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 New FIFA Intermediaries Regulations under EU Law Fire in Germany. By Tine Misic

I'm sure that in 1985, plutonium is available in every corner drugstore, but in 1955, it's a little hard to come by.” (Dr. Emmett L. Brown)[1]


Back to the future?

Availing oneself of EU law in the ambit of sports in 1995 must have felt a bit like digging for plutonium, but following the landmark ruling of the European Court of Justice (ECJ) in the Bosman case[2], 20 years later, with all the buzz surrounding several cases where EU law is being used as an efficient ammunition for shelling various sports governing or organising bodies, one may wonder if in 2015 EU law is to be “found in every drug store” and the recent cases (see inter alia Heinz Müller v 1. FSV Mainz 05, Daniel Striani ao v UEFA, Doyen Sports ao v URBSFA, FIFA, UEFA) [3] cannot but invitingly evoke the spirit of 1995.

One of the aforementioned cases that also stands out pertains to the injunction decision[4] issued on 29 April 2015 by the Regional Court (Landesgericht) in Frankfurt am Main (hereinafter: the Court) in the dispute between the intermediary company Firma Rogon Sportmanagement (hereinafter: the claimant) and the German Football Federation (Deutschen Fußball-Bund, DFB), where the claimant challenged the provisions of the newly adopted DFB Regulations on Intermediaries (hereinafter: DFB Regulations)[5] for being incompatible with Articles 101 and 102 TFEU.[6] The Court, by acknowledging the urgency of the matter stemming from the upcoming transfer window and the potential loss of clients, deemed a couple of shells directed at the DFB Regulations to be well-aimed, and granted an injunction due to breach of Article 101 TFEU. More...




Compatibility of fixed-term contracts in football with Directive 1999/70/EC. Part 2: The Heinz Müller case. By Piotr Drabik

Introduction
The first part of the present blog article provided a general introduction to the compatibility of fixed-term contracts in football with Directive 1999/70/EC[1] (Directive). However, as the Member States of the European Union enjoy a considerable discretion in the implementation of a directive, grasping the impact of the Directive on the world of football would not be possible without considering the national context. The recent ruling of the Arbeitsgericht Mainz (the lowest German labour court; hereinafter the Court) in proceedings brought by a German footballer Heinz Müller provides an important example in this regard. This second part of the blog on the legality of fixed-term contract in football is devoted to presenting and assessing the Court’s decision.


I. Facts and Procedure
Heinz Müller, the main protagonist of this case, was a goalkeeper playing for 1.FSV Mainz 05 a club partaking to the German Bundesliga. More...


Compatibility of Fixed-Term Contracts in Football with Directive 1999/70/EC. Part.1: The General Framework. By Piotr Drabik

Introduction
On 25 March 2015, the Labour Court of Mainz issued its decision in proceedings brought by a German footballer, Heinz Müller, against his (now former) club 1. FSV Mainz 05 (Mainz 05). The Court sided with the player and ruled that Müller should have been employed by Mainz 05 for an indefinite period following his 2009 three year contract with the club which was subsequently extended in 2011 to run until mid-2014. The judgment was based on national law implementing Directive 1999/70 on fixed-term work[1] (Directive) with the latter being introduced pursuant to art. 155(2) TFEU (ex art. 139(2) TEC). On the basis of this article, European social partners’ may request a framework agreement which they conclude to be implemented on the European Union (EU, Union) level by a Council decision on a proposal from the Commission. One of the objectives of the framework agreement,[2] and therefore of the Directive, was to establish a system to prevent abuse arising from the use of successive fixed-term employment contracts or relationships[3] which lies at the heart of the discussed problem.[4] More...

UEFA’s FFP out in the open: The Dynamo Moscow Case

Ever since UEFA started imposing disciplinary measures to football clubs for not complying with Financial Fair Play’s break-even requirement in 2014, it remained a mystery how UEFA’s disciplinary bodies were enforcing the Club Licensing and Financial Fair Play (“FFP”) regulations, what measures it was imposing, and what the justifications were for the imposition of these measures. For over a year, the general public could only take note of the 23 settlement agreements between Europe’s footballing body and the clubs. The evidential obstacle for a proper analysis was that the actual settlements remained confidential, as was stressed in several of our previous Blogs.[1] The information provided by the press releases lacked the necessary information to answer the abovementioned questions.

On 24 April 2015, the UEFA Club Financial Control Body lifted part of the veil by referring FC Dynamo Moscow to the Adjudicatory Body. Finally, the Adjudicatory Body had the opportunity to decide on a “FFP case. The anxiously-awaited Decision was reached by the Adjudicatory Chamber on 19 June and published not long after. Now that the Decision has been made public, a new stage of the debate regarding UEFA’s FFP policy can start.More...

Policing the (in)dependence of National Federations through the prism of the FIFA Statutes. By Tine Misic

…and everything under the sun is in tune,

but the sun is eclipsed by the moon…[1] 


The issue

Ruffling a few feathers, on 30 May 2015 the FIFA Executive Committee rather unsurprisingly, considering the previous warnings,[2] adopted a decision to suspend with immediate effect the Indonesian Football Federation (PSSI) until such time as PSSI is able to comply with its obligations under Articles 13 and 17 of the FIFA Statutes.[3] Stripping PSSI of its membership rights, the decision results in a prohibition of all Indonesian teams (national or club) from having any international sporting contact. In other words, the decision precludes all Indonesian teams from participating in any competition organised by either FIFA or the Asian Football Confederation (AFC). In addition, the suspension of rights also precludes all PSSI members and officials from benefits of any FIFA or AFC development programme, course or training during the term of suspension. This decision coincides with a very recent award by the Court of Arbitration for Sport (CAS) in this ambit, which shall be discussed further below.[4]More...


The Brussels Court judgment on Financial Fair Play: a futile attempt to pull off a Bosman. By Ben Van Rompuy

On 29 May 2015, the Brussels Court of First Instance delivered its highly anticipated judgment on the challenge brought by football players’ agent Daniel Striani (and others) against UEFA’s Club Licensing and Financial Fair Play Regulations (FFP). In media reports,[1] the judgment was generally portrayed as a significant initial victory for the opponents of FFP. The Brussels Court not only made a reference for a preliminary ruling to the European Court of Justice (CJEU) but also imposed an interim order blocking UEFA from implementing the second phase of the FFP that involves reducing the permitted deficit for clubs.

A careful reading of the judgment, however, challenges the widespread expectation that the CJEU will now pronounce itself on the compatibility of the FFP with EU law. More...

A Bridge Too Far? Bridge Transfers at the Court of Arbitration for Sport. By Antoine Duval and Luis Torres.

FIFA’s freshly adopted TPO ban entered into force on 1 May (see our Blog symposium). Though it is difficult to anticipate to what extent FIFA will be able to enforce the ban, it is likely that many of the third-party investors will try to have recourse to alternative solutions to pursue their commercial involvement in the football transfer market. One potential way to circumvent the FIFA ban is to use the proxy of what has been coined “bridge transfers”. A bridge transfer occurs when a club is used as an intermediary bridge in the transfer of a player from one club to another. The fictitious passage through this club is used to circumscribe, for example, the payment of training compensation or to whitewash a third-party ownership by transforming it into a classical employment relationship. This is a legal construction that has gained currency especially in South American football, but not only. On 5 May 2015, in the Racing Club v. FIFA case, the Court of Arbitration for Sport (CAS) rendered its first award involving directly a bridge transfer. As this practice could become prevalent in the coming years we think that this case deserves a close look. More...

20 Years After Bosman - The New Frontiers of EU Law and Sport - Special Issue of the Maastricht Journal of European and Comparative Law

Editor's note: This is a short introduction written for the special Issue of the Maastricht Journal of European and Comparative Law celebrating the 20 years of the Bosman ruling and dedicated to the new frontiers of EU law and Sport (the articles are available here). For those willing to gain a deeper insight into the content of the Issue we organize (in collaboration with Maastricht University and the Maastricht Journal) a launching event with many of the authors in Brussels tomorrow (More info here).More...

ASSER Exclusive! Interview with Charles “Chuck” Blazer by Piotr Drabik

Editor’s note: Chuck Blazer declined our official interview request but thanks to some trusted sources (the FIFA indictment and Chuck’s testimony) we have reconstructed his likely answers. This is a fictional interview. Any resemblance with real facts is purely coincidental.



Mr Blazer, thank you for agreeing to this interview, especially considering the circumstances. How are you doing?

I am facing ten charges concerning, among others, conspiracy to corrupt and money laundering. But apart from that, I am doing great (laughs)!

 

It is good to know that you have not lost your spirit. And since you’ve been involved in football, or as you call it soccer, for years could you please first tell us what was your career at FIFA and its affiliates like?

Let me see… Starting from the 1990s I was employed by and associated with FIFA and one of its constituent confederations, namely the Confederation of North, Central American and Caribbean Association Football (CONCACAF). At various times, I also served as a member of several FIFA standing committees, including the marketing and television committee. As CONCACAF’s general secretary, a position I proudly held for 21 years, I was responsible, among many other things, for negotiations concerning media and sponsorship rights. From 1997 to 2013 I also served at FIFA’s executive committee where I participated in the selection process of the host countries for the World Cup tournaments. Those years at the helm of world soccer were truly amazing years of travel and hard work mainly for the good of the beautiful game. I might add that I even managed to document some of my voyages on my blog. I initially called it “Travels with Chuck Blazer” but Vladimir (Putin) convinced me to change the name to “Travels with Chuck Blazer and his Friends”. You should check it out.

 More...



Financial Fair Play: Lessons from the 2014 and 2015 settlement practice of UEFA. By Luis Torres

UEFA announced on 8 May that it had entered into Financial Fair Play settlement agreements with 10 European football clubs. Together with the four other agreements made in February 2015, this brings the total to 14 FFP settlements for 2015 and 23 since UEFA adopted modifications in its Procedural rules and allowed settlements agreements to be made between the Clubs and the Chief Investigator of the UEFA Club Financial Control Body (CFCB).[1] 

In the two years during which UEFA’s FFP regulations have been truly up and running we have witnessed the centrality taken by the settlement procedure in their enforcement. It is extremely rare for a club to be referred to the FFP adjudication chamber. In fact, only the case regarding Dynamo Moscow has been referred to the adjudication chamber. Thus, having a close look at the settlement practice of UEFA is crucial to gaining a good understanding of the functioning of FFP. Hence, this blog offers a detailed analysis of this year’s settlement agreements and compares them with last year’s settlements. More...

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. 

Comments are closed