Expert Group "Sustainable Financing of Sport”
Report from the 3 rd meeting (14 November 2012)
Rep ort drafted by the Europ ean Commission
EU Work Plan
XG FIN – Report 3 rd meeting
� Experts from the following Member States: AT, CY, DE, DK, FI, HU, IR, LU, MT, PL,
PT, RO, UK (chair)
� European Commission: DG EAC, DG COMP
� Other participants: Council Secretariat
� Observers: EOC EU Office, ENGSO, CEMR
The chairman (UK) welcomed the members of the Expert Group "Sustainable
Financing of Sport" (XG FIN) and noted that the main aim of the 3 rd and last meeting
of the XG was to agree on the final text of the Group's deliverable.
The XG adopted the draft agenda without comments.
COM informed that the negotiations on the future EU Programme for Education,
Training, Youth and Sport ("Erasmus for All"), including the Sport Chapter, were
progressing. In its partial general approach of May 2012, the EU Council had
proposed some changes, one of which was to add volunteering in sport to the
objectives of the Sport Chapter. Meanwhile the European Parliament (EP) was
preparing its position and in the available draft documents this terminology was
confirmed. COM noted that one outstanding question regarding the Sport Chapter
was possible support for sport events; the EP was in favour, but the Council of
Ministers was against. Hence, the outcome of the negotiations for this particular
issue had still to be seen.
The representative from Ireland confirmed that the sustainable financing of sport
would be a main topic for the sport agenda under the Irish Presidency. The
Presidency programme foresaw a conference on that issue on 7 March 2013 as well
as a policy debate in the EU Council in May.
2. LATEST EU LEVEL DEVELOPMENTS WITH A POSSIBLE IMPACT ON THE FINANCING OF SPORT
The chairman (UK) welcomed the Commission representatives to report on specific
topics relating to the group’s work, namely EU developments in the fields of State
aid, Cohesion Policy (Structural Funds) and taxation (VAT). The chairman would
give an update on intellectual property rights (IPR) following discussions with DG
COM (DG COMP) noted that since the last meeting in May there had not been too
many developments in the field of State aid. State aid could take the form of state
assistance, using state resources, tax benefits or direct support. Sport fell under EU
rules, including State aid rules, if it involved an economic activity; which was the
case usually for professional sport. State assistance that fulfilled four cumulative
conditions laid down in Art. 107(1) TFEU (aid is granted by the State or through
State resources, leads to an economic advantage for certain undertakings, distorts or
threatens to distort competition, and affects trade between Member States) was
considered State aid. Selective aid from public resources to an economic activity was
likely to fulfil the requirements of that article and was, in principle, incompatible
with the internal market. However, for example aid for training of youngsters and
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amateurs was no State aid in the meaning of that article. As there was no single
European definition, COM looked at amateur sport on a case-by-case basis. If aid was
awarded to a professional club, separation of accounts would be required to
separate amateur activities from economic activities; and similarly, also amateur
clubs could have separate economic activities. Under certain conditions, derogations
from incompatibility could apply under Article 107(3)(c) – e.g. examining if there
was a market failure, a public interest, the necessity and proportionality of the aid.
COM would do a balancing exercise examining these elements against the negative
effect of the distortion. The positive effects from a European perspective, potentially
taking also Article 165 into account, could sometimes outweigh the negative effects
of the measure on competition.
Support for sport infrastructure was likely to constitute State aid, e.g. the
exploitation of a stadium (multifunctional or other) was, in principle, an economic
activity. However, if this infrastructure was open for the general public it could be
found compatible with the common market as it was demonstrated in the
Commission Decision of 13 October 2011 concerning the support of the sport sector
in Hungary through a tax benefit scheme (SA.31722). In this area in 2012 the
Commission launched in-depth investigation procedures in the cases concerning the
Nürburgring racetrack (SA.31550), the Uppsala arena in Sweden (SA.33618) and the
financing of a new multifunctional arena in Copenhagen (SA.33728).
Regarding aid to professional football and respective cases, DG COMP had not
received notifications; all cases were mainly based on complaints from citizens. In
October 2012 COM had sent a letter to all MS, which asked them to provide an
overview of public financing of professional football and reminded authorities to
notify measures that were likely to be State aid. This initiative was at this stage an
information gathering exercise, to get an overview of the situation in all MS. Besides,
the joint statement from Vice-President Almunia and UEFA President Platini was
mentioned which was issued in March 2012 on the interaction between the
application to professional football of Financial Fair Play (FFP) rules by UEFA and
the control of State aid in professional football by the COM. COM considered that if
FFP rules worked, fewer State aid cases would be expected.
In the discussion, concern was raised with regard to financial solidarity mechanisms
within sport involving both professional and amateur sport within the club. COM
noted that the link between both sides should be transparent; a separate account
should exist for the amateur part of the club to ensure that public money did not
flow through the amateur club to support professional activities.
Asked about the purpose of the letter to MS, COM informed that the aim was to
provide guidance and to remind them of the applicable rules. Unlike other sectors,
there were no guidelines in place for sport; these could only be expected when the
number of cases increased. It was premature to confirm whether or not guidelines
would be established. If that happened, there would be public consultations with all
stakeholders. On the question why the focus had been on football only, COM said that
it was looking at potential disciplines where distortion was most likely to happen –
football was the biggest market in terms of sponsorship and transfers.
Regarding economic and non-economic activities, COM explained that in any area
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the distinction would remain difficult in the absence of the relevant jurisprudence.
However, some activities were clearly non-economic, such as youth training or
activities of an amateur club, but the more there was commercial exploitation of
certain activities (e.g. professional club players employed fulltime), the more there
was a chance to go towards “economic activities” and subsequently State aid.
Furthermore, COM stressed that the analysis should be made on a case-by-case
basis. For instance, support to sport facilities or swimming pools could potentially be
compatible with State aid rules if they were of local nature (e.g. in the “Dorsten” case
there was considered to be no cross-border dimension, because the facility was
more than 50 km from the border). Potentially there could be complaints from
private competitors when a public authority supported a club, and COM would have
to look into this.
COM (DG EAC) presented the state of play regarding the EU's future Cohesion
policy 2014-2020: The inclusion of sport in the Lisbon Treaty provided a basis to
better promote the interests of sport at EU level, including a more systematic
mobilisation of other EU programmes and funds for sport and a more systematic use
of EU funds for projects and actions in support of sustainable sport structures. The
2007 White Paper on Sport, in its societal chapter, identified the importance of
specific EU programmes and funds to support actions in the field of sport. The 2011
Communication on sport noted that the Structural Funds can support investments in
line with priorities set in the Operational Programmes in order to exploit the value
of sport as a tool for local and regional development, urban regeneration, rural
development, employability, job creation and labour market integration.
Accordingly, the Commission committed “to fully exploit the possibility of the ERDF
to support sport infrastructure and sustainable activities in sport and outdoors as a
tool for regional and rural development, and of the ESF to strengthen the skills and
employability of workers in the sport sector”. Sport projects as such were not
eligible for funding under the Structural Funds for the period 2007-2013 (i.e. there is
no specific reference to sport). However, sport-related activities could be funded if
they contribute to regional/local/urban/rural development or employment.
Investments in health tourism, sport tourism or leisure and sport infrastructure
have been financed from the European Regional Development Fund (ERDF). Under
the European Social Fund (ESF), sport projects that make a positive contribution to
regional employment or constitute an investment in human resources can be
financed. While no complete overview or figures were available regarding the
contribution of the Structural Funds to sport, many best practice projects were
identified which had been financed from the Structural Funds (e.g. ERDF/INTERREG,
ESF, EAFRD). Besides, the brochure on Funding for Sports in the EU was mentioned,
which had been prepared by the EOC EU Office.
Regarding the programming for 2014-2020, COM informed that within the COM's
proposal of the Common Provisions Regulation (CPR) 11 thematic objectives
(exhaustive list) were identified, whereas the fund-specific regulations listed
investment priorities (exhaustive list). Besides, the Common Strategic Framework
(CSF) translated the thematic objectives into key actions (indicative list). COM
presented the main areas (thematic objectives/key actions) where sport-related
projects could in principle contribute to the scope of the relevant Fund; these were
mainly linked to promoting employment and social inclusion. COM noted that
recently it had started submitting Commission Position Papers to Member States.
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This would be the basis for the informal phase of the negotiation process. Following
that informal period and after adoption of the Regulations package (as well as
possibly the CSF) by the EP/Council foreseen for the first quarter 2013, the COM
would prepare a Negotiating Mandate (based on the Position Papers) which would
then be the basis for the formal procedure to discuss with the Member States the
Partnership Contracts and the Operational Programmes (to be adopted by COM by
In the discussion, concerns were raised that the situation could be worse than before
for sport, because tourism had been removed from the Regulations; in the current
period many sport projects were financed linked to tourism. Recently the EP had
asked for adding sport to Articles 3 and 5 of the ERDF Regulation. However, in the
end the final decision would be taken in the Member States as the Partnership
Contracts and Operative Programmes were drafted at national/regional level.
As an additional argument for ensuring an adequate place for sport in the new
Cohesion Package, COM highlighted the importance of sport’s contribution to the
economy. It was important to acknowledge that, when the economy was suffering,
sport was a very resilient sector, generating growth and jobs. According to the
results of a recent EU study, the share of sport in the EU economy, expressed in
Gross Value Added (GVA), was 1.76%, while the share of sport in employment
amounted to 2.12% (comparable to agriculture, forestry and fishing combined).
Sport represented a labour-intensive growth industry which meant that growth in
the sport sector was likely to lead to additional employment. The sport sector
thereby contributed to fulfilling the Europe 2020 goals. Country-specific results in
this study should help further defend the role of sport as an important driver for
innovation, growth and jobs.
COM (DG EAC) presented recent developments regarding the VAT system, in
particular referring to the Communication on the future of VAT "Towards a simpler,
more robust and efficient VAT system tailored to the single market" which had been
published in December 2011. The topic was high on the European agenda as VAT
constituted a major part of the revenue of national budgets. COM noted that the
Council had called for the removal of unjustified tax burdens.
Regarding the rate structure as proposed in the Communication, the application of
the standard rate should remain the basic principle and the use of reduced rates was
an option for the Member States. In October 2012 the COM launched a consultation
on the review of existing legislation on VAT reduced rates, which would run until 4
January 2013. The review should then lead to a new proposal in the field of VAT by
the end of 2013 (as included in the COM Work Programme). It was noted that sport
was not directly concerned; the paper singled out sectors but attention was drawn to
the fact that the general direction was that reduced rates should not be the means to
reach social and other political objectives.
COM mentioned a draft study (not yet published) on VAT in the public sector and
exemptions in the public interest, which had been carried out by Copenhagen
Economics. It highlighted that in many cases differential VAT treatment existed
between public activities and private activities.
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In the discussion, experts expressed concern both about maintaining reduced rates
and exemptions in the field of sport. COM noted that more information on planned
initiatives ahead could possibly be made available at the conference in Dublin in
March organised by the Irish Presidency. The chairman stressed the importance for
stakeholders and Member States to reply to consultations relating to VAT.
The chairman (UK) updated the XG on the European framework for online
gambling by referring to the COM's Communication adopted on 23 October 2012,
which sets out an action plan seeking to enhance clarity throughout the EU for the
benefit of national authorities, operators, consumers and related industries such as
payment service or media service providers. Five action areas had been prioritised
to address the challenges faced at EU and national level: compliance of national
regulatory frameworks with EU law; enhancing administrative cooperation and
efficient enforcement; protecting consumers and citizens, minors and vulnerable
groups; preventing fraud and money laundering; and safeguarding the integrity of
sports and preventing match-fixing. COM had found that it was not appropriate at
this stage to propose sector-specific legislation, but that there were unanimous calls
for policy action at EU level. In the document, COM confirmed that Member States
were free to set the objectives of their policy on games of chance and to define
protective and regulatory frameworks. Following the Communication, the COM
would speed up on-going infringement proceedings, clarify their procedures,
facilitate cooperation and enhance exchanges of information. While a key aspect of
the Communication was to consider sustainable financing of sports integrity
measures, the chairman noted that more concrete steps towards a more balanced
relationship between sports events organisers and the betting industry (i.e. a sports
organisers' right) were not included in the document.
3. DELIVERABLE OF THE XG FIN: STRENGTHENING FINANCIAL SOLIDARITY MECHANISMS
The chairman (UK) presented the draft final document representing the Group's
deliverable, i.e. "Recommendations to strengthen solidarity mechanisms within
sport". The final format of the document including a set of recommendations and
best practice examples was displayed on screen for possible comments. The XG had
no objections to the format. The chairman introduced the main changes in the
background paper, in particular the elements relating to the function of the group as
well as to State aid and EU funding programmes.
The recommendations were presented including the results from the online survey,
which had been sent out in October. Regarding the four main recommendations
there was general support and the XG agreed on the final wording. Subsequently
there was an in-depth discussion on the proposed list of detailed recommendations.
Regarding best practice examples, the chairman reminded that it would be good to
have a more comprehensive set of examples. One option would be to send out a link
to a dedicated website to national sport federations allowing them to fill in any
examples they might have. These could then be taken forward and a collection of
‘case studies’ could possibly be produced ahead of the conference organised by the
In the discussion the question arose whether the number of recommendations was
not too high. The chairman replied that for this reason four main recommendations,
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which the XG believed to be the most important at EU level, had been singled out and
highlighted at the beginning of the document.
The chairman noted that he would revise the document according to the comments
received and circulate it for a final check to the XG with a short deadline given that
the final text of the deliverable had to be submitted to the Council WPS by the end of
the year. Furthermore, the chairman informed that the deliverable would be handed
over to the Irish Presidency with a view to its conference on this issue on 7 March,
followed by a discussion at the Sport Directors' meeting the day after. It could also
form the basis for the policy discussion in May in the Council. The chairman
reminded the XG to provide further best practice examples until mid-February to
contribute to the preparation of the Irish Presidency conference.
The chairman concluded the last meeting of the XG FIN in the framework of the EU
Work Plan for Sport for 2011-2014 and thanked the members for their active
participation and the Commission for its support.