Policy Brief

June 2006

The King Baudouin Foundation and Compagnia di San Paolo are strategic partners of the European Policy Centre

Playing ball: EU regulation of professional football since the

By Borja García

Background

As World Cup fever grips the Jean-Marc Bosman, a Belgian salaries shot up partly as an indirect continent, most football fans player whose failed transfer consequence of the Court’s verdict. are probably totally unaware of from RC Liège to French Second the impact the Division side Dunkerque In parallel to the ECJ’s interventions, has had on the ‘beautiful game’. kick-started the whole process, football in Europe has been asked the courts to rule on transformed by an enormous In a landmark ruling in 1974, whether the international influx of money from the television the European Court of Justice transfer system and the industry, as the deregulation of (ECJ) declared, in the Walrave nationality quotas in club the broadcasting market and and Koch case, that sport was competitions imposed by the development of digital and subject to EU law “in so far as FIFA and UEFA were lawful. pay-per-view television encouraged it constitutes an economic In a preliminary ruling, the new operators to penetrate the activity within the meaning ECJ declared that these sector by investing large amounts of Art.2 of the EC Treaty”. regulations breached the of money in football and other Treaty’s provisions on freedom major sporting competitions. Since then, the EU institutions of movement for workers and have become increasingly against discrimination on The importance of football involved in sports-related grounds of nationality. to television was underlined issues and debates, especially when Barcelona’s Brazilian about football, even though Despite several clear precedents right-back Juliano Belletti the Treaties do not give them at both European and national scored the winning goal in any explicit powers in this level, the far-reaching implications May’s UEFA Champions area. This culminated in of the Court’s ruling came as a League final against Arsenal, a specific article on sport shock to the football authorities, watched by 13,715,000 Spanish (Article III-282) being which had never imagined that viewers – almost one-third of included in the EU’s ill-fated the EU’s regulatory powers could the country’s entire population. Constitutional Treaty. have an impact on their sport. Money matters However, it was the 1995 The subsequent liberalisation ruling by the ECJ on the of the players’ market changed Over the last ten years, television Bosman case that really the balance of power between income has displaced gate receipts catapulted football to the employers (the clubs) and as the top source of income for top of the European agenda. employees (the players), whose professional football. In 1992, broadcasters paid Arguably, European football’s in Spain. However, this has 434 million euros for the governance structures have been less successful at European television rights to English not been able to keep pace level, where there have been Premier League games for with the rapid commercial two failed attempts to create a five seasons. Recently, the development of the professional breakaway tournament to Premier League sold its game, and this has created compete with UEFA’s own live-to-air broadcasting rights numerous internal tensions Champions League and other for three seasons (starting in between those involved club competitions. 2007-2008) for a massive in the sport. 2.5 billion euros, with the Football’s ‘excesses’ in recent final figure likely to be as Whereas clubs and federations years have intensified the internal high as 3.6 billion euros formed a common front against debate about the way the sport once the rest of the rights, Jean-Marc Bosman during his is run, amid concerns over the such as highlights or the battle in the courts, the increasing origin of money invested in right to broadcast delayed amount of money available football, rumours of illegal betting games, are sold. to the sport has prompted and money-laundering, an numerous requests for changes increasing gap between the richer This suggests that predictions of to a governance structure which and poorer clubs, and even a decline in the amount of money used to be dominated, from match-fixing practices which going into the sport from television, the top down, by international have, in some cases (for example, made a few years ago in the wake (FIFA), European (UEFA) and Germany) led to referees being of the collapse of the ITV Digital national bodies. sent to jail. venture in the UK and the Kirch empire in Germany, may have At EU Member State level, top The debate about the (re)distribution been wide of the mark. However, clubs have managed to increase of power within football’s system the auction for the broadcasting their power, organising their own of governance now overlaps with rights to UEFA’s Champions top-flight national competitions, discussions on how its structures League matches, which is now for example, through the Premier should be updated both to comply under way, will give a clearer League in England, Lega Calcio in fully with European law and to picture of the trend. Italy or Liga de Fútbol Profesional combat such ‘excesses’.

State of play

The EU takes a predominantly its potentially significant impact In the immediate aftermath of regulatory approach towards on the European economy and the Bosman ruling, Commission football, with its influence on markets. This has involved: competition officials received at the game shaped mainly by a) ensuring freedom of movement least 60 sports-related complaints, the application of EU law – for players, who are now with most of them linked to the especially provisions linked considered workers as defined by application of competition policy to the internal market and to the Treaty; and b) regulating the to the sector. This prompted the the economic activities of the economic aspects of the game Commission to examine how far professional game. (such as the sale of broadcasting football and other sports complied rights and ticketing arrangements with EU competition rules, starting However, regulatory policies for major tournaments) to ensure with an investigation into FIFA’s tend to become politicised that they comply fully with EU international transfer system. over time and football is no competition law. exception. As a result, the The Commission decided that the EU now has two distinct Despite opposition from the changes introduced post-Bosman approaches towards the game: sport’s governing bodies, this fell short of the EU Treaties’ a legal and a political one. has been enforced through a series provisions on free movement, and of ECJ rulings and investigations entered into protracted negotiations Regulating football by the European Commission’s with the sport’s governing bodies to Directorate-General for try to settle the issue. First and foremost has been the Competition. These have normally drive to liberalise football as an resulted in negotiated settlements The eventual agreement between economic activity because of rather than official decisions. the two sides included measures to support the training of In essence, the current position declarations on the specific players; the establishment is that leagues, federations or nature of sport and its social of a transfer period per season; other organisations can sell values attached to the Treaties clearly-defined rules on the the rights to their competitions of Amsterdam in 1997 and Nice contractual arrangements jointly as long as they create in 2000; and the Commission’s between players and clubs; several rights’ packages which 1999 Helsinki report on sport the setting up of an arbitration can then be bought by more (which was drafted by the body; and clarification that than one broadcaster, thereby Directorate-General for Education the latter did not prevent boosting competition within and Culture). players taking their cases to the television market. In short, national courts. there can be only one seller, This politicisation of sport reflects as this is better for football, but concerns that football’s ‘excessive’ Despite initial complaints from there must be several buyers. economic development, facilitated the sport’s governing bodies that (although by no means caused) the Commission was exceeding Three years after the case by the liberalising zeal of the its powers and interfering with was closed, both sides now EU’s policy-makers, is putting football’s right to self-government, acknowledge that the agreement the football’s social functions, both sides have since heralded has been a success. It is seen and even the future of the sport the negotiations which led to by many as a turning point, with itself, at risk. Recent scandals – the deal as constructive, and UEFA recognising the benefits of over match-fixing in Belgium, agree that they helped improve bringing its procedures into line the jailing of referees in Germany mutual understanding of each with EU law and the Commission and the judicial investigations other’s concerns. acknowledging that the sport into Juventus and other teams has some specific characteristics in Italy – demonstrate just how The second important case was which make it different from other real this risk is. the Commission’s investigation economic activities. into the joint sale of television rights This politicisation has had two for the UEFA Champions League, Politicising football consequences. First, it has had coupled with investigations into an impact on the approach to similar practices at national level Alongside the regulatory drive by liberalising the sport taken by EU by the German Bundesliga and EU policy-makers, there has been a policy-makers, who now tailor the the English Premier League. growing debate on sport’s socio- way they apply European law to cultural values, bringing politics the specific nature of football in The Commission argued that into play as a counterweight to the order to protect its social function. UEFA was hindering competition market-oriented approach which Second, it has opened up a debate in the television market by dominated in the aftermath of the on the changes needed in the way selling broadcasting rights in a Bosman ruling. European football is run to ensure single package to just one the survival of the professional game. broadcaster in each Member This approach regards sport as State. However, it accepted something more than an economic It is argued that one important way the principle of joint selling – activity and as a sector which to redress the situation is to allowing UEFA to sell rights deserves special protection strengthen football’s ‘pyramid’ on behalf of all the participating because, notwithstanding its governance structure. In this clubs – even though this also economic element, it also scenario, UEFA and national had a negative impact on performs five important social federations could play a central competition. It justified this functions: educational, public role in giving the game a secure decision on the grounds that it health, social, cultural and future, provided that they would increase the appeal of recreational. update their structures to ensure the UEFA Champions League democracy, transparency and as a brand and maximise the This argument has won support representation in decision-making income to be redistributed at from the European Parliament, for all stakeholders and to comply the grass-roots level of the game. football’s governing bodies with the legal requirements. (especially UEFA) and national Once again, UEFA entered into governments. However, in the The latest development in this negotiations with Commission absence of an EU competence area was the launch of an competition officials and the for sport, policy-makers have Independent European Football case was settled informally, had to rely on soft law measures, Review by British Sports Minister with UEFA agreeing to amend such as parliamentary reports Richard Caborn during the British its selling arrangements. in 1994 and 1997; political Presidency of the EU in 2005. Prospects

Ten years after the Bosman case, Three key elements are likely to 3. The Commission’s recently- professional football has been shape the game’s future at the announced White Paper on sport. transformed beyond recognition. European level: Consultations between different It is now somewhere between Commission departments have sport and entertainment, but it 1. The report of the Independent just begun, and a public dialogue remains as popular as ever – and European Football Review is about to be launched with civil still “more important than life launched by the British Presidency society and the sports movement. and death”, as former Liverpool last year. The Review’s chairman, Commission President José Manuel manager Bill Shankly famously former Portuguese Minister José Barroso also wants the College put it. Luís Arnaut, wants to establish of Commissioners to discuss the a framework for forging a EU’s future role in sport-related The EU institutions’ interventions partnership between football issues at the highest political have undoubtedly had an impact and public authorities. The aim level. This could result in sport on this transformation, but they would be to provide political being mainstreamed in other are not responsible for the worrying support and legal certainty to European policies. trends in professional football. the dialogue between stakeholders in the professional game to ensure As a general principle, the EU The politicisation of the game in its future. This would entail a institutions would prefer to the post-Bosman era has led to a central role for governing bodies reduce their role in the regulation debate on the wisdom of giving such as UEFA, but could also of professional football, limiting the Union competences in sport. give clubs – and possibly even themselves to supervising the Football’s governing bodies initially supporters – better representation. way the game is run and its requested a protocol exempting The report expresses serious compliance with EU law. sport from the application of concern about the health of European law, but they were European football and calls Instead, they want to concentrate eventually forced to recognise for quick action by governing on using sport as a tool to that this was a non-starter. bodies, EU institutions and achieve their goals in other national governments. policy areas, such as health Other stakeholders in the (for example, the fight against governance of sport, such as 2. The outcome of the so-called obesity), social cohesion (for clubs and players, as well as Charleroi or Oulmers case. In example, the fight against the Commission and, ultimately, this case, which is tipped to racism) and bringing citizens the Member States, were all be a new Bosman for European closer to the Union. adamantly opposed to any such football, the Belgian club exemption. Charleroi and the association With political and legal support of 18 of the richest football clubs from public authorities, it would The European Convention on the in Europe, known as the G-14, then be up to the football Future of Europe which drafted are arguing that FIFA and UEFA community – clubs, federations, the EU’s Constitutional Treaty in rules on the release of players players, supporters and maybe 2002-03 suggested – and national for national team games amount even broadcasters – to settle leaders agreed – that sport should to an abuse of a dominant position their internal arguments in a be made one of the Union’s under Articles 81 and 82 of the way that ensures fair competition “coordinating and supporting” EU Treaties. The question has (both on and off the pitch) and competences, as this would been referred to the ECJ for a better-managed professional allow it to help Member States preliminary ruling, which is not football clubs. develop a European dimension expected before late 2007. If to sport, mainly at amateur the Court accepts the clubs’ level. It is, however, unlikely argument, this is bound to Borja García is a PhD candidate that this would have major increase their power and at the Department of Politics, consequences for football if representation in football’s International Relations and the beleaguered Constitution governing structures at the European Studies, Loughborough eventually comes into force. European level. University, UK

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