Asser International Sports Law Blog

Our International Sports Law Diary
The Asser International Sports Law Centre is part of the T.M.C. Asser Instituut

International and European Sports Law – Monthly Report – March-May 2020 by Thomas Terraz

Editor's note: This report compiles the most relevant legal news, events and materials on International and European Sports Law based on the daily coverage provided on our twitter feed @Sportslaw_asser. 

 

The Headlines

Coronavirus Pandemic Takes Over Sports

Since the last monthly report, the coronavirus pandemic has completely taken over the headlines and has had enormous impacts on the sports field. The most significant of these impacts so far was the rather slow (see here and here) decision by the IOC to move the Tokyo 2020 Olympic Games to 2021 after a widespread push among athlete stakeholders to do so. Concerns were raised that besides the wellbeing of the participants, athletes under lockdowns would not have the access to the training facilities, meaning preparations for the Games would suffer. The IOC has already started its new planning for Tokyo 2021 and sees this new opportunity to be ‘an Olympic flame’ at the end of a ‘dark tunnel’ for the entire world.

Besides the Olympics, football has also experienced colossal effects as this crisis landed right as leagues were approaching the end of their season. In this context, FIFA has released specific guidelines on player contracts and transfer windows, which has included extending player contracts to the new postponed end of season dates. It has also organized a working group on COVID-19, which has already made recommendations to postpone all men and women’s international matches that were to be played during the June 2020 window. Earlier in March, UEFA had already announced that the EURO 2020 was also postponed by 12 months and has also recently approved guidelines on domestic competitions. These guidelines place emphasis on ‘sporting merit’ and urge ‘National Associations and Leagues to explore all possible options to play all top domestic competitions giving access to UEFA club competitions to their natural conclusion’. Nevertheless, UEFA also emphasizes that the health of all stakeholders must remain the top priority.

In the end, numerous sport federations have also had to amend their calendars due to the pandemic (see UCI and FIBA) and a variety of sport stakeholders have been confronted with immense financial strain (e.g. football, tennis and cycling). For example, UEFA has acted preemptively in releasing club benefit payments to try to alleviate the economic pressure faced by clubs. There have also been efforts to support athletes directly (e.g. FIG and ITF). All in all, the social and economic impacts of the coronavirus pandemic on sport have been unprecedented and will require creative solutions while continuing to place public health as the top priority.

Platini’s ECtHR Appeal Falls Flat

There have also been a few other stories that have (understandably) been overshadowed by the pandemic. One of these include Michel Platini’s unsuccessful appeal to the ECtHR challenging his 2015 football ban. The ECtHR’s decision concerned the admissibility of his appeal and in the end found it to be ‘manifestly ill-founded’. This is because he failed to raise his procedural rights concerns under Article 6 (1) ECHR in his proceedings at the Swiss Federal Tribunal. Besides rejecting his other claims based on Article 7 and 8 ECHR, the ECtHR decision also touched upon the issue of CAS’ procedural and institutional independence. In doing so, it referred to its Pechstein decision and once more affirmed that the CAS is sufficiently independent and impartial (see para 65), further giving credence to this notion from its case law. However, there are still concerns on this matter as was highlighted in the Pechstein dissent. Overall, the decision indicates that the ECtHR is willing to give the CAS the benefit of the doubt so long as it sufficiently takes into account the ECHR in its awards.

Mark Dry – UKAD Dispute

In February, Mark Dry was suspended by UKAD after a decision of the National Anti-Doping Panel (NADP) Appeal Tribunal  for four years after having given a ‘false account’ in order to ‘subvert the Doping Control process’. Specifically, Dry had told anti-doping authorities that he had been out fishing after he had missed a test at his residence. After further investigation, Dry admitted that he had forgotten to update his whereabouts while he was actually visiting his parents in Scotland and in panic, had told anti-doping authorities that he had been out fishing. Following the decision of the NADP Appeal Tribunal, athlete stakeholders have argued the four-year ban was disproportionate in this case. In particular, Global Athlete contended that Whereabouts Anti-Doping Rule Violations only occur in cases where an athlete misses three tests or filing failures within a year. Furthermore, even if Dry had ‘tampered or attempted to tamper’, a four-year sanction is too harsh. Subsequently, UKAD responded with a statement, arguing that ‘deliberately providing false information’ is ‘a serious breach of the rules’ and that the UKAD NADP Appeal Tribunal ‘operates independently’. In light of the mounting pressure, Witold Bańka, WADA President, also responded on Twitter that he is ‘committed to ensuring that athletes’ rights are upheld under the World Anti-Doping Code’. More...

Anti-Doping in Times of COVID-19: A Difficult Balancing Exercise for WADA - By Marjolaine Viret

Editor's note: Marjolaine is a researcher and attorney admitted to the Geneva bar (Switzerland) who specialises in sports and life sciences.


I.               Introduction

The COVID-19 pandemic has shaken the manner in which we approach human interactions that suppose close and prolonged physical contact. Across the world, authorities are having to design ways to resume essential activities without jeopardising participants’ health, all the while guaranteeing that other fundamental rights are paid due respect. The fight against doping is no exception. Anti-doping organizations – whether public or private – have to be held to the same standards, including respect for physical integrity and privacy, and considerate application of the cornerstone principle of proportionality.

Throughout this global crisis, the World Anti-Doping Agency (‘WADA’) has carefully monitored the situation, providing anti-doping organizations and athletes with updates and advice. On 6 May 2020, WADA issued the document called ‘ADO Guidance for Resuming Testing’ (‘COVID Guidance’). A COVID-19 ‘Q&A’ for athletes (‘Athlete Q&A’) is also available on WADA’s website, and has been last updated on 25 May 2020. This article focuses on these two latest documents, and analyses the solutions proposed therein, and their impact on athletes.

Like many public or private recommendations issued for other societal activities, the WADA COVID Guidance is primarily aimed at conducting doping control while limiting the risk of transmission of the virus and ensuing harm to individuals. More specifically, one can identify two situations of interest for athletes that are notified for testing:

  1. The athlete has or suspects that they may have been infected with COVID-19, or has come in close contact with someone having COVID-19;
  2. The athlete fears to be in touch with doping control personnel that may be infected with COVID-19.

Quite obviously, either situation has the potential to create significant challenges when it comes to balancing the interests of anti-doping, with individual rights and data protection concerns. This article summarises how the latest WADA COVID Guidance and Athlete Q&A address both situations. It explores how the solutions suggested fit in with the WADA regulatory framework and how these might be assessed from a legal perspective.

The focus will be on the hypothesis in which international sports federations – i.e. private entities usually organised as associations or similar structures – are asked to implement the COVID Guidance within their sport. National anti-doping organizations are strongly embedded in their national legal system and their status and obligations as public or semi-public organisations are likely to be much more dependent on the legislative landscape put in place to deal with the COVID-19 pandemic in each country. Nevertheless, the general principles described in this article would apply to all anti-doping organizations alike, whether at international or national level. More...



(A)Political Games: A Critical History of Rule 50 of the Olympic Charter - By Thomas Terraz

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.More...

Mega-sporting events and human rights: What role can EU sports diplomacy play? - Conference Report – By Thomas Terraz

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.

 

1.     Introduction

 On March 05, the T.M.C. Asser Institute hosted ‘Mega-sporting events and human rights: What role can EU sports diplomacy play?’ a Multiplier Sporting Event organized in the framework of a European research project on ‘Promoting a Strategic Approach to EU Sports Diplomacy’. This project funded by the European Commission through its Erasmus+ program aims to help the EU adopt a strategic approach to sports diplomacy and to provide evidence of instances where sport can help amplify EU diplomatic messages and forge better relations with third countries. In particular, Antoine Duval from the Asser Institute is focusing on the role of EU sports diplomacy to strengthen human rights in the context of mega sporting events (MSE) both in Europe and abroad. To this end, he organized the two panels of the day focusing, on the one hand, on the ability of sport governing bodies (SGB) to leverage their diplomatic power to promote human rights, particularly in the context of MSEs and, on the other, on the EU’s role and capacity to strengthened human rights around MSEs. The following report summarizes the main points raised during the discussions. More...

International and European Sports Law – Monthly Report – February 2020 - By Thomas Terraz

Editor's note: This report compiles the most relevant legal news, events and materials on International and European Sports Law based on the daily coverage provided on our twitter feed @Sportslaw_asser. 

 

The Headlines

Manchester City sanctioned by UEFA’s Financial Fair Play

Manchester City has been sanctioned under UEFA’s Financial Fair Play (FFP) regulations for two seasons for ‘overstating its sponsorship revenue in its accounts and in the break-even information’ it had provided UEFA. The February 14 decision of the Adjudicatory Chamber of the Club Financial Control Body (CFCB) likely heralds the start of a long and bitter legal war between Manchester City and UEFA, which may end up settling many of the questions surrounding the legality of FFP rules. Since its introduction in 2010, the compatibility of FFP with EU law, especially in terms of free movement and competition law, has been a continued point of contention amongst the parties concerned and commentators (see discussion here, here and here). It was only a matter of time that a case would arise to test this issue and the present circumstances seem to indicate that this may go all the way.                                 

Regardless, the ban will not be enforced this season and in light of the appeal process, it is hard to predict when the CFCB’s decision will have any effect. Indeed, Manchester City has shown an incredible willingness to fighting this out in the courts and shows no signs of backing down. The next stop will be the CAS and perhaps followed by the Swiss Federal Tribunal. It should also be recalled that the CAS has already examined FFP in its Galatasaray award, where it found FFP compatible with EU law (see commentary here). There is even a decent chance that this emerging saga may end up in front of the European Commission and eventually the Court of Justice of the European Union.

Sun Yang CAS award published

After a much-anticipated public hearing, the Panel’s award in the Sun Yang case has finally been published, sanctioning Sun Yang with an eight-year period of ineligibility (see here for a detailed commentary). The decision does not reveal anything groundbreaking in terms of its legal reasoning and in many ways the case will most likely be remembered for its historical significance: the case that jumpstarted a new era of increased public hearings at the CAS.

Perhaps of some interest is the extent to which the panel took into account Sun Yang’s behavior during the proceedings in order to support its assessment of the case. For example, the panel describes how Sun Yang had ignored the procedural rules of the hearing by inviting ‘an unknown and unannounced person from the public gallery to join him at his table and act as an impromptu interpreter’. The Panel interpreted this as Sun Yang attempting ‘to take matters into his own hands’ which it found resembled the athlete’s behavior in the case (see para 358). The Panel also found it ‘striking’ that Sun Yang did not express any remorse concerning his actions during the proceedings. Since the proceedings were held publicly and have been recorded, it is possible to verify the Panel’s assessment in this regard.

In the end, it is possible that Sun Yang may seek to reduce the period of ineligibility once the 2021 WADA Code comes into force (see para 368). For now, Sung Yang may also try to appeal the award to the Swiss Federal Tribunal on procedural grounds, and has already indicated his wish to do so. More...

Special Issue Call for Papers: Legal Aspects of Fantasy Sports - International Sports Law Journal

The International Sports Law Journal (ISLJ) invites submissions to a special issue focusing on legal aspects of fantasy sports. For some time, fantasy sports has been a major phenomena in North America and this has been reflected in the sports law literature. Fantasy sports have more recently grown in popularity in the rest of world, raising a number of novel legal questions. The ISLJ wants to support fruitful global discussions about these questions through a special issue. We welcome contributions from different jurisdictions analyzing fantasy sports from the perspective of various areas of law including, but not limited to, intellectual property law, gambling law, and competition law.

Please submit proposed papers through the ISLJ submission system (http://islj.edmgr.com/) no later than November 15, 2020. Submissions should have a reccomended length of 8,000–12,000 words and be prepared in accordance with the ISLJ's house style guidelines (https://www.springer.com/journal/40318/submission-guidelines). All submissions will be subject to double-blind peer review.

Question about the special issue can be directed to the Editor–in-Chief, Johan Lindholm (johan.lindholm@umu.se).

International and European Sports Law – Monthly Report – January 2020 - By Thomas Terraz

Editor's note: This report compiles the most relevant legal news, events and materials on International and European Sports Law based on the daily coverage provided on our twitter feed @Sportslaw_asser. 

 

The Headlines

IOC Athlete Commission releases its Rule 50 Guidelines for Tokyo 2020

The IOC Athlete Commission presented its Rule 50 Guidelines for Tokyo 2020 at its annual joint meeting with the IOC Executive Board. It comes as Thomas Bach had recently underlined the importance of political neutrality for the IOC and the Olympic Games in his New Year’s message. Generally, rule 50 of the Olympic Charter prohibits any political and religious expression by athletes and their team during the Games, subject to certain exceptions. The Guidelines clarify that this includes the ‘field of play’, anywhere inside the Olympic Village, ‘during Olympic medal ceremonies’ and ‘during the Opening, Closing and other official ceremonies’. On the other hand, athletes may express their views ‘during press conferences and interview’, ‘at team meetings’ and ‘on digital or traditional media, or on other platforms. While rule 50 is nothing new, the Guidelines have reignited a debate on whether it could be considered as a justified restriction on one’s freedom of expression.

 

The IOC has made the case that it is defending the neutrality of sport and that the Olympics is an international forum that should help bring people together instead of focusing on divisions. Specifically, Richard Pound has recently made the argument that the Guidelines have been formulated by the athletes themselves and are a justified restriction on free expression with its basis in ‘mutual respect’. However, many commentators have expressed their skepticism to this view (see here, here and here) citing that politics and the Olympics are inherently mixed, that the IOC is heavily involved in politics, and that the Olympics has often served as the grounds for some of history’s most iconic political protests. All in all, the Guidelines have certainly been a catalyst for a discussion on the extent to which the Olympics can be considered neutral. It also further highlights a divide between athlete committees from within the Olympic Movement structures and other independent athlete representation groups (see Global Athlete and FIFPro’s statements on rule 50).

 

Doping and Corruption Allegations in Weightlifting 

The International Weightlifting Federation (IWF) has found itself embroiled in a doping and corruption scandal after an ARD documentary was aired early in January which raised a wide array of allegations, including against the President of the IWF, Tamás Aján. The documentary also included hidden camera interviews from a Thai Olympic medalist who admits having taken anabolic steroids before having won a bronze medal at the 2012 London Olympic Games and from a team doctor from the Moldovan national team who describes paying for clean doping tests. The IWF’s initial reaction to the documentary was hostile, describing the allegations as ‘insinuations, unfounded accusations and distorted information’ and ‘categorically denies the unsubstantiated’ accusations. It further claims that it has ‘immediately acted’ concerning the situation with the Thai athletes, and WADA has stated that it will follow up with the concerned actors. However, as the matter gained further attention in the main stream media and faced increasing criticism, the IWF moved to try to ‘restore’ its reputation. In practice, this means that Tamás Aján has ‘delegated a range of operation responsibilities’ to Ursual Papandrea, IWF Vice President, while ‘independent experts’ will conduct a review of the allegations made in the ARD documentary. Richard McLaren has been announced to lead the investigation and ‘is empowered to take whatever measures he sees fit to ensure each and every allegation is fully investigated and reported’. The IWF has also stated that it will open a whistleblower line to help aid the investigation.More...


How 2019 Will Shape the International Sports Law of the 2020s - By Thomas Terraz

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.

 

1.     Introduction

As we begin plunging into a new decade, it can be helpful to look back and reflect on some of the most influential developments and trends from 2019 that may continue to shape international sports law in 2020 and beyond. Hence, this piece will not attempt to recount every single sports law news item but rather identify a few key sports law stories of 2019 that may have a continued impact in the 2020s. The following sections are not in a particular order.More...

Free Event! Mega-sporting events and human rights: What role can EU sports diplomacy play? - 5 March at the Asser Institute in The Hague

The upcoming 2022 FIFA World Cup in Qatar and its links to human rights violations has been the subject of many debates in the media and beyond. In particular, the respect of migrant workers’ labour rights was at the forefront of much public criticisms directed against FIFA. Similarly, past Olympics in Rio, Sochi or Beijing have also been in the limelight for various human rights issues, such as the lack of freedom of the press, systematic discrimination on the basis of sexual orientation or forced evictions. These controversies have led sports governing bodies (SGBs) to slowly embrace human rights as an integral part of their core values and policies. Leading to an increased expectation for SGBs to put their (private) diplomatic capital at the service of human rights by using their leverage vis-à-vis host countries of their mega-sporting events (MSEs). In turn, this also raises the question of the need for the EU to accompany this change by putting human rights at the heart of its own sports diplomacy.


Research collective 
This Multiplier Sporting Event, organised in the framework of the transnational project on ‘Promoting a Strategic Approach to EU Sports Diplomacy’ funded by the Erasmus + Programme, aims to trigger discussions on the role of an EU sports diplomacy in strengthening respect for human rights in the context of MSEs both at home and abroad. It will feature two roundtables focused on the one hand on the diplomatic power and capacity of SGBs to fend for human rights during MSEs and on the other on the EU’s integration of human rights considerations linked to MSEs in its own sports diplomacy.


Programme

13:20 – 14:00 – Welcome and opening speech –Antoine Duval (Asser Institute)
14:00 - 15:30 - Panel 1: Leveraging the Diplomatic Power of the Sports Governing Bodies for Human Rights

  • Lucy Amis (Unicef UK/Institute for Human Rights and Business)
  • Guido Battaglia (Centre for Sport and Human Rights)
  • Florian Kirschner (World Players Association/UNI Global Union)
  • Claire Jenkin (University of Hertfordshire)

15:30 – 16:00 - Coffee Break

16:00 - 17:30 - Panel 2: A Human Rights Dimension for the EU’s Sports Diplomacy?

  • Arnout Geeraert (Utrecht University)
  • Agata Dziarnowska (European Commission)
  • Alexandre Mestre (Sport and Citizenship)
  • Ministry of Health, Welfare and Sport (TBC)

17:30 - Reception

Balancing Athletes’ Interests and The Olympic Partner Programme: the Bundeskartellamt’s Rule 40 Decision - By Thomas Terraz

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.

 

1        Introduction

The International Olympic Committee (IOC), after many years of ineffective pushback (see here, here and here) over bye law 3 of rule 40[1] of the Olympic Charter (OC), which restricts the ability of athletes and their entourage to advertise themselves during the ‘blackout’ period’[2] (also known as the ‘frozen period’) of the Olympic Games, may have been gifted a silver bullet to address a major criticism of its rules. This (potentially) magic formula was handed down in a relatively recent decision of the Bundeskartellamt, the German competition law authority, which elucidated how restrictions to athletes’ advertisements during the frozen period may be scrutinized under EU competition law. The following blog begins by explaining the historical and economic context of rule 40 followed by the facts that led to the decision of the Bundeskartellamt. With this background, the decision of the Bundeskartellamt is analyzed to show to what extent it may serve as a model for EU competition law authorities. More...

Asser International Sports Law Blog | Blog Symposium: The Impact of the TPO Ban on South American Football. By Ariel N. Reck

Asser International Sports Law Blog

Our International Sports Law Diary
The Asser International Sports Law Centre is part of the T.M.C. Asser Instituut

Blog Symposium: The Impact of the TPO Ban on South American Football. By Ariel N. Reck

Introduction: FIFA’s TPO ban and its compatibility with EU competition law.
Day 1: FIFA must regulate TPO, not ban it.
Day 2: Third-party entitlement to shares of transfer fees: problems and solutions
Day 4: Third Party Investment from a UK Perspective.
Day 5: Why FIFA's TPO ban is justified.

Editor’s note: Ariel N. Reck is an Argentine lawyer specialized in the football industry. He is a guest professor at ISDE’s Global Executive Master in International Sports Law, at the FIFA CIES Sports law & Management course (Universidad Católica Argentina) and the Universidad Austral Sports Law diploma (Argentina) among other prestigious courses. He is a regular conference speaker and author in the field of sports law.

Being an Argentine lawyer, Ariel will focus on the impact FIFA’s TPO ban will have (and is already having) on South American football.


Introduction

Before discussing the impact of the TPO ban, it is important to highlight that the purposes of TPO in South America are somehow different than in Europe. Here “economic rights” (that’s how we call it) are basically assigned in four different moments and/or situations:

First, when a youth player is first registered for the club at amateur level. This is a recognition to the person or entity that brings the player to the club and is usually between 10% and 20% of a future transfer. This practice widens the club’s scouting net and attracts promising young players from the small clubs to the big ones. The percentage can be assigned to the former club of the player, a third person who brings the player (a scout / intermediary) or to the player’s family if he comes as a free or unregistered player. In these cases the position of the beneficiary is really passive and the assigned rights are fragile and dependent of many factors (the player is not even a professional yet).

A second stage in which rights are assigned to third parties is when the club needs money to cover other obligations, unrelated to that particular player. Every club has one or more starlets and investors are willing to take the risk and acquire a percentage of the player’s economic rights. For the club, the sale of portions of the economic rights helps to balance its books and provides an alternative source of credit. In this case there’s no “standard” percentage, it depends on the money the investor is willing to pay, the potential value of the player and the needs of the club. The influence, or the ability to “force” a transfer of the player, of the third party is also subject to each particular agreement, with a direct correlation between percentage owned and influence.[1]

The third situation is when a club wants to hire a player but does not have the financial resources to do it. The rights of such a player might be owned by a company or a company might be willing to acquire the player’s rights from the former club and bring him to the new club. Consequently, the new club is used as showcase only. Under this situation, the player is usually hired for a single season with an option for the purchase of a percentage in favor of the new club, triggering –if executed- a long term employment contract. Sometimes, even if the option is not executed the TP owner recognizes the club a small percentage (around 10%) as “showcase rights” in case the player is immediately hired with a long term contract by another club after the termination of his one season contract. Under these circumstances, the influence of the TP owner is clearly strong, irrespective of how the relevant documents are drafted. 

Clubs could also turn to selling economic rights to third parties in order to cancel debts or to seduce a player for a contractual renewal. A club accepts to assign a share to the player against previous salary debts or in order to convince him to renew the contract without a mayor salary raise. If the club cannot pay the amounts wanted by the player to renew, it offers to assign the player a percentage of his own transfer. In most South American countries, the law or a collective bargaining agreement grants players a minimum percentage of the proceeds of his own transfer (between 10% and 20% depending the country)[2], but this additional assignment is heavily used to satisfy a player’s demands at a renewal of the employment contract.

With so many purposes, and taking into account the financial needs of clubs, the lack of alternative sources of financing and the number of South American players transferred each year, it is obvious that the use of TPO in South America is definitively widespread. Therefore, the impact of the ban will be certainly important, especially in the first years when clubs have not yet found alternative forms of financing.  


The impact of the FIFA Ban

The situation is aggravated by the short transitional period established by FIFA. While previous statements of FIFA officials suggested a period of 3 to 4 seasons[3], the FIFA Circular letter 1264 reduced it to just four months.

It is hard to predict the effectiveness of the prohibition. The current scenario shows many parties looking for forms or mechanisms to circumvent the prohibition, while others are trying to challenge it before the courts. If we consider the experience of art.18bis of the FIFA Regulations on the Status and Transfer of Players (RSTP) (an article included in the FIFA rules right after the Tévez affair as an attempt to protect the independence of clubs in its transfers decisions limiting the power to force a transfer, third parties usually had in TPO agreements), the forecast for the effectiveness of art.18ter is not good. But, as we will show, in the case of art.18ter there’s a clear new impulse and moreover, UEFA stands strongly behind the prohibition. Therefore, in my opinion, we can expect a different outcome. I think the ban will be especially effective in cases of players involved in transfers from South America to the European leagues. Transfers to Portugal, Spain or Greece (countries that relied on TPO in the recent past) will be heavily scrutinized. Nonetheless, it is unclear whether at domestic level, especially in South America, the practice will be banned with similar efficiency or if it will continue secretly with limited or no control by the national Associations. Some federations already implemented their own form of TPO ban (even when art.18ter RSTP is mandatory at national level). Brazil was one of the pioneers[4] and in Argentina, the fiscal authorities, passed a regulation banning TPO agreements.[5]

As to the ways to try to circumvent the TPO ban, I think we will see a raise in the use of “bridge transfers”, which is basically the registration of a player in a club just to cover the TPO with a federative “shell”. With this maneuver, the TP owner artificially enjoys all the benefits of being a club, like retaining a percentage of the player’s future transfer or controlling the player’s career by signing a long term contract with a huge buyout clause loaning the player to different clubs each year.[6] According to the FIFA regulations any club that had ever registered the player is not a “third party” (see definition 14[7]). There is no further requirement, no “sporting interest” in the registration or playing time, the simple act of registration allows a club to have a share of the player’s future transfers. To this regard, while it is true that FIFA already sanctioned clubs for “bridge transfers”[8], it was only an isolated case (still pending at CAS) and we can see examples of patent “bridge transfers” in every transfer window and in the top-5 leagues, not just in minor competitions. 

Another way to deceive TPO is to assign a share to the player and a further (hidden) assignment from the player to a third party. At this point, a big question arises: is the player a third party according to the FIFA regulations? Can a club assign a percentage of the player’s future transfers to the player himself?
As said, the opportunity for a player to profit from his own transfer is a labour right in many South American countries. While South American employment laws, statutes and/or CBAs tend to fix a minimum percentage of the transfer fee for the player, there is no cap and in theory a player can receive up to 100% of the transfer price. 

The FIFA regulations only exclude the two clubs involved in a transfer and the previous clubs where the player was registered from being a third party. Hence, in principle, the player seems to be a “third party” too.

But art.18ter provides that no club or player shall enter into an agreement with a third party, based on the wording of this provision it is clear that a player should not be considered a “third party”. Moreover, the player is a necessary party in every transfer agreement and he is also subject to sanctions if he violates the aforementioned FIFA prohibition on TPO according to paragraph 6 of art.18ter.

In addition, the fact that in many South American countries the player’s entitlement to a share of his own transfer is a labour right, a systematic interpretation of art.18ter makes it plausible to sustain the validity of the assignment of a percentage of the transfer fee to the player. In that regard, it is important to recall that FIFA’s prohibition has in principle effect only at federative level. This means that at civil level, any assignment will still be valid and enforceable.

Furthermore, the jurisprudence of the majority of the South American countries holds that federative rules have only effect within the framework of the federation and cannot contradict the civil legislation, of a higher hierarchy.

Argentina is an exception in South America. Ordinary Argentine courts settled that Federative rules are the “lex specialis” in relation to the general rules of the civil code. Therefore, if the regulations of FIFA and/or the Argentine Federation prohibit TPO, any contract in that sense will be null and void, even when under our civil code the assignment of a future transfer is perfectly valid.

Saved for this exception, the result of this is that FIFA’s remedy might be worse than the disease. Since FIFA can only sanction its own members (meaning clubs and players), if a club or a player enters into a TPO agreement, such player or club might be subject to disciplinary sanctions and the contract will still be valid and enforceable.

It is not unthinkable that a player or a club surrendering to the need of funds and signing a TPO agreement despite FIFA’s ban, thereby placing himself in a difficult position. The counterpart (the third party) might force the compliance of the agreement by threatening with reporting the deal to FIFA. In the end, the ban will have the opposite effect to what was sought: Players and clubs will be more vulnerable in their relationship with the third-party than before the introduction of art.18ter RSTP.

As said, it is hard to think that clubs will immediately find an alternative source of funding or will be able to live within their own means. Therefore, it is probable that clubs will try to circumvent or challenge the rule.

Again, the final consequences are hard to predict, but will of an important magnitude. TPO is not just a financing method ‎to bring players to clubs, sharing the risk with the investor, it is also a way to get cash-flow without the need to transfer the player to another club. Furthermore, it is an essential part of the scouting method that widens the club’s network, attracts young talents to the clubs and is also a way to cancel debts towards the player or to achieve a renewal of his contract.  


Conclusion

To conclude, I don’t think the TPO ban is the best way to achieve the –alleged- objectives declared by FIFA. Obligation to disclose, controlled payments (via TMS for example) and other regulatory approaches would have been better options. The pressure from an investor could have been diluted by setting a limit (maximum percentage or maximum number of players under TPO) and the reality is that the pressure to “force” a transfer comes in general from other actors, mainly the player and/or his agent. 

Now the new “pushers” will be the European clubs. How will it be possible for an Argentine club to refuse a -say- € 5 million transfer for a 19 year old player even if the club knows his value will double or triple if he stays at the club? With the TPO ban the club cannot rely on an investor paying, for example, € 3 million for 50% of the player's economic rights to “hold on” a few years. It is worth remembering that Chelsea tried to seal the transfer of Neymar for € 20 million when he was 18. However, Santos managed to reject such offer relying on TPO.

South American players account already for approximately 25% of all the international transfers worldwide[9], after the TPO ban this percentage will certainly raise.

As to the “morals” arguments, recently reiterated by UEFA’s president Platini who said TPO is “a form of slavery”[10], I believe they are just a fallacy. Every transfer needs the player’s consent and the investor owns a share of the profit of a potential future transfer, not a part of the human being. Otherwise, for clubs, owning 100% of a human being would be equally immoral.

Moreover, other types of assignments, like third party litigation funding, are legal in many countries, including the UK and France. The similarities and analogies than can be made with TPO are immense and nobody is claiming third party litigation funding is a way of “owning a person’s justice”.

With the introduction of the Financial Fair Play Regulations European clubs and federations are looking into ways to reduce expenditures and also scrutinizing what the “neighbors” are doing. Clubs want cheaper players and clubs from countries were TPO was long ago banned had a handicap for UEFA spots against clubs from countries were TPO was allowed and relied on TPO to acquire players.[11] The TPO ban serves both objectives: A reduction in the player’s transfer price and an end to the Spanish and Portuguese transfer “tactics” that relied heavily on TPO. 

Also, the inclusion or exclusion of the player in the definition of “third party” triggers conflictive issues. In most South American countries national labour laws or CBAs allow the player to obtain a percentage of the proceeds of his own transfer. If FIFA tries to extend the definition of “third party” to include players, this might certainly prevent a complete implementation of FIFA´s TPO ban in South America. 

As a conclusion I can say that, for South American clubs, the TPO ban just changed the “predator” in the transfer market. Our clubs can now stand stronger against investors, but as counter-effect they are in a much weaker position against European clubs‎.



[1] For a discussion on “buy-sell” clauses (the core of any TPO agreement) and whether they constitute prohibited influence see my opinion: Do “Buy-Sell” Clauses In Third Party Ownership Agreements Constitute Undue Influence Under FIFA’s Art 18bis?

 http://www.lawinsport.com/blog/argentine-sports-law-blog/item/do-buy-sell-clauses-in-third-party-ownership-agreements-constitute-undue-influence-under-fifa-s-art-18bis

[2] Brazil, Peru and Bolivia are exceptions to this rule; no such right is established in their regulations. In Argentina the minimum percentage is 15% according to art.8 of the CBA 557/2009 http://infoleg.mecon.gov.ar/infolegInternet/anexos/155000-159999/158453/norma.htm , in Paraguay 20% for international transfers, art.12 law 5322 from 29th  October 2014 http://www.escritosdederecho.com/2014/11/ley-5322-del-29-10-2014-estatuto-del-futbolista-profesional.html , in Uruguay 20%, art.34 of the Professional Footballers Statute http://www.mutual.com.uy/index.php?option=com_content&view=article&id=49&Itemid=83 , in Ecuador 15%, Chile 10% law 20.178 http://www.sifup.cl/wp-content/uploads/2014/12/Ley-20178-Estatuto-Laboral-del-Futbolista-Profesional-Chileno.pdf , and Colombia 8% art.14 Colombian Players Status Regulations http://fcf.com.co/index.php/la-federacion-inferior/normatividad-y-reglamento/158-estatuto-del-jugador

[3] http://www.fifa.com/aboutfifa/organisation/footballgovernance/news/newsid=2463828/

[4] http://www.insideworldfootball.com/world-football/south-america/16188-brazil-conforms-and-sets-date-for-ending-tpo-funding-practices

[5] General Resolution 3740/2015 http://eco-nomicas.com.ar/7183-rg-3740-afip-ganancias-transferencia-de-jugadores

[6] For more on “Bridge Tranfers” http://www.lawinsport.com/sports/football/item/what-is-a-bridge-transfer-in-football

[7] Third party: a party other than the two clubs transferring a player from one to the other, or any previous club, with which the player has been registered.”

[8] http://www.fifa.com/aboutfifa/organisation/news/newsid=2292724/index.html

[9] Source: FIFA TMS Global Transfer Market Report 2015, page 78.

[10] http://in.reuters.com/article/2015/03/16/soccer-platini-tpo-idINKBN0MC1B220150316

[11] http://www.e-comlaw.com/world-sports-law-report/article_template.asp?Contents=Yes&from=wslr&ID=1388

 

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