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

Stepping Outside the New York Convention - Practical Lessons on the Indirect Enforcement of CAS-Awards in Football Matters - By Etienne Gard

Editor’s Note: Etienne Gard graduated from the University of Zurich and from King's College London. He currently manages a project in the field of digitalization with Bratschi Ltd., a major Swiss law firm where he did his traineeship with a focus in international commercial arbitration.

1. Prelude

On the 10th of June, 1958, the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, widely known as the “New York Convention”, was signed in New York by 10 countries.[1] This rather shy figure progressively grew over the decades to now reach 157 signatory countries, turning the New York Convention into the global recognition and enforcement instrument it is today. As V.V. Veeder’s puts it, “One English law lord is said to have said, extra judicially, that the New York Convention is both the Best Thing since sliced bread and also whatever was the Best Thing before sliced bread replaced it as the Best Thing.”[2]

However, among the overall appraisal regarding the New York Convention, some criticisms have been expressed. For instance, some states use their public policy rather as a pretext not to enforce an award than an actual ground for refusal.[3]  A further issue is the recurring bias in favor of local companies.[4] Additionally, recognition and enforcement procedures in application of the New York Convention take place in front of State authorities, for the most part in front of courts of law, according to national proceeding rules. This usually leads to the retaining of a local law firm, the translation of several documents, written submissions and one, if not several hearings. Hence, the efficiency of the New York Convention as a recognition and enforcement mechanism comes to the expense of both money and time of both parties of the arbitral procedure.

In contrast with the field of commercial arbitration, where the New York Convention is often considered the only viable option in order to enforce an award, international football organizations, together with the Court of Arbitration for Sport (“CAS”), offer an effective enforcement alternative. This article aims at outlining the main features of the indirect enforcement of CAS awards in football matters in light of a recent case. More...



The International Partnership against Corruption in Sport (IPACS) and the quest for good governance: Of brave men and rotting fish - By Thomas Kruessmann

Editor's note: Prof. Thomas Kruessmann is key expert in the EU Technical Assistant Project "Strengthening Teaching and Research Capacity at ADA University" in Baku (Azerbaijan). At the same time, he is co-ordinator of the Jean-Monnet Network "Developing European Studies in the Caucasus" with Skytte Institute of Political Studies at the University of Tartu (Estonia).


The notion that “fish rots from the head down” is known to many cultures and serves as a practical reminder on what is at stake in the current wave of anti-corruption / integrity and good governance initiatives. The purpose of this blog post is to provide a short update on the recent founding of the International Partnership against Corruption in Sport (IPACS), intermittently known as the International Sports Integrity Partnership (IPAS), and to propose some critical perspectives from a legal scholar’s point of view.

During the past couple of years, the sports world has seen a never-ending wave of corruption allegations, often followed by revelations, incriminations and new allegation. There are ongoing investigations, most notably in the United States where the U.S. Department of Justice has just recently intensified its probe into corruption at the major sports governing bodies (SGBs). By all accounts, we are witnessing only the tip of the iceberg. And after ten years of debate and half-hearted reforms, there is the widespread notion, as expressed by the Council of Europe’s (CoE’s) Parliamentary Assembly (PACE) Resolution 2199/2018 that “the sports movement cannot be left to resolve its failures alone”. More...



International and European Sports Law – Monthly Report – January 2018 - By Tomáš Grell

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 

Anti-doping whereabouts requirements declared compatible with the athletes' right to privacy and family life

On 18 January 2018, the European Court of Human Rights rendered a judgment with important consequences for the world of sport in general and the anti-doping regime in particular. The Strasbourg-based court was called upon to decide whether the anti-doping whereabouts system – which requires that a limited number of top elite athletes provide their National Anti-Doping Organisation or International Federation with regular information about their location, including identifying for each day one specific 60-minute time slot where the athlete will be available for testing at a pre-determined location – is compatible with the athletes' right to private and family life under Article 8 of the European Convention on Human Rights and their freedom of movement pursuant to Article 2 Protocol No. 4 of the Convention. The case was brought by the French cyclist Jeannie Longo and five French athlete unions that had filed their application on behalf of 99 professional handball, football, rugby, and basketball players.

While acknowledging that the whereabouts requirements clash with the athletes' right to private and family life, the judges took the view that such a restriction is necessary in order to protect the health of athletes and ensure a level playing field in sports competitions. They held that ''the reduction or removal of the relevant obligations would lead to an increase in the dangers of doping for the health of sports professionals and of all those who practise sports, and would be at odds with the European and international consensus on the need for unannounced testing as part of doping control''. Accordingly, the judges found no violation of Article 8 of the Convention and, in a similar vein, ruled that Article 2 Protocol No. 4 of the Convention was not applicable to the case.

 

Football stakeholders preparing to crack down on agents' excessive fees

It has been a record-breaking January transfer window with Premier League clubs having spent an eye-watering £430 million on signing new acquisitions. These spiralling transfer fees enable football agents, nowadays also called intermediaries, to charge impressive sums for their services. However, this might soon no longer be the case as the main stakeholders in European football are preparing to take action. UEFA, FIFPro, the European Club Association and the European Professional Football Leagues acknowledge in their joint resolution that the 2015 FIFA Regulations on Working with Intermediaries failed to address serious concerns in relation to the activities of intermediaries/agents. They recognise in broad terms that a more effective regulatory framework is needed and call among other things for a reasonable and proportionate cap on fees for intermediaries/agents, enhanced transparency and accountability, or stronger provisions to protect minors.

 

The CAS award in Joseph Odartei Lamptey v. FIFA 

On 15 January 2018, FIFA published on its website an arbitral award delivered on 4 August 2017 by the Court of Arbitration for Sport (CAS) in the dispute between the Ghanian football referee Joseph Odartei Lamptey and FIFA. The CAS sided with FIFA and dismissed the appeal filed by Mr Lamptey against an earlier decision of the FIFA Appeal Committee which (i) found him to have violated Article 69(1) of the FIFA Disciplinary Code as he unlawfully influenced the 2018 World Cup qualifying match between South Africa and Senegal that took place on 12 November 2016; (ii) as a consequence, banned him for life from taking part in any football-related activity; and (iii) ordered the match in question to be replayed. In reaching its conclusion, the CAS relied heavily on multiple reports of irregular betting activities that significantly deviated from usual market developments.  More...


Towards a Suitable Policy Framework for Cricket Betting in India - By Deeksha Malik

Editor's note: Deeksha Malik is a final-year student at National Law Institute University, India. Her main interest areas are corporate law, arbitration, and sports law. She can be reached at dkshmalik726@gmail.com.


In 2015, while interrogating cricketer Sreesanth and others accused in the IPL match-fixing case, Justice Neena Bansal, sitting as Additional Sessions Judge, made the following observations as regards betting on cricket matches.

“Cricket as a game of skill requires hand-eye-coordination for throwing, catching and hitting. It requires microscopic levels of precision and mental alertness for batsmen to find gaps or for bowlers to produce variety of styles of deliveries’ (medium pace, fast, inswing, outswing, offspin, legspin, googly). The sport requires strategic masterminds that can select the most efficient fielding positions for piling pressure on the batsmen. Based on above description, cricket cannot be described anything, but as a game of skill.”

The debate on the issue of betting in sports has since resurfaced and gained the attention of sportspersons, media, sports bodies, policymakers, and the general public. In April 2017, the Supreme Court bench comprising of Justices Dipak Misra and AM Khanwilkar agreed to hear a public interest litigation (PIL) seeking an order directing the government to come up with an appropriate framework for regulating betting in sports. The arguments put forth in the PIL present various dimensions. One of these pertains to economic considerations, a submission that regulated betting would be able to generate annual revenue of Rs. 12,000 crores by bringing the earnings therefrom within the tax net. As for policy considerations, it was submitted that a proper regulation in this area would enable the government to distinguish harmless betting from activities that impair the integrity of the game such as match-fixing. Further, betting on cricket matches largely depends on the skill of the concerned players, thereby distinguishing it from pure chance-based activities.

The issue of sports betting witnesses a divided opinion till this day. This is understandable, for both sides to the issue have equally pressing arguments. Aside from its regulation being a daunting task for authorities, sports betting is susceptible to corruption and other unscrupulous activities. At the same time, it is argued that it would be better for both the game and the economy if the same is legalised. More...


International and European Sports Law – Monthly Report – December 2017. By Tomáš Grell

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 International Skating Union's eligibility rules declared incompatible with EU competition law

On 8 December 2017, the European Commission announced that it had rendered a decision in the case against the International Skating Union (ISU). The Commission upheld the complaint lodged in October 2015 by two Dutch professional speed skaters Mark Tuitert and Niels Kerstholt, represented in this case by Ben Van Rompuy and Antoine Duval (you can read their joint statement here), and ruled that the ISU's eligibility rules preventing athletes from participating in speed skating competitions not approved by the ISU under the threat of severe penalties are in violation of EU competition law. In particular, the Commission held that these rules restrict the commercial freedom of (i) athletes who may be deprived of additional source of income as they are not allowed to participate in speed skating competitions other than those authorised by the ISU; and (ii) independent organisers who are unable to attract top athletes. And while the Commission recognised that sporting rules with restrictive effects might be compatible with EU law if they pursue a legitimate objective such as the protection of athletes' health and safety or the protection of the integrity and proper conduct of sport, it found that the ISU's eligibility rules pursue only its own commercial interests to the detriment of athletes and independent organisers of speed skating competitions. The ISU eventually escaped financial sanctions, but it must modify or abolish its eligibility rules within 90 days; otherwise it would be liable for non-compliance payments of up to 5% of its average daily turnover. For more information on this topic, we invite you to read our recent blog written by Professor Stefano Bastianon.

 

The International Olympic Committee bans Russia from the upcoming Winter Olympic Games

The world has been waiting impatiently for the International Olympic Committee's (IOC) decision on the participation of Russian athletes in the upcoming 2018 Winter Olympic Games in Pyeongchang. This was finally communicated on 5 December 2017. Having deliberated on the findings of the Schmid Commission, the IOC Executive Board decided to suspend the Russian Olympic Committee with immediate effect, meaning that only those Russian athletes who demonstrate that they had not benefited from the state-sponsored doping programme will be able to participate in the Games. Such clean athletes will be allowed to compete under the Olympic Flag, bearing the name 'Olympic Athlete from Russia (OAR)' on their uniforms. Further to this, the IOC Executive Board sanctioned several officials implicated in the manipulation of the anti-doping system in Russia, including Mr Vitaly Mutko, currently the Deputy Prime Minister of Russia and formerly the Minister of Sport. Mounting public pressure subsequently forced Mr Mutko to step down as head of the Local Organising Committee for the 2018 FIFA World Cup.

Meanwhile, 21 individual Russian athletes were sanctioned (see here, here, here, and here) in December (in addition to 22 athletes in November) by the IOC Oswald Commission that is tasked with investigating the alleged doping violations by Russian athletes at the 2014 Winter Olympic Games in Sochi. The Oswald Commission also published two full decisions in the cases against Evgeny Belov and Aleksandr Tretiakov who were both banned from all future editions of the Games. It is now clear that the Court of Arbitration for Sport will have quite some work in the coming weeks as the banned athletes are turning to this Swiss-based arbitral tribunal to have their sanctions reviewed (see here and here).

 

Universal Declaration of Player Rights

14 December 2017 was a great day for athletes all over the globe. On this day, representatives of the world's leading player associations met in Washington D.C. to unveil the Universal Declaration of Player Rights, a landmark document developed under the aegis of the World Players Association that strives to protect athletes from ongoing and systemic human rights violations in global sport. The World Players Association's Executive Director Brendan Schwab emphasised that the current system of sports governance ''lacks legitimacy and fails to protect the very people who sit at the heart of sport'' and stated that ''athlete rights can no longer be ignored''. Among other rights, the Declaration recognises the right of athletes to equality of opportunity, fair and just working conditions, privacy and the protection of personal data, due process, or effective remedy.

 

Chris Froome failed a doping test during the last year's Vuelta a España

The world of cycling suffered yet another blow when it transpired that one of its superstars Chris Froome had failed a doping test during the last year's Vuelta a España, a race he had eventually emerged victorious from for the first time in his career. His urine sample collected on 7 September 2017 contained twice the amount of salbutamol, a medication used to treat asthma, than permissible under the World Anti-Doping Agency's 2017 Prohibited List. Kenyan-born Froome has now hired a team of medical and legal experts to put forward a convincing explanation for the abnormal levels of salbutamol in his urine and thus to avoid sanctions being imposed on him. More...

The ISU Commission's Decision and the Slippery Side of Eligibility Rules - By Stefano Bastianon (University of Bergamo)

Editor’s note: Stefano Bastianon is Associate Professor in European Law at the University of Bergamo and lawyer admitted to the Busto Arsizio bar. He is also member of the IVth Division of the High Court of Sport Justice (Collegio di Garanzia dello sport) at the National Olympic Committee.

1. From the very beginning, the outcome of the ISU case was highly predictable, at least for those who are familiar with the basics of antitrust law. Nevertheless, more than twenty years after the Bosman judgment, the sports sector has shown the same shortsightedness and inability to see the forest for the trees. Even this attitude was highly predictable, at least for those who know the basics of sports governance. The final result is a clear-cut decision capable of influencing the entire sports movement. More...



Human Rights as Selection Criteria in Bidding Regulations for Mega-Sporting Events – Part II: FIFA and Comparative Overview – By Tomáš Grell

The first part of this two-part blog examined the new bidding regulations adopted by the IOC and UEFA, and concluded that it is the latter who gives more weight to human rights in its host selection process. This second part completes the picture by looking at FIFA's bidding regulations for the 2026 World Cup. It goes on to discuss whether human rights now constitute a material factor in evaluating bids to host the mega-sporting events organised by these three sports governing bodies. More...

Human Rights as Selection Criteria in Bidding Regulations for Mega-Sporting Events – Part I: IOC and UEFA – By Tomáš Grell

Editor’s note: Tomáš Grell holds an LL.M. in Public International Law from Leiden University. He contributes to the work of the ASSER International Sports Law Centre as a research intern.


It has been more than seven years since the FIFA Executive Committee awarded the 2022 World Cup to Qatar. And yet only in November 2017 did the Qatari government finally agree to dismantle the controversial kafala system, described by many as modern-day slavery. Meanwhile, hundreds of World Cup-related migrant workers have reportedly been exposed to a wide range of abusive practices such as false promises about the pay, passport confiscation, or appalling working and living conditions.[1] On top of that, some workers have paid the highest price – their life. To a certain extent, all this could have been avoided if human rights had been taken into account when evaluating the Qatari bid to host the tournament. In such a case, Qatar would not have won the bidding contest without providing a convincing explanation of how it intends to ensure that the country's poor human rights record will not affect individuals, including migrant workers, contributing to the delivery of the World Cup. An explicit commitment to abolish the kafala system could have formed an integral part of the bid.

Urged by Professor John Ruggie and his authoritative recommendations,[2] in October 2017 FIFA decided to include human rights within the criteria for evaluating bids to host the 2026 World Cup, following similar steps taken earlier this year by the International Olympic Committee (IOC) and UEFA in the context of the Olympic Winter Games 2026 and the Euro 2024 respectively. This two-part blog critically examines the role human rights play in the new bidding regulations adopted by the IOC, UEFA, and FIFA. The first part sheds light on the IOC and UEFA. The second part then takes a closer look at FIFA and aims to use a comparative analysis to determine whether the new bidding regulations are robust enough to ensure that selected candidates abide by international human rights standards.More...


International and European Sports Law – Monthly Report – November 2017. By Tomáš Grell

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

FIFA and FIFPro sign landmark agreement

A six-year cooperation agreement concluded between FIFA and FIFPro on 6 November 2017 puts an end to protracted negotiations which began after the latter had filed in September 2015 a complaint with the European Commission, challenging the validity of the FIFA transfer system under EU competition law. This agreement, together with an accord reached between FIFA, FIFPro, the European Club Association, and the World Leagues Forum under the umbrella of the FIFA Football Stakeholders Committee, should help streamline dispute resolution between players and clubs, avoid abusive practices in the world of football, or contribute to the growth of professional women's football. In addition, the FIFA Football Stakeholders Committee is now expected to establish a task force to study and conduct a broader review of the transfer system. As part of the deal, FIFPro agreed to withdraw its EU competition law complaint.

FIFA strengthens its human rights commitment amid reports of journalists getting arrested in Russia

It is fair to say that human rights have been at the forefront of FIFA's agenda in 2017. Following the establishment of the Human Rights Advisory Board in March and the adoption of the Human Rights Policy in June this year, in November FIFA published the bidding regulations for the 2026 World Cup. Under these new regulations, member associations bidding to host the final tournament shall, inter alia, commit themselves to respecting all internationally recognised human rights in line with the United Nations Guiding Principles on Business and Human Rights or present a human rights strategy on how they intend to honour this commitment. Importantly, the human rights strategy must include a comprehensive report that is to be complemented and informed by a study elaborated by an independent expert organisation. Moreover, on 9 November 2017, the Human Rights Advisory Board published its first report in which it outlined several recommendations for FIFA on how to further strengthen its efforts to ensure respect for human rights.

While all these attempts to enhance human rights protection are no doubt praiseworthy, they have not yet produced the desired effect as reports of gross human rights abuses linked to FIFA's activities continue to emerge. Most recently, Human Rights Watch documented how Russian police arrested a newspaper editor and a human rights defender whose work focused on exposing World Cup-related corruption and exploitation of migrant construction workers. On a more positive note, a bit of hope comes with the announcement by a diverse coalition, including FIFA, UEFA, and the International Olympic Committee, of its intention to launch a new independent Centre for Sport and Human Rights in 2018.

More than 20 Russian athletes sanctioned by the Oswald Commission for anti-doping rule violations at the Sochi Games   

November has been a busy month for the International Olympic Committee, especially for its Oswald Commission. Established in July 2016 after the first part of the McLaren Independent Investigation Report had been published, the Oswald Commission is tasked with investigating the alleged doping violations by Russian athletes at the 2014 Winter Olympic Games in Sochi. Its first sanctions were handed down last month. As of 30 November 2017, the Commission chaired by the IOC Member Denis Oswald sanctioned 22 athletes (see here, here, here, here, here, and here) who competed at the Sochi Olympics in the following sports: biathlon, bobsleigh, cross country skiing, skeleton, and speed skating. The Commission published its first full decision on 27 November 2017 in the case against the cross country skier Alexander Legkov, a gold and silver medallist from the Sochi Olympics, who was ultimately banned for life from attending another Olympics.More...

Statement on the European Commission's ISU Decision by Ben Van Rompuy and Antoine Duval

Editor's note: We (Ben Van Rompuy and Antoine Duval) are at the origin of today's decision by the European Commission finding that the International Skating Union's eligibility rules are contrary to EU competition law. In 2014, we were both struck by the news that ISU threatened lifetime ban against speed skaters wishing to participate in the then projected Icederby competitions and convinced that it was running against the most fundamental principles of EU competition law. We got in touch with Mark and Niels and lodged on their behalf a complaint with the European Commission. Three years after we are pleased to see that the European Commission, and Commissioner Vestager in particular, fully embraced our arguments and we believe this decision will shift the tectonic structure of sports governance in favour of athletes for years to come.


Here is our official statement:

Today is a great day for Mark Tuitert and Niels Kerstholt, but more importantly for all European athletes. The European Commission did not only consider the International Skating Union's eligibility rules contrary to European law, it sent out a strong message to all international sports federations that the interests of those who are at the centre of sports, the athletes, should not be disregarded. This case was always about giving those that dedicate their lives to excelling in a sport a chance to compete and to earn a decent living. The majority of athletes are no superstars and struggle to make ends meet and it is for them that this decision can be a game-changer.

However, we want to stress that this case was never about threatening the International Skating Union’s role in regulating its sport. And we very much welcome the exceptional decision taken by the European Commission to refrain from imposing a fine which could have threatened the financial stability of the International Skating Union. The International Skating Union, and other sports federations, are reminded however that they cannot abuse their legitimate regulatory power to protect their economic interests to the detriment of the athletes.

We urge the International Skating Union to enter into negotiations with representatives of the skaters to devise eligibility rules which are respectful of the interests of both the athletes and their sport.

Since the summer of 2014, it has been our honour to stand alongside Mark and Niels in a 'David versus Goliath' like challenge to what we always perceived as an extreme injustice. In this fight, we were also decisively supported by the team of EU Athletes and its Chance to Compete campaign.

Finally, we wish to extend a special thank you to Commissioner Vestager. This case is a small one for the European Commission, but Commissioner Vestager understood from the beginning that small cases do matter to European citizens and that European competition law is there to provide a level playing for all, and we are extremely grateful for her vision.


Dr. Ben Van Rompuy (Leiden University) and Dr. Antoine Duval (T.M.C. Asser Instituut)

Asser International Sports Law Blog | The Evolution of UEFA’s Financial Fair Play Rules – Part 3: Past reforms and uncertain future. By Christopher Flanagan

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 Evolution of UEFA’s Financial Fair Play Rules – Part 3: Past reforms and uncertain future. By Christopher Flanagan

Part Two of this series looked at the legal challenges FFP has faced in the five years since the controversial ‘break even’ requirements were incorporated. Those challenges to FFP’s legality have been ineffective in defeating the rules altogether; however, there have been iterative changes during FFP’s lifetime. Those changes are marked by greater procedural sophistication, and a move towards the liberalisation of equity input by owners in certain circumstances. In light of recent statements from UEFA President Aleksander Čeferin, it is possible that the financial regulation of European football will be subject to yet further change.


FFP from 2010 to 2015 

FFP was integrated into UEFA’s licensing requirements in the Club Licensing and Financial Fair Play Regulations Edition 2010.  In the 2010 Edition, implementation of FFP was to be overseen by the UEFA Club Financial Control Panel. Disciplinary action was carried out by the UEFA Control and Disciplinary Body, whose decisions could be appealed to the UEFA Appeals Board.

In the Club Licensing and Financial Fair Play Regulations Edition 2012, the oversight and disciplinary procedure of FFP was amended. The functions of the Club Financial Control Panel, Control and Disciplinary Body, and Appeals Board were replaced with a two-tier Club Financial Control Body (CFCB). The two chambers of the CFCB are the Investigatory Chamber, which actively monitors FFP compliance; and the Adjudicatory Chamber, which levies sanctions for non-compliance.

Under Article 53.1 of the 2012 Edition rules, the CFCB “carries out its duties as specified in the present regulations and the Procedural rules governing the UEFA Club Financial Control Body” (the Procedural Rules). The bespoke Procedural Rules establish a framework for the composition of the CFCB, the decision making processes of both the Investigatory and Adjudicatory Chambers, and the rules applicable to the whole proceedings. Like the Club Licensing and FFP Regulations, the Procedural Rules have gone through iterative changes (2014, and 2015 editions).

The Procedural Rules are a welcome development to FFP, ensuring the independence of the CFCB (Articles 6 and 7); bestowing broad investigatory powers upon the Investigatory Chamber (Article 13); and setting clear parameters for disciplinary action and process, including setting out potential disciplinary measures (Article 29). Overall, the Procedural Rules increase the legal sophistication of the end-to-end FFP process, and in doing so reduce the risk of irrational or arbitrary outcomes.  This protects clubs and UEFA; clubs who are in breach of FFP have clear guidance on the process that will be followed; clubs who adhere to FFP are reassured that those clubs who breach the rules will be put through a sophisticated investigation and (if necessary) disciplinary process (and additionally, pursuant to Article 22, where third party clubs and member associations are affected and have a legitimate interest in joining proceedings before the Adjudicatory Chamber, may do so); and UEFA, in having a clear and detailed rules governing procedure, helps to insulate FFP from legal challenge.

(By way of aside, in light of the changes to the procedure governing FFP sanctions, it is noteworthy that Bursaspor, in CAS 2014/A/3870 Bursaspor Kulübü Derneği v. Union des Associations Européennes de Football, argued that Control and Disciplinary Body and Appeals Board were “not professional on financial subjects”, although the Turkish club was unsuccessful in its appeal, and UEFA’s rebuttal was to highlight that the Club Financial Control Panel was made up of “financial and legal experts” and that the creation of the CFCB was “principally motivated by a desire to streamline the process”.)

Amongst the Procedural Rules, Article 33 stipulates that decisions of the Adjudicatory Chamber are to be published (subject to redaction to protect confidential information or personal data), which has the effect not just of increasing the transparency of UEFA’s decision making, but also of increasing the transparency of the financial affairs of European club football.


Settlement Agreements

One of the more dramatic changes implemented by the Procedural Rules was the implementation of ‘Settlement Agreements’, which are “aimed at ensuring that clubs in breach of the break-even requirement become compliant within a certain timeframe and are designed to be effective, equitable and dissuasive.

Settlement Agreements have been described as “basically a plea bargain”. Redolent of the settlement procedures in many competition law or white collar crime regimes, Settlement Agreements are consensual agreements entered into between a party who has breached FFP and the CFCB, which avoid the need for a breach to be referred to the Adjudicatory Chamber (Article 15.1).   Settlement Agreements have been viewed by the CAS as effectively giving clubs a ‘second chance’ to comply with FFP (CAS 2016/A/4692 Kardemir Karabükspor v. UEFA), albeit with more stringent conditions applied.

Settlement Agreements may include sanctions and timeframes for compliance (Article 15.2) and are monitored by the CFCB Chief Investigator (Article 15.4). If there is a breach of a settlement agreement, the matter is then referred to the Adjudicators Chamber.


FFP from 2015

The next major changes to FFP were implemented in the Club Licensing and Financial Fair Play Regulations Edition 2015.

Introduction of Voluntary Agreements 

In contrast to the ex post compliance approach of Settlement Agreements, Voluntary Agreements are an ex ante mechanism for clubs to derogate from the normal FFP standards, with the ultimate aim of complying with the break-even requirement. Voluntary Agreements are defined as being “a structured set of obligations which are individually tailored to the situation of the club, break-even targets defined as annual and aggregate break-even results for each reporting period covered by the agreement, and any other obligations as agreed with the UEFA Club Financial Control Body investigatory chamber” (Edition 2015, Annex XII A.5). They can last for up to four reporting periods (Annex XII A.3).

In order to enter into a Voluntary Agreement, a club must adhere to certain procedural requirements. These include submitting a long-term business plan “based on reasonable and conservative assumptions” (Annex XII B.2(a)).

On the face of it, the concept of the Voluntary Agreements–allowing clubs with new owners to incur debts on the promise of future FFP compliance–sounds like a recipe for sort of financial peril FFP was created to avoid.  However, in order to be allowed to enter into a Voluntary Agreement, there must be put in place “an irrevocable commitment(s) by an equity participant(s) and/or related party(ies) to make contributions for an amount at least equal to the aggregate future break-even deficits for all the reporting periods covered by the voluntary agreement” (Annex XII B.2(c)).

Break Even Limit Increase

Another significant change implemented by the Club Licensing and Financial Fair Play Regulations Edition 2015 was a variation to the quantum of the break even limits in certain circumstances. The limits were increased from €5m to €45m for assessment periods 2013/14 and 2014/15, and €30m for assessment periods 2015/16, 2016/17 and 2017/18  “if it is entirely covered by a direct contribution/payment from the club owner(s) or a related party” (Article 61.2).

This balance between short-term losses, guaranteed in the event of financial failure (per the Voluntary Agreement process) or offset by owner input, against long term sustainability are superficially congruent with the objectives identified by UEFA for its licensing regime, which include “to introduce more discipline and rationality in club football finances; to encourage clubs to operate on the basis of their own revenues; to encourage responsible spending for the long-term benefit of football; and to protect the long-term viability and sustainability of European club football” (Article 2 (c)-(f)).  But this takes a somewhat narrow view of the impact of spending in football. A club’s spending affects not just a buying and selling club in a market transaction for a player’s registration, but affects the overall market in football players.

Inflation in the market for player registrations far outstrips inflation across the broader economy (by one estimate, inflation in football transfer fees runs ten times higher than inflation in the “normal” economy – and those figure were calculated before Paris Saint Germain doubled the record transfer fee with the purchase of Neymar in the summer of 2017. Player wage growth runs at over 10% per annum. Voluntary Agreements and increased owner investment may contribute to this vertiginous inflation. This runs in contrast to some of UEFA’s messaging around FFP. For example, it has previously been stated that FFP was intended to “decrease pressure on salaries and transfer fees and limit inflationary effect”.

Of course, it should be borne in mind that there is nothing inherently wrong with inflation where it is sustainable; but when considered in an environment where capital is accruing to the wealthy elite (top 15 European clubs) at a quicker rate than the rest of the market (see UEFA’s Financial Fair Play Regulations and the Rise of Football’s 1% by van Maren for further analysis), there is a risk of bifurcation of the financial capabilities of football clubs, with inflation marginalising the non-elite.  European clubs have seen revenue growth at over 9% per annum on UEFA’s figures, although since 2009, the average English Premier League club has added “five times more revenue than the average Italian Serie A or French Ligue Un club”. Inflation, if not intrinsically problematic, certainly has the potential to cause problems; and UEFA, in administering and approving Voluntary Agreements, and in weakening its stance on owners offsetting losses, should consider the impact on inflation and stability. Voluntary Agreements and financial input by owners are potentially gateways to the elite level; however, this should not be at the expense of those who do not have wealthy owners or pre-existing wealth.

Perhaps more significantly, there is a normative dimension to the introduction of Voluntary Agreements and the relaxation of financial input from benefactors. The message behind FFP was one of “revolutionising European football”, with then President of UEFA Michel Platini saying that UEFA would “never [be] going back on this.” Quite conversely, the changes brought about by the 2015 Edition of FFP were welcomed with a message of FFP being “eased”. This is disappointing because, on UEFA’s own figures, FFP has had a considerable positive impact on the European football financial landscape. On one view, allowing equity input from owners is a pro-competitive encouragement of exogenous investment; on another, it is rowing back from a positive and successful policy initiative at the expense of those not fortunate enough to have a benefactor owner.


The impact of FFP

In defence of its loosening of the restriction on loss-making, UEFA would doubtless point to the positive impact the FFP has had to date,[1] which, perhaps, creates financial latitude that once did not exist.

As a part of FFP, the clubs under UEFA’s direct jurisdiction report standardised, audited, financial information. UEFA publishes annual benchmarking reports, which draw upon the information clubs submit. Since the introduction of FFP, there has been a general positive trend in European clubs’ finances.

For example, UEFA’s 7th Benchmarking Report, covering the financial year 2014, showed wage growth to have slowed to its “lowest rate in recent history” at 3%. Overdue payables (essentially debts that clubs owe but have not paid on time) had reduced by 91%. The most recent report published by UEFA, its eight Club Licensing Benchmarking Report, covering the financial year 2015, indicates that clubs “have generated underlying operating profits of €1.5bn in the last two years, compared with losses of €700m in the two years before the introduction of [FFP]”; whereas “Combined bottom-line losses have decreased by 81% since the introduction of [FFP]”.

Of course, there are methodological problems in ascribing the improvement in European clubs’ finances exclusively to FFP when in reality there are a combination of factors at play. However, what we can comfortably say is that there is an evident correlation between FFP and the stabilisation of the football financial landscape.

There is also a second-order effect of FFP at play. UEFA, in its position as the game’s regulator, in introducing FFP, has had a hegemonic influence on the governance of the game at national level.  For example, in England, domestic iterations of FFP have been instituted in the Football League, and the Premier League has introduced its own Short Term Cost Control Measures.

Thus, by setting the tone of sustainability expectations, UEFA has influenced the financial stability of clubs outside of its jurisdiction. This is highlighted neatly in the following passage from UEFA’s eight Benchmarking Report:

The centrepiece of financial fair play, the break-even rule, may not directly address small and medium-sized clubs with costs and incomes below €5m, but financial fair play has other direct and indirect impacts on these clubs. Direct in that UEFA and the Club Financial Control Body pass their eyes over detailed financial data from all clubs competing in UEFA competitions and in particular take careful, regular note of all overdue payables. And indirect in that financial fair play has resulted in a significantly higher level of scrutiny of club finances and the actions of club owners and directors. In addition, some countries, such as Cyprus, have introduced their own versions of financial fair play, tailored to their clubs and the scale of their financial activities.” 

So, whilst UEFA can legitimately point to the more secure position across the financial landscape as a good reason that Voluntary Agreements or wider economic input from owners will do no harm, it should continue to reflect on the message this loosening of FFP may send to the wider football market.


FFP Exemptions

One area of change for which UEFA should be applauded is in its use of certain exemptions from the FFP ‘break even’ calculation. These include areas such as infrastructure and youth football, both essential to the game’s long-term sustainability. By exempting these areas from the break even calculation, clubs’ owners are incentivised to invest (by equity rather than debt) in the game’s future, without an impact on short-term competitiveness.

More recently (from 2015), UEFA has moved to exclude expenditure on women’s football from the break-even calculation (Annex X C(i). Again, UEFA should be praised for taking positive steps to encourage growth across less wealthy areas of the game.


The Future of FFP after Neymar

Over the summer of 2017, public interest in FFP has reignited. The rules are now becoming synonymous with Neymar and his new club, Paris Saint Germain, after the Brazilian player’s reported €222m release clause was activated, doubling the world record fee for a player transfer.   This move, followed by French player Kylian Mbappe joining Paris Saint Germain from Monaco for similarly large fee, has upset some in the game.

These events pose a significant problem for UEFA. It is not yet known whether PSG are in breach of FFP (and, of course, it is conceivable that they have sufficient financial capabilities to fund the purchases without any breach of the rules); however, the transactions have raised questions, including La Liga President Javier Tebas stating that he believed PSG were guilty of “infringing on UEFA regulations, financial fair play and EU laws”, and Arsenal manager Arsène Wenger saying that “it looks like we have created rules that cannot be respected…there are too many legal ways to get around it.” 

The public grievances around FFP precipitated by PSG’s spending do, to an extent, seem to conflate simply spending large sums of money with breaching FFP. The rules do not prohibit spending large sums on transfers or otherwise; rather, they limit how much debt can be incurred by a club, assessed over a three year rolling period, with only limited equity input from an owner. The rules were not designed to prevent a €222m transfer per se (with the fee amortised across the length of the contract period, as is standard practice in the football industry); rather, they were designed to ensure that any such spending was sustainable, and did not put clubs at risk.

However, FFP is a reactive, not a proactive tool. Clubs report spending after the event; they are not required to seek permission from UEFA to make a capital investment. This ex post approach does perhaps reveal a flaw in managing any egregious short-term infractions that should arise, the impact of which will be felt by other clubs before UEFA, through the CFCB, can have its say.

The broader problem associated with PSG’s spending is one of opacity. PSG is owned by Oryx Qatar Sports Investments, which is an investment vehicle for the state of Qatar. There were contemporary (unconfirmed) reports that the deal would be structured to take place off of PSG’s accounting books, with Neymar being paid the value of his release clause directly for agreeing to become an ambassador to the Qatar World Cup, so that he could in turn pay his own release clause.  If true, this would notionally take the release clause fee off of PSG’s books, but would almost certainly qualify as a related party transaction with the meaning of FFP’s Annex X F and thus remain examinable by the CFCB. Similarly, it was reported that PSG’s loan-come-purchase of Kylian Mbappe was “complex”. While complicated transfer arrangements are to be expected in a game that is going through increasing commercial sophistication, there are evidently some suspicions that PSG are attempting to circumvent FFP (or, more colourfully, ‘peeing in the pool’).

However, UEFA anticipated clubs employing ‘creative’ tactics to superficially comply with FFP, and gave the CFCB jurisdiction to consider “at all times…the overall objectives of these regulations, in particular to defeat any attempt to circumvent these objectives” (Article 72.1). (At this stage, one can only speculate as to what, if any, FFP objectives PSG may have breached, but the CFCB will surely consider Article 2.2 (a) and (c) - (f)).

UEFA has publicly stated that it is investigating PSG’s FFP compliance, saying “The investigation will focus on the compliance of the club with the break-even requirement, particularly in light of its recent transfer activity”. Of course, this should not be particularly surprising given the CFCB annually examines the finances of each club that enters into UEFA competitions under the standard FFP procedure, but it will be interesting to observe how CFCB’s investigation progresses, and, if PSG is found to have breached FFP in letter or in spirit, what punishment is meted out to PSG. 

Whether PSG’s aggressive spending was emboldened by UEFA’s weakening of the more restrictive elements of FFP will remain unknown.  Similarly, one can only speculate as to whether the dilution of FFP, through changes such as the implementation of Settlement Agreements and Voluntary Agreements, came about as a result of legal challenges already brought and defended by UEFA; or whether UEFA is insulating itself from further legal challenges; or whether UEFA is simply altering the rules for the good of the game. As detailed in Part One of this series, the legality of FFP will rest on its proportionality. These changes have moved FFP towards a more flexible, and arguably more proportionate, proposition; but, given the public exposure that PSG’s spending has precipitated,UEFA will surely wish to ensure that FFP is not seen as a paper tiger.

The matter is on UEFA’s agenda. Even before the events involving PSG in the summer of 2017, incoming UEFA president, Aleksander Čeferin, spoke about the possibility of a fixed wage cap and closing the gap between the game’s haves and have nots. Such changes would certainly make FFP more congruent with its name. FFP is not about being ‘fair’ in the sense of being egalitarian or introducing a level playing field. It is a gentle brake applied to the rate of growth in the game, aimed predominantly at reducing long-term loss making and insolvency. Perhaps the rules might have been less controversial from the outset, and might not have been a mechanism for the frustration ventilated by sum following PSG’s purchase of Neymar and Mbappe, if instead of being called FFP, the rules were called ‘financial management rules’, and absolved themselves from the pretence of ‘fairness’.

Alternatively, UEFA could revisit FFP, implementing a genuinely egalitarian set of rules – a hard salary cap, a luxury tax, the abolition of the transfer market, or some combination of those things and others. This would, however, undoubtedly engender its own set of legal challenges, as we have seen with FFP. 

Whilst the challenges to various aspects of FFP have been largely ineffective in defeating FFP (see for example CAS 2016/A/4692 Kardemir Karabükspor v. UEFA; CAS 2016/A/4492 Galatasary v. UEFA; CAS 2014/A/3870 Bursaspor Kulübü Derneği v. UEFA; CAS 2014/A/3533 Football Club Metallurg v. UEFA; CAS 2013/A/3067 Málaga CF SAD v. UEFA; CAS 2012/A/2824 Beşiktaş JK v UEFA; CAS 2012/A/2821 Bursaspor Kulübü Dernegi v. UEFA; CAS 2012/A/2702 Györi ETO v. UEFA ), the rules have, against the backdrop of repeated disputes about their legality, iteratively changed, including a move towards greater liberalisation in respect of equity input into clubs by owners. 

And so UEFA finds itself at a crossroads. FFP, bombarded with legal challenges (which it has to date ridden) has gradually developed and liberalised as financial stability in European football has improved. Now, with the transfer market having escalated, the efficacy of the rules has come into question. UEFA must decide on the path it wishes to take; whether to liberate the market altogether,  whether to institute a truly ‘fair’ system, or whether to continue on FFP’s current centrist ground. Aleksander Čeferin, a lawyer by extraction, is certain to face a legal and political struggle in whichever direction he turns.


[1] For further discussion on the efficacy of FFP, see Neil Dunbar (2015) "The union of European football association’s club licensing and financial fair play regulations - are they working?" ISSN 1836-1129 http://epublications.bond.edu.au/slej/27

Comments are closed