Contemporary Issues in Sports Law and Practice 2011

Friday November 4, 2011

Over the weekend, I finally managed to collate my various thoughts and notes into some semblance of order.

Firstly, our thanks must go to De Montfort University (DMU) and the British Association for Sport and the Law (BASL) for hosting what was once again a very enjoyable afternoon of speakers exploring a variety of key sports law topics. The half-day conference heard from six speakers, the first plenary session focusing primarily on football and Europe, the second plenary session focusing more on the investigatory and disciplinary processes behind the scenes:

Nick Craig (Director of Legal Affairs, the Football League) gave a presentation on ‘Financial Fair Play and the Football League’.  While the UEFA Club Licensing Regulations have been in place from the 2004/05 season (the current Licensing Manual is now in its 2^nd edition), UEFA have also launched Financial Fair Play Regulations (FFPR) to be applied from the summer of 2011 with the view that all clubs in European competition break-even by 2018. The topic is hot news at the moment in both the mainstream press and more specialist legal coverage.

There were number of particularly interesting points about the contrast between the FFPR being applied in the Premier League as a condition of entry into European competitions, and the Football League (FL) model where the licensing regulations are intended more as a regulatory mechanism to control the clubs and force them to become more sustainable. Legally this agreement with the FL clubs represents a “soft” law approach where the clubs “agree  to actively work to introduce measures”, “increase transparency” and encourage clubs to operate”….  Time will tell how effective the league will be with this increased regulatory authority.

The big stick comes in Article 12(2) of the FFPR which states that:

2 The membership and the contractual relationship (if any) must have lasted – at the start of the licence season – for at least three consecutive years. Any alteration to the club’s legal form or company structure (including, for example, changing its headquarters, name or club colours, or transferring stakeholdings between different clubs) during this period in order to facilitate its qualification on sporting merit and/or its receipt of a licence to the detriment of the integrity of a competition is deemed as an interruption of membership or contractual relationship (if any) within the meaning of this provision.

This clause effectively holds that any club going insolvent restarts this three year process from scratch when it transfers its assets to a new owner, preventing clubs from ditching their debts and picking up where they left off free of all those troublesome creditors.

The devil as always is in the detail though, and while the cornerstone of the FFPR programme is in achieving break-even status, there are loopholes or ‘Acceptable Deviations’. In particular, the ability to lose €5m over the three years covered by the FFPR period (rising to a €45m loss if this is covered by equity contributions) neatly sidesteps the break-even provision, while Annex I A(d) of the FFPR lists an exception for:

d) Non-applicability of the three-year rule defined in Article 12(2) in case of change of legal form or company structure of the licence applicant on a caseby-case basis;   

or put another way, all clubs are equal, but some clubs are more equal than others, particularly if they might be a marquee name with large attendances and gate receipts!

 See also: http://www.financialfairplay.co.uk/ for more information on the FFPR rules

 

Chris Anderson (Associate, Brabners Chaffe Street Solicitors) gave a presentation on ‘Development Compensation for Young Football Players’.  One of the key drivers for this talk was the decision in ECJ – Case C-325/08 Olympique Lyonnais SASP v. Olivier Bernard & Newcastle United FC [41]:

“…In that regard, it must be accepted that, as the Court has already held, the prospect of receiving training fees is likely to encourage football clubs to seek new talent and train young players…”

 This will be a theme, the blog hopes to come back to in the near future, but essentially how much / little should be paid to clubs training (effectively as hot-houses) for new talent.

 Chris drew distinctions between:

• the FIFA system which compensated for both the training costs of a player (although at times there were concerns these payments were ‘damages-based’ rather than a reflection of the actual training costs), and the ‘solidarity mechanism’ (which effectively acted as a wealth redistribution system to share up to 5% of any transfer between clubs training the player between the ages of 12 and 23).
• The current domestic system which was based on agreeing costs (either by the agreement with clubs, or by reference to the Professional Football Compensation Committee (PFCC))
• The proposed NEW domestic ‘Elite Player Performance Plan (EPPP)’ provisionally scheduled to start in July 2012. This system was created and driven by the PL to specifically produce greater numbers of talented home-grown players through increased coaching time and a more transparent (and legally defensible) fixed training cost mechanism. The new system is split into three main phases:
  • The Foundation Phase (U9-U11):  every academy charges a flat fee
  • Youth Development Phase (U12-U16): standardised model of fixed payments based on academy status
  • Professional Development Phase (U17-U21): Clubs (or PFCC) agree appropriate fee

 See also alternative perspectives from: http://www.bbc.co.uk/blogs/paulfletcher/2011/02/football_league_fears_over_pla.html; http://www.fiveyearplanfanzine.co.uk/News/football-league-votes-to-back-elite-player-performance-plan.html; http://www.leedsunited.com/news/20111021/united-ceo-on-a-dark-day-for-football_2247585_2489344

 

Simon Boyes (Senior Lecturer, Nottingham Trent University) gave a presentation on ‘Sport and the European Union after the Lisbon Treaty’. The presentation traced the history of sport in the EU from its initial lack of academic interest, through the various reports, declarations, models and specificities to the present day and the Treaty of Lisbon. In doing so, Simon very much emphasised the evolutionary rather than revolutionary road to Lisbon. What was particularly interesting about the presentation was the thought that the EU was acting not so much as a regulator, but rather as a facilitator / supporter and using sport as a vehicle to engage in wider social missions (e.g. anti-doping, racism, corruption etc). These “softer” words such as “promotion…contribution…taking account of….developing” very much echoed Nick’s earlier talk on incorporating the UEFA licensing model into the Football League. Have all sporting regulators now embraced the softer stick? I thought that was just supposed to be horse-racing?

Any current discussion on Europe would not be complete without mentioning the recent Karen Murphy ruling (see here for a more in-depth analysis), and this was no exception! Interestingly, Simon suggested that fairness and openness were starting to creep into the ECJ rulings as values to be protected and upheld. This might be a trend to watch, particularly given the agenda for good governance and transparency.

 

 

Max Duthie (Partner, Bird & Bird Solicitors) gave a presentation on ‘The Sports Disciplinary Process’. The presentation started with, what seemed to be a recurring theme at the conference, the reluctance of the law to become involved in regulating sport (unless there was a clear departure from the rules / natural justice). Instead, Max pointed to the private, contractual nature of the disciplinary process, with governing bodies imposing their own regulatory codes of behaviour on the athletes under their jurisdiction.

Where I think that this presentation became more controversial was in the issue of jurisdiction, in particular who the sports were purporting to regulate. Max gave a number of examples:

• Direct contractual links (Paul Stretford)
• Implied contracts / contracts by conduct (Petr Korda)
• Voluntary submission to jurisdiction (Dean Richards)

However, where I think the issue becomes greyer is in Sports Codes like the recent Lawn Tennis Association (LTA) Competition Regulations, effective from 1 September 2011:

1.3 By organising, entering, playing tennis in and/ or participating in any way in an LTA Official Competition (including as officials, staff, coaches, representatives, agents, medical staff, relatives and associates of a Player, a Player’s entourage and spectators), a person and/or entity agrees to be bound by and to comply with these Regulations.

It is one thing to bind an athlete to a particular code of conduct, but quite another to hold that they should be responsible for the conduct of all spectators, especially when the player is court-side during a match. On a similar theme, the regulations merely state ‘relatives’ – does this mean all relatives? Or do we need to apply an Alcock-esque ‘close-ties of love and affection test’?

There was also a particularly interesting discussion on whether disciplinary sanctions should be fixed or variable and Max talked about the trade-off between consistency (fixed) and discretion / proportionality (variable), before warning of the cautionary tale of Delon Armitage and the implications that plea-bargaining might have on future tribunals.

See also: http://www.guardian.co.uk/sport/2011/nov/08/delon-armitage-london-irish-england?newsfeed=true  

 

 

Adam Brickell (Head of Legal Compliance, British Horseracing Authority) gave a presentation on ‘The Investigative Processes of the British Horseracing Authority (BHA)’. The highly technical and diagrammatic nature of the presentation makes it somewhat difficult to summarise in any way that could begin to do justice to it. That said, Adam did make a number of interesting observations about the role of the BHA, and in particular the 5 areas that it is currently addressing:

• Clear rules and regulations for participants
• An effective investigative and intelligence capability
• Robust disciplinary and licensing structures
• Comprehensive, on-going education programme
• Partnership approach with the Police, Betting industry and Gambling Commission

Two areas that may be of particular interest to watch in the future, are the concern that a number of betting firms are based offshore and, while they currently assist the BHA through Memorandums of Understanding (MoUs), these MoUs are not legally binding should the companies wish to subsequently withdraw their support. The second issue is linked to this and concerns the lack of regulation surrounding spread betting companies.

As an aside, Adam’s talk also continued Max’s theme from earlier about the regulation (or failure to regulate) members of the public not bound by the organisations rules. In particular, Adam gave the example of 6 individuals who placed suspicious bets on a particular horse, but fell outside the jurisdiction of the BHA when they decided not to cooperate with the investigation.

The final presentation belonged to Jonathan Merritt (Senior Lecturer, DMU) who gave us a sneak preview of his new PhD research into ‘Anti-Doping and Equestrianism’. We wish you every success in this venture…