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 | Bailing out your local football club: The Willem II and MVV State Aid decisions as blueprint for future rescue aid (Part 2)

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

Bailing out your local football club: The Willem II and MVV State Aid decisions as blueprint for future rescue aid (Part 2)

This is part two of the blog on the Willem II and MVV State Aid decisions. Where part one served as an introduction on the two cases, part two will analyze the compatibility assessment made by the Commission in two decisions.


The compatibility of the aid to MVV and Willem II (re-)assessed

Even though it was the Netherlands’ task to invoke possible grounds of compatibility and to demonstrate that the conditions for such compatibility were met, the aid granted to both Willem II and MVV was never notified. The Netherland’s failure to fulfill its notification obligation, therefore, appears to be at odds with the Commission’s final decision to declare the aid compatible with EU law. Yet, a closer look at the Commission’s decision of 6 March 2013 to launch the formal investigation shows that the Commission was giving the Netherlands a ‘second chance’ to invoke grounds that would lead to a justification of the measures. In paragraph 74, the Commission itself reached the conclusions that the clubs in question faced financial difficulties, consequently indicating that the Rescue and Restructuring Guidelines might apply. In fact, the Commission even suggested possible compensatory measures, which are very much related to “the peculiar nature of professional football”[1]. These suggested compensatory measures included:

- limiting the club’s number of registered players for a season or several seasons;

- accepting a cap on the relation between salaries and turnover;

- banning the payment of transfer fees for a certain period;

- offering additional expenditure on “pro bono” activities to the benefit of the community and training of amateurs.[2]

Furthermore, it invited the Dutch authorities “to provide all useful information allowing the Commission to decide whether the aid measures can be considered compatible with the Guidelines”.[3]

The observations and information submitted by the Netherlands between March 2013 and July 2016 proved more than sufficient for the Commission to carry out its compatibility assessment. As was insinuated in the decision to launch a formal investigation, the Rescue and Restructuring Guidelines proved fundamental to this assessment.  


Willem II and MVV as firms in financial difficulties

This first condition of the Guidelines was easily complied with. As regards Willem II, in the accounting year 2008/2009, it made a loss of €3.9 million on a turnover of €11.4 million. Meanwhile, its own equity decreased from €4.1 million to €200.000. The losses increased to €4.4 million on a turnover of €9.9 million for the 2009/2010 season, while its own equity decreased further from €200.000 to minus €2.1 million.[4]

MVV clearly was financially not doing much better. As the Commission itself summarizes in the MVV decision, “in 2008/2009, MVV made a loss of €1.1 million and its own equity was minus €3.8 million. By March 2010 additional losses amounting to €1.3 million had occurred and the own equity had dropped to minus €5.17 million. In April 2010, MVV was no longer able to pay salaries and other current expenditure and was on the brink of bankruptcy.”[5]

Another consequence of being in financial difficulties relates to the licensing system put in place by the Dutch football federation KNVB. As is explained in paragraph 11 of the decision to open a formal investigation, one of the obligations for clubs under the current system is submitting three financial reports a year to the KNVB. On the basis of these reports clubs are scaled in three categories (I: insufficient, II: sufficient, III: good). Clubs in category I may be obliged to present a plan for improvement in order to reach categories II or III. If the club fails to comply with the plan, sanctions may be imposed by the KNVB, including an official warning, a reduction of competition points and – as ultimate sanction – withdrawal of the licence.[6] At the time the State aid was granted, both Willem II and MVV were scaled in the insufficient category I.  


Willem II and MVV as small enterprises or medium-sized enterprises

This particular assessment is important for the two conditions below, i.e. the introduction of restructuring plans and compensatory measures. Depending on the size of the firm (or enterprise), different conditions apply. Willem II employed 53 people in 2012 and had an annual turnover of €11.4 million in 2008/2009.[7] Pursuant to the Annex of the Commission Recommendation concerning the definition of micro, small and medium-sized enterprises, Willem II just managed to be considered a medium-sized enterprise.[8]

MVV, on the other hand, is considered a small enterprise. In the season 2009/2010 it had 38 employees and in the season 2010/2011 it had 35 employees. Its turnover and balance sheet total remained well below €10 million in both years.[9] 


Restructuring plans

Though not initially communicated to the Commission, both rescue measures were subject to certain restructuring conditions. In principle, these consisted of reducing personnel costs, by introducing new managements, selling players, and signing players free of transfer payments. In the case of Willem II, in the two years following the rescue measure personnel costs were reduced by 30%.[10] The effects of MVV’s restructuring plan were even better, since it managed to book profits for the three seasons following the aid and was scaled in the highest category (III) by the KNVB in the beginning of the season 2011/2012.[11] 


Compensatory measures

For the compensatory measures it is important to take into account point 41 of the Rescue and Restructuring Guidelines. Under this provision, small enterprises, such as MVV, are not required to take compensatory measures. However, this exception did not apply to Willem II. The Commission noted more expenditure of Willem II for public benefit by the training of amateurs and a reduction of the number of registered players from 31 to 27. Similarly, no transfer payments were made during the restructuring period.[12] Potentially as a result of this, Willem II was relegated to the second league in 2011 and again in 2013. In the end, the Commission concluded that “the compensatory measures required by the Guidelines were taken, which had the effect of weakening Willem II's competitive position in professional football”.[13] 


Aid limited to a minimum

Since the aid measures rescued both football clubs from bankruptcy without creating equity surplus, the Commission believed the amount of aid granted limited to what was necessary. Furthermore, the Commission highlighted that the restructuring plans were to a large extent financed by external contributors just as the Rescue and Restructuring Guidelines requested. Private entities had agreed to lend €2.25 million to Willem II for the restructuring, which is well over the 40% of €2.4 million (the total amount of State aid granted) required for medium-sized enterprises under the Guidelines.[14] In the case of MVV, several private creditors decided to waive (part of) their debt, which amounted to €2.25 million. This amount is more than 25% of the €5.8 million granted by the Netherlands, the minimum requirement for a small enterprise like MVV.[15] 


One time, last time

The Commission believes this condition to be fulfilled, as the Netherlands specified that Willem II and MVV did not receive rescue or restructuring aid in the ten years before the aid measures, nor will it award any new rescue or restructuring aid to the clubs during a period of ten years.[16] 


Conclusion

At the time of writing, the non-confidential versions of the positive decisions regarding State aid granted in favour of the Dutch professional football clubs FC Den Bosch and NEC Nijmegen are not published. Nonetheless, this does not prevent us from drawing the following lessons from the Willem II and MVV decisions.

First of all, these decisions show that there is no need to draft sector specific guidelines for State aid to professional football clubs in difficulty. The Rescue and Restructuring Guidelines are all the Commission needs in order to carry out the compatibility assessment. This approach is radically different when compared to the Commission’s decisional practice for the State aid to sport infrastructure cases between 2011 and 2013.[17] Only after the Commission dealt with ten different cases, was its approach (to a large extent) codified in Article 55 of the 2014 General Block Exemption Regulation.[18]

In this regard it is important to highlight that the Commission seems to take into account “the peculiar nature of professional football”[19] when assessing the compatibility of State aid measures under the Rescue and Restructuring Guidelines. For example, it showed demonstrated its awareness of the UEFA Club Licensing and Financial Fair Play Regulations[20] as well as national (KNVB) licensing rules when assessing the compensatory measures taken by Willem II. Moreover, it clearly endorsed the decision taken by the club not to make transfer payments during the restructuring period, since this prevents the club from spending money it might not have, while simultaneously limiting the club’s competitiveness on the field.

A further lesson that can be drawn from these decisions is that, in my opinion, the threshold to ‘pass the compatibility test’ under the Rescue and Restructuring Guidelines is quite low. With regard to the condition that the club needs to be in financial difficulties in order to get the State aid, it is clear that granting State aid to professional football clubs in financial difficulties is one of the most (if not the most) common form of State aid in the sector. This was the case for the five Dutch clubs scrutinized by the Commission, as well as the three clubs from Valencia of which the non-confidential version of the decision still needs to be published. Other clubs like FC Twente and Sporting de Gijón have also received State aid over financial difficulties, even though the Commission did not investigate these measures (yet).[21] In other words, a majority of the cases are assessable under these Guidelines.

The condition that the beneficiary football club needs to stick to a restructuring plan in order to receive the State aid is key. As is elucidated in the two decisions, the restructuring plans consisted of selling players, reducing the costs of wages and not paying transfer fees for new players for a period of three years. In my view, these conditions are rather proportionate when considering that the clubs in question were on the verge of bankruptcy prior to the State aid measures. In fact, one could argue that FIFA’s transfer ban imposed on FC Barcelona for international transfers of minors, or excluding FC Dynamo from the next UEFA club competition for which the club would otherwise qualify in four seasons (i.e. the 2015/16, 2016/17, 2017/18 and 2018/19 seasons) for breaching UEFA’s FFP Regulations,[22] are harsher than the restructuring conditions accepted by the Commission.

The same can be said about the need to take compensatory measures. The measures taken by Willem II (reducing the number of employees and players, and reducing the cost of wages to 48% of the turnover) could be considered a direct consequence of the abovementioned restructuring plans. The only additional compensatory measure taken by Willem II was increasing expenditure of the club for the training of amateurs, though the decision does not specify what this implied in practice.

Perhaps the only condition that could be problematic for some football clubs is the “one time, last time” criterion. Under this condition, the public authorities cannot rescue Willem II and MVV again until at least 2020. Although Willem II and MVV are currently in category III and II on the KNVB’s scale respectively, falling back to category I before 2020 could have dramatic consequences.

Be that as it may, now that the Commission’s approach for the assessment of State aid to professional football clubs in financial difficulties is out in the open, public authorities and football clubs alike should use this knowledge to their own advantage. They should remember that the Commission is willing to accept rescue aid and that the restructuring conditions are far from impossible to match. One can even wonder whether a club like FC Twente would have turned to Doyen when it was facing financial difficulties, if it had been aware of the conditions imposed by the European Commission for receiving compatible State aid under the Rescue and Restructuring Guidelines.



[1] Commission Decision on State Aid SA.40168 of 4 July 2016 implemented by the Netherlands in favour of the professional football club Willem II in Tilburg, para. 50.

[2] Commission Decision SA.33584 of 6 March 2013 – The Netherlands Alleged municipal aid to the Professional Dutch football clubs Vitesse, NEC, Willem II, MVV, PSV and FC Den Bosch in 2008-2011, para. 80.

[3] Ibid, para. 77.

[4] SA.40168, para. 45.

[5] Commission Decision on State Aid SA.41612 of 4 July 2016 implemented by the Netherlands in favour of the professional football club MVV in Maastricht, para. 13.

[6] SA.33584, para. 11.

[7] SA.40168, para. 9.

[8] A firm is not considered a small enterprise i fit has more than 50 employees and an annual turnover of more than €10 million. See footnote 27.

[9] SA.41612, para. 9.

[10] SA.40168, para. 48.

[11] SA.41612, para. 52.

[12] SA.40168, para. 51. Indeed, according to www.transfermarkt.de, Willem II only paid a mere €20.000 for the signing of Kevin Brands in July 2012.

[13] Ibid.

[14] SA.40168, para. 52.

[15] SA.41612, para. 54.

[16] SA.40168, para. 55 and SA.41612, para. 61.

[17] Commission Decision of 9 November 2011, SA.31722 – Hungary - Supporting the Hungarian sport sector via tax benefit scheme; Commission Decision of 2 May 2013, SA.33618 Uppsala arena; Commission Decision of 15 May 2013, SA.33728 Multiarena in Copenhagen; Commission Decision of 20 March 2013, SA.35135 Multifunktionsarena der Stadt Erfurt; Commission Decision of 20 March 2013, SA.35440 Multifunktionsarena der Stadt Jena; Commission Decision of 18 December 2013, SA.35501 Financement de la construction et de la renovation des stades pour l’EURO 2016; Commission Decision of 2 October 2013, SA.36105 Fuβballstadion Chemnitz; Commission Decision of 20 November 2013, SA.37109 Football stadiums in Flanders; Commission Decision of 9 April 2014, SA.37342 Regional Stadia Development in Northern Ireland; and Commission Decision of 13 December 2013, SA.37373 Contribution to the renovation of ice arena Thialf in Heerenveen.

[18] For a deeper analysis of whether sport-specific guidelines are necessary, see Oskar van Maren, “EU State Aid Law and Professional Football: A threat or a Blessing?”, European State Aid Law Quarterly, Volume 15 1/2016, pages 31-46. To find out how sector-specific rules for State aid are usually articulated, see Ben Van Rompuy and Oskar van Maren, “EU Control of State Aid to Professional Sport: Why Now?” In: “The Legacy of Bosman. Revisiting the relationship between EU law and sport”, T.M.C. Asser Press, 2016.

[19] SA.40168, para. 50.

[20] In paragraph 51 of SA.40168, the Commission referred to a UEFA rule, which holds that the cost of salaries should not exceed 70%.

[21] For more information of the precarious financial situation of these two clubs, see our previous blogs: “Unpacking Doyen’s TPO Deals: FC Twente's Game of Maltese Roulette”, and “TPO and Spanish football, friends with(out) benefits?”.

[22] For more information on the FC Dynamo case, see our blog “UEFA’s FFP out in the open: The Dynamo Moscow Case”.

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