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

New Event! Rule 50 of the Olympic Charter and the Right to Free Speech of Athletes - Zoom In Webinar - 14 July - 16:00 (CET)

On Wednesday 14 July 2021 from 16.00-17.30 CET, the Asser International Sports Law Centre, in collaboration with Dr Marjolaine Viret, is organizing a Zoom In webinar on Rule 50 of the Olympic Charter and the right to free speech of athletes.

As the Tokyo Olympics are drawing closer, the International Olympic Committee just released new Guidelines on the implementation of Rule 50 of the Olympic Charter. The latter Rule provides that ‘no kind of demonstration or political, religious or racial propaganda is permitted in any Olympic sites, venues or other areas’. The latest IOC Guidelines did open up some space for athletes to express their political views, but at the same time continue to ban any manifestation from the Olympic Village or the Podium. In effect, Rule 50 imposes private restrictions on the freedom of expression of athletes in the name of the political neutrality of international sport. This limitation on the rights of athletes is far from uncontroversial and raises intricate questions regarding its legitimacy, proportionality and ultimately compatibility with human rights standards (such as with Article 10 of the European Convention on Human Rights).

This webinar aims at critically engaging with Rule 50 and its compatibility with the fundamental rights of athletes. We will discuss the content of the latest IOC Guidelines regarding Rule 50, the potential justifications for such a Rule, and the alternatives to its restrictions. To do so, we will be joined by three speakers, Professor Mark James from Manchester Metropolitan University, who has widely published on the Olympic Games and transnational law; Chui Ling Goh, a Doctoral Researcher at Melbourne Law School, who has recently released an (open access) draft of an article on Rule 50 of the Olympic Charter; and David Grevemberg, Chief Innovation and Partnerships Officer at the Centre for Sport and Human Rights, and former Chief Executive of the Commonwealth Games Federation (CGF). 

Guest speakers:

  • Prof. Mark James (Metropolitan Manchester University)
  • Chui Ling Goh (PhD candidate, University of Melbourne)
  • David Grevemberg (Centre for Sport and Human Rights)

Moderators:


Free Registration HERE

Investment in Football as a Means to a Particular End – Part 1: A non-exhaustive Typology - By Rhys Lenarduzzi

Editor's note: Rhys is currently making research and writing contributions under Dr Antoine Duval at the T.M.C. Asser Institute with a focus on Transnational Sports Law. Additionally, Rhys is the ‘Head of Advisory’ of Athlon CIF, a global fund and capital advisory firm specialising in the investment in global sports organisations and sports assets.

Rhys has a Bachelor of Laws (LL.B) and Bachelor of Philosophy (B.Phil.) from the University of Notre Dame, Sydney, Australia. Rhys is an LL.M candidate at the University of Zurich, in International Sports Law. Following a career as a professional athlete, Rhys has spent much of his professional life as an international sports agent, predominantly operating in football.

Rhys is also the host of the podcast “Sportonomic”.


Introduction

In the following two-part blog series, I will start by outlining a short typology of investors in football in recent years, in order to show the emergence of different varieties of investors who seek to use football as a means to a particular end. I will then in a second blog, explore the regulatory landscape across different countries, with a particular focus on the regulatory approach to multi-club ownership. Before moving forward, I must offer a disclaimer of sorts.  In addition to my research and writing contributions with the Asser Institute, I am the ‘Head of Advisory’ for Athlon CIF, a global fund and capital advisory firm specialising in the investment in global sports organisations and sports assets. I appreciate and hence must flag that I will possess a bias when it comes to investment in football.

It might also be noteworthy to point out that this new wave of investment in sport, is not exclusive to football. I have recently written elsewhere about CVC Capital Partners’ US$300 million investment in Volleyball, and perhaps the message that lingers behind such a deal.  CVC has also shown an interest in rugby and recently acquired a 14.3 per cent stake in the ‘Six Nations Championship’, to the tune of £365 million.  New Zealand’s 26 provincial rugby unions recently voted unanimously in favour of a proposal to sell 12.5 per cent of NZ Rugby’s commercial rights to Silver Lake Partners for NZ$387.5 million.  Consider also the apparent partnership between star footballer’s investment group, Gerard Pique’s Kosmos, and the International Tennis Federation.  Kosmos is further backed by Hiroshi Mikitani’s ecommerce institution, Rakuten, and all involved claim to desire an overhaul of the Davis Cup that will apparently transform it into the ‘World Cup of Tennis’. Grassroots projects, prizemoney for tennis players and extra funding for member nations are other areas the partnership claims to be concerned with. As is the case with all investment plays of this flavour, one can be certain that a return on the capital injection is also of interest.

So, what are we to conclude from the trends of investment in sport and more specifically for this blog series, in football? A typology elucidates that a multiplicity of investors have in recent years identified football as a means to achieve different ends. This blog considers three particular objectives pursued; direct financial return, branding in the case of company investment, or the branding and soft power strategies of nations.More...



WISLaw Blog Symposium - Rule 40 of the Olympic Charter: the wind of changes or a new commercial race - By Rusa Agafonova

Editor's note: Rusa Agafonova is a PhD Candidate at the University of Zurich, Switzerland   

The Olympic Games are the cornerstone event of the Olympic Movement as a socio-cultural phenomenon as well as the engine of its economic model. Having worldwide exposure,[1] the Olympic Games guarantee the International Olympic Committee (IOC) exclusive nine-digit sponsorship deals. The revenue generated by the Games is later redistributed by the IOC down the sports pyramid to the International Federations (IFs), National Olympic Committees (NOCs) and other participants of the Olympic Movement through a so-called "solidarity mechanism". In other words, the Games constitute a vital source of financing for the Olympic Movement.

Because of the money involved, the IOC is protective when it comes to staging the Olympics. This is notably so with respect to ambush marketing which can have detrimental economic impact for sports governing bodies (SGBs) running mega-events. The IOC's definition of ambush marketing covers any intentional and non-intentional use of intellectual property associated with the Olympic Games as well as the misappropriation of images associated with them without authorisation from the IOC and the organising committee.[2] This definition is broad as are the IOC's anti-ambush rules.More...

WISLaw Blog Symposium - Why the existing athletes' Olympic entering system does not comply with the fundamental principles of Olympism enshrined in the Olympic Charter - By Anna Antseliovich

Editor's note: Anna Antseliovich heads the sports practice at the Moscow-based legal group Clever Consult. She also works as a senior researcher at the Federal Science Center for Physical Culture and Sport (Russia).


The Olympic Games have always been a source of genuine interest for spectators as Olympians have repeatedly demonstrated astounding capacity of the human body and mind in winning Olympic gold, or by achieving success despite all odds.

At the ancient and even the first modern Olympic Games, there was no concept of a national team; each Olympian represented only himself/herself. However, at the 1906 Intercalated Games[1] for the first time, athletes were nominated by the National Olympic Committees (‘NOCs’) and competed as members of national teams representing their respective countries. At the opening ceremony, the athletes walked under the flags of their countries. This was a major shift, which meant that not only the athletes themselves competed against each other, but so too did the nations in unofficial medal standings.  

The nomination and selection of athletes by their NOCs to compete under their national flag and represent their country is a matter of pride for the vast majority of athletes. However, to what extent does such a scheme correspond to the ideals which the Olympic Games were based on in ancient times? Is it possible to separate sport and politics in the modern world? More...


WISLaw Blog Symposium - Legal and other issues in Japan arising from the postponement of the Tokyo 2020 Olympic Games due to COVID-19 - By Yuri Yagi

Editor's note: Yuri Yagi is a sports lawyer involved in Sports Federations and Japanese Sports Organizations including the Japan Equestrian Federation (JEF), the International Equestrian Federation (FEI), the Japanese Olympic Committee (JOC), the Japan Sports Council (JSC) and the All-Japan High School Equestrian Federation.


1. Introduction

Japan has held three Olympic Games since the inception of the modern Olympics;Tokyo Summer Olympic Games in 1964, Sapporo Winter Olympic Games in 1972, and Nagano Winter Olympic Games in 1998. Therefore, the Tokyo 2020 Olympic Games (Tokyo 2020) are supposed to be the fourth to be held in Japan, the second for Tokyo. Tokyo 2020 were originally scheduled for 24 July 2020 to 9 August 2020. Interestingly, the word ‘postpone’ or ‘postponement’ does not appear in the Host City Contract (HCC).

However, the International Olympic Committee (IOC), the Tokyo Metropolitan Government (TMG), the Japanese Olympic Committee (JOC), and the Tokyo Organising Committee of the Olympic and Paralympic Games (TOCOG) decided on 24 March 2020 that Tokyo 2020 would be postponed because of the pandemic of COVID-19. Later on, the exact dates were fixed ‘from 23 July 2021 (date of the Opening Ceremony) to 8 August 2021 (date of the Closing Ceremony).

The process of the decision is stipulated in the ‘ADDENDUM N° 4’ signed by IOC, TMG, JOC and TOCOG.

This paper provides an overview of the current situation, along with legal and other issues in Japan that have arisen due to the postponement of Tokyo 2020 due to COVID-19. The overview is offered from the perspective of a citizen of the host city and includes a consideration of national polls, the torch relay, vaccination, training camps, ever increasing costs, and the related provisions in the Candidature File and the Host City Contract. More...



WISLaw Blog Symposium - Freedom of Expression in Article 10 of the ECHR and Rule 50 of the IOC Charter: Are these polar opposites? - By Nuray Ekşi

Editor's note: Prof. Dr. Ekşi is a full-time lecturer and chair of Department of Private International Law at Özyeğin University Faculty of Law. Prof. Ekşi is the founder and also editor in chief of the Istanbul Journal of Sports Law which has been in publication since 2019.


While Article 10 of the European Convention on Human Rights (‘ECHR’) secures the right to freedom of expression, Rule 50 of the Olympic Charter of 17 July 2020 (‘Olympic Charter’) restricts this freedom. Following the judgments of the European Court of Human Rights (‘ECtHR’) relating to sports, national and international sports federations have incorporated human rights-related provisions into their statutes and regulations. They also emphasized respect for human rights. For example, Article 3 of the Fédération Internationale de Football Association (‘FIFA’) Statutes, September 2020 edition, provides that “FIFA is committed to respecting all internationally recognised human rights and shall strive to promote the protection of these rights”. Likewise, the Fundamental Principles of Olympism which are listed after the Preamble of the of the Olympic Charter 2020 also contains human rights related provisions. Paragraph 4 of Fundamental Principles of Olympism provides that the practice of sport is a human right. Paragraph 6 forbids discrimination of any kind, such as race, colour, sex, sexual orientation, language, religion, political or other opinion, national or social origin, property, birth or other status. In addition, the International Olympic Committee (‘IOC’) inserted human rights obligations in the 2024 and 2028 Host City Contract.[1] The IOC Athletes’ Rights and Responsibilities Declaration even goes further and aspires to promote the ability and opportunity of athletes to practise sport and compete without being subject to discrimination. Fair and equal gender representation, privacy including protection of personal information, freedom of expression, due process including the right to a fair hearing within a reasonable time by an independent and impartial panel, the right to request a public hearing and the right to an effective remedy are the other human rights and principles stated in the IOC Athletes’ Rights and Responsibilities Declaration. Despite sports federations’ clear commitment to the protection of human rights, it is arguable that their statutes and regulations contain restrictions on athletes and sports governing bodies exercising their human rights during competitions or in the field. In this regard, particular attention should be given to the right to freedom of expression on which certain restrictions are imposed by the federations even if it done with good intentions and with the aim of raising awareness. More...


WISLaw Blog Symposium - Stick to Sports: The Impact of Rule 50 on American Athletes at the Olympic Games - By Lindsay Brandon

Editor's note: Lindsay Brandon is Associate Attorney at Law Offices of Howard L. Jacobs


“Tell the white people of America and all over the world that if they don’t seem to care for the things black people do, they should not go to see black people perform.” – American sprinter and Olympic Medalist John Carlos

On 21 April 2021, the Athletes’ Commission (AC) of the International Olympic Committee (“IOC”) received the “full support of the IOC Executive Board for a set of recommendations in regard to the Rule 50 of the Olympic Charter and Athlete Expression at the Olympic Games.” This came over a year after the 2020 Tokyo Olympic Games were postponed due to the Covid-19 pandemic, and almost a year after the IOC and AC embarked on an “extensive qualitative and quantitative” consultation process to reform Rule 50 involving over 3,500 athletes from around the globe.

Since its introduction of the new guidelines in January 2020, Rule 50 has been touted by the IOC as a means to protect the neutrality of sport and the Olympic Games, stating that “No kind of demonstration or political, religious or radical propaganda is permitted in any Olympic sites, venues, or other areas.”  In other words, the Olympics are a time to celebrate sport, and any political act or demonstration might ruin their “moment of glory”.

In fact, the Rule 50 Guidelines say that a fundamental principle of sport is that it is neutral, and “must be separate from political, religious or any other type of interference.” But this separation is not necessarily rooted in totality in modern sports culture[1], particularly in the United States (“U.S.”).  This is evidenced by the United States Olympic and Paralympic Committee (“USOPC”) committing to not sanctioning Team USA athletes for protesting at the Olympics. The USOPC Athletes stated “Prohibiting athletes to freely express their views during the Games, particularly those from historically underrepresented and minoritized groups, contributes to the dehumanization of athletes that is at odds with key Olympic and Paralympic values.” More...



WISLaw Blog Symposium - 2020 Tokyo Olympic Games - Introduction

Women In Sports Law (WISLaw) is an international, non-profit association based in Switzerland and aimed at promoting women in the sports law sector, through scientific and networking events, annual meetings and annual reports. WISLaw’s objectives are to raise awareness of the presence, role and contribution of women in the sports law sector, enhance their cooperation, and empower its global membership through various initiatives.

This year, WISLaw has partnered with the Asser International Sports Law Blog to organise a special blog symposium featuring WISLaw members. The  symposium will entail both the publication of a series of blog posts authored by WISLaw members, and a virtual webinar (accessible at https://lnkd.in/dgWsy6q with the Passcode 211433) to promote discussion on the selected topics. Article contributions were invited on the topic of legal issues surrounding the Tokyo 2020 Olympics. In the midst of a pandemic and the rise of social justice movements around the world, the Games and their organisation gave rise to a number of interesting legal issues and challenges, which will be explored through a variety of lenses. 

We hope that you enjoy and participate in the discussion.

New Event! The Court of Arbitration for Sport at the European Court of Human Rights - Prof. Helen Keller - 26 May - 16:00

On Wednesday 26 May 2021 from 16.00-17.00 CET, the Asser International Sports Law Centre, in collaboration with Dr Marjolaine Viret (University of Lausanne), is organising its fifth Zoom In webinar on the Court of Arbitration for Sport (CAS) from the perspective of the European Court of Human Rights (ECtHR).

We have the pleasure to be joined by Prof. Helen Keller, former Judge at the ECtHR and a prominent dissenter to the majority’s ruling in the Mutu and Pechstein case.

The ECtHR decision in the Mutu and Pechstein case rendered on 2 October 2018 is widely seen as one of the most important European sports law rulings. It was also the first decision of the Strasbourg court dealing with a case in which the CAS had issued an award. The applicants, Adrian Mutu and Claudia Pechstein, were both challenging the compatibility of CAS proceedings with the procedural rights enshrined in Article 6(1) of the European Convention on Human Rights (ECHR). The court famously declined to conclude that the CAS lacked independence or impartiality, but did find that, insofar as Claudia Pechstein was concerned, she was forced to undergo CAS arbitration and, therefore, that CAS proceedings had to fully comply with the procedural rights guaranteed in the ECHR. In particular, the court held that the refusal by CAS to hold a public hearing, in spite of Claudia Pechstein’s express request, was contrary to Article 6(1) ECHR. Beyond this case, as highlighted by the recent decision of Caster Semenya to submit an application to the ECtHR, the decision opens the way for a more systematic intervention of the Strasbourg court in assessing the human rights compatibility of CAS awards and more broadly of the transnational sports regulations imposed by international sports governing bodies.

Prof. Helen Keller will discuss with us the implications of the ECtHR’s Mutu and Pechstein decision and the potential for future interventions by the court in the realm of the lex sportiva.

The webinar will take the form of an interview followed by a short Q&A open to the digital public. 

Please note the discussion will NOT be recorded and posted on our Youtube channel. 

Register HERE!


Asser International Sports Law Blog | Unpacking Doyen’s TPO Deals – Sporting Lisbon’s rebellion in the Rojo case. By Antoine Duval and Oskar van Maren

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

Unpacking Doyen’s TPO Deals – Sporting Lisbon’s rebellion in the Rojo case. By Antoine Duval and Oskar van Maren

In this blog we continue unpacking Doyen’s TPO deals based on the documents obtained via footballleaks. This time we focus on the battle between Doyen and Sporting over the Rojo case, which raises different legal issues as the FC Twente deals dealt with in our first blog.

 

I.              The context: The free-fall of Sporting

Sporting Lisbon, or Sporting Club de Portugal as the club is officially known, is a Portuguese club active in 44 different sports. Although the club has the legal status of Sociedade Anónima Desportiva, a specific form of public limited company, it also has over 130.000 club members, making it one of the biggest sports clubs in the world.

The professional football branch of Sporting is by far the most important and famous part of the club, and with its 19 league titles in total, it is a proud member of the big three cartel, with FC Porto and Benfica, dominating Portuguese football. Yet, it has not won a league title since 2002.

The members of Sporting get to elect the club’s president. A typical election campaign is akin to a political one with regard to status, media coverage and campaign funds. In fact, former Sporting president Pedro Santana Lopes went on to become the Prime Minister of Portugal in 2004-2005. In 2011, the elections were hotly disputed with Godinho Lopes defeating his main rival Bruno de Carvalho by only 300 votes. A request by De Carvalho to recount the votes was later dismissed, causing local unrests and police intervention.

Under Godinho Lopes’ presidency, Sporting obtained very poor sporting results, including a seventh place in the 2012/13 season, the worst ranking in the club’s history. New elections were held in 2013 and won by Bruno de Carvalho in a landslide. In addition to underwhelming results on the field, it turned out that the financial health of the club off the field was also at risk. Bruno de Carvalho faced a loss of €43 million in the 2012/13 season alone. This large financial debt was one of the reasons why on 1 October 2014, the General Assembly approved the proposal by the new Board of Directors to press liability charges against Godinho Lopes for breaching due diligence duties.

In the midst of the financial and managerial chaos surrounding Sporting, one dispute stands out as being relevant to our series of blogs on Doyen’s TPO deals. Faced with financial difficulties, Godinho Lopes had recourse to Doyen Sport to finance the recruitment of a number of players, amongst them Marco Rojo, an Argentine defender coming from Spartak Moscow in 2012. After two years at the club, the player was transferred against a healthy €20 million fee to Manchester United in 2014. However, the club staunchly refused to pay out the share of the economic rights owned by Doyen. Thus, giving way to a legal dispute on which we will put the spotlight in this blog. Although the case is still pending in front of CAS, several documents related to it were published on the footballleaks website.[1]

 

II.            The facts: the Rojo case

Before analysing the fine prints of the Economic Rights Participation Agreement (ERPA) between Doyen and Sporting concerning the economic rights of Rojo, a bit of background on the player and his career is needed. Marcos Rojo is an Argentine professional football player who appeared on the elite football scene at a young age. In 2009, by the age of 19, he won the Copa Libertadores with his side Estudiantes de la Plata, and in 2011, aged 21, he was a regular starter for the Argentinian national team during the Copa America. Sporting, under Godinho’s presidency, signed Rojo from Spartak Moscow for €5.43 million in July 2012.[2] In order to finance the signing of Rojo, Sporting needed fresh money, thus it turned to Doyen as a “last resort initiative”.[3] As provided by the ERPA, the Maltese investment company paid € 3 million and obtained in return 75% of Rojo’s Economic rights. The agreement includes similar provisions to the ones outlined in detail in our FC Twente blog. Notably, in the case Sporting would receive a transfer offer for Rojo of more than €8 million, Doyen could request that the club accept the offer or pay an amount equivalent to 75% of the offer to buy back the rights of the player from the fund. Moreover, in the case the club was to renew the contract of the player or failed to avoid that his contract runs out, it was bound to pay a minimum fee of €4.2 million (in case of renewal, Doyen could also chose to keep its share of the player’s economic rights).

Rojo’s outstanding 2014 World Cup (he was selected for the World Cup All-Star Team) triggered interest from English Premier League clubs, most notably Southampton and Manchester United. Both sides were keen on signing him in the summer of 2014, but Sporting president De Carvalho had no intention of selling him. According to De Carvalho, Rojo was key to the club’s ambition of becoming Portuguese champion. Sporting claimed that Doyen, via its director Nelio Lucas, was “promoting and forcing this transfer” and, thus, “violating his duty to respect Sporting’s independence in transfer related matters”.[4] De Carvalho maintained that Doyen’s influence breached then art.18bis of the FIFA RSTP. In retaliation against Doyen’s perceived influence, Sporting refused to pay to Doyen the agreed 75% share of the proceeds from the transfer of Rojo to Manchester United. Instead, it argued that Doyen had breached its contractual duties and declared the ERPA (and the guarantees attached to it) null and void. Nonetheless, the club did transfer back to Doyen the €3 million it invested at the outset. Hence, Sporting put Doyen’s contractual edifice to the test and Doyen was forced to go to court (and more precisely to the Court of Arbitration for Sport) to try to enforce its rights under the ERPA agreement.

 

III.         The showdown: The CAS as ultimate arbiter of the legality of Doyen’s TPO contracts

The ERPA signed by Doyen and Sporting contains both a clause defining Swiss law as the law applicable to the contract and the CAS as the jurisdiction competent to deal with disputes arising out of the contract.[5] Henceforth, it was mandatory for Doyen to turn to the CAS as soon as it became obvious that it would not recoup the 75% it believes it was owed on Rojo’s transfer. The dispute was finally heard by a CAS panel in June of this year and the final decision is still, as far as we know, pending (see the outstanding coverage of the issue by Tariq Panja from Bloomberg, here and here). The case is of great importance to Doyen, if the CAS finds that Doyen’s ERPA is contrary to Swiss law, this finding will most likely apply to each of Doyen’s TPO deals that are based on a similar model and dramatically weaken its contractual position. The good news for Doyen is that it probably has only relatively few ERPA’s still in place (for example FC Twente and Doyen agreed to put an end to their agreement), as the FIFA ban should have blocked it from entering into new agreements.

This case is not about former article 18bis of the FIFA RSTP, as is often misunderstood. This would come only into play if FIFA were to sanction Sporting for having had recourse to an ERPA with Doyen, an issue that might still arise and a configuration potentially already at play in the FC Twente case. The Rojo dispute between Sporting and Doyen, however, is of a purely contractual nature. It is only about whether Doyen’s TPO deals are compatible with Swiss civil law. In this regard, footballleaks has recently published a very interesting document: a confidential report by a Swiss law firm on the legality of Doyen’s Model ERPA in light of Swiss law. This report raises a number of thorny legal issues that the CAS will have to weigh on.

The ERPA between Doyen and Sporting must abide by the requirements of Swiss civil law. In general, the Swiss Civil Code is favourable to contractual autonomy, yet there are some restrictions to the freedom of the parties. To be valid, an agreement should not be contrary to the bonos mores. In other words, the moral values or ethical principles supported by the Swiss legal system. Indeed, as foreseen by Art. 20.1 of the Swiss Code of Obligations, a “contract is void if its terms are impossible, unlawful or immoral”.

The whole Rojo case in front of the CAS is likely to hang on the determination whether Doyen’s ERPA model is immoral or not from the Swiss perspective. Immorality is constituted especially if the contract introduces a serious imbalance between the obligations of the parties. The Swiss law firm mandated by Doyen doubted the signature of an ERPA would create such imbalance, simply because “both the FUND [Doyen] and the Club have rights and obligations according to the Agreement”.[6] This falls a bit short. As we have seen, Doyen uses the leverage offered by the financial difficulties of clubs (FC Twente or Sporting) to impose very harsh contractual conditions and high interest rates. This harshness is clearly acknowledged in the ERPA. For example, clause 10.6 indicates that Sporting “is conscious of the harshness and the severity of the consequences of clauses 10.4 and 10.5”. Whether the embedded contractual imbalance in the ERPA is sufficient to be deemed immoral under Swiss law is for the CAS to decide, but it is not a possibility that should be discarded lightly. Moreover, this potential immorality is also supported by the willingness of FIFA to ban TPO as it points at the conflicts of interest and integrity risks arising out of its use.

The ERPA could also be contrary to art. 27.2 of the Swiss Civil Code, which provides that: “No person may surrender his or her freedom or restrict the use of it to a degree which violates the law or public morals”. According to the Swiss law firm contracted by Doyen, this is especially the case if a legal entity’s “economic freedom is restricted in such a way that its economic existence is in danger”.[7] It also argued that, “the undertakings of the Club cannot in principle be considered excessive”, as “there is no obvious disparity between the considerations of the Parties”.[8] Here again, the arguments provided by Doyen’s law firm are feeble at best. In fact, the contractual imbalance is openly acknowledged in Doyen’s own contract. The economic freedom of Sporting (or FC Twente for that matter) is so drastically reduced that a club is forced into selling its best players at Doyen’s will.[9] Those players are at the heart of the “economic existence” of a club. In fact, the fate of FC Twente illustrates how the loss of its best players led to the club facing financial and sporting bankruptcy.

Finally, Sporting is also likely to have argued that Doyen was in breach of its contractual duties. Clause 14 of the ERPA stipulates that Doyen “recognizes that the Club is an independent entity in so far as the Club’s employment and transfer-related matters are concerned and [Doyen] shall not, either though this Agreement or otherwise, seek to exert influence over these matters […]”. The Club claimed in its termination letter of the ERPA that “Doyen has seriously and irremediably violated its obligations of non-influence in Sporting transfer policy […] which constitutes a material breach of the agreement”. Swiss contract law may entail the right for Sporting to refuse to execute its part of the deal in case of breach of contract by Doyen. In that regard, Sporting would have had to factually demonstrate the faulty character of Doyen’s intervention in Rojo’s transfer.

It is certainly not a given that the CAS will consider Doyen’s ERPA contrary to Swiss law or for Doyen to be in breach of its contractual duties, but there are credible legal arguments that point in both directions. Surely, the hubris of the management of Sporting and FC Twente is chiefly responsible for the terrible deals closed with Doyen. Yet, Doyen leveraged their dire financial situations and irrational ambitions to strong-arm them into one-sided agreements that are imposing unfair terms on the clubs. Doyen takes on very little risk: If a player fails to become a star, the fund will recoup its investment plus very reasonable interests (unless the club is bankrupt); if a player breaks through, it will pocket the jackpot. The fund is a true vulture fund geared to the football industry. It buys under-priced assets (economic rights attached to players) in fire sales and hopes for a huge profit.

We will hear soon from the CAS whether it deems this practice legal under Swiss law. In any event, FIFA has decided to ban TPO outright, raising the opposite question of the compatibility of the ban with EU law. This will be the subject of our final blog.

 


[1] The documents used, especially the ERPA applicable to Rojo and the termination letter send out by Sporting, might be blocked or unavailable due to complaints lodged by Doyen. They are on file with the authors.

[2] http://www.transfermarkt.nl/marcos-rojo/profil/spieler/93176.

[3] Rojo ERPA, 23 August 2012, p.2.

[4] Letter of termination of the ERPA, 14 August 2014, para.15. See also paras 17-20.

[5] Rojo ERPA, 23 August 2012, clause 22 and 23.

[6] FRORIEP, ‘Memorandum on certain questions of Swiss law in relation to a draft ERPA’, para.16.

[7] Ibid, para.23.

[8] Ibid, para.25.

[9] Doyen could not ignore the fact that those clubs were in such financial difficulties, that they would be unable to pay on their own the share of a transfer offer above the agreed amount and thus retain their player.

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