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

The State of Football Governance - Advocate General Szpunar Paves the Way for a Critical Assessment of the Status Quo - By Robby Houben (University of Antwerp) & Siniša Petrović (University of Zagreb)

Editor's noteRobby Houben is a professor at the University of Antwerp, specializing in sports enterprise law and corporate law. He founded the University of Antwerp’s Football College, championing good governance in professional football. He is editor of the Research Handbook on the Law of Professional Football Clubs (Edward Elgar Publishing 2023). Siniša Petrović is a professor at the University of Zagreb, specializing in sports law and corporate law.


Mid-March, the YouTube channel The Overlap released an interview with Aleksander Čeferin, the current president of UEFA. Asked about the Super League’s court case against UEFA, Čeferin referred to it as ‘mainly symbolical’. This statement reveals a deep trust in the status quo. In this short note we assess if such trust is justified. On the basis of advocate general (AG) Szpunar’s recent opinion in a case on home grown player rules, we argue it is not. 

What is it about? On 9 March, AG Szpunar of the Court of Justice of the EU (‘CJEU’) delivered his opinion in the case of Royal Antwerp FC against the Royal Belgian Football Association (‘RBFA’) and the European Football Association UEFA. The case relates to the so-called ‘home grown players’ rule (‘HGP rule’). This rule requires clubs to include at least 8 locally trained players in the list of 25 players that make the A team. According to Szpunar, this likely amounts to an indirect nationality discrimination and, at least, to a restriction of the free movement rights of football players under Article 45 of the Treaty on the Functioning of the EU (‘TFEU’). Nevertheless, the AG considers the HGP rule valid as such, as, according to him, it serves the legitimate aims of stimulating the training of youth players and increasing the competitive balance between clubs. Only insofar as it allows that home grown players includes players trained by another club in the same league (under the UEFA HGP rule, 4 out of 8 home grown players), instead of by the club itself, the HGP rule is not suitable to achieve these aims. His recommendation to the court is, hence, to partially invalidate the HGP rule. He would likely find a (future) HGP rule requiring home grown players to be trained only at the club compatible with EU law. 

Is sport so special that it deserves special treatment? On the basis of Wouters and Meca-Medina it is widely accepted that restrictions of competition in sports can be justified if they proportionately pursue legitimate aims. Interestingly, in his assessment of the proportionality of the HGP rule, AG Szpunar seems to do Wouters away as a peculiar case. He finds ‘it difficult to deduce a general principle … according to which private entities bound by Article 45 TFEU would have a greater discretion than that of Member States in comparable situations’. Moreover, he argues, such greater discretion may be warranted in matters transcending classical economic policy, but the HGP rule has a strong economic component and is not such a matter (paras 76-78). As a result, Szpunar sees no reason ‘to afford UEFA and the RBFA a wider discretion than would be the norm for a Member State to justify a restriction of Article 45 TFEU’ (para 78). So, no specific exceptions for football that do not apply to other economic sectors! Wrong, because, at the same time, the AG allows to justify the HGP rule in view of legitimate aims, in this case youth development and competitive balance. Hence, while closing the back door for exceptional treatment of football in his assessment of proportionality, he opens the front door for such exceptional treatment as a matter of principle quite widely - without really underpinning why, nor providing evidence of why football is so special compared to let’s say universities or hospitals, who educate youngsters too, undoubtedly for the public good, and don’t enjoy such special treatment. 

But let’s assume sport is somehow special and deserves a special treatment. Does the HGP rule serve both the aim of youth development and increasing competitive balance? Probably not. It seems the aims are conflated here. Yes, the HGP rule serves the aim of encouraging the training of players (at professional football clubs that is), and arguably it makes sense to incentivize clubs to train players. But it is unlikely that this will contribute to more competitive balance between clubs. This has to do with the territorial model of football: ‘domestic’ competitions are organized along national borders. Clubs from larger countries logically have a larger talent pool to recruit young players from than clubs from smaller countries, and therefore they likely have a competitive advantage. Moreover, assuming the pool of talented young players is larger in bigger countries, it is likely that these youngsters will add sporting value to the A-team. That’s a win-win. In smaller countries, clubs will typically have a tougher job recruiting domestic top talent, simply because the pool is smaller. Adding to that is that the real top youngsters of smaller countries will probably sign their first professional player contract with a club of a top tier foreign competition, leaving only the ‘best of the rest’ for the local clubs. At the age of 16, the next Kevin De Bruyne will of course become a ‘club-trained’ local player somewhere, but not in a Belgian club. Cutting a long story short, from the perspective of fair competition, the HGP rule is not neutral and favors clubs that happen to reside in larger countries. 

Overboard with domestic borders then? That is what small Luxemburg club Swift Hespérange claims. Swift argues its free movement rights and free competition is infringed because it has to play football within the Luxembourg borders. As a result, it cannot grow and become competitive with clubs from surrounding leagues. Szpunar’s opinion provides food for thought for this case too, as he recognizes that the territorial model of football favors clubs in larger countries more than clubs in smaller countries (paras 68 and 70). His opinion therefore seems to accord with Swift’s intuition. 

How could a HGP rule become more neutral in a territorial model of football, with club football organized along domestic borders? Arguably, the rule could concentrate on the under 21 teams, and/or under 23 teams, where training actually takes place, allowing clubs to compose their A-teams with the best players, regardless of where they were trained. Talented club-trained young players will make their way to A-teams on the basis of merit. Clubs could be incentivized to field club-trained players in their A-team through increased solidarity payments from centralized earnings. Such an approach could serve both the aims of stimulating the training of players and increasing (or better: not deteriorating) the competitiveness of local clubs. 

Is this THE solution? We don’t know, and we don’t pretend to know. We raise it to illustrate a point: the importance of alternative systems to the HGP rule in the Antwerp case. AG Szpunar rightly asserts that the burden of proof to evidence that a rule is proportionate in view of legitimate aims, so that it can be upheld instead of invalidated, lies with the claimant of such exception, in the Antwerp case UEFA and the RBFA (para 61). Remarkably, the proportionality of the HGP rule is subsequently simply assumed. Moreover, alternatives brought forward by Antwerp, whereas the burden of proof lay with UEFA and the RBFA, were put aside as more restrictive, and considered not to be equally effective without much consideration (paras 79-81). Is it not more in line with logic that when the burden of proof falls upon a party, if it fails to discharge it then its claim is simply denied? More fundamentally, if rules are simply assumed to pursue legitimate objectives instead of evidenced to do so, is this not an open invitation for ‘sports washing’, the equivalent of green washing in sports? Of course, judges are not industry experts. As a result, we may not reasonably expect too much. Regulators must have leeway to make choices. But judges can and should perform oversight, assuring: i) rules are at least aiming for the target, ii) the regulator effectively considered alternatives, iii) there are good reasons for the regulator to prefer the chosen solution over another. If the questioned rule fails this test, it should be declared invalid – and the regulator should be sent back to the drawing board.[1]

So, AG Szpunar’s opinion is not perfect. Yet, it certainly puts the finger on the sore spot of football governance: double hatting and the inherent conflicts of interest that brings. In this respect, AG Szpunar’s opinion seems to provide counterweight to AG Rantos’ opinion in the European Super League (‘ESL’) case (see the subtill ‘in this respect’ in fn 39 of Szpunar’s opinion). In essence, AG Rantos argues that UEFA’s potential design errors are irrelevant, as the ESL, because of its (at the time) semi-closed set-up, should have been rejected anyway. He even asserts that open sport competitions are a constitutional principle of EU law, enshrined in Article 165 TFEU. This is a (too) far stretch, notably not repeated by AG Szpunar. Moreover, Szpunar makes UEFA’s governance deficit so much more explicit than Rantos. Because UEFA is both the regulator and monopolist of European club football, Szpunar considers that conflicts of interest are ‘bound to arise’ (in the French official version: ‘inévitable’; in Dutch: ‘onvermijdelijk’ – so: inevitable). Moreover, confronted with such conflict, he believes UEFA and domestic football regulators will have a natural reflex to let their own commercial interests prevail over the public interest (para 58). 

AG’s Szpunar’s opinion is authoritative, and probably even more than usual. Szpunar is first advocate general, and primus inter pares. His opinion will weigh in on the other football cases pending before the CJEU too, especially the ESL case and the aforementioned Swift case. As such, it could serve as a ‘canary in the coalmine’ for what is still to come later this year. Anyway, if the CJEU judges in the ESL case follow Szpunar’s assessment of UEFA’s double hatting, those who were celebrating the status quo after the Rantos opinion might be in for a scare soon.  

2023 is a year of truth for the organization of professional football. Dissatisfaction with the status quo has led to a record number of football related cases before the CJEU. These cases are heard separately, but at the same time inevitably interconnected, because they run in parallel on similar subject matters. Szpunar’s opinion makes at least clear that all cards are still on the table and the status quo might not prevail. 

Courts can only do what they are allowed to: apply the law in a given case. They can’t solve football’s governance deficit. Only politicians can ‘save football from itself’ by regulating it and by tackling policy failures exposed by professional football’s commercial explosion fueled primarily by clubs and players. Stakeholders such as clubs and players deserve a seat at the decision-making table in a governance model for pro football 2.0. For example, it is not acceptable any more for football regulators with no skin in the game to continue to congest match calendars (40 or so more matches in the 2026 World Cup !) without consulting clubs and players. Furthermore, the cleanest way to resolve conflicts of interest once and for all would be to separate UEFA’s functions - at least to ensure that adequate procedures are in place to avoid, mitigate and make transparent conflict of interests (in that order), and allowing access to public courts for judicial scrutiny. To be meaningful, such action should be taken at EU level, so as to create a level playing field for clubs across Europe and – because of the ‘Brussels’ effect – beyond.  

We are not naïve. There is no political appetite for reforming football yet. That was made clear during the ESL hearing early July 2022, where more than 20 Member States intervened in support of UEFA and the status quo. But, one, two or three critical decisions of the CJEU might inspire politicians to take action. That way, this wave of court cases may trigger a much more profound reform of the governance of the beautiful game.    

[1] In that sense AG Szpunar seems to go too far when in his answer to the court he suggests to invalidate the current HGP rule and already advises how the new rule should look – the latter is more a matter for the regulator.

New Event! Governing European football: What role for the European Union? - 16 December - Brussels

Join us for a round table co-organized by GLawNet and the Asser Institute at the Campus Brussels of the Maastricht University (Avenue de Tervueren 153, 1150 Brussels) just one day after the publication of the Opinion of Advocate General Rantos in the European Super League (ESL) case. The discussion between academics and stakeholders will focus on the role played by the EU, as well as the role it ought to play, in determining the way football is organised and governed.


In 2021, the announcement of the creation of a breakaway European Super League (ESL), as well as the drama of its early demise, stunned the world.  Since then, the company behind the ESL and UEFA (as well as FIFA) are locked into a legal battle that will soon come to an end at the Court of Justice of the European Union (CJEU). Following the preliminary questions raised by a Spanish court, the CJEU will weigh in on whether UEFA and FIFA breached EU competition law with their attempts to thwart the emergence of the ESL. It will not be the first time that the governing bodies of football, both Swiss associations, face scrutiny before the EU courts - many will remember the 1995 Bosman ruling. However, this time around various stakeholders and observers are calling for the EU to not only referee this particular dispute, but to as well start playing a stronger governance role by regulating European football.


Programme:

15:00 – 15:05 Opening: Mariolina Eliantonio (Maastricht University)

15:05 – 16:30 - Roundtable: Governing European Football: What role for the European Union?
Moderator: Carlo Colombo (Maastricht University)

16:30 Reception


This is an In-Person event only and will take place at the Campus Brussels of the Maastricht University (Avenue de Tervueren 153, 1150 Brussels). If you wish to attend, please register HERE.


Supported by undefined

Asser International Sports Law Blog | Sport and EU Competition Law: New developments and unfinished business. By Ben Van Rompuy

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

Sport and EU Competition Law: New developments and unfinished business. By Ben Van Rompuy

Editor's note: Ben Van Rompuy, Head of the ASSER International Sports Law Centre, was recently interviewed by LexisNexis UK for their in-house adviser service. With kind permission from LexisNexis we reproduce the interview on our blog in its entirety. 

How does competition law affect the sports sector?  

The application of EU competition law to the sports sector is a fairly recent and still unfolding development. It was only in the mid-1990s, due to the growing commercialization of professional sport, that there emerged a need to address competition issues in relation to, for instance, ticketing arrangements or the sale of media rights.  

Apart from the evident link between competition law and commercial activities related to sport, competition law also has a vital role to play in relation to the regulatory aspects of sport. Most markets for the organization of sports events are a textbook example of monopolistic markets. As a result, sports associations exercise pure monopsony power: athletes have no choice but to accept unilaterally imposed restrictions. Albeit limited to case-by-case inquiry, competition law is thus a meaningful instrument to curb the otherwise unfettered private regulatory power of sports associations. Unfortunately, it remains underutilized. Only a handful of international sports federations have truly experienced the “Bosman effect” and faced scrutiny of their regulatory activity under the EU antitrust rules.   


Have there been any important sports-related antitrust cases in recent years? 

Not at the EU level. Regarding commercial activities, the latest case dates from 2006, namely the Commission’s commitment decision on the joint selling of the Premier League media rights. And after some politically difficult uphill battles around the 2000s against FIFA and the International Automobile Federation the European Commission has been extremely reluctant to intervene in regulatory matters. Lasts year’s rejection of the complaint against UEFA’s Financial Fair Play Rules was the latest “achievement”. In the last few months, however, the Commission has received a number of new interesting complaints. 

Since the decentralization of EU antitrust enforcement in 2004, National Competition Authorities have addressed more than 40 decisions concerning the joint selling of sports media rights. For the most part, the remedy package designed by the Commission has been replicated, but there are some differences: the more widespread use of a “no single buyer” obligation and the acceptance of exclusive rights contracts exceeding three years. 

Regarding regulatory aspects, a string of recent national cases have challenged rules that disproportionally restrict athlete participation in events not organized and promoted by the official federation, notably in smaller sports such as motor sport, horseracing and bodybuilding (Ireland, Italy, Sweden). What characterizes these cases is that the remedial action was purely national in scope. In Germany, by contrast, two exploitative abuse cases are making their way up through the courts that have the potential of becoming important EU-wide precedents. Both are concerned with unfair trading conditions – a rarity these days: mandatory arbitration clauses (International Skating Union) and rules concerning the mandatory release of players to the national team without compensation (International Handball Federation).  


What other aspects of competition law are important in the sporting context? 

The State aid rules are the last unexplored frontier. For decades, national and regional public authorities have directly or indirectly financed sports organisations, sports infrastructure or individual clubs, but these measures have blissfully remained under the radar of EU State aid control. Yet in the last four years, the number of complaints against alleged unlawful State aid to professional sport, mostly football clubs, has been rising. Interestingly, citizens filed most of these complaints. 

With the enactment of the new Block Exemption Regulation and several formal decisions on for instance Belgian, French, German, and Swedish State aid for the construction and renovation of stadiums, the Commission has developed a coherent set of principles for infrastructure funding. The most complex cases are still pending. They concern land swaps/sale of State property (Spain, the Netherlands), tax advantages (Spain), and bank loans, guarantees or debt waivers (Spain, the Netherlands). The beneficiaries include top clubs like Real Madrid and Barcelona so the decisions are bound to attract huge media interest. 


Are there likely to be any developments in the future? 

Competition problems related to the sale of sports media rights will continue to arise at the national level. Public authorities will inevitably face stricter State aid control when supporting professional sports. State aid control could also be an effective instrument to put an end to the practice that selective tax exemptions for UEFA, FIFA, the IOC, etc. are a condition for applications to host international sporting events. 

The European Commission is currently examining a new complaint against FIFA’s ban on third-party ownership of players’ economic rights (TPO) in football and one concerning FIFA’s new regulations for player’s agents. These could result in high-profile cases. 

I do hope that the Commission will reclaim its responsibility for ensuring that rules and practices of international sports associations comply with EU competition law, particularly when athletes lodge complaints. National competition authorities lack the political power to confront international federations. And for most athletes, the possibility of private enforcement is not a real alternative given clauses barring access to national courts, the costs and the length of proceedings. For example, I am currently advising two Dutch Olympic speed skaters whose faith lies entirely in the hands of the Commission. They filed a complaint against the International Skating Union, who threatens them with a lifelong ban if they would participate in lucrative events outside the official calendar. The European Parliament has urged the Commission to open a formal investigation so we are optimistic that the Commission will take its responsibility and handle this case.  


What should lawyers in this field advise their clients? 

It is all about justifications. What you often see is that, in an attempt to shield certain practices from competition law scrutiny, much effort is put into arguments that, for example, sports associations or clubs are not “undertakings”. And only when these fail, recourse is made to underdeveloped arguments about the specificity of sport. Yet the true test lies here: are the restrictive effects reasonably necessary for the organization and proper conduct of sport? This obviously necessitates a good understanding of the sports sector and its internal dynamics. Even more so because competition authorities and courts typically give considerable deference to the legitimate role and expertise of sports associations in regulating their competitions.  

Given that most sports-related antitrust cases are now being addressed at the national level, there is a strong need to learn and draw from this decisional practice and case law. I am currently developing a database that reports and comments on all these cases, which should be a useful resource for those advising clients in the sports world.


Comments (1) -

  • Loek Jorritsma

    5/22/2015 1:25:32 PM |

    I have some questions. Where can I find why and what is a sportorganisation? Is, for example, indeed the International Automobile Federation a sportorganisation? Who decides? On what grounds? And is bodybuilding a sport? Why and who decides? On what arguments? In my opinion, since sportorganisations are not by name and activity defined by national and international law, there is no groud to exempt them form competition law. And I dislike it. Because I think sportorganisation have to be considerd as the organisations to deliver services of general interest. There is still a gap between the status of organisations and their activities.

Comments are closed