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

Call for papers: Annual International Sports Law Conference of the International Sports Law Journal - 25 & 26 October - Asser Institute, The Hague

 Call for papers: Annual International Sports Law Conference of the International Sports Law Journal

Asser Institute, The Hague

25 and 26 October 2018

The editorial board of the International Sports Law Journal (ISLJ) is inviting you to submit abstracts for its second ISLJ Annual Conference on International Sports Law, which will take place on 25 and 26 October at the Asser Institute in The Hague. The ISLJ published by Springer in collaboration with Asser Press is the leading academic publication in the field of international sports law. Its readership includes academics and many practitioners active in the field. This call is open to researchers as well as practitioners. 

We are also delighted to announce that Prof. Franck Latty (Université Paris Nanterre), Prof. Margareta Baddeley (Université de Genève), and Silvia Schenk (member of FIFA’s Human Rights Advisory Board) have confirmed their participation as keynote speakers.

Abstracts could, for example, tackle questions linked to the following international sports law subjects:

  • The interaction between EU law and sport
  • Antitrust and sports regulation
  • International sports arbitration (CAS, BAT, etc.)
  • The functioning of the world anti-doping system (WADA, WADC, etc.)
  • The global governance of sports
  • The regulation of mega sporting events (Olympics, FIFA World Cup, etc.)
  • The transnational regulation of football (e.g. the operation of the FIFA Regulations on the Status and Transfer of Players or the UEFA Financial Fair Play Regulations)
  • The global fight against corruption in sport  
  • Comparative sports law
  • Human rights in sport 

Please send your abstract (no more than 300 words) and CV no later than 30 April 2018 to a.duval@asser.nl. Selected speakers will be informed by 15 May.

The selected participants will be expected to submit a draft paper by 1 September 2018. All papers presented at the conference are eligible for publication in a special edition of the ISLJ.  To be considered for inclusion in the conference edition of the journal, the final draft must be submitted for review by 15 December 2018.  Submissions after this date will be considered for publication in later editions of the Journal.

The Asser Institute will cover one night accommodation for the speakers and will provide a limited amount of travel grants (max. 300€). If you wish to be considered for a grant please justify your request in your submission. 

Stepping Outside the New York Convention - Practical Lessons on the Indirect Enforcement of CAS-Awards in Football Matters - By Etienne Gard

Editor’s Note: Etienne Gard graduated from the University of Zurich and from King's College London. He currently manages a project in the field of digitalization with Bratschi Ltd., a major Swiss law firm where he did his traineeship with a focus in international commercial arbitration.

1. Prelude

On the 10th of June, 1958, the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, widely known as the “New York Convention”, was signed in New York by 10 countries.[1] This rather shy figure progressively grew over the decades to now reach 157 signatory countries, turning the New York Convention into the global recognition and enforcement instrument it is today. As V.V. Veeder’s puts it, “One English law lord is said to have said, extra judicially, that the New York Convention is both the Best Thing since sliced bread and also whatever was the Best Thing before sliced bread replaced it as the Best Thing.”[2]

However, among the overall appraisal regarding the New York Convention, some criticisms have been expressed. For instance, some states use their public policy rather as a pretext not to enforce an award than an actual ground for refusal.[3]  A further issue is the recurring bias in favor of local companies.[4] Additionally, recognition and enforcement procedures in application of the New York Convention take place in front of State authorities, for the most part in front of courts of law, according to national proceeding rules. This usually leads to the retaining of a local law firm, the translation of several documents, written submissions and one, if not several hearings. Hence, the efficiency of the New York Convention as a recognition and enforcement mechanism comes to the expense of both money and time of both parties of the arbitral procedure.

In contrast with the field of commercial arbitration, where the New York Convention is often considered the only viable option in order to enforce an award, international football organizations, together with the Court of Arbitration for Sport (“CAS”), offer an effective enforcement alternative. This article aims at outlining the main features of the indirect enforcement of CAS awards in football matters in light of a recent case. More...



The International Partnership against Corruption in Sport (IPACS) and the quest for good governance: Of brave men and rotting fish - By Thomas Kruessmann

Editor's note: Prof. Thomas Kruessmann is key expert in the EU Technical Assistant Project "Strengthening Teaching and Research Capacity at ADA University" in Baku (Azerbaijan). At the same time, he is co-ordinator of the Jean-Monnet Network "Developing European Studies in the Caucasus" with Skytte Institute of Political Studies at the University of Tartu (Estonia).


The notion that “fish rots from the head down” is known to many cultures and serves as a practical reminder on what is at stake in the current wave of anti-corruption / integrity and good governance initiatives. The purpose of this blog post is to provide a short update on the recent founding of the International Partnership against Corruption in Sport (IPACS), intermittently known as the International Sports Integrity Partnership (IPAS), and to propose some critical perspectives from a legal scholar’s point of view.

During the past couple of years, the sports world has seen a never-ending wave of corruption allegations, often followed by revelations, incriminations and new allegation. There are ongoing investigations, most notably in the United States where the U.S. Department of Justice has just recently intensified its probe into corruption at the major sports governing bodies (SGBs). By all accounts, we are witnessing only the tip of the iceberg. And after ten years of debate and half-hearted reforms, there is the widespread notion, as expressed by the Council of Europe’s (CoE’s) Parliamentary Assembly (PACE) Resolution 2199/2018 that “the sports movement cannot be left to resolve its failures alone”. More...



International and European Sports Law – Monthly Report – January 2018 - By Tomáš Grell

Editor's note: This report compiles all relevant news, events and materials on International and European Sports Law based on the daily coverage provided on our twitter feed @Sportslaw_asser. You are invited to complete this survey via the comments section below, feel free to add links to important cases, documents and articles we might have overlooked. 


The Headlines 

Anti-doping whereabouts requirements declared compatible with the athletes' right to privacy and family life

On 18 January 2018, the European Court of Human Rights rendered a judgment with important consequences for the world of sport in general and the anti-doping regime in particular. The Strasbourg-based court was called upon to decide whether the anti-doping whereabouts system – which requires that a limited number of top elite athletes provide their National Anti-Doping Organisation or International Federation with regular information about their location, including identifying for each day one specific 60-minute time slot where the athlete will be available for testing at a pre-determined location – is compatible with the athletes' right to private and family life under Article 8 of the European Convention on Human Rights and their freedom of movement pursuant to Article 2 Protocol No. 4 of the Convention. The case was brought by the French cyclist Jeannie Longo and five French athlete unions that had filed their application on behalf of 99 professional handball, football, rugby, and basketball players.

While acknowledging that the whereabouts requirements clash with the athletes' right to private and family life, the judges took the view that such a restriction is necessary in order to protect the health of athletes and ensure a level playing field in sports competitions. They held that ''the reduction or removal of the relevant obligations would lead to an increase in the dangers of doping for the health of sports professionals and of all those who practise sports, and would be at odds with the European and international consensus on the need for unannounced testing as part of doping control''. Accordingly, the judges found no violation of Article 8 of the Convention and, in a similar vein, ruled that Article 2 Protocol No. 4 of the Convention was not applicable to the case.

 

Football stakeholders preparing to crack down on agents' excessive fees

It has been a record-breaking January transfer window with Premier League clubs having spent an eye-watering £430 million on signing new acquisitions. These spiralling transfer fees enable football agents, nowadays also called intermediaries, to charge impressive sums for their services. However, this might soon no longer be the case as the main stakeholders in European football are preparing to take action. UEFA, FIFPro, the European Club Association and the European Professional Football Leagues acknowledge in their joint resolution that the 2015 FIFA Regulations on Working with Intermediaries failed to address serious concerns in relation to the activities of intermediaries/agents. They recognise in broad terms that a more effective regulatory framework is needed and call among other things for a reasonable and proportionate cap on fees for intermediaries/agents, enhanced transparency and accountability, or stronger provisions to protect minors.

 

The CAS award in Joseph Odartei Lamptey v. FIFA 

On 15 January 2018, FIFA published on its website an arbitral award delivered on 4 August 2017 by the Court of Arbitration for Sport (CAS) in the dispute between the Ghanian football referee Joseph Odartei Lamptey and FIFA. The CAS sided with FIFA and dismissed the appeal filed by Mr Lamptey against an earlier decision of the FIFA Appeal Committee which (i) found him to have violated Article 69(1) of the FIFA Disciplinary Code as he unlawfully influenced the 2018 World Cup qualifying match between South Africa and Senegal that took place on 12 November 2016; (ii) as a consequence, banned him for life from taking part in any football-related activity; and (iii) ordered the match in question to be replayed. In reaching its conclusion, the CAS relied heavily on multiple reports of irregular betting activities that significantly deviated from usual market developments.  More...


Towards a Suitable Policy Framework for Cricket Betting in India - By Deeksha Malik

Editor's note: Deeksha Malik is a final-year student at National Law Institute University, India. Her main interest areas are corporate law, arbitration, and sports law. She can be reached at dkshmalik726@gmail.com.


In 2015, while interrogating cricketer Sreesanth and others accused in the IPL match-fixing case, Justice Neena Bansal, sitting as Additional Sessions Judge, made the following observations as regards betting on cricket matches.

“Cricket as a game of skill requires hand-eye-coordination for throwing, catching and hitting. It requires microscopic levels of precision and mental alertness for batsmen to find gaps or for bowlers to produce variety of styles of deliveries’ (medium pace, fast, inswing, outswing, offspin, legspin, googly). The sport requires strategic masterminds that can select the most efficient fielding positions for piling pressure on the batsmen. Based on above description, cricket cannot be described anything, but as a game of skill.”

The debate on the issue of betting in sports has since resurfaced and gained the attention of sportspersons, media, sports bodies, policymakers, and the general public. In April 2017, the Supreme Court bench comprising of Justices Dipak Misra and AM Khanwilkar agreed to hear a public interest litigation (PIL) seeking an order directing the government to come up with an appropriate framework for regulating betting in sports. The arguments put forth in the PIL present various dimensions. One of these pertains to economic considerations, a submission that regulated betting would be able to generate annual revenue of Rs. 12,000 crores by bringing the earnings therefrom within the tax net. As for policy considerations, it was submitted that a proper regulation in this area would enable the government to distinguish harmless betting from activities that impair the integrity of the game such as match-fixing. Further, betting on cricket matches largely depends on the skill of the concerned players, thereby distinguishing it from pure chance-based activities.

The issue of sports betting witnesses a divided opinion till this day. This is understandable, for both sides to the issue have equally pressing arguments. Aside from its regulation being a daunting task for authorities, sports betting is susceptible to corruption and other unscrupulous activities. At the same time, it is argued that it would be better for both the game and the economy if the same is legalised. More...


International and European Sports Law – Monthly Report – December 2017. By Tomáš Grell

Editor's note: This report compiles all relevant news, events and materials on International and European Sports Law based on the daily coverage provided on our twitter feed @Sportslaw_asser. You are invited to complete this survey via the comments section below, feel free to add links to important cases, documents and articles we might have overlooked.

 

The Headlines 

The International Skating Union's eligibility rules declared incompatible with EU competition law

On 8 December 2017, the European Commission announced that it had rendered a decision in the case against the International Skating Union (ISU). The Commission upheld the complaint lodged in October 2015 by two Dutch professional speed skaters Mark Tuitert and Niels Kerstholt, represented in this case by Ben Van Rompuy and Antoine Duval (you can read their joint statement here), and ruled that the ISU's eligibility rules preventing athletes from participating in speed skating competitions not approved by the ISU under the threat of severe penalties are in violation of EU competition law. In particular, the Commission held that these rules restrict the commercial freedom of (i) athletes who may be deprived of additional source of income as they are not allowed to participate in speed skating competitions other than those authorised by the ISU; and (ii) independent organisers who are unable to attract top athletes. And while the Commission recognised that sporting rules with restrictive effects might be compatible with EU law if they pursue a legitimate objective such as the protection of athletes' health and safety or the protection of the integrity and proper conduct of sport, it found that the ISU's eligibility rules pursue only its own commercial interests to the detriment of athletes and independent organisers of speed skating competitions. The ISU eventually escaped financial sanctions, but it must modify or abolish its eligibility rules within 90 days; otherwise it would be liable for non-compliance payments of up to 5% of its average daily turnover. For more information on this topic, we invite you to read our recent blog written by Professor Stefano Bastianon.

 

The International Olympic Committee bans Russia from the upcoming Winter Olympic Games

The world has been waiting impatiently for the International Olympic Committee's (IOC) decision on the participation of Russian athletes in the upcoming 2018 Winter Olympic Games in Pyeongchang. This was finally communicated on 5 December 2017. Having deliberated on the findings of the Schmid Commission, the IOC Executive Board decided to suspend the Russian Olympic Committee with immediate effect, meaning that only those Russian athletes who demonstrate that they had not benefited from the state-sponsored doping programme will be able to participate in the Games. Such clean athletes will be allowed to compete under the Olympic Flag, bearing the name 'Olympic Athlete from Russia (OAR)' on their uniforms. Further to this, the IOC Executive Board sanctioned several officials implicated in the manipulation of the anti-doping system in Russia, including Mr Vitaly Mutko, currently the Deputy Prime Minister of Russia and formerly the Minister of Sport. Mounting public pressure subsequently forced Mr Mutko to step down as head of the Local Organising Committee for the 2018 FIFA World Cup.

Meanwhile, 21 individual Russian athletes were sanctioned (see here, here, here, and here) in December (in addition to 22 athletes in November) by the IOC Oswald Commission that is tasked with investigating the alleged doping violations by Russian athletes at the 2014 Winter Olympic Games in Sochi. The Oswald Commission also published two full decisions in the cases against Evgeny Belov and Aleksandr Tretiakov who were both banned from all future editions of the Games. It is now clear that the Court of Arbitration for Sport will have quite some work in the coming weeks as the banned athletes are turning to this Swiss-based arbitral tribunal to have their sanctions reviewed (see here and here).

 

Universal Declaration of Player Rights

14 December 2017 was a great day for athletes all over the globe. On this day, representatives of the world's leading player associations met in Washington D.C. to unveil the Universal Declaration of Player Rights, a landmark document developed under the aegis of the World Players Association that strives to protect athletes from ongoing and systemic human rights violations in global sport. The World Players Association's Executive Director Brendan Schwab emphasised that the current system of sports governance ''lacks legitimacy and fails to protect the very people who sit at the heart of sport'' and stated that ''athlete rights can no longer be ignored''. Among other rights, the Declaration recognises the right of athletes to equality of opportunity, fair and just working conditions, privacy and the protection of personal data, due process, or effective remedy.

 

Chris Froome failed a doping test during the last year's Vuelta a España

The world of cycling suffered yet another blow when it transpired that one of its superstars Chris Froome had failed a doping test during the last year's Vuelta a España, a race he had eventually emerged victorious from for the first time in his career. His urine sample collected on 7 September 2017 contained twice the amount of salbutamol, a medication used to treat asthma, than permissible under the World Anti-Doping Agency's 2017 Prohibited List. Kenyan-born Froome has now hired a team of medical and legal experts to put forward a convincing explanation for the abnormal levels of salbutamol in his urine and thus to avoid sanctions being imposed on him. More...

The ISU Commission's Decision and the Slippery Side of Eligibility Rules - By Stefano Bastianon (University of Bergamo)

Editor’s note: Stefano Bastianon is Associate Professor in European Law at the University of Bergamo and lawyer admitted to the Busto Arsizio bar. He is also member of the IVth Division of the High Court of Sport Justice (Collegio di Garanzia dello sport) at the National Olympic Committee.

1. From the very beginning, the outcome of the ISU case was highly predictable, at least for those who are familiar with the basics of antitrust law. Nevertheless, more than twenty years after the Bosman judgment, the sports sector has shown the same shortsightedness and inability to see the forest for the trees. Even this attitude was highly predictable, at least for those who know the basics of sports governance. The final result is a clear-cut decision capable of influencing the entire sports movement. More...



Human Rights as Selection Criteria in Bidding Regulations for Mega-Sporting Events – Part II: FIFA and Comparative Overview – By Tomáš Grell

The first part of this two-part blog examined the new bidding regulations adopted by the IOC and UEFA, and concluded that it is the latter who gives more weight to human rights in its host selection process. This second part completes the picture by looking at FIFA's bidding regulations for the 2026 World Cup. It goes on to discuss whether human rights now constitute a material factor in evaluating bids to host the mega-sporting events organised by these three sports governing bodies. More...

Human Rights as Selection Criteria in Bidding Regulations for Mega-Sporting Events – Part I: IOC and UEFA – By Tomáš Grell

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


It has been more than seven years since the FIFA Executive Committee awarded the 2022 World Cup to Qatar. And yet only in November 2017 did the Qatari government finally agree to dismantle the controversial kafala system, described by many as modern-day slavery. Meanwhile, hundreds of World Cup-related migrant workers have reportedly been exposed to a wide range of abusive practices such as false promises about the pay, passport confiscation, or appalling working and living conditions.[1] On top of that, some workers have paid the highest price – their life. To a certain extent, all this could have been avoided if human rights had been taken into account when evaluating the Qatari bid to host the tournament. In such a case, Qatar would not have won the bidding contest without providing a convincing explanation of how it intends to ensure that the country's poor human rights record will not affect individuals, including migrant workers, contributing to the delivery of the World Cup. An explicit commitment to abolish the kafala system could have formed an integral part of the bid.

Urged by Professor John Ruggie and his authoritative recommendations,[2] in October 2017 FIFA decided to include human rights within the criteria for evaluating bids to host the 2026 World Cup, following similar steps taken earlier this year by the International Olympic Committee (IOC) and UEFA in the context of the Olympic Winter Games 2026 and the Euro 2024 respectively. This two-part blog critically examines the role human rights play in the new bidding regulations adopted by the IOC, UEFA, and FIFA. The first part sheds light on the IOC and UEFA. The second part then takes a closer look at FIFA and aims to use a comparative analysis to determine whether the new bidding regulations are robust enough to ensure that selected candidates abide by international human rights standards.More...


International and European Sports Law – Monthly Report – November 2017. By Tomáš Grell

Editor's note: This report compiles all relevant news, events and materials on International and European Sports Law based on the daily coverage provided on our twitter feed @Sportslaw_asser. You are invited to complete this survey via the comments section below, feel free to add links to important cases, documents and articles we might have overlooked.

 

The Headlines

FIFA and FIFPro sign landmark agreement

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

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

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

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

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

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

Asser International Sports Law Blog | Unpacking Doyen’s TPO Deals: TPO and Spanish football, friends with(out) benefits?

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: TPO and Spanish football, friends with(out) benefits?

Update: On 14 April footballleaks released a series of documents concerning Sporting de Gijón. Therefore, I have updated this blog on 19 April to take into account the new information provided.  

Doyen Sports’ TPO (or TPI) model has been touted as a “viable alternative source of finance much needed by the large majority of football clubs in Europe". These are the words of Doyen’s CEO, Nélio Lucas, during a debate on (the prohibition of) TPO held at the European Parliament in Brussels last January. During that same debate, La Liga’s president, Javier Tebas, contended that professional football clubs, as private undertakings, should have the right to obtain funding by private investors to, among other reasons, “pay off the club’s debts or to compete better”. Indeed, defendants of the TPO model continuously argue that third party investors, such as Doyen, only have the clubs’ best interests in mind, being the only ones capable and willing to prevent professional football clubs from going bankrupt. This claim constitutes an important argument for the defendants of the TPO model, such as La Liga and La Liga Portuguesa, who have jointly submitted a complaint in front of the European Commission against FIFA’s ban of the practice.[1]

The eruption of footballleaks provided the essential material necessary to test this claim. It allows us to better analyse and understand the functioning of third party investment and the consequences for clubs who use these services. The leaked contracts between Doyen and, for example, FC Twente, showed that the club’s short term financial boost came at the expense of its long-term financial stability. If a club is incapable of transferring players for at least the minimum price set in Doyen’s contracts, it will find itself in a financially more precarious situation than before signing the Economic Rights Participation Agreement (ERPA). TPO might have made FC Twente more competitive in the short run, in the long run it pushed the club (very) close to bankruptcy.

More than four months after its launch, footballleaks continues to publish documents from the football world, most notably Doyen’s ERPAs involving Spanish clubs. For this blog, our dataset will cover the two ERPAs between Doyen and Sporting de Gijón (found here and here); the ERPAs between Doyen and Sevilla FC for Kondogbia and Babá; the ERPAs between Doyen and Getafe for Abdelazziz Barreda and Pedro León; the ERPA between Doyen and Granada CF for Luís Martins; the ERPA between Doyen and Atlético Madrid for Josuha Guilavogui; and the ERPA between Doyen and Valencia CF for Dorlan Pabón.

The first part of this blog will provide background information on the recent economic history of Spanish football. The posterior in-depth analysis of the ERPAs will thus be placed in context. The blog will also include a table with the relevant facts from the ERPAs completed with the information included in an Excel document showing a map of deals and transactions allegedly conducted by Doyen and recently published on footballleaks. Relevant facts and figures that are not found in the ERPAs or in the Excel document, will be taken from the website www.transfermarkt.de. Based on the outcome of the analysis, we will attempt to conclude whether, and to what extent, the ERPAs have been profitable for the clubs involved, from a financial and competitive perspective.

 

Financial misery and TV rights inequality off the field

The financial misery

Spain was one of the countries most affected by the global financial crisis that commenced in 2008. The unemployment rate was above 25% for a long period of time and its budget deficit was about 10% from 2008 to 2012. The (professional) football sector also suffered from this general financial crisis. A study on the financial situation of Spanish clubs during the period 2007-2011 shows that by June 2011, 80% of La Liga clubs had a negative working capital. This meant that the clubs’ short term assets were not enough to cover the short term debts. The study further explains that the main reason for the financial difficulties is the excess of expenditures on players, i.e. paying transfer fees and salaries that clubs cannot afford. Not surprisingly, by 2011, half of the clubs from the Spanish first and second division had entered bankruptcy proceedings. A large part of the total debt was owed to the Spanish public authorities. In 2012, clubs in Spain's top two divisions collectively owed some €750 million to the tax authorities and another €600 million to the social security system. One of the teams who signed ERPAs with Doyen, Atlético Madrid, was known to have a tax debt which accounted for a fifth of the entire league’s tax debt. In fact, their tax debt of over €120 million amounted to over 60% of their annual revenue. Almost 40% of the clubs in the top two divisions presented negative equity, meaning that they were in clear need for funds from other parties. The general economic crisis prevented clubs to get these funds through normal means, like shareholders, members, sponsorships and bank loans. Local authorities were many times willing to aid their clubs. For example, the municipality of Gijón had rescued Sporting de Gijón by relocating its youth training facilities and subsequently buying the facilities for €12 million. Another example is that of Valencia CF. In its ambition to grow, the club decided to build a new stadium. The idea was to finance the new stadium by selling the old stadium. Once again, due to the financial crisis, and particularly the collapse of the housing market, it suddenly was incapable of selling the old stadium for the required price. The construction on the new stadium had already commenced with loaned money which could not be paid back. The municipality’s decision to place a State guarantee on this loan has been the subject of a formal State aid investigation by the European Commission.

 

TV Rights income inequality

One of the most important ways to generate income for professional football clubs is through the selling of TV rights. The Spanish clubs combined generated roughly €700 million per year from the selling of TV rights between 2010 and 2015.[2] This is slightly more than the €628 million the German Bundesliga was making per year between 2013 and 2016, but less than €940 million the Italian league was making in the 2012-13 season. The English Premier League is in a league of its own in this regard, which is making about €1.2 billion per year from the 2013-14 season onwards.[3]

Notwithstanding the total €700 million a year, most Spanish clubs do not derive enough money from selling the TV rights to compensate their losses. One has to keep in mind that where the clubs of Europe’s other major football leagues (e.g. England, Germany, France and Italy) were selling their TV rights jointly, Spanish clubs were still selling their TV rights individually. By means of the individual selling system, Spain’s two most popular clubs, Real Madrid and FC Barcelona, were capable of selling their TV rights for much more money than the other clubs. In the 2010/11 season for example, out of the €641 million generated in total, FC Barcelona got €163 million, whereas Real Madrid got €156 million. The remaining 16 clubs of La Liga had to share the remaining €322 million, which is slightly more than €20 million per club on average. By contrast, the ‘smaller clubs’ of the English Premier League were still making at least €49 million in that same season, which is two-and-a-half times as much as their Spanish counterparts.[4] Even the club that was earning least money in Italy in 2012, Pescara, was earning more per year from the selling of TV rights than the average Spanish club (€25 million).

Calls for a fairer distribution of TV rights income in Spain have been heard for years, particularly from the smaller clubs, but the switch to a joint selling system will only take place as of the start of the 2016-17 season. It is believed that continuous lobbying by Real Madrid and FC Barcelona against the joint selling system is the main reason for this delay. In a way, it could be argued that apart from reckless risks on the transfer market and the effects of the Spanish financial crisis, the dominant position of Real Madrid and FC Barcelona is what led to many Spanish clubs being in severe financial difficulties. The urge of these clubs to turn to investment companies like Doyen becomes more understandable, given that the system itself did not allow them from obtaining funds from other ‘normal’ sources.    

 

The ERPA’s and its aftermaths explained

On the day of writing this blog (12 April 2016), nine ERPAs between Doyen and Spanish football clubs were published on the website of footballleaks. The ERPAs are divided in two groups: Firstly, the ERPAs that proved to be successful for both the club and Doyen are analysed; the second part combines all the ERPAs in which the players concerned were either not sold for high enough profit, or not transferred at all. As will be shown, these ERPAs had mostly negative financial consequences for the clubs.

 

The successful ERPAS: Kondogbia and Barrada

Sevilla’s recent sporting successes, most notably winning the Europa League four times since 2006, are said to have been the result of a high level youth academy combined with an excellent scouting network. However, it has never been a secret that Sevilla made use of the services provided by Doyen, including the signing of ERPAs. In a well-publicised seminar on TPO that took place in April 2015, Sevilla defended the TPO model and made clear that it was against an outright ban of the practice. The ERPA concerning Geoffrey Kondogbia and his subsequent transfer to AS Monaco can explain why Sevilla is in favour of the TPO model. Kondogbia was transferred from RC Lens to Sevilla on the same date as the signing of the ERPA (26 July 2012) for €3 million. With the objective of obtaining 100% of the Economic rights, Doyen paid RC Lens the full amount of the transfer fee. In turn, Sevilla would buy from Doyen 50% of the economic rights for €1.65 million. Even though the minimum transfer fee was set by the parties at €6 million, Kondogbia was sold only one year later to AS Monaco for a staggering €20 million. An excellent deal for Doyen, which registered a profit of €7.89 million.[5] This ERPA is an example of a collaboration between a club and an investment fund, which has been highly profitable for both. With the “help” of Doyen, Sevilla managed to sign a young player and sell him for a profit not long after. However, as can be seen below, even Sevilla has signed ERPAs that have not been very beneficial for the club.

 

A second “successful ERPA” signed between Doyen and a Spanish club was the ERPA between Doyen and Getafe for Barrada. Similar to many other ERPAs, it stipulated that Getafe was not able to obtain financial support from the banking system due “to the current financial crisis”. Therefore, Getafe decided to sell 60% of the economic rights of one of its most promising young players for €1.5 million to Doyen. Both parties agreed that the minimum transfer value of Barrada was €5 million. Consequently, as can be deducted under paragraph 7 of the ERPA, Doyen’s minimum return would always be at least €3 million (60% of €5 million), guaranteeing Doyen a profit of €1.5 million (€3 million minimum return minus €1.5 million grant fee). The minimum return was easily surpassed after Barrada was transferred to Al-Jazira for €8.5 million in 2013. In accordance with Doyen’s own figures, the investment fund obtained €3.35 million for this transfer, a profit of 223%.[6]

 

The many “failed” ERPAs

Atlético Madrid was no novice to the practice of TPO when it sold 50% of Joshua Guivalogui’s economic rights for €5 million to Doyen. As can be seen from the ‘Map of Deals’, Atlético had previously sold 33% of the economic rights of the highly successful Atlético player, Falcao, to Doyen for €10 million. His later transfer to AS Monaco for €43 million was probably also economically beneficial for Atlético. Guivalogui, however, has been less successful wearing an Atlético shirt. He has played seven games in total for the club in two-and-a-half years, having been loaned to St-Étienne for the 2013-14 season, and to VfL Wolfsburg for the 2014-15 and 2015-16 seasons. If Wolfsburg decides to lift the option it has to buy Guivalogui for €4 million[7], Atlético Madrid will probably need to pay an additional amount to Doyen in order to reach the agreed minimum fee of €6.5 million.[8]

As regards Sevilla FC, where the ERPA concerning Kondogbia can be seen as “successful”, Babá’s ERPA tells a completely different story. Sevilla sold 20% of Babá’s economic rights for €660.000 to Doyen in 2012. Nonetheless, Babá never managed to secure a spot in the Sevilla squad and he was loaned out to Getafe and Levante between 2013 and 2015. After his contract expired with Sevilla in the summer of 2015, he moved back to his former club Marítimo as a free agent. Although Sevilla did not receive a fee for this transfer, Doyen still obtained a guaranteed profit of €148.000, as can be seen from the ‘map of deals’.

The Guivalogui ERPA and the Babá ERPA tell a similar story. Both players did not fulfil the expectations the clubs had of them at the moment Doyen bought parts of their economic rights. As a result, they were transferred, or are going to be transferred, for an amount well below the agreed minimum return. A similar run of events occurred with Luís Martins and Dorlan Pabon. Both players were not successful at Granada and Valencia respectively, and were transferred at a loss for the club. The exact figures of the transfers can be found in the table below.

The ERPA’s signed between Doyen and Sporting de Gijón are particularly interesting in terms of “failure”, because they illustrate perfectly the desperate situation the club found itself in. Sporting has been on the verge of disappearing not once, but several times in the last 10 to 15 years. In 2005, its total debt amounted to €51 million, with more than half owed to the public authorities. As a result, the club entered bankruptcy proceedings. In 2007, a settlement was reached between the club and its creditors. Even though the club still had a debt of €35.8 million, a Spanish court decided to terminate the bankruptcy proceedings. By the second half of 2011, the club presented a positive balance sheet at the shareholders’ general assembly for a fifth year in a row, but in reality Sporting was still acute financial difficulties, as the club would admit later on. It is this acute need for money that made the club turned to Doyen twice in less than a year. The fact that Sporting de Gijón is still alive today (albeit in danger of relegating to the second division), makes one wonder whether the ERPA with Doyen actually aided the club in its fight for survival or whether it worsened the situation in a similar way as FC Twente’s.

The first agreement concerns the purchase for €2 million of part of the economic rights of nine players who, at the time of signing, were registered as Sporting players.[9] Future transfers of one or more of these players would need to generate a profit of €7 million for Doyen.[10] The lifespan of the first agreement was not very long, as it was replaced by a second ERPA on 22 March 2012. Indeed, Sporting de Gijón stated officially on 23 February 2016 that the first ERPA never deployed any legal effects.

The first ERPA and the second ERPA between Doyen and Sporting show some clear similarities. For an amount of €2 million, Doyen buys 25% of the economic rights of all the players of both the first team and Sporting B (the second team).[11] This percentage remains 25% until Doyen obtains an amount of €7 million from the transfers of Sporting players to other clubs. Once this amount is reached, the percentage will be reduced to 15% until a further €3 million is earned by Doyen. Therefore, the minimum return Doyen should get is that of €10 million. Should Doyen not have received €7 million or more by 31 January 2015, the percentage of the economic rights owned by Doyen of all the Sporting and Sporting B players will be increased to 35%. Doyen's share of the economic rights would also increase to 35% if the club relegates from the first division (clause 2.5). A further important element of the ERPA is clause 4.1, by which Sporting names Doyen as the exclusive agent (intermediary) of the club for all transfer and loan operations of Sporting players. 

By using the ‘map of deals’ and transfermarkt, we have listed all Sporting and Sporting B players sold after March 2012. These players were:

-          Davud Barral – sold for €2 million to Orduspor on 5 July 2012;

-          Alberto Botía – sold for €3 million to Sevilla FC on 11 August 2012;

-          Miguel de las Cuevas – sold for €1.2 million to CA Osasuna on 1 July 2013;

-          Óscar Guido Trejo – sold for €2.7 million to FC Toulouse on 19 July 2013;

-          Borja López - sold for €2.2 million to AS Monaco on 2 August 2013;

-          Stefan Scepovic - sold for €2.56 million to Celtic FC on 1 September 2014.

A closer look at the ‘map of deals’ shows one important discrepancy compared to the ERPA of 22 March 2012. The share of economic rights owned by Doyen were not 25% (as stipulated in the ERPA), but 45%. Thanks to footballleaks' release of the so-called 'Escritura de Liquidación' on 14 April we now know what caused this increase. Firstly, in accordance with clause 2.5 of the ERPA, the economic rights owned by Doyen of all the Sporting players (except Botía and De las Cuevas) increased to 35%, since Sporting relegated to the second division in May 2012. Secondly, being an intermediary in all of these transfers, Doyen was entitled to an additional 10% of all the income generated from the transfers.[12] The ‘map of deals’ shows that the transfers of Sporting players has so far led to Doyen receiving more than €3.5 million, a profit of about €1.5 million for their €2 million investment. Nonetheless, this figure is still well short of the minimum return Doyen expects to get of €10 million. In other words, should the ERPA still be in force, Sporting is still required to sell more players if it is to meet its obligations towards Doyen.

Table summarizing the analysed ERPA’s signed between Doyen and Spanish clubs


Conclusion

The reason that many Spanish clubs decided to sell economic rights of players to companies like Doyen from about 2011 to 2015 (the year FIFA banned the practice) is relatively straightforward: The financial crisis was heavily felt in Spanish football, with many clubs incapable of paying off high debts owed to the public authorities. Moreover, the difference between the financial and competitive power of Real Madrid and FC Barcelona on the one hand, and all the other clubs on the other was only getting bigger. Not only did competing at national level become close to impossible, even smaller clubs from England were generating more than twice the revenues of Spanish clubs. The chances of being successful at European level were at risk.

Doyen was basically at the right place, at the right time. The ‘small’ Spanish clubs were in desperate need for money, either to compete or simply to survive, and Doyen was willing to give them this money in return for (part of) the economic rights of their football players. From the outside, it looks like a perfect match between club and investment fund. However, was TPO profitable for Spanish football clubs from a competitive and financial perspective?

From a financial perspective, the business is clearly lucrative for Doyen. As can be seen in the table, by investing €19.335 million it so far made a profit of €15.757 million.[13] In other words, an 81.5% profit! The same cannot be said for the clubs. Only the transfers of Barrada from Getafe to Al-Jazira and Kondogbia from Sevilla to AS Monaco were profitable. For all the other ERPAs, it appears that an a posteriori compensation to Doyen was necessary, because the amount obtained through the transfer could not cover the minimum return secured to Doyen in the ERPAs.

The legal discussions on TPO to a large extent focused on whether the practice leads to an unauthorized influence of third parties on the internal governance and policies of a club; and on whether a complete ban is contrary to (EU) competition law. Yet, the aspect that remains underexposed in the author’s opinion is the severe negative financial effect TPO can have on a football club. As we have discussed a couple of months ago in a blog on FC Twente, the financial position of the Dutch club deteriorated after signing the ERPA to such an extent that the club is now in serious danger of disappearing all together.

It is possible, though unlikely, that FC Twente’s downfall was an exception.  However, one should not underestimate Sporting de Gijon’s current financial situation, for example. A closer look at the ‘map of deals’ tells us that in March 2015 Sporting had only paid €250.000 of the €3.5 million it owed Doyen. A total debt of at least €3 million was confirmed in an official joined statement, dated 29 February 2016. The statement further holds that this debt has to be repaid before 2019, but one cannot help thinking that, for a club like Sporting de Gijón, this is easier said than done. Getting the money from future transfers should be complicated if Sporting only partially owns the economic rights of its own players, plus a looming relegation to the second division at the end of this season will not be beneficial either.[14]



[1] More information on the TPO ban can be found in our previous Blogs, such as “Blog Symposium: FIFA’s TPO ban and its compatibility with EU competition law – Introduction”.

[2] The total amount generated for the 2010/11 season was €641, see Mail Online, “Barca and Real consider sharing TV rights to make La Liga more competitive”; The total amount generated for the 2014/15 season was €742.5 million, see Marca, “Así será el reparto del dinero televisivo”.

[3] As of the 2016-17 season, The English Premier League will make €2.1 billion per year, see Mail Online, "Premier League set for £3bn windfall from global TV rights as rival broadcasters slug it out to screen England-based superstars"

[4] More information on the selling of TV rights in football can be found in our previous Blogs, such as “Why the European Commission will not star in the Spanish TV rights Telenovela”.

[5] See: Map of deals and transactions updated until 10 March 2015.

[6] See: Map of deals and transactions updated until 10 March 2015.

[7] Transfermarkt - Josuha Guilavogui.

[8] The original minimum return of €5.5 million set in September 2013 was increased every year by €500.000 until 1 September 2015, since Doyen continued to own 50% of the Guilavogui’s economic rights.

[9] The players concerned were Roberto Canella Suárez, Álvaro Bustos Sandoval, Alejandro Serrano García, Abdou Karim Tima, Mendy Formose, Juan Muñiz Gallego, Sergio Álvarez Díaz, Óscar Guido Trejo and David Barral Torres.

[10] In the first phase, Doyen receives a percentage of 50% of the economic rights of the nine players until Doyen received an amount of €5 million for the transfer of one or more of those players. After Doyen receives its first €5 million, Doyen’s ownership of the economic rights of the remaining players is to be reduced to 40% until Doyen received an additional €1 million. Once Doyen receives this additional €1 million, Doyen’s ownership of the economic rights of the remaining players would be reduced to 30% until Doyen again receives €1 million from the selling of those players. Consequently, the agreement stipulates that Doyen is to receive an amount equal or superior to €7 million for the transfer of players in which it partly owned the economic rights.

[11] As an exception, Doyen only gets 10% of the economic rights of the players Alberto Botía and Miguel de las Cuevas.

[12] Moreover, the 20% of the transfer fee for De las Cuevas that Sporting owed Doyen consisted of 10% for the economic rights and 10% as an agency fee.

[13] This figure might even get higher when taking into account that Doyen had a share in all Sporting de Gijón players and the fact that Pedro León is still registered as a Getafe player.

[14] With seven matches to go, Sporting finds itself in 17th place.

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