopolies) that are in a dominant position from abusing their market dominance.

In view of this friction, the European courts have developed, through the case of Wouters, the concept of regulatory ancillarity.^[6] This is the doctrine under which, subject to a test of proportionality, reasonability and necessity, even in circumstances where there is a prima facie breach of competition law by a regulatory body (in that particular case by the Dutch Bar Association), this may be permissible under EU competition law where the regulatory body in question “could reasonably have considered that that regulation, despite the effects restrictive of competition that are inherent in it, is necessary for the proper practice of the [relevant profession]”.

The applicability of Wouters to a sporting regulatory context is confirmed and clarified in the landmark Meca-Medina case. In considering whether a regulatory rule breaches competition law, the European courts must determine: 

1. Whether the rules are necessary for the proper conduct of the sport;
2. Whether the penalties are inherent to the restrictions in questions; and
3. Whether the effects of the rules are proportionate to the aims pursued.

Should UEFA be unable to meet the test under the regulatory ancillarity doctrine, there is an alternative exemption with a lower threshold to which it could look. Within Article 101(3) TFEU, there is an exemption for agreements which promote “technical or economic progress, while allowing consumers a fair share of the resulting benefit” as long as such restrictions do not (a) impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives; or (b) afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question.

It is open to UEFA to argue that FFP dampens inflation in football in a way that is for the improvement of the game and passes a benefit to ‘consumers’ (i.e. fans) by, for example, reducing the need for ticket price increases to sustain escalating players’ wages. This would perhaps be difficult for UEFA to establish, but the economics of FFP are complicated and second order effects should be borne in mind.

EU free movement – workers, services and/or capital 

The EU is built upon certain deeply enshrined freedoms. These include the free movement of workers (Article 45 TFEU), the free movement of services (Article 56 TFEU), and the free movement of capital. Any agreement that acts as an impediment to these freedoms is susceptible to a finding of illegality.

In order to be permissible under EU law, any rule or agreement that restricts any fundamental freedom must be:

1. Justified by a necessary objective in the general interest;
2. Suitable for achieving that objective; and
3. Proportionate.

In the case of sporting rules, the European courts have determined that the rule in question must not “go beyond what is necessary for achieving the aim pursued”,^[7] which is to reiterate that it must be proportionate – a recurrent theme in considering the legality of rules made by the governing bodies of sport, such as UEFA.

The criteria to be met by UEFA in establishing that FFP does not breach EU fundamental freedoms is in line with the threshold to be met in establishing compliance with EU competition law: FFP must be necessary, suitable and proportionate.

However, in the case of free movement law, it is far from obvious that FFP will have a substantive impact on fundamental freedoms. In previous writing on the subject, I have made the following analogy:

The restriction does not emanate from the rule per se, rather by the size of the club’s turnover; players are no more restricted from moving between clubs by FFP than this author is denied a Ferrari by his credit rating.^[8]

The specificity of sport under EU law

In the event that a competent adjudicative authority makes a prima facie finding that FFP is in breach of EU competition law or EU free movement law, there is still a possibility of an overall finding that FFP is not illegal under the doctrine of the specificity of sport; however, this would require the adjudicative body in question to row back considerably from the current position, and general trajectory, of the level of latitude granted to the governing bodies of sport by the European courts.

The concept of specificity will be familiar to all those with an interest in sports law and policy. It is the hypothesis under which, at its starkest interpretation, suggests governing bodies, not courts (or governments or other legislative bodies), are best placed to determine how sport should be run. Sports, it is argued, should have rule making autonomy. A more moderate view on specificity holds that due regard should be paid to the idiosyncrasies of the sports sector and the legitimate governance function played by governing bodies. 

The role of sports governing bodies, whose rules, as was the case with FFP, are often enacted in a broadly consensual way, with engagement, input and consent from key stakeholders, should be acknowledged and some due reverence should be paid to governing bodies' ability to regulate the sporting aspects under their aegis.

Indeed, the European Union had no express competence to in respect of sport until the introduction of Article 165 TFEU, a soft competency, which states that, “The Union shall contribute to the promotion of European sporting issues, while taking account of the specific nature of sport, its structures based on voluntary activity and its social and educational function.”

However, the distinction between elite football as being ‘purely sport’ and elite football as a business has become blurred in to the point of being indistinguishable; and the EU clearly has express competence to deal with business.

The general trend in decisions of the European courts has been to circumscribe self-determination by the governing bodies of sport. Through cases such as Bosman,^[9] Meca-Medina, and Bernard,^[10] the European courts have made it clear that sport cannot avoid or cherry-pick the applicability of EU law. This is acutely relevant in the case of FFP, which, after all, deals with how football clubs are run financially. There are obvious sporting consequences to this, but it is difficult to characterise FFP as anything other than a rule restrictive of the business of sport.

UEFA’s position on Article 165 is that “while sport is not ‘above the law’, there is now a provision in the Treaty itself recognising that sport cannot simply be treated as another ‘business’, without reference to its specific characteristics”. This is not an unreasonable position; sport is a unique industry in which, unlike other industries, the survival of competitors is important for any given club to flourish. Perhaps the courts could be persuaded that a carve-out based on specificity should be applicable to FFP – but this would require a seismic change of direction.

So it is incredibly unlikely that specificity as a discrete sui generis doctrine would give sanctuary to FFP were the rules deemed to be otherwise in breach of EU law. However, facts peculiar to the football industry (i.e. its specificity) should be considered as part of an assessment as to whether FFP is a proportionate mechanism to pursue UEFA’s objectives. As noted above, proportionality is a limb of the tests for derogations to EU competition and fundamental freedom law.

I have previously commented that: 

For football clubs, there is a strong correlational link between spending money and playing success. This has encouraged clubs to risk financial vulnerability in pursuit of improved match results, despite the mathematical impossibility of all clubs being able to improve their fortunes on the field. This innate instability has resulted in persistent insolvencies despite the remarkable growth in turnover seen in the professional game. Regrettably, when balance sheets weaken, the risk of insolvency increases; and once a club becomes insolvent, its survival is subject to the predilections of its creditors. The game’s governing bodies should aim to militate against…this volatility.

UEFA would doubtless argue that, given the specific nature of the industry it regulates, instituting a soft salary cap such as that implemented by FFP is a proportionate response. In that sense at least, the specificity of sport might be of consideration in the legality of FFP.

Conclusion 

It is difficult to say with any degree of conclusiveness whether FFP is legal or not. There are strong arguments either way. The marginal nature of the legal position has been problematic for UEFA and has undoubtedly led to the legal challenges to FFP over the last five years, which are discussed in greater depth in Part Two of this series.

The uncertain legal position, and the challenges generated by that lack of clarity has also, in all likelihood, shaped UEFA’s policy decisions as FFP has evolved in the years since its inception. These are discussed in Part Three of this series.

FFP has certainly been fertile ground for debate, and will likely continue to be so until such a time as there has been a determinative, binding view of its legality. When or whether this will happen remains to be seen.

^[1] Annex X, Club Licensing and Financial Fair Play Regulations, Edition 2012.

^[2] Ibid.

^[3] Thomas Peeters and Stefan Szymanski , 'Financial Fair Play in European Football ' [2014] 29(78) Economic Policy 343-390

^[4] See, for example, Serby, T. (2016) The state of EU sports law: lessons from UEFA’s ‘Financial Fair Play’ regulations, International Sports Law Journal 16(1–2):37–51; Flanagan, C (2013) A tricky European fixture: an assessment of UEFA’s Financial Fair Play regulations and their compatibility with EU law, International Sports Law Journal 13(1):148; Lindholm, J (2010) The Problem with Salary Caps Under European Union Law: The Case Against Financial Fair Play, Texas Review of Entertainment and Sports Law, Vol. 12.2, pp. 189-213

^[5] Noting that UEFA certainly constitute an association of undertakings in the relevant legal sense, see for example Case T-193/02 Piau (2005) ECR I-209, (2005) 5 CMLR 42 or EU Commission decision 2003/778/EC, 23 July 2003, Case COMP C.2-37.398 - Joint selling of the commercial rights of the UEFA Champions League §§ 106-107

^[6] As identified and defined by Whish and Bailey in Competition Law (OUP, 8th)

^[7] Case C-176/96, Jyri Lehtonen and Castors Canada Dry Namur- Braine ASBL v Fédération Royale Belge des Sociétés de Basketball ASBL (FRBSB) ECR (2000) I-2681

^[8] Flanagan, C (2013) A tricky European fixture: an assessment of UEFA’s Financial Fair Play regulations and their compatibility with EU law, International Sports Law Journal 13(1).

^[9] Case C-415/93 Union Royale Belge des Socie ́te ́s de Football Association ASBL v Jean-Marc Bosman (1995) ECR I-4921.

^[10] C-325/08 Olympique Lyonnais v Olivier Bernard and Newcastle United FC (2010) ECLI:EU:C:2010:143.