Editor's note: Marine Montejo is a graduate from the College of
Europe in Bruges and is currently an intern at the ASSER International Sports
Law Centre.
Part 2. EU competition law and sports funding
The first analysed impact of Brexit on
sport was the one regarding EU internal market rules and free movement.
However, all sport areas that are of interest to the European Union will be
impacted by the result of the future Brexit negotiations. This second part of
the blog will focus on EU competition law and the media sector as well as
direct funding opportunities keeping in mind that if the UK reaches for an EEA
type agreement competition law and state aid rules will remain applicable as
much as the funding programs.
A) EU competition law and the media sector
As for the internal market rules, EU
competition law applies to sport as long as an economic activity appears to
have an impact on the European market. In the field of sport this is particularly
true for the media sector, a key source of economic revenue for professional sport.
EU competition law
It should be stated from the beginning that
the UK, even completely outside of the EU, will not escape EU competition law
(articles 101 and 102 TFEU). Indeed, if there is an economic activity within
the European market EU law will continue to apply. The application of EU
competition law leads to a convergence with national competition rules and most
of the decisions relating to sport will probably remain enforceable through UK
national law provisions unless there is an important change in their
interpretation or a complete shift in competition law policy leading to a
change of these rules.
The main impact for the UK regarding the
applicability of EU competition law appears to be in the media sector. With regard
to the collective selling of media rights, for the time being national
provisions should maintain the system in force which is derived from the
Commission’s decisional practice (Football Association Premier League for a British example). Collective selling of media
rights is compatible with EU competition law if the selling procedure is organised
in a transparent and non-discriminatory manner, the contractual exclusivity
runs for no more than three years and the rights are sold in several packages. The
“no-single buyer” clause that was first imposed upon the Premier League to
avoid the risk of monopolisation given the specific structure of the British
sport media market (and now also applied by the German competition authority
for the Bundesliga rights) might be questioned. This clause, providing that all
the rights should not be sold to a single broadcaster, combined with the
possibilities offered by EU free movement and impressive marketing skills from
the Football Association, has made the Premier League the most valuable
football competition in the world (6.9 billion euros for 2016-2019). It is
highly probable that the UK national competition authority will keep that
clause and the obligations for all sport media rights unless there is a major
shift in national competition law policy. Remaining or leaving, in any case EU
competition law will have left an important imprint on the British sport media
rights landscape.
Other media related questions
In relation to media rights, two more points
are interesting. Firstly, the question concerning multi-territory licensing of media
rights in sport may arise. Sport rights are sold on a territorial basis. One of
the many reasons for it are linguistic borders. However, the ECJ concluded that
territorial exclusivity agreements relating to the transmission (using
satellite decoders from broadcast providers based on another Member State) of
football matches were a breach of competition law and the free movement of
provision of services (Football Association Premier League v QC Leisure and
Karen Murphy v. Media Protection Services Limited, joined cases C-403/08 and C-429/08). This important
judgement caused great despair among sport organisers but it gave the
opportunity to consumers to access a broader list of sport media providers
around the EU. Depending on the position of the UK towards the EU, this
possibility may vanish in the future. This judgment is also important for EU
protection of property rights. The Court held that sport events cannot be
considered intellectual creations, and, as such, cannot be protected by
copyright. However, a clear distinction was made between private residence
watching and public screening. The latter could amount to copyright
infringement if some part of the event can be considered as unique and original
and are duly protected (i.e. songs, slow motion extracts, etc.). In that case,
it is for the Members States to regulate such a protection, but the EU is also
developing a specific protection at the European level. Sport rights holders
are exposed to financial damages due to breach of intellectual property rights with
high economic value. This is the case for media rights but also for sport
merchandising. The enforcement of those rights is conjointly overlooked by the
Commission for harmonization of national legislations as well as the European Union Intellectual property Office (EUIPO)
and Europol. In a situation where
cross-border piracy and counterfeiting is difficult to tackle alone, the UK
might consider to secure some kind of cooperation with the EU on that matter.
Secondly, also concerning the sports media
industry, albeit with less ties to competition law provisions, the Audiovisual Media Services Directive (better known as the “Television Without Frontiers
directive”) might not be applied to the UK in the future or at least as it
stands at the moment. This directive regulates cross-border television
broadcasting and allows EU Member States to establish a list of sport events of
major importance for society that are offered on subscription-free TV channels
(article 14 of the directive). The protected events list is then transmitted to
the Commission in order to check its compliance with EU law and published in
the EU Official Journal. Members States are entitled to create such a list but
may choose not to. The UK is amongst the Members States that choose to set up
such a list. Consequently, the 1996 Broadcasting Act lists those events for the UK (for example the
Olympic Games, the Wimbledon Tennis Finals, the FA Cup Final, or the FIFA World Cup
Finals Tournament). The national law relies on the directive which means that
after Brexit, if the UK wants to keep with that requirement it should integrate
the list into its national law. In a country where the subscriptions for
premium sports pay television are the most expensive in Europe, it is quite
doubtful whether this is good news for the British consumer and that might be
an incentive to maintain a similar system. The directive also provides for a
system of mutual recognition meaning that a provider of an audiovisual media
services is subject to the law of its country of origin. Another Member State
cannot impose other requirements than the one provided for by the directive.
This principle, in case of Brexit, will surely disappear which is a potential
problem for sports broadcasters seated in the UK and engaged in cross-border
activities.
EU State aid policy
Public funding and financial support is
often used in sport and is a highly sensitive issue. Infrastructure and
individual sport clubs are the main beneficiaries of public funds, which can
make them subject to EU State aid provisions (article 107 TFEU). The Commission
has closely monitored the application of State aid law in the field of sport,
drawing a big line between professional and grassroots sports subsidies.
Financial support to professional clubs is sometimes found incompatible with EU
law as it distorts competition. An exception to this is where the objectives
pursued are non-economic (subsidies for young training centres have been
considered compatible as the main goal is to meet education obligations).
Subsidies to amateur clubs are less likely to constitute State aid as they are
not pursuing an economic activity. For sport infrastructures, only the ones
pursuing economic activities and in competition at the European level are
likely to be subject to State aid rules. A consequence of a complete Brexit
might end the application of EU State aid rules in the UK. Anyway, given the
expected negative economic consequences related to Brexit, it is rather unlikely
that British public authorities will have the financial capacity to intensively
fund professional clubs and sports infrastructures even if it they would have
the freedom to do so.
B) The money: securing sports funding
Finally, since the entry into force of the
Lisbon Treaty, the EU developed a more proactive policy in sport via funding
opportunities. These are also going to be impacted by Brexit and adverse
consequences will specifically target amateur sport.
EU funding for sport
The introduction of article 165 TFEU
allowed the EU to create a specific funding programme for sport. Before that,
sport related projects were indirectly funded through other EU programmes. The
2014-2020 Erasmus + Sport programme provides grants for a broad range of
actions and activities in the field of sport. The aim of the programme is to
promote the positive values of sport and physical activity and good governance
in the sector as well as support dual careers of athletes and projects against
match-fixing, doping, violence, racism and intolerance. These funds are
directly targeted to grassroots sports through collaborative partnerships,
not-for-profit European sport events, dialogue with European sport stakeholders
as well as studies and conferences. British sport and sport-related
organisations as well as public authorities can benefit from funding. However, these
possibilities may disappear following Brexit. Erasmus + Sport is a European
programme and, as such, helps to finance projects contributing to the
development of a European dimension of sport. Consequently, it is difficult to
give an exact number of projects financed through the programme in the UK. However,
to give an illustration, in 2015, just for Erasmus + Sport projects for which a UK
sport organisations was the lead coordinator, the EU funding amounted up to 1.1
million euros. It should be kept in mind that other British organizations are
simple partners to many other projects and are entitled to be funded as well (the
2015 budget for the Erasmus + Sports programme was 18,8 million euros). Will
the UK be entitled to keep some funding? If it secures an EEA type agreement,
Erasmus + Sport will still apply but the UK will have to financially contribute
to it.
The financial participation from the EU in
UK sports is also possible through other EU programmes. It is worth mentioning the
European Structural and Investment funds which promotes the socio-economic development of
European regions (10.7 billion euros were awarded to the UK for 2014-2020). The
EU also provides funding for sport related studies to which several UK-based
academics and think tanks have already participated. One should not forget that
the EU is also actively supporting academic and PhD research through several
programmes (the main one being Horizon 2020) and that in case of Brexit it will have a negative
impact on the UK’s capacity to produce academic output on sport (think about
anti-doping, sports law and governance, economics studies, etc…).
Gambling and sport betting
The British market for gambling and sports
betting generated 12.6 billion pounds last year. It is one of the biggest
markets in Europe and British betting operators seized the opportunities
offered by the EU’s freedom to provide services to develop their activities in
other EU Members States as the EU pushed for the opening of gambling and online
betting to competition. As a consequence of Brexit, Gibraltar-based online
betting firms (let’s face it, due to a favourable taxation system) might lose
their access to the European market. The Gibraltar betting and gambling authority tried to put on a brave face in the aftermath of the
Brexit vote but, in the case of Brexit, the best solution for the operators
will be to leave Gibraltar for an EU Member State and secure its access to the
European market (for example Malta, a very popular host for betting operators).
The economic impact for the gambling sector
is sure to be important, but it is just as important for the sport sector as
part of the betting industry’s revenue constitutes an important source of
income for sport, and in particular grassroots sport via taxes. Furthermore,
betting operators are active in sponsorship for professional club and athletes.
If the financial stability of these companies is undermined, it will probably
have an impact on both their participation in the financing of sport and their
marketing strategy.
Another problem that might arise for the UK
in that area concerns the fight against corruption and match fixing that threatens
the integrity of sport and its economic value. The UK cannot handle this
problem alone and the EU, given the sector’s inherent cross-border nature, is
encouraging cooperation between Members States and sport organisations to
tackle the issue. Europol, the EU’s law enforcement agency, provides assistance
to EU Member States and sport organisers (collaborating for example with UEFA). Brexit might imply that the UK will leave that
organisation, yet it could also maintain a cooperation via operational or/and strategic agreements. In any event, the UK remains a member of Interpol also very active in the fight against
match-fixing and illegal gambling.
Conclusion
Just about everything is going to change
between the EU and the UK and it is the same for sport. At this stage, a lot of
guesswork is involved in trying to elucidate a picture of the impact of Brexit
on sport. Whether with a direct positive action through its funding policy or
because of the rules on the internal market and competition having an indirect
impact, the EU had an influence on the whole of British sport. This blog tackled
the main issues at stake in sport for the EU and the UK before the latter
starts its negotiations to formally rescind its membership. But it also should
be noted that the EU is an important arena for formal and informal discussion
on subject that interest sport in general. For example the EU Work Plan for sport for 2014-2017 sets up EU expert groups to
work on topical issues in the field of sport. The European Parliament also hosts
a sport-intergroup. By leaving the EU, the UK is also leaving behind an opportunity
to deepen its cooperation at the EU level.