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

Overdue payables in action: Reviewing two years of FIFA jurisprudence on the 12bis procedure – Part 2. By Frans M. de Weger and Frank John Vrolijk.

Editor's Note: Frans M. de Weger is legal counsel for the Federation of Dutch Professional Football Clubs (FBO) and CAS arbitrator. De Weger is author of the book “The Jurisprudence of the FIFA Dispute Resolution Chamber”, 2nd edition, published by T.M.C. Asser Press in 2016. Frank John Vrolijk specialises in Sports, Labour and Company Law and is a former legal trainee of FBO and DRC Database.

This second blog will focus specifically on the sanctions available for FIFA under Article 12bis. It will provide explanatory guidelines covering the sanctions imposed during the period surveyed.


Introduction

The possibility to impose sanctions under article 12bis constitutes one of the pillars of the 12bis procedure. Pursuant to Article 12bis of the RSTP, edition 2016, the DRC and the PSC may impose a sanction on a club if the club is found to have delayed a due payment for more than 30 days without a prima facie contractual basis[1] and the creditor have put the debtor club in default in writing, granting a deadline of at least 10 days.[2] The jurisprudence in relation to Article 12bis also shows that sanctions are imposed ex officio by the DRC or the PSC and not per request of the claimant.More...





Overdue payables in action: Reviewing two years of FIFA jurisprudence on the 12bis procedure – Part 1. By Frans M. de Weger and Frank John Vrolijk.

Editor's Note: Frans M. de Weger is legal counsel for the Federation of Dutch Professional Football Clubs (FBO) and CAS arbitrator. De Weger is author of the book “The Jurisprudence of the FIFA Dispute Resolution Chamber”, 2nd edition, published by T.M.C. Asser Press in 2016. Frank John Vrolijk specialises in Sports, Labour and Company Law and is a former legal trainee of FBO and DRC Database.

In this first blog, we will try to answer some questions raised in relation to the Article 12bis procedure on overdue payables based on the jurisprudence of the DRC and the PSC during the last two years: from 1 April 2015 until 1 April 2017. [1] The awards of the Court of Arbitration for Sport (hereinafter: “the CAS”) in relation to Article 12bis that are published on CAS’s website will also be brought to the reader’s attention. In the second blog, we will focus specifically on the sanctions applied by FIFA under Article 12bis. In addition, explanatory guidelines will be offered covering the sanctions imposed during the period surveyed. A more extensive version of both blogs is pending for publication with the International Sports Law Journal (ISLJ). If necessary, and for a more detailed and extensive analysis at certain points, we will make reference to this more extensive article in the ISLJ. More...

International and European Sports Law – Monthly Report – May 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 end of governance reforms at FIFA?

The main sports governance story that surfaced in the press (see here and here) during the last month is related to significant personal changes made by the FIFA Council within the organization’s institutional structure. In particular, the FIFA Council dismissed the heads of the investigatory (Mr Cornel Borbély) and adjudicatory (Mr Hans-Joachim Eckert) chambers of the Independent Ethics Committee, as well as the Head (Mr Miguel Maduro) of the Governance and Review Committee. The decision to remove Mr Maduro was taken arguably in response to his active role in barring Mr Vitaly Mutko, a Deputy Prime Minister of Russia, from sitting on the FIFA Council due to an imminent conflict of interests. These events constitute a major setback to governance reforms initiated by the football’s world governing body in 2015. For a more detailed insight into the governance reforms at FIFA, we invite you to read the recent blog written by our senior researcher Mr Antoine Duval. More...

The Olympic Games and Human Rights – Part II: Human Rights Obligations Added to the Host City Contract: Turning Point or Empty Promise? – By Tomáš Grell


This is a follow-up contribution to my previous blog on human rights implications of the Olympic Games published last week. Together with highlighting some of the most serious Olympic Games-related human rights abuses, the first part has outlined the key elements of the Host City Contract ('HCC') as one of the main legal instruments regulating the execution of the Olympic Games. It has also indicated that, in February 2017, the International Olympic Committee ('IOC') revised the 2024 HCC to include, inter alia, explicit human rights obligations. Without questioning the potential significance of inserting human rights obligations to the 2024 HCC, this second part will refer to a number of outstanding issues requiring clarification in order to ensure that these newly-added human rights obligations are translated from paper to actual practice. More...


The Olympic Games and Human Rights – Part I: Introduction to the Host City Contract – By Tomáš Grell

Editor’s note: Tomáš Grell is currently an LL.M. student in Public International Law at Leiden University. He contributes to the work of the ASSER International Sports Law Centre as a part-time intern.


In its press release of 28 February 2017, the International Olympic Committee ('IOC') communicated that, as part of the implementation of Olympic Agenda 2020 ('Agenda 2020'), it is making specific changes to the 2024 Host City Contract with regard to human rights, anti-corruption and sustainable development. On this occasion, IOC President Thomas Bach stated that ''this latest step is another reflection of the IOC's commitment to embedding the fundamental values of Olympism in all aspects of the Olympic Games''. Although the Host City of the 2024 Summer Olympic Games is scheduled to be announced only in September this year, it is now clear that, be it either Los Angeles or Paris (as Budapest has recently withdrawn its bid), it will have to abide by an additional set of human rights obligations.

This two-part blog will take a closer look at the execution of the Olympic Games from a human rights perspective. The first part will address the most serious human rights abuses that reportedly took place in connection with some of the previous editions of the Olympic Games. It will also outline the key characteristics of the Host City Contract ('HCC') as one of the main legal instruments relating to the execution of the Olympic Games. The second part will shed light on the human rights provisions that have been recently added to the 2024 HCC and it will seek to examine how, if at all, these newly-added human rights obligations could be reflected in practice. For the sake of clarity, it should be noted that the present blog will not focus on the provisions concerning anti-corruption that have been introduced to the 2024 HCC together with the abovementioned human rights provisions. More...



Exploring the Validity of Unilateral Extension Options in Football – Part 2: The view of the DRC and the CAS. 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. 

This blog is a follow up to my previous contribution on the validity of Unilateral Extension Options (hereafter UEOs) under national and European law. It focuses on the different approaches taken to UEOs by the FIFA Dispute Resolution Chamber (DRC) and the Court of arbitration for sport (CAS). While in general the DRC has adopted a strict approach towards their validity, the CAS has followed a more liberal trend. Nonetheless, the two judicial bodies share a common conclusion: UEOs are not necessarily invalid. In this second blog I will provide an overview of the similarities and differences of the two judicial bodies in tackling UEOs. More...

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...

Asser International Sports Law Blog | To pay or not to pay? That is the question. The case of O’Bannon v. NCAA and the struggle of student athletes in the US. By Zlatka Koleva

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

To pay or not to pay? That is the question. The case of O’Bannon v. NCAA and the struggle of student athletes in the US. By Zlatka Koleva

Editor's note
Zlatka Koleva is a graduate from the Erasmus University Rotterdam and is currently an Intern at the ASSER International Sports Law Centre.

The decision on appeal in the case of O’Bannon v. NCAA seems, at first sight, to deliver answers right on time regarding the unpaid use of names, images and likenesses (NILs) of amateur college athletes, which has been an ongoing debate in the US after last year’s district court decision that amateur players in the college games deserve to receive compensation for their NILs.[1] The ongoing struggle for compensation in exchange for NILs used in TV broadcasts and video games in the US has reached a turning point and many have waited impatiently for the final say of the Court of Appeal for the 9th circuit. The court’s ruling on appeal for the 9th circuit, however, raises more legitimate concerns for amateur sports in general than it offers consolation to unprofessional college sportsmen. While the appellate court agreed with the district court that NCAA should provide scholarships amounting to the full cost of college attendance to student athletes, the former rejected deferred payment to students of up to 5,000 dollars for NILs rights. The conclusions reached in the case relate to the central antitrust concerns raised by NCAA, namely the preservation of consumer demand for amateur sports and how these interests can be best protected under antitrust law.


Facts and proceedings 

The case is brought before the district court by Ed O’Bannon, a former American basketball player at the University of California, Los Angeles (UCLA).[2] In 2008 he visited a friend’s house, where he saw his friend’s son playing a video game depicting him as a player in a college basketball competition.[3] The producer, Electronic Arts (EA), based video games on the concept of college football and men’s basketball.[4] O’Bannon saw an avatar with a striking resemblance of himself, playing for UCLA with his jersey number 31. He never consented to the use of his likenesses nor did he receive any financial remuneration for its usage.[5] For this reason, O’Bannon filed a lawsuit against the NCAA (National Collegiate Athletic Association) and the CLC (Collegiate Licensing Company) for using his NILs for commercial purposes.[6] The main argument supported by his legal counsel was that the NCAA restrictions on compensation for student athletes beyond university scholarships impose a limitation on trade under Section 1 of the Sherman Antitrust Act.[7] In June 2014 the claims based on antitrust law found a solid ground and the case was sent to the district court.[8] The court at first identified two markets where the NCAA rules can have a significant impact, namely the college education market and the group licensing market.[9] Afterwards, it applied the three-step Rule of Reason test in order to determine whether the NCAA restrictions on compensation for the usage of NILs violate antitrust laws.[10] After weighting the anticompetitive and procompetitive purposes of those rules, the court took the decisive third step in pursuit of less restrictive alternatives available to the NCAA in the attainment of its final goal – preserving the nature of amateur college games.[11] It ruled that there are two alternative routes, which preserve amateurism and, at the same time, protects the NILs rights of college athletes: stipends to the full cost of attendance or deferred payments as portions of the license agreements concluded between third party licensing companies and universities upon completion of their college education.[12] The NCAA objected to the district court’s decision on the ground that the court in the Board of Regents[13] declared the NCAA rules a matter of law and compensation norms, falling outside of the scope of a commercial activity, and therefore not covered by the Sherman Act. Finally, the association claimed that the plaintiffs failed to demonstrate injury as a result of the restrictions on compensation.[14] The Court of Appeal for the 9th circuit ruled on the case as follows.

 

The judgment of the Court of Appeal for the 9th circuit

Preliminary questions

The court started the legal discussion by answering to some preliminary legal questions before ruling on the substance. It rejected the notion that Board of Regents automatically renders the NCAA’s rules valid as a matter of law.[15] In fact, “a restraint that serves a procompetitive purpose can still be invalid under the Rule of Reason”.[16] Thus, procompetitive rules are not necessarily deemed lawful.[17] Moreover, rules designed to promote competitiveness “surely affect commerce” and, therefore, fall under the scope of the Sherman Act, according to the reasoning of the Court of Appeal in the 9th circuit.[18] Finally, the court disagreed with NCAA in finding that the plaintiffs have no standing for failing to demonstrate the injury inflicted by the compensation rules.[19] On the contrary, the plaintiffs have shown willingness and readiness by video game producers to pay for their NILs rights have they possessed these rights, which means that the requirement of antitrust injury in this case is satisfied.[20]

Rule of Reason test

Judge Bybee then continued with the application of the Rule of Reason as assessed in relation to the restrictive measures towards compensation of student athletes.


1. Anticompetitive effect

The court concluded that the NCAA’s rules have an anticompetitive effect on the college education market and invalidated the association’s arguments.[21] It further examined whether the rules produce a procompetitive effect on the market and concluded that the district court has indeed undermined the importance the NCAA pays with regard to the preservation of amateurism in college competitions.[22]


2. Procompetitive purposes

Henceforth, the court outlined two procompetitive purposes of the NCAA’s restrictions: integrating academia with athletics and fostering the popularity of NCAA by promoting amateurism.[23] Nonetheless, it was highlighted that not every restrictive rule preserves the nature and distinctive character of college amateur sports.[24] For this reason, it should be examined whether there are any substantially less restrictive measures available to attain the goals intended by NCAA.[25]


3. Substantially less restrictive alternatives

The appellate court concurred with the district court on the first alternative, namely the grants-in-aid up to the full cost of attendance. The court for the 9th circuit stated that “the district court did not clearly err in its judgment”[26] and “indicated that raising the grant-in-aid cap to the cost of attendance would have virtually no impact on amateurism”.[27] In fact, “there is no evidence that this cap will significantly increase costs”,[28] since NCAA already granted permission to schools to fund athletes to the full cost of attendance.[29] Nevertheless, the court rejected cash compensation beyond college scholarships to athletes on the ground that if amateur sportsmen receive a payment, they lose their amateur status.[30] The central question which needs closer attention is whether payments to amateur athletes promote amateurism more than the lack of any such remuneration.[31] The court, thus, contended that the comparison between smaller and larger sums and their respective impact on the market is irrelevant, since this is not a point of discussion in this analysis: it would not crystalize whether “paying students small sums is virtually as effective in promoting amateurism as not paying them”.[32] It further rejected the analogy with professional baseball and the Olympic Games, when in 1970s there was a strong opposition against the raising salaries of baseball players and the Olympic Committee permitted the participation of professional athletes in the Games.[33] The court, however, did not agree with this line of reasoning, since the Olympics have not been so impacted by the introduction of professionalism as college sports would be.[34] Finally, the imposition of a 5000-dollar yearly ceiling of deferred payments to college athletes lacks solid argumentation.[35] Neal Pilson, a former sports consultant at CBS and an expert witness for the NCAA, did not opine on how cash compensation relates to the promotion of amateurism and his ‘offhand comment’ does not grant sufficient support for such a revolutionary turnover in the NCAA’s practice.[36] Consequently, the deferred payment alternative failed the Rule of Reason test and was, thus, rejected.[37]

On these grounds, the court concluded that a stipend beyond sports scholarships up to the full amount of college attendance is a substantially less restrictive measure, which withstands the Rule of Reason test, while the cash compensation argument failed the assessment. 


Commentary

This judgment demonstrates a remarkable, yet confusing line of reasoning followed by the appellate court. On the one hand, albeit already affirmed by the NCAA itself, the decision confirms the right of schools to provide compensation up to the full amount of attendance to college athletes. On the other hand, however, the court could have outlined more clearly the instances in which an athlete can qualify for such full compensation and those cases in which student athletes risk violating their legal status of amateurs. A clear example of the court’s reluctance to give more specific guidelines with regard to this subject matter is the rejection of the argument raised by the district court in relation to the compensation received by college tennis players. Although they still qualify as amateurs, tennis competitors earn arguably around 10,000 dollars yearly in prize money.[38] The court conveniently circumvented this argument without stating opposing views or contesting the afore-mentioned statement. It directed its full attention on how the substantially less restrictive measures can contribute to the promotion of amateur college sports instead. In fine, there are two legal points that need further examination. Firstly, amateurism is a relevant concept as long as it relates to consumer demand in antitrust claims.[39] The question at step 3 should, thus, be reformulated to whether less restrictive alternatives are virtually effective in preserving consumer interest in college sports as those prohibiting extra compensation to amateur athletes.[40] In this respect, popular demand by consumers should be the decisive factor in antitrust cases within the sports sector. Secondly, what should also be taken into more careful consideration is that the court on appeal has skipped an essential step in the Rule of Reason analysis and, thus, arguably misapplied the concept.[41] Upon identification of less limiting measures for the attainment of the main goal, one has to balance the harm those alternatives might produce against the benefits there might be if such measures were not implemented. This final stage is necessary as to provide an objective cost-benefit analysis of a legal rule, which in turn determines whether it withstands the reasonableness test. Had the court applied the Rule of Reason in such a manner, the outcome of the case would have potentially differed significantly; the court would have weighted the cost of paying cash compensation to student athletes for their NILs rights against the lack of such additional educationally unrelated payment in the attainment of the NCAA’s final aim, namely preserving amateurism in college sports. [42]  Rather, as Chief Judge Thomas stated in his opinion, it is important to underline that, in the light of US antitrust rules, it is the preservation of popular demand for college sports which should be the key factor in the legal analysis of competition issues in such a scenario.[43]

At the end of the day, the NCAA’s dilemma is solved by the appellate court by exempting the association from further financial obligations towards college athletes. Both parties have 90 days after the release of the court’s decision to “weigh their options” for appeal before the Supreme Court.[44]


[1] Edward O'Bannon, Jr. v. National Collegiate Athletic Association (the NCAA) and Electronic Arts, Inc and Collegiate Licensing Company (CLC) 14-16601 (2015) [hereinafter referred to as ‘O’Bannon v NCAA (2015)’]; O’Bannon v. NCAA 7 F. Supp. 3d 955 (N.D. Cal. 2014) [hereinafter referred to as ‘O’Bannon v. NCAA (2014)’].

[2] Ibid, p 12.

[3] Ibid.

[4] Ibid.

[5] Ibid.

[6] Ibid.

[7] Section 1 of Sherman Antitrust Act of 1890 15 U.S.C. states that ‘every contract, combination… in restraint of trade or commerce’ should be prohibited.

[8] O’Bannon v NCAA (2015) (n 1), p 14.

[9] O’Bannon v. NCAA (2014) (n 1), paras 956-968.

[10] Ibid., paras 984-1009.

[11] Ibid., paras 1005-1006.

[12] Ibid.

[13] NCAA v. Board of Regents of the University of Oklohoma 468 US 85 (1984).

[14] O’ Bannon v. NCAA (2015) (n 1), p 25.

[15] Ibid., p 26.

[16] Ibid., p 31.

[17] Ibid., p 32.

[18] Ibid., p 36: “We simply cannot understand this logic. Rules that are “anti-commercial and designed to promote and ensure competitiveness” […] surely affect commerce just as much as rules promoting commercialism.”

[19] Ibid., pp 37-43.

[20] Ibid., p 43.

[21] Ibid., pp 47-48.

[22] Ibid., pp 48-52.

[23] Ibid., p 51.

[24] Ibid., p 52.

[25] Ibid.

[26] Ibid., pp 54.

[27] Ibid.

[28] Ibid., p 56.

[29] Ibid.

[30] Ibid., p 57: “But in finding that paying students cash compensation would promote amateurism as effectively as not paying them, the district court ignored that not paying student-athletes is precisely what makes them amateurs”.

[31] Ibid., p 56: “The question is whether the alternative of allowing students to be paid NIL compensation unrelated to their education expenses, is “virtually as effective” in preserving amateurism as not allowing compensation.”

[32] Ibid., pp 58-59.

[33] Ibid., p 59.

[34] Ibid.

[35] Ibid., p 60.

[36] Ibid: “But even taking Pilson’s comments at face value, as the dissent urges, his testimony cannot support the finding that paying student-athletes small sums will be virtually as effective in preserving amateurism as not paying them.”

[37] Ibid., p 63 : “The Rule of Reason requires that the NCAA permit its schools to provide up to the cost of attendance to their student athletes. It does not require more.

[38] O’Bannon v. NCAA (2014) (n 1), para 1000.

[39] Chief Judge Thomas, concurring in part and dissenting in part, p 68.

[40] Ibid.

[41] Carrier M (2015) How Not to Apply the Rule of Reason: The O’Bannon Case. Rutgers University School of Law – Camden. http://ssrn.com/abstract=2672256. Accessed 20 October 2015.

[42] O’ Bannon v. NCAA (2015) (n 1), p 59: “The district court adverted to testimony from a sports management expert, Daniel Rascher, who explained that although opinion surveys had shown the public was opposed to rising baseball salaries during the 1970s, and to the decision of the International Olympic Committee to allow professional athletes to compete in the Olympics, the public had continued to watch baseball and the Olympics at the same rate after those changes”.

[43] Supra n 39, Chief Judge Thomas: “Rather, we must determine whether allowing student-athletes to be compensated for their NILs is ‘virtually as effective’ in preserving popular demand for college sports as not allowing compensation”.

[44] Tracy M and Strauss B, Court Strikes Down Payments to College Athletes (The New York Times.com, 30 September 2015). http://www.nytimes.com/2015/10/01/sports/obannon-ncaa-case-court-of-appeals-ruling.html?_r=0. Accessed 2 October 2015.

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