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

Book Review: Reforming FIFA, or Not

Editor’s note: This short book review will be published in a different format in the International Sports Law Journal, due to its timeliness we decided to reproduce it here. 

Reforming FIFA, or Not

 Antoine Duval

Book Review: Mark Pieth (ed.), Reforming FIFA, Dike Verlag, St. Gallen, 2014, 28.00 CHF, p.178

 


This book looks back at the work of the Independence Governance Committee (IGC). This Committee, constituted in 2011, had as primary objective to drive a reform process of FIFA initiated by its President Sepp Blatter. After ordering from the Swiss anti-corruption expert Mark Pieth, a report on the state of FIFA’s governance, FIFA decided to mandate him with the leadership of a consulting body composed of a mix of independent experts and football insiders, which would be accompanying and supervising the internal reform process of FIFA. The IGC was officially dissolved at the end of 2013, after completing its mandate. The book is composed of eight chapters, written by former members of the IGC, including former chairman Mark Pieth. In addition to the chapters, it includes the different reports (available here, here and here) submitted by the IGC to FIFA across the years. In the words of Pieth, this account is “fascinating because it gives a hands-on, realistic perspective of the concrete efforts, the achievements and the remaining challenges in the struggle for the reform of this organization [FIFA], avoiding the usual glorification or vilification.”[1] This review will first summarize the core of the account of the FIFA reform process provided by the book, before critically engaging with the outcome of the process and outlining the deficiencies that culminated on 29 May 2015 with the re-election of Sepp Blatter as FIFA president.More...



The Spanish TV Rights Distribution System after the Royal Decree: An Introduction. By Luis Torres

On the first of May 2015, the Spanish Government finally signed the Royal Decree allowing the joint selling of the media rights of the Spanish top two football leagues. The Minister for Sport stated that the Decree will allow clubs to “pay their debts with the social security and the tax authorities and will enable the Spanish teams to compete with the biggest European Leagues in terms of revenues from the sale of media rights”.[1]Although the signing of the Royal Decree was supposed to close a very long debate and discussion between the relevant stakeholders, its aftermath shows that the Telenovela is not entirely over. 

This blog post will first provide the background story to the selling of media rights in Spain. It will, thereafter, analyse the main points of the Royal Decree and outline how the system will work in practice. Finally, the blog will shortly address the current frictions between the Spanish League (LFP) and the Spanish football federation (RFEF).More...

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.  More...



Is FIFA fixing the prices of intermediaries? An EU competition law analysis - By Georgi Antonov (ASSER Institute)

Introduction

On 1 April 2015, the new FIFA Regulations on Working with Intermediaries (hereinafter referred as the Regulations) came into force. These Regulations introduced a number of changes as regards the division of competences between FIFA and its members, the national associations. A particularly interesting issue from an EU competition law perspective is the amended Article 7 of the Regulations. Under paragraph 3, which regulates the rules on payments to intermediaries (also previously referred to as ‘agents’), it is recommended that the total amount of remuneration per transaction due to intermediaries either being engaged to act on a player’s or club’s behalf should not exceed 3% of the player’s basic gross income for the entire duration of the relevant employment contract. In the case of transactions due to intermediaries who have been engaged to act on a club’s behalf in order to conclude a transfer agreement, the total amount of remuneration is recommended to not exceed 3% of the eventual transfer fee paid in relation to the relevant transfer of the player.More...

The Impact of the new FIFA Regulations for Intermediaries: A comparative analysis of Brazil, Spain and England. By Luis Torres

INTRODUCTION

Almost a year after their announcement, the new FIFA Regulations on working with Intermediaries (“FIFA Regulations”) came into force on 1 April 2015. Their purpose is to create a more simple and transparent system of regulation of football agents. It should be noted, however, that the new FIFA rules enable every national football association to regulate their own system on players’ intermediaries, provided they respect the compulsory minimum requirements adopted. In an industry that is already cutthroat, it thus remains to be seen whether FIFA’s “deregulation” indeed creates transparency, or whether it is a Pandora’s Box to future regulatory confusion.

This blog post will provide an overview of the new FIFA Regulations on working with intermediaries and especially its minimum requirements. Provided that national associations are encouraged to “draw up regulations that shall incorporate the principles established in these provisions”[1], three different national regulations have been taken as case-studies: the English FA Regulations, the Spanish RFEF Regulations and the Brazilian CBF Regulations. After mapping their main points of convergence and principal differences, the issues that could arise from these regulatory differences shall be analyzed.  More...

Blog Symposium: Why FIFA's TPO ban is justified. By Prof. Dr. Christian Duve

Introduction: FIFA’s TPO ban and its compatibility with EU competition law.
Day 1: FIFA must regulate TPO, not ban it.
Day 2: Third-party entitlement to shares of transfer fees: problems and solutions
Day 3: The Impact of the TPO Ban on South American Football.
Day 4: Third Party Investment from a UK Perspective. 

Editor’s note: Finally, the last blog of our TPO ban Symposium has arrived! Due to unforeseen circumstances, FIFA had to reconsider presenting its own views on the matter. However, FIFA advised us to contact Prof. Dr. Christian Duve to author the eagerly awaited blog on their behalf. Prof. Dr. Christian Duve is a lawyer and partner with Freshfields Bruckhaus Deringer LLP and an honorary professor at the University of Heidelberg. He has been a CAS arbitrator until 2014. Thus, as planned, we will conclude this symposium with a post defending the compatibility of the TPO ban with EU law. Many thanks to Prof. Dr. Duve for having accepted this last-minute challenge! More...






Blog Symposium: Third Party Investment from a UK Perspective. By Daniel Geey

Introduction: FIFA’s TPO ban and its compatibility with EU competition law.
Day 1: FIFA must regulate TPO, not ban it.
Day 2: Third-party entitlement to shares of transfer fees: problems and solutions
Day 3: The Impact of the TPO Ban on South American Football.
Day 5: Why FIFA's TPO ban is justified.

Editor's note: In this fourth part of our blog symposium on FIFA's TPO ban Daniel Geey shares his 'UK perspective' on the ban. The English Premier League being one of the first leagues to have outlawed TPO in 2010, Daniel will outline the regulatory steps taken to do so and critically assess them. Daniel is an associate in Field Fisher Waterhouse LLP's Competition and EU Regulatory Law Group. As well as being a famous 'football law' twitterer, he has also published numerous articles and blogs on the subject.

 

What is Third Party Investment?
In brief Third Party Investment (TPI) in the football industry, is where a football club does not own, or is not entitled to, 100% of the future transfer value of a player that is registered to play for that team. There are numerous models for third party player agreements but the basic premise is that companies, businesses and/or individuals provide football clubs or players with money in return for owning a percentage of a player’s future transfer value. This transfer value is also commonly referred to as a player’s economic rights. There are instances where entities will act as speculators by purchasing a percentage share in a player directly from a club in return for a lump sum that the club can then use as it wishes. More...





Blog Symposium: The Impact of the TPO Ban on South American Football. By Ariel N. Reck

Introduction: FIFA’s TPO ban and its compatibility with EU competition law.
Day 1: FIFA must regulate TPO, not ban it.
Day 2: Third-party entitlement to shares of transfer fees: problems and solutions
Day 4: Third Party Investment from a UK Perspective.
Day 5: Why FIFA's TPO ban is justified.

Editor’s note: Ariel N. Reck is an Argentine lawyer specialized in the football industry. He is a guest professor at ISDE’s Global Executive Master in International Sports Law, at the FIFA CIES Sports law & Management course (Universidad Católica Argentina) and the Universidad Austral Sports Law diploma (Argentina) among other prestigious courses. He is a regular conference speaker and author in the field of sports law.

Being an Argentine lawyer, Ariel will focus on the impact FIFA’s TPO ban will have (and is already having) on South American football.More...





Blog Symposium: Third-party entitlement to shares of transfer fees: problems and solutions - By Dr. Raffaele Poli (Head of CIES Football Observatory)

Introduction: FIFA’s TPO ban and its compatibility with EU competition law.
Day 1: FIFA must regulate TPO, not ban it.
Day 3: The Impact of the TPO Ban on South American Football.
Day 4: Third Party Investment from a UK Perspective.
Day 5: Why FIFA's TPO ban is justified.

Editor’s note: Raffaele Poli is a human geographer. Since 2002, he has studied the labour and transfer markets of football players. Within the context of his PhD thesis on the transfer networks of African footballers, he set up the CIES Football Observatory based at the International Centre for Sports Studies (CIES) located in Neuchâtel, Switzerland. Since 2005, this research group develops original research in the area of football from a multidisciplinary perspective combining quantitative and qualitative methods. Raffaele was also involved in a recent study on TPO providing FIFA with more background information on its functioning and regulation (the executive summary is available here).

This is the third blog of our Symposium on FIFA’s TPO ban, it is meant to provide an interdisciplinary view on the question. Therefore, it will venture beyond the purely legal aspects of the ban to introduce its social, political and economical context and the related challenges it faces. More...






Blog Symposium: FIFA must regulate TPO, not ban it. The point of view of La Liga.

Introduction: FIFA’s TPO ban and its compatibility with EU competition law.
Day 2: Third-party entitlement to shares of transfer fees: problems and solutions
Day 3: The Impact of the TPO Ban on South American Football.
Day 4: Third Party Investment from a UK Perspective.
Day 5: Why FIFA's TPO ban is justified.

Editor's note: This is the first blog of our symposium on FIFA's TPO ban, it features the position of La Liga regarding the ban and especially highlights some alternative regulatory measures it would favour. La Liga has launched a complaint in front of the European Commission challenging the compatibility of the ban with EU law, its ability to show that realistic less restrictive alternatives were available is key to winning this challenge. We wish to thank La Liga for sharing its legal (and political) analysis of FIFA's TPO ban with us.

INTRODUCTION

The Spanish Football League (La Liga) has argued for months that the funding of clubs through the conveyance of part of players' economic rights (TPO) is a useful practice for clubs. However, it also recognized that the practice must be strictly regulated. In July 2014, it approved a provisional regulation that was sent to many of the relevant stakeholders, including FIFA’s Legal Affairs Department. More...






Asser International Sports Law Blog | The boundaries of the “premium sports rights” category and its competition law implications. By Marine Montejo

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 boundaries of the “premium sports rights” category and its competition law implications. By Marine Montejo

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.

In its decisions regarding the joint selling of football media rights (UEFA, Bundesliga, FA Premier league), the European Commission insisted that premium media rights must be sold through a non-discriminatory and transparent tender procedure, in several packages and for a limited period of time in order to reduce foreclosure effects in the downstream market. These remedies ensure that broadcasters are able to compete for rights that carry high audiences and, for pay TV, a stable number of subscriptions. In line with these precedents, national competition authorities have tried to ensure compliance with remedy packages. The tipping point here appears to be the premium qualification of sport rights on the upstream market of commercialization of sport TV rights.

This begs the question: which sport TV rights must be considered premium? The European Commission already held that European football championships, the Olympics and Formula 1 are premium rights but the question remains open for various other sports because they have not been the subject of competition proceedings yet. Two recent cases (the decisions are accessible here and here) brought before the French competition authority concerning rugby TV rights highlighted the need to bring out objective criteria to determine what are premium sport rights, bearing in mind that something premium in France may be qualified as non-premium in another market depending on its characteristics. Before discussing the need for legal certainty for sport rights holders, we will appraise the two French decisions on rugby and how premium sports are qualified.  


From non-premium to premium 

Canal Plus, the current holder of the rights, and the Ligue Nationale de Rugby (national rugby league, “LNR”) entered into a negotiated procedure regarding the renewal of their Top 14 TV rights. However, in December 2013, the procedure was unsuccessful and the LNR decided to terminate the contract it had with Canal Plus. In so doing, the LNR started a legal war with its former broadcaster. As one of the conditions for the approval of the TPS/Canal Sat merger, Canal Plus was required to give the LNR the option to terminate their contract at the end of the 2013/2014 season.[1] The LNR, deciding that the price Canal Plus was paying did not correspond to the reality of the market anymore, started an open call for tenders for the next four seasons which led Canal Plus to file several legal actions to challenge the interruption of the negotiations, the termination of the contract and the call for tenders. Almost immediately the LNR suspended the call for tenders and resumed its negotiations with Canal Plus. In January 2014, the exclusive TV rights for all the Top 14 matches were awarded to Canal Plus - not only for the subsequent four but ultimately the following five seasons (2014/2015 to 2018/2019). Canal Plus had to put 355 million euros on the table to acquire the exclusive rights, amounting to twice the amount it paid for the previous broadcasting contract. BeIN Sports, a newcomer on the French sport TV rights market,[2] filed a complaint and asked for interim measures with the Autorité de la concurrence.[3]

The French competition authority, in its decisional practice,[4] distinguishes six different markets for sport TV rights acquisitions: (i) the national football first division market (Ligue 1); (ii) the market for annual football championships involving French teams (Ligue, UEFA Champions League and UEFA Europa League); (iii) the market for the most attractive foreign football championships; (iv) the market for other football competitions; (v) the market for events of major importance other than football; and (vi) the market for sport competitions other than football and events of major importance (or “other rights”). The first five markets are better known as premium rights while the last one consists of all other non-premium rights. Rugby media rights were considered as non-premium before that decision.

The Autorité recognized that rugby and more importantly, the Top 14 championship, were facing an important growth in popularity as reflected by the high value of its broadcastings rights and the high audiences it attracts. At the time of the decision, rugby was the third sport, after football and tennis, in terms of viewers and Canal Plus accepted to pay an average of 71 million euros per season for the rights.

 

Top 14 average rights price per season (1998-2014) 


Canal Plus Top 14 audiences and best audiences per season (2008-2014)

 

The Top 14 appears to be an important source of subscriptions (pt. 100) which makes it particularly attractive for pay TV channels. This competition was the second driver of subscriptions (32%) for Canal Plus just after the Ligue 1 (51%) but before the UEFA Champions League (31%). In light of these circumstances, the Top 14 rights should be considered as premium TV rights.

Next, in considering which market these rights should belong to, the Autorité set four criteria to be met to decide on the relevant premium market: (i) key sales driver for TV subscription; (ii) high audiences; (iii) value over 10 million euros per season; and (iv) competition characteristics (level and regularity). Without being particularly clear, the Autorité seems to consider that the Top 14 rights belong to a separate premium market (pt. 138). As a consequence, given the particularities of the French market, the Top 14 rights shifted from the non-premium market to the premium market which means that their commercialisation should have been awarded through a transparent and non-discriminatory tender procedure, for a limited period of time and divided into several packages consistent with the national and European practices.[5] 


From non-premium to semi-premium? 

The question concerning the premium qualification of sport TV rights arose again in a more recent case[6] before the French competition authority, this time concerning the live broadcasting rights for rugby’s second tier (“Pro D2”). The LNR carried out a public consultation for the marketing of commercial rights for the Pro D2 championships for the 2015/2016 to 2019/2020 seasons. Following three rounds of negotiation, Canal Plus and Eurosport were awarded the rights for a total of 31 million euros. The third and rejected applicant, Ma Chaîne Sport (“MCS”), a fairly new but growing sports channel[7] and more importantly part of the Altice group (a multinational cable, fiber, telecommunications, contents and media company), filed a complaint before the French Autorité de la Concurrence. In this complaint, it claimed it was excluded from the selling process as a result of both a cartel between Eurosport, Canal Plus and the LNR, and an abuse of dominant position from the LNR on “the market for the acquisition of semi-premium sport TV rights” (pt.47).

The TV rights for the Pro D2 championship are part of the sport “other rights” market as the competition authority never had to decide on that particular case before. However, MCS is claiming that these rights should belong to a new and different market of semi-premium sport rights that, without combining together the usual criteria found in the jurisprudence to identify premium rights, are still able to attract significant audiences, making them sufficiently attractive to be of interest to premium channels.[8] MCS further argues that the Pro D2, the football Ligue 2 (second division), the basketball Pro A and the handball D1 (all first division) belong on that market. All those rights, with the exception of the Ligue 2 rights which are considered as premium, are valuable in terms of killer content for pay TV but currently belong to the non-premium rights market. The Autorité acknowledges that the non-premium rights market is set as default and brings together a heterogeneous set of rights in attractiveness and value (pt.55). It also acknowledges that some of these rights attract higher prices but not quite enough to meet the threshold of 10 million euros per season to be considered as premium. Referring to its consistent decision making, the Autorité considers that relying on a sole criterion, namely a higher selling price than the average prices in the non-premium market, is not sufficient to change the relevant market to a premium market, without a substitutability analysis (pt.58). As a consequence, those rights are still deemed to belong to the non-premium rights market.

The recognition of a semi-premium market would have led to a division in the non-premium rights market (i.e. semi-premium rights on the one hand and the remaining rights that are less valuable on the other hand). Once again, the Autorité points out that such a categorization within the non-premium category is irrelevant from a competition law point of view (pt.59). Establishing a specific premium TV rights market should involve legal consequences as usually occurs when TV rights shift from the non-premium market to a specific premium market. Within the same market, it is difficult to see what those legal consequences should be. The non-premium TV market is ruled by common contract law in contrast to premium rights that have to comply with a number of obligations to ensure compliance with EU competition law (open and transparent tendering process, packages, and limits in duration). Imposing those remedies on the semi-premium market would lead to the absorption of the market by the premium TV rights markets (pt.63). As a consequence, the Autorité finds that there is no legal need to define a semi-premium sport TV rights market.  


Towards legal certainty for sport rights holders

We have seen that the shift between non-premium and premium sport rights is the tipping point that leads rights holders to start open tendering processes for the selling of their rights. However, in France, the Code du Sport provides that sport federations are the owners[9] of the media rights for their sport. These federations can decide to transfer this ownership to clubs.[10] In this case, joint selling by the league is compulsory[11] and it has to be done through an open and transparent tender process, the rights must be packaged and they must be sold for a maximum period of four years.[12] The Code du Sport codifies the remedies imposed by the European Commission in the joint selling of football media rights cases, but it does not mention premium rights. These obligations are applicable in the case of transfer of ownership and where a professional league exists. Thus, in France it only applies in relation to football, rugby, basketball, volleyball and handball, five sport for which a professional league has been set up. In practice, the French football federation is the only federation that transferred the ownership of rights to its clubs for the first and second divisions[13] and, as a consequence, the football national league, responsible for the joint selling on behalf of the clubs, has to respect the obligations laid down in the Code. It is possible that, in hoping to circumvent those obligations, the other four federations decided to keep the ownership of the media rights. This is, in particular, the case of the rugby federation where the league is selling the media rights for the Top 14 and Pro D2 on behalf of the federation.[14]

Both decisions on the Top 14 and Pro D2 reintegrate the notion of premium and non-premium rights into the legal analysis. In the case of rugby, where the national provisions for the selling of sport rights did not apply because the federation was the owner of these rights and not the clubs, the shift from non-premium to premium rights leads to the application of competition remedies. Moreover, the Top 14 decision opens the way to tendering processes, packaging and the limiting of contract durations in cases of sports where national provisions do not apply because there is no professional league. Indeed, in this scenario, the media rights will be considered as premium because they fulfil all criteria. Hence, two scenarios can be envisaged: where a professional league exists, the federation has to decide whether it transfers the rights ownership to clubs and respects the obligations laid down in the law; and where it decides to retain ownership, or if there is no league, the federation or league has to make sure its rights are not premium in accordance with the Top 14 decision before deciding on the marketing procedure it has to follow.

The criteria developed by the French competition authority appear to be quite objective and effective as these criteria were also used by the Belgian competition authority in a dispute between Proximus and Telenet concerning the rights of the 2015-2016 cycle-cross Superprestige competition that were awarded to Telenet.[15] Telenet used the cumulative criteria from the Top 14 decision to show that cycle-cross does not constitute a separate market from the other cycling rights that are not premium. The national competition authority however, also referring to the French decision, considers that these rights should be on a separate premium market because of their popularity throughout Flanders and that they are subscriptions driver. The question remaining here is whether it would be useful to codify these criteria. First, it has to be stated that these criteria were only used in the case of live TV and that it is difficult to assess if they are objective enough to be used for all media transmissions (which are mostly Internet-based). On the other hand, media is a fast moving market and it is absolutely not certain that engaging in a legislative process to codify those criteria will give the margin of appreciation necessary to correctly assess premium sport media rights markets and prevent any distortion of competition. A full codification does not appear essential in that case and, as shown in the Belgian cycle-cross situation, these criteria can be used in other sports and markets to determine the premium qualification of media rights which gives a modicum of legal certainty to sport rights holders.

However, a question remains surrounding sport rights that almost fall within the premium market. For non-premium rights, rights holders have the freedom to decide how they want to organise the selling of their TV rights. As Telenet in the Belgian decision on cycle-cross rightly pointed out, the imposition of a transparent tender procedure for rights holders that belong to the non-premium market creates an imbalance as they do not have the same resources as the premium rights holders to organise such a costly tender procedure. Yet, in practice, and in the Pro D2 case, rights holders tend to organise tender procedures and unbundle their rights even though they are not legally obliged to do so. In the case of the Top 14, the LNR carried out a market assessment before even starting its negotiations with Canal Plus and should have known its rights fell into the premium category. The problem here for rights holders is to prevent any dispute arising after the selling process concerning the non-premium/premium qualification of the TV rights in question. Identifying a semi-premium category may be useful for rights holders in better managing the shift from non-premium to premium rights holders. Right holders that are close to seeing their non-premium rights become premium should carefully assess the commercial attractiveness of their rights and probably decide on a formal selling procedure in order not to risk their selling process being annulled by competition authorities.

As seen with these two French cases, the value of sport TV rights may change over time, depending on factors such as the improvement in the level of competition and the public interest, which creates the possibility for these rights to change categories. Moreover, this appreciation may change from one national market to another. Moving from the non-premium to premium market implies some important changes in the selling process and rights holders should carefully appraise the value and popularity of their sport beforehand. The criteria laid down in the Top 14 decision may be considered as guiding principles in this process and, accordingly, it may be used by other competition authorities faced with similar circumstances.



[1] Autorité de la concurrence, 12-DCC-100, 23/07/2012

[2] BeIN Sport is a French sport premium channel in direct competition with Canal Plus and Eurosport and owns an important portfolio of sport rights for football (Ligue 1, Ligue 2, UEFA Champions League and Europa League), rugby, tennis and handball in particular. In February 2016 Canal Plus announced it had reached an agreement to exclusively distribute beIN Sports. The French competition authority is expected to decide very soon on that issue.

[3] Autorité de la concurrence, 14-MC-01, 30/07/2014 and Cour d’Appel de Paris, arrêt du 09 octobre 2014.

[4] Autorité de la concurrence, 12-DCC-100, 23/07/2012.

[5] Commission Decision, UEFA Champions League (Case COMP/C.2-37.398), 23/07/2003

[6] Autorité de la concurrence, 16-D-04, 23/03/2016.

[7] MCS (from July 2016, SFR Sport channels) sport rights portfolio mainly consists of the competition rights overlooked by the biggest actors on the market. However, it owns some valuable rights such as the basketball Pro A (French first division basketball championship), the CEV DenizBank Volleyball Champions League, the WTA tour in tennis and more importantly, from 2016, the FA Premier League.

[8] « qui, sans réunir l’ensemble des critères habituellement retenus par la jurisprudence pour identifier un caractère premium, sont des moteurs d’audience significatifs pour les chaînes thématiques sportives et des contenus suffisamment attractifs pour également intéresser les chaînes premium », pt.49

[9] Code du Sport, articles L.331-1 and R.333-1

[10] Ibid, L.331-1

[11] Ibid, article R.333-2

[12] Ibid, article R.333-3

[13] See article 25 of the FFF/LFP convention

[14] See article 28 of the FFR/LNR convention

[15] Belgische Mededingingsautoriteit, 15-VM-65, 05/11/2015

Comments are closed