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

International and European Sports Law – Monthly Report – February 2016

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 eagerly awaited FIFA Presidential elections of 26 February provided for a “new face” at the pinnacle of international football for the first time since 1998. One could argue whether Infantino is the man capable of bringing about the reform FIFA so desperately needs or whether he is simply a younger version of his predecessor Blatter. Both men are of course Swiss[1], and both were general secretaries of an international football governing body (UEFA and FIFA respectively) before becoming FIFA President. Only time will tell whether Infantino manages to cleanse FIFA from all the corruption and demonstrate that he is the right man for the job. In this regard, Infantino’s portrait by Sam Borden is definitely worth a read.

Though no FIFA official was lifted from his hotel bed by the police in the days before this FIFA Extraordinary Congress, the build-up was not entirely flawless. Two of the four Presidential Candidates, Prince Ali and Jérôme Champagne, turned to CAS prior to the elections with the aim of “incorporating transparent voting booths as well as independent scrutineers, in order to safeguard the integrity of the voting process and to ensure that the vote is conducted in secret. In addition, Prince Ali also asked for the FIFA Presidential Election to be postponed in the event the CAS could not rule on the request for provisional measures before the election.”[2] Unfortunately for the two candidates, on 24 February CAS rejected their requests (press releases are accessible here and here), promising that the “full order with grounds will be communicated in a few days”. Yet, the CAS website remained mute since then.

At that same Extraordinary FIFA Congress of 26 February, several reforms were also approved. The reforms include term limits for the FIFA President, FIFA Council members and members of the Audit and Compliance Committee and of the judicial bodies of max. 12 years, and the disclosure of individual compensation on an annual basis of the FIFA President, all FIFA Council members, the Secretary General and relevant chairpersons of independent standing and judicial committees. A summary of these reforms can be read here.

Another headline involving FIFA was the FIFA’s Appeal Committee’s decision to uphold the sanctions imposed on the Belgian club FC Seraing for infringing the rules on Third Party Ownership (TPO). The sanctions include a fine of CHF 150.000 and a complete transfer ban for four consecutive transfer windows starting in the summer of 2016. TPO (or FIFA’s decision to ban the practice) was once again making headlines in February, in large part thanks to the website of footballleaks (for more on the people behind this website, I recommend this interview published by Der Spiegel). On 1 February footballleaks published the Economic Rights Participation Agreement (ERPA) between Doyen Sport and the Spanish club Sevilla FC regarding the economic rights of the French football player Geoffrey Kondogbia. Another ERPA that was made accessible for the general public also involved Doyen and a Spanish club, namely Sporting de Gijón.

In addition to new agreement releases by footballleaks, the consequences of earlier releases were slowly being felt in February. For example, the release of the Gareth Bale transfer agreement between Tottenham Hotspur and Real Madrid on 20 January caused quite a few raised eyebrows throughout Europe. Most interestingly, three Members of the European Parliament officially asked the European Commission whether it is planning to “take action under its competition law and state aid responsibilities”, since one of the banks involved in the transfer agreement (Bankia) was previously saved by the European Stability Mechanism (ESM) with public money. The Commission’s answer to this question can be expected shortly.

As regards other issues involving EU law and sport, February was a relatively quiet month. The most interesting new development took place on 22 February with the Euroleague Basketball stating that it submitted a competition complaint before the European Commission against FIBA and FIBA Europe. In a nutshell, Euroleague Basketball is attacking the “unacceptable and illegal threats and pressures that FIBA and its member federations are making against clubs, players and referees to force them to abandon the Euroleague and the Eurocup and only participate in FIBA competitions”. The point of view of FIBA on this issue can be read here. It remains open whether the Commission decides to investigate the matter formally.

This same question can be asked about FIFPro’s complaint against the transfer system. FIFPro has decided to launch #GameChangers campaign to support the complaint and pressure the European Commission into opening an investigation. For an in-depth analysis of the issue, I recommend this piece by Nick de Marco and Alex Mills. 

A report listing the sportslaw headlines would be incomplete these days without references to all the doping related news. It is worth remembering that the two reports by the WADA Independent Commission into doping in international athletics[3] lead to the IAAF banning for life three of its senior officials.[4] This IAAF decision was appealed by the three officials in front of CAS on 1 February. The outcome of this appeal is currently still pending. The Russian Government, meanwhile, heavily criticised the two reports, holding that there is no evidence that it was involved in State-supported doping.  


Case law

The German Appeal Court in Rheinland-Pfalz reached a decision in the Müller case on 17 February.  Contrary to what the Labour Court of Mainz held in March 2015[5], the Appeal Court argued that football players are employed under a fixed-term contract. The judgment has not been made public (yet), so we do not know the full extent of the Appeal Court’s legal argumentation. Further appeal options were available to Müller, but it is unclear whether he exercised them.

On 4 February, another German Appeal Court (the OLG Frankfurt) rendered its decision in the Rogon case (we commented the first ruling on provisory measure in June) involving the German implementation of the new FIFA Regulations on Working with Intermediaries. Here again, the full text of the ruling is still missing and we can only elaborate on press reports (here and here). Yet, it seems that the Court has decided to partially uphold the new Regulations (especially the no-fee for minors provision), while it also stroke down some aspects of the new rules (especially the intermediary’s duty to register with the DFB). 


Official Documents and Press Releases


In the news

Athletics

Australian Football

Baseball

Cycling

Football

Speed skating – Pechstein

Tennis

Other


Academic materials



[1] In fact, Infantino grew up in the town of Brig, less than 10 km from Visp, Blatter’s home town.

[2] Media Release by the Court of Arbitration for Sport of 24 February 2016, “CAS rejects HRH Prince Ali Al Hussein’s request for urgent provisional measures”, http://www.tas-cas.org/fileadmin/user_upload/Media_Release_4459_decision.pdf accessed 23 March 2016.

[3] The Independent Commission Report #1 of 9 November 2015, https://wada-main-prod.s3.amazonaws.com/resources/files/wada_independent_commission_report_1_en.pdf accessed 24 March 2016; and The Independent Commission Report #2 of 14 January 2016, https://wada-main-prod.s3.amazonaws.com/resources/files/wada_independent_commission_report_2_2016_en_rev.pdf accessed 24 March 2016.

[4] I.e. Papa Massata Diack, Valentin Balakhnichev and Alexei Melnikov.

[5] For more information on the Müller case in first instance, read the blogs by Piotr Drabik: “Compatibility of Fixed-Term Contracts in Football with Directive 1999/70/EC. Part.1: The General Framework”, http://www.asser.nl/SportsLaw/Blog/post/part-1-compatibility-of-fixed-term-contracts-in-football-with-directive-1999-70-ec-the-general-framework-by-piotrek-drabik accessed 24 March 2016; and “Compatibility of fixed-term contracts in football with Directive 1999/70/EC. Part 2: The Heinz Müller case”, http://www.asser.nl/SportsLaw/Blog/post/compatibility-of-fixed-term-contracts-in-football-with-directive-1999-70-ec-part-2-the-heinz-muller-case-by-piotr-drabik accessed 24 March 2016.

[6] Prof. Ben Van Rompuy of the Asser Institute contributed tot his report with his piece “The role of the betting industry”, pages 236-241.

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Asser International Sports Law Blog | State Aid and Sport: does anyone really care about rugby? By Beverley Williamson

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

State Aid and Sport: does anyone really care about rugby? By Beverley Williamson

There has been a lot of Commission interest in potential state aid to professional football clubs in various Member States.  The huge sums of money involved are arguably an important factor in this interest and conversely, is perhaps the reason why state aid in rugby union is not such a concern. But whilst the sums of money may pale into comparison to those of professional football, the implications for the sport are potentially no less serious.

At the end of the 2012/2013 season, Biarritz Olympique (Biarritz) were relegated from the elite of French Rugby Union, the Top 14 to the Pro D2.  By the skin of their teeth, and as a result of an injection of cash from the local council (which amounted to 400,000€), they were spared administrative relegation to the amateur league below, the Fédérale 1, which would have occurred as a result of the financial state of the club. Article 8 of the Statuts et Règlements Générqaux (the rules that govern professional rugby) states that if it is determined by the DNACG (Direction Nationale d’Aide et de Contrôl de Gestion; the organisation charged with overseeing the administrative, financial and legal aspects of rugby in France) that a professional team is unable to satisfy its projected financial commitments, it will be relegated to the amateur leagues. Biarritz have been one of the great Top 14 clubs, having won the league in 2005 and 2006, having reached the Heineken Cup final in 2010 and won the smaller of the European competitions, the Challenge Cup in 2012 and they look set to make their return to the Top 14 next year, something that would not have been possible had the local council not intervened, an intervention that was permitted by the DNACG.

Article 107 TFEU provides for a very inclusive definition of state aid, declaring as incompatible with the internal market any aid whatsoever, granted by the State or funded with state resources, which distorts or threatens to distort competition by favouring certain undertakings in so far as it affects trade between Member States. There is a four part test for determining whether or not state aid has been granted; (i) did the money come from state resources; (ii) was it given to an undertaking; (iii) did that money confer selective advantage; and (iv)did it have the potential to distort competition. 

The definition of state resources in this context is fairly wide, and covers money provided by local government and so is easily satisfied in this case. The European jurisprudence is clear that a sporting club or association can be considered to be an undertaking within the meaning of the Treaty provisions in so far as its economic activity is concerned; again, this is easily satisfied in this instance. Given the lack of information available as to the nature of Biarritz’s financial concerns or the terms of the grant, it is difficult to determine whether selective advantage has been conferred by the grant. Selective advantage, of this particular type, is conferred when the undertaking could not have obtained that economic advantage under normal market conditions (market economy operator principle), so had Biarritz been unable to obtain a grant on similar terms to that which was provided by the Council, selective advantage will have been obtained. Finally, the aid has to have the potential to distort competition, and idea that is explored below alongside its affect upon trade between Member States.  

The Pro D2 is an entirely domestic league, it has no international fixtures whatsoever, so potentially is a purely domestic matter. In Stevenage Borough Football Club v The Football League (1996) Times Law Review, 6 July, it was deemed too remote that Stevenage would be able to compete for a place in European competitions and so there was no effect on trade between Member States in that case. However, the Commission have been clear that trade between Member States may be affected by aid given to an undertaking that is not itself, trading across borders (Case C-102/87 France v Commission [1988] ECR 4067, para.19) and indeed, have recently opened an investigation into a second division football team in the Netherlands. The Stevenage case can be contrasted with Biarritz where, despite a rocky start to the season, they have now climbed the table and sit second place. They have a serious chance of being promoted back into the Top 14, or at the very least, occupying one of the coveted promotion playoffs spots, thereby altering who could potentially win promotion (in France two teams go up and two teams come down).  Every team in the Top 14 competes in one of two European competitions: the European Championship Cup or the European Challenge Cup.  The potential effect on trade between Member States starts therefore, to become more evident. The concept of ‘trade between Member States’ has traditionally been given a wide interpretation and can be said to include situations which affect the competitive structure of the market, within its scope. The Top 14 has fixtures with other European countries, including England, Ireland and Italy.  Who enters (and who leaves) therefore will affect the competitive structure of those international fixtures. Article 107 however, states that aid is only prohibited ‘in so far as it’ has an effect on trade between Member States, rather than in Article 101 or 102 which rely on ‘may’ as a limiting concept. The jurisprudence is clear that it is the effect of the aid, rather than the intent or form of the aid which is determinative.  A full market analysis of the effect on trade, as occurs under Article 101 and 12, is not required under Article 107, although justification for the finding of a distortion of competition, or threatened distortion, would be necessary (Case 730/79 Philip Morris Holland BV v Commission, [1980] ECR 2671). In the case of Biarritz, the provision of the 400,000€ saved the team from relegation to the Fédéral 1 and therefore put them in a position in which they could immediately fight for promotion back into the Top 14 (which they look likely to achieve). It does not appear therefore, that an investigation would stumble at this stage of its inquiry.   

Due to the inclusive nature of the Article 107 prohibition, many investigations turn on whether they satisfy the exemption criteria of 107(3). The one most typically utilised in the case of investigations of professional football clubs in 107(3)(c) which states that aid used to facilitate the development of certain economic areas or activities may not be incompatible with the internal market, or the ‘failing firm’  defence. The local mayor hinted at the economic implications for the town itself of the teams fall from professionalism, as the primary motive for providing the aid. There is however, no (public) suggestion that the club would have folded without the injection of cash, merely that it would have had to compete in the amateur Fédérale 1. The definition of a failing firm is necessarily flexible. Nevertheless, it is a requirement when considering rescue aid (as opposed to restructuring aid as appears to be the case here) that the difficulties faced by the firm be short/medium term difficulties that are dependent upon short term government help for their resolution. As Biarritz have performed so well this season, it seems that there is an argument to be made that their difficulties were indeed short-term in nature, and have been resolved by the injection of cash provided by the local council. The aid itself would also have to be a ‘one time, last time’ injection of financial help, something that is not entirely clear from the local media reports. Further, the question of whether demotion to an amateur league is comparable to the outright failure of a firm would have to be addressed. Fellow former Top 14 great and rival, Union Sportive Montalbanaise (Montauban) faced administrative relegation in 2010. The local council there did not provide the club with the money required to prevent their fall. The club filed for bankruptcy after being unable to prove to the DNACG that they would be able to address the rumoured 1.7 million Euro shortfall in their budget for that season. After 4 years in the amateur league they succeeded in winning promotion back into the Pro D 2 for the 2014/2015 season, where they currently sit mid-table. Using this as an example, and provided that the criteria laid out in 3.1.1. of the Community Guidelines on State Aid for Rescuing and Restructuring Firms in Difficulty are satisfied, it seems there is at least a basis for defending the council loan. 

However, as there is very little by the way of detailed information available as to the nature of the financial difficulties of the club or the terms of the financial assistance provided by the Council, it is impossible to be determinative as to its standing under Article 107. On the face of it though, the case of Biarritz looks at least worthy of some Commission interest and could well be an example of unlawful state aid, aid that looks likely to have enabled Biarritz re-admittance to the Top 14, the ‘richest league in the world’. 400,000€ may seem like peanuts when compared with the figures the Commission is looking at in respect of professional football, but in this case it seems, paying peanuts gets you a lot more than monkeys. 

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