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

Dahmane v KRC Genk: Bosman 2.0 or Storm in a Teacup?

Mohamed Dahmane is a professional football player of French-Algerian origin, who has played for a variety of European clubs, including French club US Mauberge, Belgian club RAEC Mons and Turkish club Bucaspor. However, he will mostly be remembered as the player whose legal dispute with his former club (Belgian club KRC Genk) revived the debate on football players’ labour rights.  More...

Get Up, Stand Up at the Olympics. A review of the IOC's policy towards political statements by Athletes. By Frédérique Faut

The Olympic Games are a universal moment of celebration of sporting excellence. But, attention is also quickly drawn to their dark side, such as environmental issues, human rights breaches and poor living conditions of people living near the Olympic sites. In comparison, however, little commentary space is devoted to the views of athletes, the people making the Olympics. This article tries to remediate this, by focussing on Rule 50 of the Olympic Charter which prevents athletes from freely expressing their (political) thoughts.  More...

Final Report on the FIFA Governance Reform Project: The Past and Future of FIFA’s Good Governance Gap

Qatar’s successful bid to host the 2022 World Cup left many people thunderstruck: How can a country with a population of 2 million people and with absolutely no football tradition host the biggest football event in the world? Furthermore, how on earth can players and fans alike survive when the temperature is expected to exceed 50 °C during the month (June) the tournament is supposed to take place?

Other people were less surprised when FIFA’s President, Sepp Blatter, pulled the piece of paper with the word “Qatar” out of the envelope on 2 December 2010. This was just the latest move by a sporting body that was reinforcing a reputation of being over-conservative, corrupt, prone to conflict-of-interest and convinced of being above any Law, be it national or international.More...

Doping Paradize – How Jamaica became the Wild West of Doping

Since the landing on the sporting earth of the Übermensch, aka Usain Bolt, Jamaica has been at the centre of doping-related suspicions. Recently, it has been fueling those suspicions with its home-made scandal around the Jamaica Anti-Doping Commission (JADCO). The former executive of JADCO, Renee Anne Shirley, heavily criticized its functioning in August 2013, and Jamaica has been since then in the eye of the doping cyclone. More...

Cocaine, Doping and the Court of Arbitration for sport - “I don’t like the drugs, but the drugs like me”. By Antoine Duval

Beginning of April 2014, the Colombian Olympic Swimmer Omar Pinzón was cleared by the Court of Arbitration for Sport (CAS) of an adverse finding of Cocaine detected in a urine sample in 2013. He got lucky. Indeed, in his case the incredible mismanagement and dilettante habits of Bogotá’s anti-doping laboratory saved him from a dire fate: the two-year ban many other athletes have had the bad luck to experience. More...

The French “betting right”: a legislative Dr. Jekyll and Mr. Hyde. By Ben Van Rompuy

The European Commission has published the “Study on Sports Organisers’ Rights in the EU”, which was carried out by the ASSER International Sports Law Centre (T.M.C. Asser Institute) and the Institute for Information Law (University of Amsterdam). 

The study critically examines the legal protection of rights to sports events (sports organisers’ rights) and various issues regarding their commercial exploitation in the field of media and sports betting, both from a national and EU law perspective.  

In a number of posts, we will highlight some of the key findings of the study. 


“It was Hyde, after all, and Hyde alone, that was guilty.” 


In recent years, numerous national and European sports organisers have called for the adoption of a specific right to consent to the organisation of bets (“right to consent to bets”), by virtue of which no betting operator could offer bets on a sports event without first entering into a contractual agreement with the organiser. More...



Five Years UEFA Club Licensing Benchmarking Report – A Report on the Reports. By Frédérique Faut, Giandonato Marino and Oskar van Maren

Last week, UEFA, presented its annual Club Licensing Benchmark Report, which analyses socio-economic trends in European club football. The report is relevant in regard to the FFP rules, as it has been hailed by UEFA as a vindication of the early (positive) impact of FFP. This blog post is a report on the report. We go back in time, analysing the last 5 UEFA Benchmarking Reports, to provide a dynamic account of the reports findings. Indeed, the 2012 Benchmarking Report, can be better grasped in this context and longer-lasting trends be identified.More...

The EU State aid and Sport Saga – Setting the scene

The last years has seen the European Commission being put under increasing pressure to enforce EU State aid law in sport. For example, numerous Parliamentary questions have been asked by Members of the European Parliament[1] regarding alleged State aid to sporting clubs.  In reply to this pressure, on 21 March 2012, the European Commission, together with UEFA, issued a statement. More...

FFP for Dummies. All you need to know about UEFA’s Financial Fair Play Regulations.

Football-wise, 2014 will not only be remembered for the World Cup in Brazil. This year will also determine the credibility of UEFA’s highly controversial Financial Fair Play (FFP) Regulations. The FFP debate will soon be reaching a climax, since up to 76 European football clubs are facing sanctions by the UEFA Club Financial Control Body (CFCB). More...

Asser International Sports Law Blog | State Aid and Sport: does anyone really care about rugby? By Beverley Williamson

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

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

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

At the end of the 2012/2013 season, Biarritz Olympique (Biarritz) were relegated from the elite of French Rugby Union, the Top 14 to the Pro D2.  By the skin of their teeth, and as a result of an injection of cash from the local council (which amounted to 400,000€), they were spared administrative relegation to the amateur league below, the Fédérale 1, which would have occurred as a result of the financial state of the club. Article 8 of the Statuts et Règlements Générqaux (the rules that govern professional rugby) states that if it is determined by the DNACG (Direction Nationale d’Aide et de Contrôl de Gestion; the organisation charged with overseeing the administrative, financial and legal aspects of rugby in France) that a professional team is unable to satisfy its projected financial commitments, it will be relegated to the amateur leagues. Biarritz have been one of the great Top 14 clubs, having won the league in 2005 and 2006, having reached the Heineken Cup final in 2010 and won the smaller of the European competitions, the Challenge Cup in 2012 and they look set to make their return to the Top 14 next year, something that would not have been possible had the local council not intervened, an intervention that was permitted by the DNACG.

Article 107 TFEU provides for a very inclusive definition of state aid, declaring as incompatible with the internal market any aid whatsoever, granted by the State or funded with state resources, which distorts or threatens to distort competition by favouring certain undertakings in so far as it affects trade between Member States. There is a four part test for determining whether or not state aid has been granted; (i) did the money come from state resources; (ii) was it given to an undertaking; (iii) did that money confer selective advantage; and (iv)did it have the potential to distort competition. 

The definition of state resources in this context is fairly wide, and covers money provided by local government and so is easily satisfied in this case. The European jurisprudence is clear that a sporting club or association can be considered to be an undertaking within the meaning of the Treaty provisions in so far as its economic activity is concerned; again, this is easily satisfied in this instance. Given the lack of information available as to the nature of Biarritz’s financial concerns or the terms of the grant, it is difficult to determine whether selective advantage has been conferred by the grant. Selective advantage, of this particular type, is conferred when the undertaking could not have obtained that economic advantage under normal market conditions (market economy operator principle), so had Biarritz been unable to obtain a grant on similar terms to that which was provided by the Council, selective advantage will have been obtained. Finally, the aid has to have the potential to distort competition, and idea that is explored below alongside its affect upon trade between Member States.  

The Pro D2 is an entirely domestic league, it has no international fixtures whatsoever, so potentially is a purely domestic matter. In Stevenage Borough Football Club v The Football League (1996) Times Law Review, 6 July, it was deemed too remote that Stevenage would be able to compete for a place in European competitions and so there was no effect on trade between Member States in that case. However, the Commission have been clear that trade between Member States may be affected by aid given to an undertaking that is not itself, trading across borders (Case C-102/87 France v Commission [1988] ECR 4067, para.19) and indeed, have recently opened an investigation into a second division football team in the Netherlands. The Stevenage case can be contrasted with Biarritz where, despite a rocky start to the season, they have now climbed the table and sit second place. They have a serious chance of being promoted back into the Top 14, or at the very least, occupying one of the coveted promotion playoffs spots, thereby altering who could potentially win promotion (in France two teams go up and two teams come down).  Every team in the Top 14 competes in one of two European competitions: the European Championship Cup or the European Challenge Cup.  The potential effect on trade between Member States starts therefore, to become more evident. The concept of ‘trade between Member States’ has traditionally been given a wide interpretation and can be said to include situations which affect the competitive structure of the market, within its scope. The Top 14 has fixtures with other European countries, including England, Ireland and Italy.  Who enters (and who leaves) therefore will affect the competitive structure of those international fixtures. Article 107 however, states that aid is only prohibited ‘in so far as it’ has an effect on trade between Member States, rather than in Article 101 or 102 which rely on ‘may’ as a limiting concept. The jurisprudence is clear that it is the effect of the aid, rather than the intent or form of the aid which is determinative.  A full market analysis of the effect on trade, as occurs under Article 101 and 12, is not required under Article 107, although justification for the finding of a distortion of competition, or threatened distortion, would be necessary (Case 730/79 Philip Morris Holland BV v Commission, [1980] ECR 2671). In the case of Biarritz, the provision of the 400,000€ saved the team from relegation to the Fédéral 1 and therefore put them in a position in which they could immediately fight for promotion back into the Top 14 (which they look likely to achieve). It does not appear therefore, that an investigation would stumble at this stage of its inquiry.   

Due to the inclusive nature of the Article 107 prohibition, many investigations turn on whether they satisfy the exemption criteria of 107(3). The one most typically utilised in the case of investigations of professional football clubs in 107(3)(c) which states that aid used to facilitate the development of certain economic areas or activities may not be incompatible with the internal market, or the ‘failing firm’  defence. The local mayor hinted at the economic implications for the town itself of the teams fall from professionalism, as the primary motive for providing the aid. There is however, no (public) suggestion that the club would have folded without the injection of cash, merely that it would have had to compete in the amateur Fédérale 1. The definition of a failing firm is necessarily flexible. Nevertheless, it is a requirement when considering rescue aid (as opposed to restructuring aid as appears to be the case here) that the difficulties faced by the firm be short/medium term difficulties that are dependent upon short term government help for their resolution. As Biarritz have performed so well this season, it seems that there is an argument to be made that their difficulties were indeed short-term in nature, and have been resolved by the injection of cash provided by the local council. The aid itself would also have to be a ‘one time, last time’ injection of financial help, something that is not entirely clear from the local media reports. Further, the question of whether demotion to an amateur league is comparable to the outright failure of a firm would have to be addressed. Fellow former Top 14 great and rival, Union Sportive Montalbanaise (Montauban) faced administrative relegation in 2010. The local council there did not provide the club with the money required to prevent their fall. The club filed for bankruptcy after being unable to prove to the DNACG that they would be able to address the rumoured 1.7 million Euro shortfall in their budget for that season. After 4 years in the amateur league they succeeded in winning promotion back into the Pro D 2 for the 2014/2015 season, where they currently sit mid-table. Using this as an example, and provided that the criteria laid out in 3.1.1. of the Community Guidelines on State Aid for Rescuing and Restructuring Firms in Difficulty are satisfied, it seems there is at least a basis for defending the council loan. 

However, as there is very little by the way of detailed information available as to the nature of the financial difficulties of the club or the terms of the financial assistance provided by the Council, it is impossible to be determinative as to its standing under Article 107. On the face of it though, the case of Biarritz looks at least worthy of some Commission interest and could well be an example of unlawful state aid, aid that looks likely to have enabled Biarritz re-admittance to the Top 14, the ‘richest league in the world’. 400,000€ may seem like peanuts when compared with the figures the Commission is looking at in respect of professional football, but in this case it seems, paying peanuts gets you a lot more than monkeys. 

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Asser International Sports Law Blog | UEFA Financial Fair Play Regulations Put PSG and Manchester City on a Transfer Diet

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

UEFA Financial Fair Play Regulations Put PSG and Manchester City on a Transfer Diet

The main lesson of this year’s transfer window is that UEFA’s Financial Fair Play (FFP) rules have a true bite (no pun intended). Surely, the transfer fees have reached usual highs with Suarez’s move to FC Barcelona and Rodriguez’s transfer from AS Monaco to Real Madrid and overall spending are roughly equal to 2013 (or go beyond as in the UK). But clubs sanctioned under the FFP rules (prominently PSG and Manchester City) have seemingly complied with the settlements reached with UEFA capping their transfer spending and wages.

 

FFP's Transfer Diet

PSG’s summer of impuissance

It was widely expected, and trumpeted, that PSG and Manchester City would disregard the transfer restrictions imposed on them. Besides all the talking and the costly recruitment of David Luiz for nearly 50M€ earlier this summer, PSG’s transfer activity was limited to Serge Aurier’s arrival on loan from modest Toulouse. Moreover, the talks over Di Maria’s move to PSG faltered over the inability of the French club to pay a transfer fee due to the FFP constraints. Thus, PSG was forced into relative thrift by the FFP rules, a remarkable achievement in itself. This has recently triggered widespread critique against UEFA and FFP by PSG officials.

 

Manchester City overtaken by Manchester United

Even though Manchester City has largely dominated the transfer contest against its arch-rival over the latest years, this balance has dramatically tilted during this summer. United was able to attract a number of high-ranked and expensive players, most notably Di Maria for the total sum of 66M€ (more than City’s total spending). In a final transfer twist, United was even able to snap away Falcao from City apparently due to FFP concerns.  City did not engage in the usual frenzy spending spree of the previous years. It did spend around 60 M€ (and racked in 25M€ in transfer fees), but this number pales in regard to the 116M€ spent in 2013. Here again, despite talks to the contrary and vouching to disregard UEFA’s FFP rules, one cannot ignore the toll taken by them on the capacity of Manchester City to outrageously dominate the UK transfer market.

  

 

 

The general timidity of FFP culprits

This is not an isolated development. Other clubs concerned by FFP settlements have followed a similar path (see graph below). In general, clubs sanctioned under FFP rules have reduced their transfer spending in comparison to previous years. More surprisingly, big players like PSG and Manchester City have complied with the net transfer limit of 49M€ imposed on them in the settlement. This points at an apparent success of the FFP regulations, which have not materialised, as many feared, as a public relations exercised in the guise of a toothless regulation. The rules have a real-world impact, and in spite of the high profiles of certain clubs concerned those have felt the urge to internalize them reinforcing UEFA’s claim that FFP is a serious regulation. As will be shown below, however, this also supports the claims that FFP regulations constitute a restriction on competition in need of adequate justification.


 


New strategies to bypass FFP rules 

This development has also led clubs to devise bypassing strategies to the FFP rules. The first strategy is to use loans as temporary or differed transfers by including a mandatory transfer clause in the contract. This is the solution adopted by PSG in the transfer of Serge Aurier from Toulouse. In a way there is no reason why this should not be considered as a new liability for accounting purposes, as it is akin to a delayed payment but not to a delayed transfer. Finally, there is the possibility of using affiliated clubs to store the long-term liabilities (wages and fees), while getting a player on short-term loans. This is likely the strategy used by Manchester City in the now infamous recruitment of Frank Lampard from its sister club New York City FC. Hence, one should not underestimate the ability of clubs to sidestep the FFP rules, albeit a way more difficult and protracted transfer game as before.

 

FFP’s compatibility with EU competition law still a threat

Does this real-world efficacy change anything to the assessment of FFP’s compatibility with EU competition law? Not really. On the one hand, it is all the more evident that the FFP rules have a restraining effect on free competition; certain economic actors are undoubtedly not free to invest their money, as they would see fit. On the other hand, the real test for evaluating the FFP’s compatibility with EU law is the Wouters/Meca-Medina proportionality test developed by the EU Court. First of all UEFA will have to identify the legitimate objective it intends to pursue with these regulations. This is likely to be good corporate governance, as one cannot consider that FFP rules improve the competitive balance by reducing the inequality between clubs in the absence of any redistributive effects. Actually, FFP will most likely sclerotize the pre-existing hierarchies. If good corporate governance in football is deemed a worthy objective (it probably will), the next question will be: are these regulations a proportionate mean to achieve it? At this stage UEFA will need to explain why the existing national bankruptcy frameworks are inadequate for this purpose (due, for example, to the political influence of clubs like in Spain, or to the particular feature of football competition that cannot tolerate the vagaries of a normal bankruptcy process), but also why the existing debt stock is not taken into account by the rules. Here, the brunt of the socio-political debate on the need of FFP will unfold.

 

As UEFA’s FFP rules strengthen their grip over clubs, they will be more and more incentivized to contest the rules in front of the EU Commission (PSG and Manchester City fans have recently submitted a complaint) or national tribunals. Thus, these questions will not remain hypothetical and will have to be met by UEFA with hard facts and convincing arguments. If not the FFP rules will be remembered as an ephemeral, though remarkable, interlude of the summer 2014.

 

Clubs

Amount spend on transfers in 2010 (in millions)

2011

2012

2013

2014

Manchester City

€182.45

€96.05

€61.95

€116.0

€65.5

PSG

€9.0

€107.1

€149.45

€135.9

€49.5

Galatasaray

€29.5

€23.6

€30.05

€41.84

€15.75

Trabzonspor

€7.9

€24.45

€8.06

€4.7

€29.11

Bursaspor

€1.38

€10.2

€3.66

€2.33

€1.8

FC Zenit

€43.0

€16.2

€103.76

€32.8

€22.8

Rubin Kazan

€43.6

€23.35

€29.0

€25.1

€8.0

FC Anzhi

€31.2

€84.5

€67.9

€59.4

€0

Levski Sofia

€0.8

€0.95

€1.25

€0.59

€0.05

 Data from transfermarkt.com






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