Islj 2009 3-4 - TMC Asser Instituut

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compensation awarded. Applying a rule of equivalence, to this notion of constructive unilateral termination, would mean that both the new and old club should be severally liable to pay compensation to the player. If we follow the logic of Matuzalem, the player should be awarded the value of his lost income from his old club, plus the transfer paid for him, because the said transfer fee (which results from the constructive unilateral termination of his contract) clearly and unambiguously states his worth. It represents what a club was prepared to pay to obtain his services. The transfer of a player to another club is, tautologically, a club induced transfer. It might be useful to regard Article 17 as providing a means for a player to initiate a player induced transfer. What is the difference between the two? In principle, especially after Matuzalem, there is none. With a club induced transfer, involving the constructive unilateral termination of a contract, the old club receives a transfer fee. With a player induced transfer, the old club can utilise a bureaucratic process to obtain income based on future earnings of the player and a combination of real and fictitious transfer fee offers. The player is treated less equally than the club, irrespective of whether the player or club unilaterally terminates the contract. With the exception of a qualification which will be discussed below, for players and clubs under Article 17 to be treated equally requires a rejection of Matuzalem. Matuzalem is based on events, the respective two three year contracts negotiated with Real Zaragoza and Lazio and subsequent earnings from Lazio and the fictitious transfer fee, which occurred more than a year after he terminated his contract. Matuzalem encourages the club that has lost a player to litigate rather than enter into negotiations with the player and his new club to seek a settlement. The best strategy for an aggrieved club is to drag out proceedings for as long as possible, hope that his new club will offer him higher payments than what it had paid and that there will be ‘various’ transfer offers for his services and take its chances in a lucky-dip. This can be contrasted with Webster. It provides clear guidance as to what matters should be included in determining compensation; namely the income remaining on that portion of the contract not fulfilled. An Australian example may help to illustrate this point. Ante Covic was a goalkeeper with Newcastle Jets of the A-League. The Swedish club Elfsborg unsuccessfully approached Newcastle Jets to secure his transfer. Covic, who was over 28 and satisfied the various provisions in Article 17 (1), with advice from the Australian Professional Footballers’ Association, unilaterally terminated his contract. In subsequent negotiations, the parties pointed to Webster as providing guidance on the compensation to be paid to Newcastle Jets. 74 Article 17 (1) allows ‘fees and expenses’ incurred by the former club, amortised over the life of the contract, to be included in compensation calculations. 75 Webster did not incorporate such payments because Heart of Midlothian had recouped such costs and he had played with the club longer that the length of his original contract. 76 74 Braham Dabscheck, ‘An Australian Webster: Ante Covic Takes Advantage of FIFA’s Unilateral Termination of Contract Rules’, (2009) 78 The Commentator 1. 75 Article 17 (1), Federation International de Football Association, Regulations for the Status and Transfer of Players [1 July 2005]. 76 Paragraph 148 of The Court of Arbitration for Sport, The Webster Decision, 30 January 2008 77 Paragraph 127 of The Court of Arbitration for Sport, The Matuzalem Decision, 19 May 2009. 78 FIFPro, Decision in Matuzalem case not unfavourable for players, 20/5/2009; FIFPro website, http://www.fifpro.org/index.php?mod=o ne&id=17091, accessed 29 June 2009. Also see FIFA’s press release of the same day which praises the decision; FIFA, ‘Matuzalem case: CAS decision fully backs FIFA regulations; FIFA website, http://www.fifa.com/aboutfifa/federation/administration/releases/newsid=106 0323.html, accessed 29 June 2009. 79 See David Yallop, How They Stole The Game, Poetic Publishing, London, 1999; Andrew Jennings, Foul! The Secret World Of FIFA: Bribes Vote Rigging And Ticket Scandals, HarperSport, London, 2006; David Goldblatt, The Ball Is Round: A Global History Of Football, Viking, London, 2006; and for an Australian example Report by the Hon. D. G. Stewart, Published by the Senate Environment, Recreation, Communications and the Arts References Committee, 10 January 1995, Canberra. Matuzalem had two years to run on his contract. The CAS amortised the five year value of the transfer fee Shakhtar Donetsk paid Brescia in equal annual amounts, resulting in a liability of €3.2 million. 77 If the approach employed in Webster is followed and combined with the addition of this amortised value of the transfer fee, the qualification that was flagged above, the compensation payout to Shakhtar Donetsk would have been €5.6 million. Revision Ten. More thought may be needed in deciding on the most appropriate way to amortise the value of a transfer fee. Rather than attaching an equal weight to each year it may be more appropriate to bias the weighting to the early years on the assumption that as players get older they loose their competitive ability; their bodies wear out, are more prone to injury, loose that extra yard of pace and so on. It may be more appropriate to adopt a five year depreciation based on 35, 25, 20, 15 and 5. If this was substituted for the above calculation, the payout would fall to €4 million. Revision Eleven. These two figures are both higher than the €2,325,601 calculated in Revision Three, which subtracted the fictional transfer from the amount awarded by the CAS. Looking Forward The day after Matuzalem was handed down FIFPro issued a press release which said ‘this case is certainly not a revision of the Webster case but merely a case by case decision with some critical elements that have not been well thought out’. 78 The analysis here concurs with the second half of the sentence, not the first. FIFPro’s cautious response may be because the bulk of the compensation awarded was based on a fictitious transfer fee in a loan agreement between two clubs and an expectation that this will not occur in future cases. If nothing else, Matuzalem provides a powerful incentive for a club which enters into a loan agreement with another club, after obtaining a player who has unilaterally terminated his contract, not to include an option transfer clause in a loan agreement. This may in fact be the lasting impact of Matuzalem. An approach which followed Webster and the addition of two different scenarios of amortised transfer fees would have provided a higher compensation payout than Matuzalem, shorn of the fictitious transfer fee. In contrast to Webster, which based compensation on the contract unilaterally terminated, Matuzalem links it to income of the new club, or clubs, and to income obtained after the balance of the expiry of the contract unilaterally terminated. Linking compensation to future earnings was rejected by Webster because of its discriminatory and punitive impact on players. The indefinite nature of the compensation to be awarded after the event has the appearance of being designed to have a chilling effect on players who desire to unilaterally terminate their contracts and clubs prepared to employ them. It is so easy for ways and means to be found to avoid such swords of Damocles. Players and clubs can enter into side agreements to reduce the ‘book’ amount of payments to hide the real levels from prying eyes. Alternatively, sponsors or friends of the club can be found to provide extra sources of income to players and their families. Matuzalem will have the effect of driving transactions underground and adding to the charges of corruption which have often been associated with the global operation of football across the globe. 79 A major advantage of Webster is that linking payments to existing contracts avoids such problems. The language associated with Article 17 is and needs to be broad to deal with the various ways in which clubs and players unilaterally breach contracts. FIFPro may give consideration to entering into negotiations with FIFA, and in doing so enlisting the support of the European Commission, to make an addition to Article 17 to take account of the sanctioned or special unilateral terminations of contracts as occurred in Webster and Matuzalem - situations where players over 23 satisfy the time/season limits (do not fall foul of the protected period) and the fifteen day rule at the end of the season when unilateral terminations occur. The inclusion that is proposed here - The Webster Rule, is 28 2009/3-4 A RT I C L E S
Article 17 (6) For a player over 23 who unilaterally terminates his contract with his Club outside the Protected Period, that is after a period of three entire Seasons or three years whichever comes first, and for a player over 28 after a period of two entire seasons or two years whichever comes first, and the termination occurs within fifteen days of the completion of the last match of the season, the only criteria that can be included in determining compensation are the remuneration and benefits due to the player under the existing contract and the fees and expenses incurred by the Former Club (amortised over the term of the contract). The contract of the player with a new club or clubs and the offer of transfer fees are not criteria to be considered. Matuzalem is a confusing and poorly thought out decision. It is based on fictions and events which occurred after the commission of the unilateral termination of the contract - the option transfer which Real Zaragoza hoped to obtain but never realised and contracts negotiated after the unilateral termination based on income to be earnt after the expiry of the unilaterally terminated contract. It provides an incentive for an aggrieved party to litigate and promotes a lucky-dip mentality. It is inconsistent with and overturns Webster. Moreover, it did not engage with and provide a rationale for rejecting Webster. Future cases will see a club who has lost a player in circumstances similar to Webster and Matuzalem relying on Matuzalem in its submissions. The player and his new club will point to the confusion and problems in Matuzalem and base their case on the reasoning of Webster. The two cases are inconsistent. This inconsistency will need to be resolved by the CAS in future cases which will be submitted to it for adjudication. ❖ All Sports for Free! A Difficult Match? Right to Information in the Digital Broadcasting Era by Katrien Lefever and Tom Evens* 1. Introduction Needless to say that sport fulfils a vital function in our society. As the European Commission argues in its white paper on sport, “sport is a growing social and economic phenomenon which makes an important contribution to the European Union’s strategic objectives of solidarity and prosperity”. 1 According to the famous Latin saying “mens sana in corpore sano”, sports contribute to the physical and psychological wellness of the people. Moreover, sports hold an enormous potential for community building regardless of age or race by fighting against racism and violence and by promoting volunteering and active citizenship. But more than ever, sports have developed into a dynamic global business environment. Broadly defined, sports’ macro-economic impact in the European Union is estimated at 407 billion Euros, accounting for 4.58% of EU GDP. 2 This economic value of sports is exemplified by the top wages sports stars earn and especially by the multibillion dollar broadcasting rights contracts, which have played a major role in the establishment of professional sports and the media sport content economy. The exploding broadcasting rights marketplace is considered one of the driving forces behind this fast-growing share of sports within the European economy. In today’s hypercompetitive media climate, these sports rights have become increasingly important for broadcasters as well as platform operators to differentiate from other competitors. In this era of digital and mobile television platforms, live sports coverage * Katrien Lefever is a legal researcher at the Interdisciplinary Centre for Law & ICT (ICRI) of the Catholic University Leuven, Belgium (www.icri.be). She is working on a PhD about how balancing exclusive sports rights and the citizen’s right to information in the digital media environment. Tom Evens is affiliated to the Media & ICT Research Group (MICT) at Ghent University, Belgium (www.mict.be). He is pursuing a PhD in digital distribution models of the content industries with particular attention to sports and cultural content. ICRI and MICT are both part of the Interdisciplinary Institute for Broadband Technology (www.ibbt.be). 1 Commission of the European Communities (2007). White paper on sport, Brussels: European Commission, p. 2. 2 Kleissner, A. (2008). Economic trends in sport. Sport satellite accounts in Europe. European Conference on Sport and Innovation, March 13, Eindhoven, The Netherlands. 3 Bolotny, F. and Bourg, J.-F. (2006). The demand for media coverage, in: W. Andreff and S. Szymanski (Eds.), Handbook of the Economics of Sport (pp. 112-133). Cheltenham: Edward Elgar. 4 Jhally, S. (1989). Cultural studies and the Sports/media complex, in: L. Wenner (Ed.), Media, Sport and Society (pp. 70- 97). London: Sage. has shifted from terrestrial and free-to-air (FTA) television towards digital premium television. For these new platforms, the acquisition of live sports rights became a competitive advantage to drive up subscription uptake and to reign supreme in the digital premium content marketplace. However, as these premium platforms including pay-television require an additional subscription payment, analogue households could be denied access to major sports events. Contrary to the United States, the European Commission has introduced the list of major events mechanism within its regulatory framework to guarantee access to these sports events and to safeguard the right to information of the public. This mechanism should allow Member States to assure free-to-air coverage of events of major interest for society. Although the European Commission claims that this major events mechanism is working satisfactorily, at least some critical assessments should be made. Because issues on sports broadcasting rights have mainly been studied either from an economic or from a legal perspective, an interdisciplinary approach is handled in this article. As the transformation of the media ecosystem may affect the sale and application of media sports rights in a fundamental manner, the article kicks off with a political economy of the digital sports broadcasting market. In this section, the digitised value chain and the established synergy between sports and digital media are emphasised. Afterwards, the legal implications of exclusive sports coverage for major events with a national interest are critically explored with a specific focus on the Flemish legislation. 2. Digital sports broadcasting market For decades, sports and the media, in particular broadcasting, have developed a self-interesting relationship allowing them to gain benefits from their complementary interests. Sports act as a pool for content and audience for broadcasters, which function as a revenue source and a promotion tool for sports. 3 This interdependence between sporting organisations, media companies and public society is often referred to as the sports/media complex. 4 This relationship originates from the end of the 18th century when newspapers began to cover sporting events. This clearly meant a win-win situation for both parties: sports coverage enabled newspapers to sell more copies and to attract manufacturers interested in advertising their products to these committed sports readers while sporting organisations gained benefits from this media exposure to drive up stadium attendance. A RT I C L E S 2009/3-4 29
Page 1 and 2: 2009/3-4 EU Sports Policy FIFA Tran
Page 3 and 4: EDITORIAL 2 ARTICLES The Future EU
Page 5 and 6: The Future EU Sports Policy: Hollow
Page 7 and 8: Community a new dimension, such as
Page 9 and 10: Sports Ministers Conference, The Ha
Page 11 and 12: and 15) that the provisions of Comm
Page 13 and 14: The Case against the Applicability
Page 15: not fall within the wording “tran
Page 19 and 20: 4 See also in support of this argum
Page 21 and 22: This is not an unrealistic career p
Page 23 and 24: cerned, the specificity of sport, a
Page 25 and 26: compensated for the income it could
Page 27: A more basic question is what weigh
Page 33 and 34: live sports rights in many other co
Page 35 and 36: equired coverage of 90% is not met.
Page 37 and 38: letes in any form, even including a
Page 39 and 40: Article 95 of the CHL Rules governs
Page 41 and 42: The RFL may declare that a player w
Page 43 and 44: ices acquired by the clubs in the r
Page 45 and 46: competition (thereby enhancing the
Page 47 and 48: Each country of the Kingdom has all
Page 49: 2.2.The objectionable NAOC intentio
Page 53 and 54: Sub Rule 29.5 It reads “The area
Page 55 and 56: To secure the appreciation of CAS i
Page 57 and 58: 5.3 Recognition by the internationa
Page 59 and 60: however it will all come to the lev
Page 61 and 62: ICAS International Council for Arbi
Page 63: or serious bodily harm. Such prepar
Page 66 and 67: cumstances arise, a measure can be
Page 68 and 69: to the amount of regulations in the
Page 70 and 71: 4.1. The relationship between sport
Page 72 and 73: 5. Conclusion In this article I hav
Page 76 and 77: ing a player. In order to create an
Page 78 and 79:
9 The ‘reserve clause’ gave clu
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In this research, the focus will be
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sports agent will not bargain at ar
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have a dominant position. Thereafte
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3.5.2. Regulations of the KNVB The
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Siekmann, R.C.R., Parrish, R., Bran
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limit on the number of times a play
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to these regulations. This refers,
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Article 4 of the Act No. 401/1989 p
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any tax evasions. Added to this is
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the machines while, at the same tim
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saw sports betting as an easy way t
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mulated by football clubs, it was a
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tions,” which means that there we
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which includes the state monopoly a
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estricted items” and, together wi
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influence on the society. 7 Amendme
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6.4. Compatibility with Article 49
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ting market is the fact that most o
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as local). 7 The amount of the paid
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estriction in the most extensive wa
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Conditions for organizing sports be
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Although Delaware discontinued its
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Sports Betting: Law and Policy. A U
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deterred because electronic transac
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lenging time for the industry. As a
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CAS Publishes the Decisions Rendere
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tickets.com>, , and be transferre
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4. to Tottenham Hostpur Public Lim
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Football League after government pr
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Football had given them a rare outl
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Moseneke wanted everyone to underst
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men and to repair the damage that h
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a day of jet travel for any competi
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television rights to the games, 67
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extraterritoriality nor a division
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cal matter, deter interference of h
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Thus, International Law, once a law
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en. 248 Typically, two separate con
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Guarantors would have undertaken to
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ing a professional football club or
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“TRANSLATING IS THINKING WITH ANO
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