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

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...

Statement on the European Commission's ISU Decision by Ben Van Rompuy and Antoine Duval

Editor's note: We (Ben Van Rompuy and Antoine Duval) are at the origin of today's decision by the European Commission finding that the International Skating Union's eligibility rules are contrary to EU competition law. In 2014, we were both struck by the news that ISU threatened lifetime ban against speed skaters wishing to participate in the then projected Icederby competitions and convinced that it was running against the most fundamental principles of EU competition law. We got in touch with Mark and Niels and lodged on their behalf a complaint with the European Commission. Three years after we are pleased to see that the European Commission, and Commissioner Vestager in particular, fully embraced our arguments and we believe this decision will shift the tectonic structure of sports governance in favour of athletes for years to come.


Here is our official statement:

Today is a great day for Mark Tuitert and Niels Kerstholt, but more importantly for all European athletes. The European Commission did not only consider the International Skating Union's eligibility rules contrary to European law, it sent out a strong message to all international sports federations that the interests of those who are at the centre of sports, the athletes, should not be disregarded. This case was always about giving those that dedicate their lives to excelling in a sport a chance to compete and to earn a decent living. The majority of athletes are no superstars and struggle to make ends meet and it is for them that this decision can be a game-changer.

However, we want to stress that this case was never about threatening the International Skating Union’s role in regulating its sport. And we very much welcome the exceptional decision taken by the European Commission to refrain from imposing a fine which could have threatened the financial stability of the International Skating Union. The International Skating Union, and other sports federations, are reminded however that they cannot abuse their legitimate regulatory power to protect their economic interests to the detriment of the athletes.

We urge the International Skating Union to enter into negotiations with representatives of the skaters to devise eligibility rules which are respectful of the interests of both the athletes and their sport.

Since the summer of 2014, it has been our honour to stand alongside Mark and Niels in a 'David versus Goliath' like challenge to what we always perceived as an extreme injustice. In this fight, we were also decisively supported by the team of EU Athletes and its Chance to Compete campaign.

Finally, we wish to extend a special thank you to Commissioner Vestager. This case is a small one for the European Commission, but Commissioner Vestager understood from the beginning that small cases do matter to European citizens and that European competition law is there to provide a level playing for all, and we are extremely grateful for her vision.


Dr. Ben Van Rompuy (Leiden University) and Dr. Antoine Duval (T.M.C. Asser Instituut)

A Good Governance Approach to Stadium Subsidies in North America - By Ryan Gauthier

Editor's Note: Ryan Gauthier is Assistant Professor at Thompson Rivers University in Canada. Ryan’s research addresses the governance of sports organisations, with a particular focus on international sports organisations. His PhD research examined the accountability of the International Olympic Committee for human rights violations caused by the organisation of the Olympic Games.


Publicly Financing a Stadium – Back in the Saddle(dome)

Calgary, Canada, held their municipal elections on October 16, 2017, re-electing Naheed Nenshi for a third term as mayor. What makes this local election an interesting issue for sports, and sports law, is the domination of the early days of the campaign by one issue – public funding for a new arena for the Calgary Flames. The Flames are Calgary’s National Hockey League (NHL) team, and they play in the Scotiabank Saddledome. More...




Illegally obtained evidence in match-fixing cases: The Turkish perspective - By Oytun Azkanar

Editor’s Note: Oytun Azkanar holds an LLB degree from Anadolu University in Turkey and an LLM degree from the University of Melbourne. He is currently studying Sports Management at the Anadolu University.

 

Introduction

On 19 October 2017, the Turkish Professional Football Disciplinary Committee (Disciplinary Committee) rendered an extraordinary decision regarding the fixing of the game between Manisaspor and Şanlıurfaspor played on 14 May 2017. The case concerned an alleged match-fixing agreement between Elyasa Süme (former Gaziantepspor player), İsmail Haktan Odabaşı and Gökhan Sazdağı (Manisaspor players). The Disciplinary Committee acknowledged that the evidence relevant for proving the match-fixing allegations was obtained illegally and therefore inadmissible, and the remaining evidence was not sufficient to establish that the game was fixed. Before discussing the allegations, it is important to note that the decision is not only significant for Turkish football but is also crucial to the distinction between disciplinary and criminal proceedings in sports. More...

Report from the first ISLJ Annual International Sports Law Conference - 26-27 October at the T.M.C. Asser Instituut

Close to 100 participants from 37 different countries attended the first ISLJ Annual International Sports Law Conference that took place on 26-27 October 2017 in The Hague. The two-day programme featured panels on the FIFA transfer system, the labour rights and relations in sport, the protection of human rights in sport, EU law and sport, the Court of Arbitration for Sport, and the world anti-doping system. On top of that, a number of keynote speakers presented their views on contemporary topics and challenges in international sports law. This report provides a brief summary of the conference for both those who could not come and those who participated and would like to relive their time spent at the T.M.C. Asser Institute.More...

International and European Sports Law – Monthly Report – October 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. More...

Multi-Club Ownership in European Football – Part II: The Concept of Decisive Influence in the Red Bull Case – By Tomáš Grell

 

Introduction 

The first part of this two-part blog on multi-club ownership in European football outlined the circumstances leading to the adoption of the initial rule(s) aimed at ensuring the integrity of the UEFA club competitions (Original Rule) and retraced the early existence of such rule(s), focusing primarily on the complaints brought before the Court of Arbitration for Sport and the European Commission by the English company ENIC plc. This second part will, in turn, introduce the relevant rule as it is currently enshrined in Article 5 of the UCL Regulations 2015-18 Cycle, 2017/18 Season (Current Rule). It will then explore how the UEFA Club Financial Control Body (CFCB) interpreted and applied the Current Rule in the Red Bull case, before drawing some concluding remarks.  More...

Multi-Club Ownership in European Football – Part I: General Introduction and the ENIC Saga – 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.

 

Introduction

On 13 September 2017, more than 40,000 people witnessed the successful debut of the football club RasenBallsport Leipzig (RB Leipzig) in the UEFA Champions League (UCL) against AS Monaco. In the eyes of many supporters of the German club, the mere fact of being able to participate in the UEFA's flagship club competition was probably more important than the result of the game itself. This is because, on the pitch, RB Leipzig secured their place in the 2017/18 UCL group stage already on 6 May 2017 after an away win against Hertha Berlin. However, it was not until 16 June 2017 that the UEFA Club Financial Control Body (CFCB) officially allowed RB Leipzig to participate in the 2017/18 UCL alongside its sister club, Austrian giants FC Red Bull Salzburg (RB Salzburg).[1] As is well known, both clubs have (had) ownership links to the beverage company Red Bull GmbH (Red Bull), and therefore it came as no surprise that the idea of two commonly owned clubs participating in the same UCL season raised concerns with respect to the competition's integrity. More...


Asser International Sports Law Blog | Why the European Commission will not star in the Spanish TV rights Telenovela. By Ben Van Rompuy 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

Why the European Commission will not star in the Spanish TV rights Telenovela. By Ben Van Rompuy and Oskar van Maren

The selling of media rights is currently a hot topic in European football. Last week, the English Premier League cashed in around 7 billion Euros for the sale of its live domestic media rights (2016 to 2019) – once again a 70 percent increase in comparison to the previous tender. This means that even the bottom club in the Premier League will receive approximately €130 million while the champions can expect well over €200 million per season.

The Premier League’s new deal has already led the President of the Spanish National Professional Football League (LNFP), Javier Tebas, to express his concerns that this could see La Liga lose its position as one of Europe’s leading leagues. He reiterated that establishing a centralised sales model in Spain is of utmost importance, if not long overdue.

Concrete plans to reintroduce a system of joint selling for the media rights of the Primera División, Segunda División A, and la Copa del Rey by means of a Royal Decree were already announced two years ago. The road has surely been long and bumpy. The draft Decree is finally on the table, but now it misses political approval. All the parties involved are blaming each other for the current failure: the LNFP blames the Sport Governmental Council for Sport (CSD) for not taking the lead; the Spanish Football Federation (RFEF) is arguing that the Federation and non-professional football entities should receive more money and that it should have a stronger say in the matter in accordance with the FIFA Statutes;  and there are widespread rumours that the two big earners, Real Madrid and FC Barcelona, are actively lobbying to prevent the Royal Decree of actually being adopted.

To keep the soap opera drama flowing,  on 30 December 2014, FASFE (an organisation consisting of groups of fans, club members, and minority shareholders of several Spanish professional football clubs) and the International Soccer Centre (a movement that aims to obtain more balanced and transparent football and basketball competitions in Spain) filed an antitrust complaint with the European Commission against the LNFP. They argue that the current system of individual selling of LNFP media rights, with unequal shares of revenue widening the gap between clubs, violates EU competition law.


Source:http://www.gopixpic.com/600/buscar%C3%A1n-el-amor-verdadero-nueva-novela-de-televisa/http:%7C%7Cassets*zocalo*com*mx%7Cuploads%7Carticles%7C5%7C134666912427*jpg/


The complaint will surely be frowned upon in Brussels. First, Spain is on the verge of introducing a joint selling arrangement. So what is the point of using competition law as an instrument to obtain … a joint selling arrangement? Second, the argument that a horizontal agreement, preventing LNFP clubs from individually competing in the sale of their media rights, is needed to ensure fair and effective competition seems, to put it mildly, counterintuitive. Third, who files an antitrust complaint on 30 December?

The complainants essentially target the polarization of revenues between the two top clubs (Real Madrid and FC Barcelona) and the other clubs. This is a well-known and long-standing feature of the LNFP, which is only in part attributable to disparities in the clubs’ media rights income. The complainants point out, however, that media coverage is also an important driver of other main revenue streams (e.g. value of sponsorship deals, ticket sales, and merchandising). 

Since the end of the 1990s, clubs have been selling the LNFP media rights individually. In a system of individual selling, a club’s bargaining power is evidently determined by the market potential of the matches of a specific club and not by the collective attractiveness of the competition as a whole. This has resulted in a pronounced imbalance between the two top clubs Real Madrid and FC Barcelona, who are able to extract supra-normal profits, and the other clubs.

For the 2010-2011 season, for example, the two Spanish giants both received around €125 million for their live media rights, leaving their domestic peers fighting over the scraps (i.e. the next biggest clubs earned around €40 million and the majority of the clubs sold their rights for about €15 million). In other words, Real Madrid and FC Barcelona generate ten times more revenue from their media rights as compared to the smaller clubs.

While it is easy to see why this situation may be considered unfair from the perspective of the majority of the clubs, it is less evident to find a competition law problem. 


A competition law perspective 

As stated above, the complaint is launched against the LNFP who, according to FASFE, by means of authorising the individual selling of TV rights system, is violating EU competition law.

First, the complainants argue that the system of individual selling strengthens the dominant positions of Real Madrid and FC Barcelona and, subsequently, undermines the competitive position of the other clubs. So far so good. But then they jump to the conclusion that Article 102 TFEU is being violated, not by the LNFP, but by Real Madrid and FC Barcelona. 

There they lost us – and presumably anyone remotely familiar with EU competition law. But let’s be a good sport and contemplate this line of reasoning a bit further.  

It might be argued that Real Madrid and FC Barcelona hold a (collective) dominant position on certain product markets in Spain and, by extension, in a substantial part of the internal market – even though the complaint fails to properly define those relevant markets. On the upstream market for the acquisition of media rights of La Liga, both clubs behave to a certain extent independently of their competitors. Spanish broadcasters first seek to acquire the media rights to their matches, which undercuts the bargaining position of the other clubs in the subsequent negotiations for the purchase of their rights. A more fundamental flaw is that the complainants contend that the possession or even strengthening of a dominant position by way of competition falls within the prohibition of Article 102 TFEU. The complaint does not put forward a single argument substantiating how both clubs engage in abusive conduct. 

Second, the complainants argue that the LNFP, according to Article 49 of its statutes, must look after the common interests of the competitions that it organises and of its members. In their view, the 1996 decision of the LFNP General Assembly to re-introduce a system of joint selling, which has negatively affected the majority of clubs and a large majority of fans, does not comply with this objective. 

While it can be argued that the LNFP’s decision constitutes a decision of an association of undertakings within the meaning of Article 101(1) TFEU, it is difficult to see how it has an anti-competitive object or effect. Quite on the contrary, the decision lifted the competitive constraints on the clubs’ independent decision-making that were in place up until the season 1997-1998. 

It should be noted that a system of joint selling of media rights does not necessarily bring about an equitable distribution of the revenues among the clubs. Albeit connected, the distribution mechanism is a separate measure, which is typically for the most part performance-based. Moreover, financial solidarity can also be implemented through other mechanisms, such as a taxation system or the redistribution of voluntary contributions. That said, it must be acknowledged that a system of joint selling does facilitate the sharing of revenues among clubs. The ability of sports organisers to impose alternative financial solidarity mechanisms might be constrained by the pressure of the larger clubs (which evidently wish to see a larger share of the revenues flow back to them because they are primarily responsible for generating these revenues). The clubs’ media rights income ratio in the other top European football leagues, where media rights are sold collectively, illustrates this point. In the season 2011-2012 the earnings ratio of the top to the bottom club was as follows: Premier League (1,55 to 1); Serie A (4,35 to 1); Bundesliga (2,3 to 1); and Ligue 1 (3,2 to 1).[1] 

Considering that joint selling only creates incentives for horizontal solidarity, the financial solidarity justification in itself could not outweigh the anti-competitive effects of a joint selling arrangement. The restrictions of competition are considerable. First, joint selling agreements prevent clubs from individually competing in the sale of their media rights. Access to the market can therefore be foreclosed to competing buyers. Second, joint selling leads to uniform prices and other trading conditions. Price-fixing is a hard-core restriction that is normally prohibited. Third, joint selling could lead to output restrictions when certain rights are withheld from the market. 

As the discussion of the competition law decisional practice below will demonstrate, it is even unclear whether the financial solidarity argument can be invoked as a partial legal defence against the prohibition of restrictive agreements. 


The financial solidarity conundrum

One of the key assumptions underlying the complaint is that the EU institutions advocate the joint selling of media rights. This is presumably one of the main reasons why they are turning to Brussels for help. While it is true that the European Council (e.g. in the 2001 Nice Declaration) and the European Parliament have always been supportive of the link between joint selling and the principle of financial solidarity, the same cannot be said about the European Commission. In policy documents, the Commission has refrained from making (strong) pronouncements on the solidarity benefits of joint selling vis-à-vis individual selling. In the Helsinki Report on Sport (1999) the Commission underscored the need to examine the precise link between the joint selling of media rights and financial solidarity between professional and amateur sport. In its White Paper on Sport (2007) the Commission acknowledged that joint selling “can be a tool for achieving greater solidarity within sports”, but immediately added that also a system of individual selling by clubs can be linked to a robust solidarity mechanism. Only in the Communication on Developing the European Dimension of Sport (2011) the Commission expressed some general support for a system of joint selling. Surely some of the Commission’s press releases coinciding its decisions in this area mention benefits for financial solidarity (see e.g. here). If the complainants had looked at the actual decisions, however, they would have realised that that rhetoric is inconsistent with the legal argumentation.

After the need to address competition issues in relation to joint selling arrangements for football media rights emerged in the 1990s, several National Competition Authorities (NCAs) found that the system was incompatible with the national competition rules. The NCAs were sceptical about the necessary link between joint selling and revenue distribution and, subsequently, did not consider it to be a pro-competitive benefit capable of offsetting the identified restrictive effects. Even though the NCAs spoke out uniformly against the joint selling of football media rights, in three Member States their decisions were either overruled by a national court (United Kingdom) or circumvented through legislative action (Germany) or executive orders (the Netherlands).[2] This created uncertainties regarding the circumstances under which joint selling could be considered compatible with EU and national competition law. 

In the UEFA Champions League decision (2003) the European Commission for the first time assessed the compatibility of the joint selling of football media rights with Article 101 TFEU. In two subsequent decisions, German Bundesliga (2005) and FA Premier League (2006), the Commission raised similar competition concerns and imposed similar remedies to address these concerns. 

In all three decisions, the Commission found that joint selling arrangements are caught by the prohibition of Article 101(1) TFEU, but may create substantial efficiency gains so that Article 101(3) TFEU could be invoked as a legal defence. It identified three main benefits: (1) the creation of a single point of sale (which creates efficiencies by reducing the transaction costs for sports organisers and media content operators); (2) branding of the output by one entity (which creates efficiencies as it helps the media products receive wider recognition and distribution); and (3) the creation of a league product focused on the competition as a whole rather than individual clubs. 

To ensure that the efficiency benefits outweigh the toxic cocktail of anti-competitive effects (i.e. price-fixing and considerable risks of market foreclosure and output restrictions), the Commission carefully prescribed the way in which the rights must be marketed by imposing a list of behavioural remedies. 

Competition concern

Remedy

UEFA

DFB

FAPL

Risk of foreclosure effects in downstream markets

Non-discriminatory and transparent tendering procedure

X

X

X

Independent monitoring trustee overseeing tender process

 

 

X

No conditional bidding

 

 

X

Risk of market foreclosure effects in downstream markets as a result of exclusivity and bundling of media rights.

Limitation of scope of exclusive contracts:

-       a reasonable amount of different rights packages

-       no combination of large and small packages

-       earmarked packages for special markets/platforms (new media rights)

 

X

 

X

 

X

 

X

 

X

X

X

Limitation of duration of exclusive contracts: max. three football seasons

X

X

X

Risk of output restrictions

Fall-back option to clubs for unsold or unused rights

X

X

X

Parallel exploitation of less valuable rights by clubs

X

 

 

Risk of monopolisation

“No single buyer” obligation

 

 

X

In all three of the Commission’s investigations, the parties put forward the financial solidarity argument as the main justification for an exemption of their joint selling arrangements under Article 101(3) TFEU.[3] Yet the Commission never substantially addressed that argument. Only in the UEFA Champions League decision, the point was briefly considered. The Commission simply noted that UEFA had failed to substantiate the indispensability of a joint selling agreement for the redistribution of revenue and, subsequently, for the organisation of the Champions League.[4] Since it could exempt the joint selling agreement on economic efficiency grounds, however, the Commission concluded that “it is not necessary for the purpose of this procedure to consider the solidarity argument any further”.[5] As such, the Commission conveniently got round the issue.

The national decisional practice subsequent to the Commission’s precedents equally refrained from addressing the issue. The NCAs started focusing their assessments exclusively on efficiency benefits, as instructed by the Commission.  

In short, in competition law proceedings related to joint selling arrangements, the financial solidarity defence has never been very compelling – it was either considered unsound (early national enforcement practice) or remained unaddressed. Of course, one may still argue that the elephant in the room was surreptitiously taken into account (bearing in mind that the acceptance of a similar price-fixing cartel in other sectors would be difficult to imagine).[6] 


Redistribution formulas for media rights income  

After the European Commission de facto legitimized the joint selling of football media rights, the system became the common practice for marketing such rights in Europe. Since Italy reintroduced the system of joint selling in 2010, Cyprus, Portugal, and Spain are now the last EU markets in which first division football clubs sell their rights individually. 

To put the distribution key foreseen in the pending Spanish Royal Decree into perspective, we will first summarize how the other four big European leagues redistribute the media rights income. 

England: Since 1992, the year in which the Premier League was formed, it was decided that 50% of the revenue is split equally between the 20 clubs, 25% is paid in Merit Payments (depending on where a club finishes in the final League table), and the final 25% is paid in Facility Fees (based on each time a club’s matches are broadcast in the UK). All international broadcast revenue, and central commercial revenue, is split equally amongst the 20 clubs. For the season 2013/2014, the ratio between the top (Liverpool at €132 million Euros) and the bottom earning club (Cardiff City at €84 million) was 1.57:1.

Germany: Within the German Bundesliga clubs, the criteria for the distribution of revenues will be determined by a 2:1 ratio between the top-ranked and the bottom-ranked teams in an ad hoc distribution ranking for the years 2013 – 2017. This means that the revenue sharing distribution will range from a maximum of 5.8% of the total amount for the first place team to at least 2.9% for the 18th place team. The Bundesliga’s international media rights income distribution, however, remains based on both international and domestic sport performance.

Italy: Italy’s Serie A joint selling system had an earnings ratio of the top to bottom club of 5.25:1 for the season 2013/2014. Juventus, the top earning club, had an income from TV rights of €94 million, whereas the bottom earning club, Sassuolo, of €17.9 million.[7] Out of the total amount distributed, 40% is distributed to all the clubs as a fixed amount. Furthermore, 30% is distributed on the basis of past results (15% on results during last five seasons, 10% on historical results[8], and 5% on last season’s final league position); and 25% according to club supporters base.  

The planned Royal Decree in Spain will have a distribution system that guarantees Real Madrid and FC Barcelona an amount that is very close to what they earn now. The income ratio of the clubs will start at 4:1 and diminishes as the total amount of income increases. From the total income, about 3% will be deducted for the Spanish FA and for non-professional sports. Additionally, 10% will be assigned to the Second Division. The remaining amount will be distributed as follows: 50% as fixed amount for all the clubs, 25% depending on sports results while taking into account historical results. The other 25% will be distributed in relation to public awareness similar the Italian system (calculated on the basis of TV audiences, city population, and number of fans of the club).  


Conclusion

It is safe to say that the competition complaint launched by FASFE will not lead to the European Commission opening a formal investigation. The complainants fail to demonstrate how the current Spanish individual selling system breaches, or even potentially breaches, Article 101 and/or 102 TFEU. In that regard, it should be noted that they already tried their luck with the national competition authority (CNC), alleging infringements of national competition law. On 8 January 2013, the CNC decided to reject the complaint because it only prescribed the results of the current media rights sales process without demonstrating violations of the national competition rules. 

Whether FASFE is aware of the same judicial inaccuracies in its Commission complaint is unknown. On the other hand, it is quite evident that invoking competition law to argue for the introduction of a cartel with significant anti-competitive effects is paradoxical. The ex post fairness (i.e. the outcome of market competition) that FASFE is looking for is quite different from the ex ante fairness in the market place that competition policy is concerned with. One can therefore interpret the complaint as an attempt to add pressure on the involved Spanish parties (the CSD, the LNFP, and the RFEF) to introduce the new Royal Decree once and for all. Although the Spanish public is provided daily episodes full of jabbering, backstabbing and other drama, as with all Telenovelas, the soap is dragging on and on and should have ended ages ago. 

Whether the switch to a joint selling arrangement will significantly improve the competitive balance in La Liga remains to be seen. Since FC Barcelona and Real Madrid are guaranteed an amount similar to what they receive now, this will ultimately depend on how much the total income from the sale of the media rights will increase. The inexorable rise in the value of the broadcasting deals in the UK, which is the unique result of a duopoly of two powerful deep-pocket players (i.e. the incumbent dominant pay-TV operator Sky and new market entrant BT) that emerged after the introduction of the “no single buyer” obligation, cannot be realistically expected – at least not in the short term. Yet it is relatively certain that the overall income from media rights will go up – ultimately to the benefit of all the clubs. A (minimum) earnings ratio of the top to bottom club of 4:1 is not overly ambitious, but surely is a welcome step towards remedying the current imbalance between the two top clubs and their less fortunate competitors.


[1] See T.M.C. Asser Institute and Institute for Information Law, “Study on Sports Organisers' Rights in the EU”, Commissioned by the European Commission, DG Education and Culture, February 2014.

[2] Idem.

[3] See e.g. Commission, “Case No IV/37.214 - DFB - Central marketing of TV and radio broadcasting rights for certain football competitions in Germany” (Notice) (1999) OJ C/610, para. 7; Commission, “Notice published pursuant to Article 19(3) of Council Regulation No 17 concerning case COMP/C.2/38.173 and 38.453 - joint selling of the media rights of the FA Premier League on an exclusive basis” (2004) OJ C 115/3, para. 10.

[4] UEFA Champions League (Case COMP/37.398) Commission decision 2003/778/EC (2003) OJ L291/25, para. 131.

[5] Idem, para. 167.

[6] See e.g. Giorgio Monti, “Article 81 EC and Public Policy” (2002) 39 CMLR 1057 (calling it a “sector-specific exemption”).

[7] FASFE Antitrust Complaint of 30 December 2014, page 11

[8] In other words, this revenue is determined by overall league placings since 1946. In this category, Juventus, AC Milan and Inter Milan are the top earning clubs. For more info see: http://www.financialfairplay.co.uk/latest-news/tv-revenue-distribution-%E2%80%93-comparing-italian-and-english-models.

Comments (2) -

  • José Antonio Rodríguez Miguez

    2/17/2015 1:09:50 PM |

    Congratulations for this very interesting and solid post. A Spanish sayung days that “Barça is more than a club”; we can say that football is more than a sport, it’s basically a bussness, and a level playing field must be guaranted. It’s the best and only way to go forward as a sport and as bussness.  

  • Count of Egmont

    2/19/2015 2:13:50 PM |

    FASFE's complaint is indeed quite weak and amateurish (more posturing than anything else as they fail to raise some well known issues that could have significantly strengthened their case) but you forgot to mention that, irrespective of the merits of the complaint, their chances of succeeding against Real Madrid in a competition case would be near zero at the moment since the current EC Deputy Director-General for Antitrust, Mr. Cecilio Madero-Villarejo is a die-hard Real Madrid fan and club member who regularly attends football games at the VIP area of the Bernabeu Stadium. It is therefore highly unlikely that he will be very keen to open an investigation into this issue as it would go against his own personal interests. Could this be the reason why a series of unfortunate events has surrounded all Real Madrid related investigations?

    The British newspaper, The Independent, reported about this situation two years ago:

    "After Real Madrid’s victory in the 2000 Champions League final, a supporter of the club who identified himself then as a 43-year-old European Union official living in Brussels wrote to the newspaper El Pais to convey his joy at the club’s eighth European title.

    In the letter published in the newspaper on 14 June 2000, he described how after the match, in a state of some emotion, he placed a Real “Campeones” flag on the balcony of his Brussels flat. To some eyes, it looked uncomfortably like a reference to the Spanish phrase “poner una pica en flandes” – literally “putting a pike in Flanders” – which refers to the Spanish occupation of the territory in the 16th and 17th centuries.

    Not in the best taste, but given the individual’s euphoria and the memories he said it brought back of his childhood, perhaps it was understandable. The letter was written by Cecilio Madero Villarejo, who still lives in Brussels but has a better job than he did 13 years ago.

    These days, Madero is one of the four men who make up the directorate-general at the European Commission under the leadership of commissioner and fellow Spaniard Joaquin Almunia, whose job it is to enforce the rules on big business, from anti-trust, to mergers and, of course, state aid."

    Real Madrid is safe for as long as he is in DG-Comp, in any case safer than the reputation of the EC's competition policy that will surely face some scrutiny in the light of the UK's EU referendum .

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