Editor’s note: Thomas Terraz is a third year LL.B. candidate at the International and European Law programme at The Hague University of Applied Sciences with a specialisation in European Law. Currently he is pursuing an internship at the T.M.C. Asser Institute with a focus on International and European Sports Law.

1.     Introduction

The surge of e-sports has stimulated a lively discussion on the essential characteristics of sport and whether e-sports, in general, can be considered a sport. However, one should not overlook the fact that e-sports encompass a broad range of video games that fundamentally differ from one another. Thus, as one commentator recently underlined, “the position of video games and the e-sport competitions based on them should be analysed on a case-by-case basis.”[1] In this spirit, this blog aims to provide a concise analysis of one of these e-sports, League of Legends (LoL), and one of its main competitions, the League of Legends European Championship (LEC), to assess whether it could be considered a sport in the sense of EU law. The LEC offers a fascinating opportunity to examine this issue especially since the previous European League of Legends Championship Series (EU LCS) was rebranded and restructured this year into the LEC.

2.     What is League of Legends and the LEC?

At the time of writing, LoL released nearly a decade ago by Riot Games (a game developer based in the USA) and rapidly became one of the most played video games in the world due in part to its free to play business model. This means that anyone can download and play LoL on their computer without ever having to pay anything. In-game microtransactions exist but do not provide any competitive advantage. The game itself involves two teams of five players who each control a ‘champion’, which are characters in the game that each possess unique abilities. A team only wins when it has destroyed the enemy base (‘nexus’). The game is not only a popular video game, but it is a popular e-sport. The most recent world championships finals attracted 99.6 million unique viewers. While these numbers are greatly due to its popularity in China and South Korea, there is also a sizeable European viewership of LoL. For example, the LEC regular season matches have reached a record-breaking 355,000 concurrent viewers in its 2019 spring competition.

The LEC is LoL’s highest level of European competition and is owned and organised by Riot Games who establishes and enforces the rules which apply to the teams participating in the LEC. Consequently, Riot Games is truly at the apex of professional LoL in Europe by setting both the in-game parameters (the rules of the game) and the regulations that govern its competitive play. As explained earlier, Riot Games restructured and rebranded its previous European competition, EU LCS, into the LEC. While previously the EU LCS was characterised by a pyramid structure with a promotion and relegation system familiar to the European sports world, the LEC introduced a franchise model to follow its sibling competition in North America, the League Championship Series (LCS). The LEC itself is a limited liability company registered in the Republic of Ireland as League of Legends European Championship Limited.[2] The LEC buy-in fee for teams already in the EU LCS was reportedly set at 8 million euros and 10.5 million euros for those outside the EU LCS. Additionally, big brands such as KIA, Shell, Foot Locker and Red Bull sponsor the LEC and are featured during the broadcast. Besides being produced and diffused weekly by the official Riot Games English broadcast team in a professional studio in Berlin on Twitch (an online video game livestreaming service) and YouTube, the LEC partners with other official broadcasters who provide coverage of the matches in other languages (French, Spanish, Polish, German, Italian). Nevertheless, before examining the LEC’s position under EU law, a review of the broader arguments on the fundamental traits of sport will contextualise the Court of Justice of the European Union’s (CJEU) interpretation of the concept of sport.

3.     Is LoL played in the LEC a sport competition?

The academic discourse on the definition of sport has provided a plethora of elements and conditions for an aspiring sport to meet in order to be considered a ‘real’ sport. Needless to say, this blog will not be able to address all of them. However, the characteristics identified by Suits and elaborated by Jenny et al. and Abanazir are a good starting point for this brief review.[3] Suits explains that sports are in essence games that require skill, where the skill requires physicality, that the game have a wide following, and that this following have a certain level of stability. Abanazir delved into the concept of stability in the e-sports context by explaining institutionalisation’s central role in achieving permanence.

On the first requirement, there is very little room to argue that professional LoL does not require a great amount of skill. Suits explains that games of skill provide ‘unnecessary obstacles’ (in relation to daily life) “to realize capacities not otherwise realizable” that do not rely on pure chance.[4] Playing LoL is not in any way a necessary part of human life, yet many players practicing LoL play to refine and improve their mechanical skill (the physical element of the game, e.g. muscle memory and reflexes). Chance sometimes plays a role in LoL, but it is rarely a decisive factor in determining the outcome of a competitive match. Generally, Riot Games has taken steps over the years to limit the elements of pure luck in its game.

The role of physical motor skills in e-sports has been explained in detail by van Hilvoorde and Pot, and this blog will not dive into the arguments on whether actions taken in a video game can be considered taking place in the ‘real’ world.[5] Assuming that it does, the skill required in LoL is intrinsically connected to its physicality. LoL is played on a computer with a mouse and a keyboard. High level play requires precise movement of the arm, wrist and/or hand to most effectively control one’s character with the mouse. Additionally, the clicks and inputs registered by one’s fingers on the mouse and keyboard must be timed precisely and with enough practice these movements become muscle memory. The classic example of a game that does not require this sort of physicality is chess because the manner in which one moves a chess piece from a to b does not affect the result of the game. On the other hand, LoL demands precise and timed movements of the player’s arms, wrists, and/or fingers to be played optimally. One can be a LoL strategic genius but without a sufficient level of mechanical skill, it is impossible to become a professional LoL player.

Next, a large following is probably the easiest criteria for LoL and the LEC to fulfil. Between the large viewership that watch the LoL events online and the thousands of spectators that come to watch the championships live, there is very little doubt that LoL and the LEC have a wide following at the moment. However, this point leads into the next element which arguably may be the hardest criteria for it to satisfy in the long term: stability.

Video games and consequently, e-sports, generally reach a point where they have achieved their max popularity and eventually begin to lose players and viewers. Often times, this is the result of newly released video games pushing older and ‘outdated’ games out of the spotlight. LoL has remained at the forefront of e-sports for nearly a decade and there is little suggestion that this will change in the near future. Part of this is Riot Games’ continued support of LoL by regularly updating the game. Updates are released nearly every other week and can range from graphical improvements, balancing the game to ensure the viability of new strategies, the introduction of new champions (currently 143 champions) and tweaks that improve the way the game runs on the computer. Abanazir describes that changes such as these “present a double-edged sword” because while they keep the game fresh for players, they can result in drastic changes to the best strategies (meta) to win the game.[6] Thus, professional teams and players must continually adapt their play to conform to the meta. Nevertheless, updates have never fundamentally changed the goal and overall ‘rules’ of the game. Professional LoL is always two teams of five players, each controlling one champion, aiming to destroy the enemy nexus.

From an outsider’s point of view, it may seem that the constant flux of the meta would truly damage any of LoL’s claim to stability. However, in this context, it is imperative to highlight the institutionalisation of the LEC. Institutionalisation describes the appearance of “standardisation of rules, the formalisation of learning of the games, the development of expertise and finally the emergence of coaches, trainers, officials and governing bodies.”[7] The very fact that the meta often changes have pushed professional teams to hire analysts that review the team’s play and are constantly searching for new and creative ways to play LoL. Additionally, all professional teams have at least one coach who not only define the team’s strategy before each game, but also ensure that players observe strict practice schedules. During LEC matches, referees (Riot Games employees) are always present in order to ensure that the LEC rules are observed, which greatly lends to the idea of a ‘standardisation’ of the rules.[8] In fact, Riot Games directly state that the creation of the LEC Rulebook is to help “unify and standardize the rules used in competitive play.”[9] From this outline, there are many indications that the LEC and LoL have many of the characteristics of a sport and currently have achieved a certain amount of stability and institutionalisation. The true test will be whether these structures continue to last as they have been developed and implemented over the past eight years.

4.     A Sport under EU Law?

Recently, the Court of Justice of the European Union (CJEU) ruled on whether the English Bridge Union could benefit from a sports exemption under the VAT Directive and in doing so examined the concept of sport under that Directive.[10] Furthermore, in this case, Advocate General (AG) Szpunar provided an enlightening opinion to the Court examining the concept of sport in the context of the VAT exemption.[11] Both provide a good opportunity to infer how the Court would perhaps go about determining whether the LEC is a sport competition under EU law. This being said, the sport exception in the current VAT Directive would not apply to the LEC since Article 132 (1) (m) applies only to services provided by non-profit organisations. Nonetheless, should League of Legends European Championship Limited eventually restructure into a non-profit, it would not be far-fetched to imagine a situation in which it would seek to have VAT reimbursed from authorities under a sports exception in the future. After all, Riot Games has repeatedly stated that it does not make a profit on its e-sport activities.[12]

The AG’s opinion began by explaining that the concept of sport in the exemption should be “interpreted in a narrow manner, while bearing in mind the purpose and objective of the exemption.”[13] From this it is clear that the analysis of the concept of sport differs depending on the applicable provision, which could mean that the LEC could be considered a sport competition under one provision and a purely economic activity in another context. The AG goes on to identifying elements which preclude an activity from being considered a sport and states that “where a physical element is not necessary, sport is defined by competition and the fact that equipment is provided by not just one supplier -  which excludes activities without a broad basis in civil society, such as commercial products in the market place, designed by firms for pure consumption (for instance video games).”[14] If this interpretation of the concept of sport had been endorsed by the CJEU, it would have constituted a tremendous obstacle for the LEC. Indeed, if the ‘equipment’ also encompasses the game itself, it is impossible to argue that Riot Games does not hold a monopoly over the supply of LoL. Moreover, Riot Games has made and continues to support LoL in order to make money. In analysing this opinion, Abanazir explains the core issue well: “e-sport competitions based on video games created for purely consumption purposes and organised by persons aimed to profit from these activities may find themselves out of the scope as they are perceived to be devoid of social function.”[15] Indeed, it can seem difficult for the LEC and LoL to argue that it has a deeper ‘social function’ but perhaps this requirement might not be completely insurmountable. An argument could be made that the e-sports aspect of LoL is not only a commercial product made for pure consumption especially because LoL is a free to play game, and Riot Games does not seem to be making any profit in its e-sport related activities. Riot Games and the LEC have also taken steps to enhance the social function of LoL by investing in regional leagues to develop local talent.

In its ruling on the Bridge case, the CJEU sidelined the AG’s approach and decided to focus on a physicality requirement. The Court, in examining the specific VAT provision, found that sport must be “characterised by a not negligible physical element,” and the fact that an activity has elements of competition, professionality and organisation were not deemed sufficient to argue that the activity is a sport for the VAT exemption.[16] Physicality was the central criteria in the CJEU’s interpretation of the concept of sport, but in doing so, it did not give any further clarity as to the threshold of physicality required for an activity to benefit from the VAT sport exemption. It has already been contended above that LoL does have a clear physical element which is intrinsically connected to the game’s skill, yet the question remains whether the physicality would be considered more than negligible by the CJEU.

In summary, if LoL and the LEC were to be examined under the VAT Directive sport exemption, it would be confronted with several challenges. The approach endorsed in the AG’s opinion would have been the most problematic since LoL is mainly a commercial product designed to attract consumers and ultimately profit a private company. However, the CJEU chose to focus its interpretation of the concept of sport on a physicality criterion. This decision may give the LEC a wide enough window to argue that the fine motor skills involved in LoL are enough to fulfil this condition.

5.     Conclusion

In its current form, the LEC would not be able to benefit from the sport exemption in the VAT Directive, but this is just one provision of EU law, and there could be other opportunities where it could attempt to claim to be a sport. In the meantime, this gives an opportunity to Riot Games to continue to develop and emphasise the social function of its e-sports competitions, which might entail building a not-for-profit entity to run the competition and to strengthen the redistribution of economic gains to the grassroots. In any case, LoL and the LEC share many characteristics with established sports, but it remains to be seen if this will be enough to boost its recognition as a ‘real’ sport in law and society.

[1] Cem Abanazir, ‘E-sport and the EU: the view from the English Bridge Union’ (2019) International Sports Law Journal 102.

[2] ‘LEC Rules’ (LoLEsports).

[3] William Morgan, Ethics in Sport (3rd edn, Human Kinetics 2018) ch 1: Elements of Sport by Bernard Suits; Seth Jenny et al., ‘Virtual(ly) Athletes: Where eSports fit within the definition of “Sport”’(2016) Quest 1; Cem Abanazir, ‘Institutionalisation in E-Sports’ (2019) Sport, Ethics and Philosophy 117.

[4] Morgan (n 3) ch 1.

[5] Ivo van Hilvoorde and Niek Pot, ‘Embodiment and fundamental motor skills in eSports’ (2016) Sports, Ethics and Philosophy 14.

[6] Abanazir (n 3).

[7] Jenny et al. (n 3); Abanazir (n 3).

[8] See LEC Rulebook Art. 8.15.

[9] LEC Rules (n 2).

[10] Case C-90/16 The English Bridge Union Limited v Commissioners for Her Majesty’s Revenue & Customs ECLI:EU:C:2017:814.

[11] Case C-90/16 The English Bridge Union Limited v Commissioners for Her Majesty’s Revenue & Customs ECLI:EU:C:2017:814, Opinion of AG Szpunar.

[12] Steven Asarch, ‘“League of Legends” cuts esports budget, can Riot Games bounce back?’ (Newsweek, 28 August 2018); Derrick Asiedu head of Global Events at Riot Games confirmed this in a Reddit post: “We’re a long way from breaking even (revenue minus cost equalling 0)”.

[13] English Bridge Union Opinion (n 11) para 21.

[14] English Bridge Union Opinion (n 11) para 38.

[15] Abanazir (n 1).

[16] English Bridge Union (n 10) para 19, 25.

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. 

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.