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The corridor of uncertainty: part two, why attempts to regulate the financial aspects of football are met with legal challenges

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Abstract

Legal systems should be certain so that rules can be easily enforced and the law’s subjects can operate with certitude. And yet, in the world of professional football, the legal validity of various regulatory rules governing the financial aspects of professional football has repeatedly been called into question. Legal challenges, ventilated through various national and international fora, call into question the stability of financial rules created by football’s governing bodies, and, prima facie, undermine the ability of the game’s rule making bodies to create financial rules which engender the requisite degree of legal certainty. This paper is the second in a two-part series. Part One consisted of case studies on legal challenges to financial regulatory rules (Financial Fair Play, the prohibition on third party ownership, and aspects of the market in player transfers). This Part Two critically assesses the underlying themes to those challenges, reflecting on the difficulties in making financial rules in a system of conditional autonomy; the uncertainty precipitated by using arbitration as a preferred—or as the case may be, mandatory—system of dispute resolution; and the intractability of challenges brought by actors outside of governing bodies’ jurisdictional ambit. It is argued that this confluence of factors has put football’s governing bodies in a ‘Corridor of Uncertainty’ in respect of their ability to regulate the financial aspects of the game. In this ‘Corridor of Uncertainty’, governing bodies’ financial rules are inexorably prone to legal challenges to which a legal, political or regulatory response must be produced.

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Notes

  1. For the basis of the test see infra, under Rule Making under Conditional Autonomy and Case C-309/99J. C. J. Wouters, J. W. Savelbergh and Price Waterhouse Belastingadviseurs BV v Algemene Raad van de Nederlandse Orde van Advocaten, intervener: Raad van de Balies van de Europese Gemeenschap.

  2. For a recent example of the consequences of derogation from these standards, see for example the Commission’s view on the penalties levied on athletes by the International Skating Union:

    ‘In order to comply, the ISU can abolish or modify its eligibility rules so that they are based only on legitimate objectives (explicitly excluding the ISU’s own economic interests) and that they are inherent and proportionate to achieve those objectives’.

    ‘European Commission—PRESS RELEASES—Press Release—Antitrust: International Skating Union’s Restrictive Penalties On Athletes Breach EU Competition Rules’ (Europa.eu, 2017) <http://europa.eu/rapid/press-release_IP-17-5184_en.htm> accessed 14 December 2017.

  3. The relationship between (wage) spending and league finish can be measured by Spearman’s rank correlation coefficient, ‘which measures the relationship between league position and total wage cost rank’ Deloitte Annual Review of Football Finance 2016 (Deloitte 2016) <https://www2.deloitte.com/content/dam/Deloitte/uk/Documents/sports-business-group/deloitte-uk-annual-review-of-football-finance-2016.pdf> accessed 31 December 2017. Football displays a high coefficient, showing a strong relationship between spending and winning. The correlation between expenditure and success on the pitch is well established empirically; for further, see (inter alia) Szymanski and Kuper (2012) p. 14 ‘The size of [clubs’] wages bills explained a massive 92 per cent of variation in their league position’; Highlights, Deloitte Annual Review of Football Finance (Deloitte 2011) <https://www2.deloitte.com/content/dam/Deloitte/uk/Documents/sports-business-group/uk-sbg-arff-2010-highlights.pdf> accessed 31 December 2017 ‘there continues to be a strong correlation in the Premier League between league finishing position and a club’s ranking in terms of wages expenditure’; Highlights, Deloitte Annual Review of Football Finance (Deloitte 2012) <https://www2.deloitte.com/content/dam/Deloitte/uk/Documents/sports-business-group/uk-sbg-annual-football-finance-review-2012-highlights.pdf> accessed 31 December 2017 ‘a particularly strong correlation in the Premier League between league finishing and a club’s wage ranking’.

  4. Craig and de Marco in Lewis and Taylor (2014).

  5. Complaints are dealt with in accordance with Commission Notice on the handling of complaints by the Commission under Articles 81 and 82 of the EC Treaty (2004/C 101/05).

  6. For thoughts on Belgian clubs being at the vanguard of football and money, see Rory Smith, ‘Belgian Clubs And Foreign Money: A Modern Soccer Mix’ (Nytimes.com, 2017) <https://www.nytimes.com/2017/09/09/sports/soccer/belgian-clubs-and-foreign-money-a-modern-soccer-mix.html> Accessed 15 October 2017.

  7. Parrish (2016), p. 191.

  8. Per the International Labour Organisation, ‘Successful social dialogue structures and processes have the potential to resolve important economic and social issues, encourage good governance, advance social and industrial peace and stability and boost economic progress’. ‘Social Dialogue (GOVERNANCE)’ (Ilo.org) <http://www.ilo.org/ifpdial/areas-of-work/social-dialogue/lang--en/index.htm)%20%20a> accessed 11 March 2018.

  9. Parrish (2016) p. 191.

  10. See the corridor of uncertainty: part one, sections 3.3 and 4.4.

  11. Case C-415/93 Union Royale Belge des Sociétés de Football Association ASBL v Jean-Marc Bosman (1995) ECR I-4921.

  12. As to the status and manifestations of such ‘soft’ law, see Serby (2016).

  13. Serby (2016).

  14. See discussion of FFP evolution in the corridor of uncertainty: part one, and Serby (2016).

  15. Geeraert et al. (2012). See also Manali Kulkarni, ‘The Future of Sports Governance: Will Sport Sustain its Traditional Model of Autonomy?’ (LawInSport, 2016) <https://www.lawinsport.com/articles/item/the-future-of-sports-governance-will-sport-sustain-its-traditional-model-of-autonomy> accessed 14 October 2017 ‘Since the 19th century, many sports have been run on a self-regulating model, anchored in their origins as amateur pastimes’.

  16. Geeraert et al (2012).

  17. European law has to some extent impinged upon sport since the 1970s. See, for example, Case 36-74 B.N.O. Walrave and L.J.N. Koch v Association Union Cycliste Internationale, Koninklijke Nederlandsche Wielren Unie and Federación Española Ciclismo (1974) ECR 1423, or Case C 13-76 Donà v Mantero (1976) ECR 133.

  18. For a detailed analysis of the evolution of the influence of EU law and sport, see Chapters 4 (free movement) and 5 (competition) of Weatherill (2017).

  19. ‘appropriately the same number as the number of players in a football team’, Value 11, European Sports Model and Specificity of Sport, 11 Values (UEFA) http://www.uefa.com/insideuefa/about-uefa/eleven-values/index.html accessed 14 October 2017.

  20. Ibid.

  21. Chappelet (2010) p17.

  22. UEFA (2017), The European Club Footballing Landscape Club Licensing Benchmarking Report, available at http://www.uefa.org/MultimediaFiles/Download/OfficialDocument/uefaorg/Finance/02/42/27/91/2422791_DOWNLOAD.pdf accessed 9 March 2017.

  23. Case C-519/04P, David Meca-Medina and Igor Majcen v. Commission (2006) ECR I-6991.

  24. Siekmann (2012).

  25. van Rompuy (2015).

  26. Infantino G, Meca-Medina: a Step Backwards for the European Sports Model and the Specificity of Sport? (UEFA). http://www.uefa.com/MultimediaFiles/Download/uefa/KeyTopics/480401_DOWNLOAD.pdf accessed 14 October 2017.

  27. Weatherill (2013a).

  28. Weatherill (2013b).

  29. Vermeersch (2007).

  30. Weatherill (2017) p. 167.

  31. Id. p. 168.

  32. Weatherill (2011).

  33. Notwithstanding the input of the Commission (if any), which itself operates somewhat in the dark given the nebulous nature of international sports law competence, for discussion of which see Serby (2016).

  34. CAS 2016/A/4492 Galatasaray v UEFA http://www.uefa.org/MultimediaFiles/Download/uefaorg/CASdecisions/02/42/66/95/2426695_DOWNLOAD.pdf.

  35. Weatherill (2017) p. 169.

  36. Infantino G, Meca-Medina: a Step Backwards for the European Sports Model and the Specificity of Sport? (UEFA). http://www.uefa.com/MultimediaFiles/Download/uefa/KeyTopics/480401_DOWNLOAD.pdf accessed 14 October 2017.

  37. Duval (2016).

  38. Eastham v Newcastle United [1964] Ch 413.

  39. Rule R45 of the CAS Code of Sports-related Arbitration states ‘The Panel shall decide the dispute according to the rules of law chosen by the parties or, in the absence of such a choice, according to Swiss law. The parties may authorize the Panel to decide ex aequo et bono’. (As at 1 January 2017).

  40. See, for example, the Rules Governing the Procedures of the Players’ Status Committee and the Dispute Resolution Chamber, which state: ‘In their application and adjudication of law, the Players’ Status Committee and the DRC shall apply the FIFA Statutes and regulations whilst taking into account all relevant arrangements, laws and/or collective bargaining agreements that exist at national level, as well as the specificity of sport’.

    Similarly, Article 26 of the Procedural Rules Governing the UEFA Club Financial Control Body states: ‘In rendering its final decision, the adjudicatory chamber applies the UEFA Statutes, rules and regulations and, in addition, Swiss law’.

  41. Enderby Town Football Club Ltd v. Football Association Ltd [1971] 1 All ER 215.

  42. S14 of the CAS Code of Sports-related Arbitration ‘The ICAS shall appoint personalities to the list of CAS arbitrators with appropriate legal training, recognized competence with regard to sports law and/or international arbitration, a good knowledge of sport in general’ (as at 1 January 2017).

  43. Duval (2015).

  44. For analysis, see for example Duval (2017) and p22 ‘Who gets to be a CAS arbitrator?’ in Duval and van Rompuy (2015).

  45. See, for example, summaries by Anderson (2010), The Grundel Effect at p. 80; James (2010) at p. 55; or Blackshaw (2003).

  46. For a detailed explanation, see Duval (2017).

  47. Noting, however, that the quasi-mandatory nature of sports arbitration does not yet appear to have been a deterministic feature of financial regulatory disputes exercised through the CAS.

  48. Nafziger (2004).

  49. ‘In CAS jurisprudence there is no principle of binding precedent (‘stare decisis’ or ‘collateral estoppel’)’, Andrea Anderson, LaTasha Colander Clark, Jearl Miles-Clark, Torri Edwards, Chryste Gaines, Monique Hennagan, Passion Richardson v. International Olympic Committee (IOC), CAS 2008/A/154.

  50. Blackshaw (2003).

  51. Bersagel (2012).

  52. Id.

  53. See for example the case of Heart of Midlothian v. Webster and Wigan Athletic [2008] CAS Decision 2007/A/1298–1300 and the subsequent decision in Shakhtar Donetsk v. Matuzalem [2008] CAS Decisions: 2008/A/1519 as discussed in The Corridor of Uncertainty: Part One (Sect. 4.1).

  54. Notwithstanding the parties’ failure to fully articulate the case against those respective rules in those particular cases.

  55. Indeed, the CAS referred to Galatasaray in Seraing (see TAS 2016/A/4490 RFC Seraing v. FIFA).

  56. Duval (2015).

  57. Id.

  58. Id.

  59. CAS 98/200 AEK Athens and SK Slavia Prague/Union of European Football Associations (UEFA).

  60. Duval (2015).

  61. Weatherill (2006).

  62. Moreover, this has been described as a ‘heavy evidentiary burden’, see Antoine Duval, ‘Asser International Sports Law Blog | RFC Seraing At The Court Of Arbitration For Sport: How FIFA’S TPO Ban Survived (Again) EU Law Scrutiny’ (Asser.nl, 2016) <http://www.asser.nl/SportsLaw/Blog/post/rfc-seraing-at-the-court-of-arbitration-for-sport-how-fifa-s-tpo-ban-survived-again-eu-law-scrutiny> accessed 15 October 2017.

  63. Ibid.

  64. It is an interesting point of discussion that the lack of legitimacy of interest coincides with governing bodies’ lack of jurisdiction.

  65. Duval and van Rompuy (2016).

  66. Weatherill (2017).

  67. Ibid.

  68. MacLaren (2010).

  69. See Lewis and Taylor (2014) and Anderson (2010) p. 29.

  70. See TAS 2016/A/4474 Michel Platini c. Fédération Internationale de Football Association and CAS 2016/A/4501 Joseph S. Blatter v. FIFA.

  71. Andrews and Harrington (2016).

  72. In respect of Financial Fair Play in particular, see discussion in Serby (2016).

  73. ‘European Union’s Supreme Court Rejects Challenge To Uefa’s FFP Rules’ (the Guardian, 2017) <https://www.theguardian.com/football/2015/jul/22/eu-supreme-court-rejects-ffp-challenge-uefa> accessed 15 October 2017.

  74. Andrews and Harrington (2016).

  75. See van Rompuy (2015), Nick de Marco, ‘After FIFA/IAAF Corruption—Time For Institutional Change’ (Blackstone Chambers, 2015) <https://www.sportslawbulletin.org/after-fifaiaaf-corruption-time-for-institutional-change/> accessed 15 October 2017; Andrews and Harrington (2016).

  76. Andrews and Harrington (2016).

  77. This is indisputably less so in the case of FFP. Clubs will be incentivised to spend more in wages than they generate irrespective of outlay on transfer fees. However, transfers are a significant and arbitrarily defined cost for football clubs, and their eradication would surely help stabilise the financial landscape and would reduce barriers to entry in a landscape where buying elite players costs hundreds of millions of Euro.

  78. ‘An investor in a player is unlikely to simply sit back and allow a club to employ the player until the end of his contract thereby liquidating the whole of their investment’ Lewis and Taylor (2014) para B3.41.

  79. UEFA (2017), The European Club Footballing Landscape Club Licensing Benchmarking Report.

  80. Pearson (2014).

  81. See the cases of Shakhtar Donetsk v. Matuzalem [2008] CAS Decisions: 2008/A/1519 and Udinese v. De Sanctis CAS 2010/A/2145–2147.

  82. Serby (2016) describes the ‘preference of the EC for a collaborative form of ‘soft law’ rather than enforcement/obligation of ‘hard’ competition law as a basis for its sports policy’.

  83. See, for example, statements and press releases such as: European Commission (2014) Commission Decision of 14.10.2014 adopting the Arrangement for Cooperation between the European Commission and the Union of European Football Associations (UEFA). http://ec.europa.eu/sport/news/2014/docs/uefa2014_en.pdf.

    European Commission (2012) Joint statement by Vice-President Joaquin Almunia and President Michel Platini. http://ec.europa.eu/competition/sectors/sports/joint_statement_en.pdf.

    European Commission (2014) Press Release Database ‘Financial Fair Play helping to preserve the real values of football, says Commissioner’. http://europa.eu/rapid/press-release_SPEECH-14-706_en.htm.

  84. See for example Serby (2016) and Bastianon (2015).

  85. See the corridor of uncertainty: part one at Sect. 2.

  86. Andrew Nixon, ‘Daniel Striani And The UEFA FFP Regulations - The New Bosman?’ (LawInSport, 2013) <https://www.lawinsport.com/blog/sheridans/item/daniel-striani-and-the-uefa-ffp-regulations-the-new-bosman> accessed 14 January 2018.

  87. See Javier Sillés, ‘The Future Of Football Business In The Hands Of A Belgian Court’ (AS.com, 2017) <https://en.as.com/en/2017/11/25/football/1511592109_451085.html> accessed 14 January 2018; Antoine Duval, ‘Asser International Sports Law Blog | EU Law Is Not Enough: Why FIFA’s TPO Ban Survived Its First Challenge Before The Brussels Court’ (Asser.nl, 2015) <http://www.asser.nl/SportsLaw/Blog/post/eu-law-is-not-enough-why-fifa-s-tpo-ban-survived-before-the-brussels-court1> accessed 14 January 2018.

  88. The concept or prospect of which is much discussed in the literature. See, for example, various references throughout Duval and van Rompuy (eds 2016).

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    Christopher A. Flanagan

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Flanagan, C.A. The corridor of uncertainty: part two, why attempts to regulate the financial aspects of football are met with legal challenges. Int Sports Law J 18, 29–38 (2018). https://doi.org/10.1007/s40318-018-0125-z

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