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

Nudging, not crushing, private orders - Private Ordering in Sports and the Role of States - By Branislav Hock

Editor's note: Branislav Hock (@bran_hock)  is PhD Researcher at the Tilburg Law and Economics Center at Tilburg University. His areas of interests are transnational regulation of corruption, public procurement, extraterritoriality, compliance, law and economics, and private ordering. Author can be contacted via email: b.hock@uvt.nl.


This blog post is based on a paper co-authored with Suren Gomtsian, Annemarie Balvert, and Oguz Kirman.


Game-changers that lead to financial success, political revolutions, or innovation, do not come “out of the blue”; they come from a logical sequence of events supported by well-functioning institutions. Many of these game changers originate from transnational private actors—such as business and sport associations—that produce positive spillover effects on the economy. In a recent paper forthcoming in the Yale Journal of International Law, using the example of FIFA, football’s world-governing body, with co-authors Suren Gomtsian, Annemarie Balvert, and Oguz Kirman, we show that the success of private associations in creating and maintaining private legal order depends on the ability to offer better institutions than their public alternatives do. While financial scandals and other global problems that relate to the functioning of these private member associations may call for public interventions, such interventions, in most cases, should aim to improve private orders rather than replace them. More...



What Pogba's transfer tells us about the (de)regulation of intermediaries in football. By Serhat Yilmaz & Antoine Duval

Editor’s note: Serhat Yilmaz (@serhat_yilmaz) is a lecturer in sports law in Loughborough University. His research focuses on the regulatory framework applicable to intermediaries. Antoine Duval (@Ant1Duval) is the head of the Asser International Sports Law Centre.


Last week, while FIFA was firing the heads of its Ethics and Governance committees, the press was overwhelmed with ‘breaking news’ on the most expensive transfer in history, the come back of Paul Pogba from Juventus F.C. to Manchester United. Indeed, Politiken (a Danish newspaper) and Mediapart (a French website specialized in investigative journalism) had jointly discovered in the seemingly endless footballleaks files that Pogba’s agent, Mino Raiola, was involved (and financially interested) with all three sides (Juventus, Manchester United and Pogba) of the transfer. In fine, Raiola earned a grand total of € 49,000,000 out of the deal, a shocking headline number almost as high as Pogba’s total salary at Manchester, without ever putting a foot on a pitch. This raised eyebrows, especially that an on-going investigation by FIFA into the transfer was mentioned, but in the media the sketching of the legal situation was very often extremely confusing and weak. Is this type of three-way representation legal under current rules? Could Mino Raiola, Manchester United, Juventus or Paul Pogba face any sanctions because of it? What does this say about the effectiveness of FIFA’s Regulations on Working with Intermediaries? All these questions deserve thorough answers in light of the publicity of this case, which we ambition to provide in this blog.More...


International and European Sports Law – Monthly Report – April 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.More...

The Reform of FIFA: Plus ça change, moins ça change?

Since yesterday FIFA is back in turmoil (see here and here) after the FIFA Council decided to dismiss the heads of the investigatory (Cornel Borbély) and adjudicatory (Hans-Joachim Eckert) chambers of the Independent Ethics Committee, as well as the Head (Miguel Maduro) of the Governance and Review Committee. It is a disturbing twist to a long reform process (on the early years see our blogs here and here) that was only starting to produce some tangible results. More...

RFC Seraing at the Court of Arbitration for Sport: How FIFA’s TPO ban Survived (Again) EU Law Scrutiny

Doyen (aka Doyen Sports Investment Limited) is nothing short of heroic in its fight against FIFA’s TPO ban. It has (sometimes indirectly through RFC Seraing) attacked the ban in front of the French courts, the Belgium courts, the European Commission and the Court of Arbitration for Sport. This costly, and until now fruitless, legal battle has been chronicled in numerous of our blogs (here and here). It is coordinated by Jean-Louis Dupont, a lawyer who is, to say the least, not afraid of fighting the windmills of sport’s private regulators. Yet, this time around he might have hit the limits of his stubbornness and legal ‘maestria’. As illustrated by the most recent decision of the saga, rendered in March by the Court of Arbitration for Sport (CAS) in a case opposing the Belgium club RFC Seraing (or Seraing) to FIFA. The arguments in favour of the ban might override those against it. At least this is the view espoused by the CAS, and until tested in front of another court (preferably the CJEU) it will remain an influential one. The French text of the CAS award has just been published and I will take the opportunity of having for once an award in my native language to offer a first assessment of the CAS’s reasoning in the case, especially with regard to its application of EU law. More...

The Validity of Unilateral Extension Options in Football – Part 1: A European Legal Mess. By Saverio Spera

Editor’s Note: Saverio Spera is an Italian lawyer and LL.M. graduate in International Business Law at King’s College London. He is currently an intern at the ASSER International Sports Law Centre.

                 

In the football world the use of unilateral extension options (hereafter UEOs) in favour of the clubs is common practice. Clubs in Europe and, especially, South America make extensive use of this type of contractual clauses, since it gives them the exclusive possibility to prolong the employment relationship with players whose contracts are about to come to an end. This option gives to a club the right to extend the duration of a player’s contract for a certain agreed period after its initial expiry, provided that some previously negotiated conditions are met. In particular, these clauses allow clubs to sign young promising players for short-term contracts, in order to ascertain their potential, and then extend the length of their contracts.[1] Here lies the great value of UEOs for clubs: they can let the player go if he is not performing as expected, or unilaterally retain him if he is deemed valuable. Although an indisputably beneficial contractual tool for any football club, these clauses are especially useful to clubs specialized in the development of young players.[2] After the Bosman case, clubs have increasingly used these clauses in order to prevent players from leaving their clubs for free at the end of their contracts.[3] The FIFA Regulations do not contain any provisions regulating this practice, consequently the duty of clarifying the scope and validity of the options lied with the national courts, the FIFA Dispute Resolution Chamber (DRC) and the CAS. This two-part blog will attempt to provide the first general overview on the issue.[4] My first blog will be dedicated to the validity of UEOs clauses in light of national laws and of the jurisprudence of numerous European jurisdictions. In a second blog, I will review the jurisprudence of the DRC and the CAS on this matter. More...

Call for papers: ISLJ Annual Conference on International Sports Law - 26-27 October 2017

The editorial board of the International Sports Law Journal (ISLJ) is very pleased to invite you to submit abstracts for its first Annual Conference on International Sports Law. The ISLJ, published by Springer in collaboration with ASSER Press, is the leading publication in the field of international sports law. Its readership includes both academics and many practitioners active in the field. On 26-27 October 2017, the International Sports Law Centre of the T.M.C. Asser Instituut and the editorial board of the International Sports Law Journal will host in The Hague the first ever ISLJ Annual Conference on International Sports Law. The conference will feature panels on the Court of Arbitration for Sport, the world anti-doping system, the global governance of sports, the FIFA transfer regulations, comparative sports law, and much more.

More...


International and European Sports Law – Monthly Report – March 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.

 More...

The legality of surety undertakings in relation to minor football players: the Lokilo case. By Adriaan Wijckmans

Editor's note: Adriaan Wijckmans is an associate specialized in sports law at the Belgium law firm Altius.

In a recent judgment, the Brussels Court of First Instance confirmed the legality of a so-called surety undertaking, i.e. an agreement in which the parents of a minor playing football guarantee that their child will sign a professional contract with a football club as soon as the child reaches the legal age of majority.

This long-awaited ruling was hailed, on the one hand, by clubs as a much needed and eagerly anticipated confirmation of a long-standing practice in Belgian football[1] and, on the other hand, criticised by FIFPro, the international player’s trade union, in a scathing press release. More...



Kosovo at the Court of Arbitration for Sport – Constructing Statehood Through Sport? By Ryan Gauthier (Thompson Rivers University)

Editor's Note: Ryan is Assistant Professor at Thompson Rivers University, he defended his PhD at Erasmus University Rotterdam in December 2015. His dissertation examined human rights violations caused by international sporting events, and how international sporting organisations may be held accountable for these violations. 


“Serious sport…is war minus the shooting.” – George Orwell

 

In May 2016, the Union of European Football Associations (UEFA) admitted the Football Federation of Kosovo (Kosovo) as a member. The voting was close, with 28 member federations in favour, 24 opposed, and 2 whose votes were declared invalid. The practical outcome of this decision is that Kosovo would be able participate in the UEFA Euro championship, and that Kosovo teams could qualify for the UEFA Champions’ League or Europa League. More...


Asser International Sports Law Blog | The FIFA Business – Part 1 – Where Does The Money Come From? - By Antoine Duval and Giandonato Marino

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 FIFA Business – Part 1 – Where Does The Money Come From? - By Antoine Duval and Giandonato Marino

On next Thursday the 2014 World Cup will kick off in Sao Paulo. But next week will also see the FIFA members meeting on Tuesday and Wednesday at a much awaited FIFA congress. For this special occasion we decided to review FIFA’s financial reports over the last ten years. This post is the first of two, analysing the reports and highlighting the main economic trends at play at FIFA. First, we will study the revenue streams and their evolution along the 2003-2013 time span. In order to ensure an accurate comparison, we have adjusted the revenues to inflation, in order to provide a level playing field easing the comparative analysis over the years and types of revenues. Our first two graphs gather the main revenue streams into two comparative overviews. Graph 1 brings together the different types of revenues in absolute numbers, while Graph 2 lays down the share of each type of revenues for any given year (the others category covers a bundle of minor revenue streams not directly relevant to our analysis).

 

 


Graph 1: FIFA revenues in Millions of Dollars, 2003-2013 (adjusted for inflation).

 


Graph 2: Share of each revenue stream in Total FIFA revenues 2003-2013

 

Since 2003, FIFA’s total revenues have more than doubled, from 685 Million$ to 1406 Million$. Its constant growth over the last decade turned negative only in 2011 and 2012 due to a fallout in broadcasting revenues (see below Graph 4). In terms of economic power this means that FIFA has doubled its financial capacity within ten years.  It has succeeded in developing new income streams, while also consolidating its traditional source of revenue: broadcasting rights.




Graph 3: Total FIFA revenues in Million$ 2003-2013 (adjusted for inflation)

 

Key to FIFA’s continuous enrichment were the broadcasting revenues. From 2006 to 2010 they nearly doubled from 391 Million$ to 779 Million$. A huge 100% jump! Since this peak, revenues have settled for a more modest amount of around 600 Million$, but still much higher than at the turn of the century. In any given year the broadcasting revenues represent 40 to 50% of FIFA’s total revenues. Thus, one can understand the paramount importance of broadcasting rights for the economic stability and health of FIFA. The progressive bite of the revised TV without frontier directive of the EU (revised in 1997), enabling countries to define certain World Cup games as “major events” which therefore must be broadcasted freely, might explain the recent fall in broadcasting revenues. In this context, recent decisions of the EU Courts, in cases T-68/08, C‑205/11 P and  C‑204/11 P reinforce the rights of the Member States to make use of the “major events” listing, this could, on the long run, limit the rise of the broadcasting revenues for FIFA.


 

Graph 4: FIFA Broadcasting Revenues 2003-2013 (adjusted to Inflation)

 

The marketing rights (see graph 5) constitute the second leg of FIFA’s financial income stream. They have been constantly growing since 2003. From 168 Million$ in 2003 to 419 Million$ in 2013, reaching quasi 150% growth (at constant prices). In recent years, this has been a more dynamic revenue stream than broadcasting rights, but it has remained less important in absolute terms. It seems that the FIFA Partners Programme launched by FIFA, probably inspired by the TOP Programme created by the IOC, is a tremendous success. Nowadays, marketing rights constitute 30 to 35% of FIFA’s total revenues. Together, broadcasting revenues and marketing rights amount to a staggering 75 to 85% of FIFA’s total revenues. A share which remained more or less stable over the latest years (see Graph2).


Graph 5: FIFA Revenues from Marketing rights 2003-2013

 

The rather minor revenue streams are constituted by the FIFA hospitality rights, licensing and brand licensing revenues. Hospitality rights revenues (Graph 6) are a relic from the past. They derive from the profits made by MATCH Hospitality, the sole company authorised by FIFA to offer and guarantee exclusive hospitality packages for every match of the FIFA World Cup directly or through its appointed sales agents. With the competition of internet-based travel agencies and the evolution of the ticketing system of FIFA under the pressure of the European Commission, the revenues of match hospitality have been dwindling over the last 10 years.




Graph 6: FIFA Hospitality Rights Revenues 2003-2013 (adjusted for inflation)


The FIFA licensing programme (Graph 7) derives its revenues from fixed royalty payments and variable profit shares paid for the use of the FIFA brand. FIFA’s licensing programme covers a broad range of activities, including for example numismatic and philatelic collections and the more classical retail & merchandising. After a peak at the World Cup 2006 in Germany, where FIFA licensing brought in 51 Million$, licensing revenues have remained more or less stable averaging at 10 to 20 Million$ a year.


 

Graph 7: FIFA Licensing Revenues 2003-2013 (adjusted for inflation)

 

Another closely related, but distinct for accountancy purposes, income stream, is the one generated by brand licensing (Graph 8). Five companies dispose of a specific agreement with FIFA: Adidas, Electronic Arts, Hublot, Louis Vuitton and Panini. Each of these companies holds a licence to use the FIFA Brand Marks in the advertising, marketing, promotion and sale of its licensed products or programmes. These long-term licensing agreements bring in more and more money, from 5 Million$ in 2003, to 58 Million$ in 2013. The biggest jump for a category of FIFA revenues.  Its success is exemplified by the world-wide fame of the eponym Electronic Arts video game: FIFA. However, all three revenue streams amount to less than 10% of FIFA’s total revenues in 2013, the lion share is still constituted by the broadcasting rights.



Graph 8: FIFA Brand Licensing Revenues 2003-2013 (adjusted for inflation)

 

Conclusion: Get rich and die getting richer?

Economically the last 10 years have been a phenomenal success for FIFA. Its revenues have grown substantially and it has, to some extent, managed to diversify its revenue streams. Indeed, FIFA is less and less dependent on broadcasting revenues, while relying more and more on marketing and brand licensing income streams. This diversification appears judicious as the broadcasting market seem to be losing steam, especially in light of a public will, at least at the European level, to control and tame the monopoly of FIFA over the broadcasting of the World Cup. Thus, FIFA is in a paradoxical situation. It will enter its congress engulfed in an unending governance crisis, but financially it looks as profitable as ever. In some way the big leap forward of FIFA’s recent, and highly successful, commercialization might cause the existential crisis it is now confronted with. Indeed, all this fresh money influx may have destabilized even more a governance system prone to favour nepotism. Hence, the paradox might be that FIFA got rich and might die (at least as we know it) because of it. This is also connected to the way FIFA distributes the revenues it collects, which will be the focus point of the second part of this blog series.

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