By James Harwood
February 26, 2015 marked a new chapter in the field of litigation and sport, specifically in European soccer. This date saw the first of a two-day hearing in a Belgian court into the legality of the Union of European Football Associations (UEFA) Financial Fair Play (FFP) regulations. The regulations, which were enacted at the start of the 2013—2014 season, were challenged by Jean-Louis Dupont, who was acting on behalf of an Italian soccer agent Daniel Striani, with the central issue of debate being whether these FFP regulations breach European Union (EU) competition legislation (commonly known as Antitrust Law in the United States).
Dupont is seeking an interim decision that will freeze the progress of FFP (into Stage 2) until the full legal process has been completed. The complaint, which is being heard in the Belgian Court of First Instance, is being pursued by Dupont. This complaint is the second such filed by Dupont on behalf of Striani. In the first occurrence, it was submitted as a challenge to the European Commission (EC). However, they have deferred judgment to the Belgian Court.
In 1995, it was Dupont who fought the soccer authorities on behalf of Jean-Marc Bosman, leading to a Court of Justice of the European Union (ECJ) ruling that is commonly known as ‘The Bosman Ruling’. This ruling concerned Article 39 of the European Commission (formally Article 48) Treaty, specifically on freedom of movement for workers, freedom of association and the direct effect of Article 39. The ruling consolidated three separate cases involving Bosman: Belgian Football Association v. Jean-Marc Bosman; R.F.C. de Liège v. Jean-Marc Bosman and others; and UEFA v. Jean-Marc Bosman. This ruling is considered a landmark decision in the world of soccer as it enabled players to move (or transfer) for free at the end of their contracts with clubs (effectively establishing a type of free agency period within European soccer) that had not been possible previously.
From a sporting perspective, it is not just soccer that has seen rulings against them in the European Courts. P Meca-Medina and Majcen v. Commission and Olympique Lyonnais v. Bertrand and Newcastle FC are two further cases that have shown that EC legislation (and specifically competition and free trade rules) apply to sport as they do with other industries; a key factor that will affect the outcome of the litigation being fought against FFP and UEFA.
A number of ‘fundamental freedoms’ are guaranteed to citizens of the EU and Dupont and Striani propose that UEFA’s FFP regulations, and specifically, the ‘break-even’ clause infringe these; specifically: the free movement of capital, services, and workers (in respect of these three terms, the owners of clubs and the financial impetuous inject; the employment of player agents; and players themselves). The complaint highlights these fundamental freedoms of EU legislation as the central objection to FFP and any restrictions placed on clubs (or subsequently players or agents) is in violation of these fundamental freedoms.
In a press release, Dupont further expanded the objections to FFP that the complaint puts forward. The belief is that FFP will restrict competition, as investments from club owners will be placed under strain due to the need for their ‘assets’ to be ‘breaking-even’. Subsequently, the transfer market will stall causing the market structure to remain in status-quo,, or potentially, the disparity between Europe’s top clubs and bottom clubs may be further expanded (resulting in an NBA-style league, where those who are the existing elite remain elite and those who are considered to be ‘middle of the road’ clubs remain as such). This stalling will cause clubs to be more fiscally aware, and as a direct result transfer fees will be reduced in addition to the number of players under contract at each club (another potential restriction of FFP surrounds the number of ‘non-home-grown’ players that can be on a particular clubs roster). This will be followed by the reduction in player salaries as clubs attempt to comply fully with the FFP regulation. Finally, the conclusion from an agents perspective is that the reduction in transfers and salaries will have a negative affect on the income of player agents, who earn their living from transfer fees and player contract negotiations. (http://fairplayfc.org/blog-3/page/2/)
As a side note, the Striani complaint does not fundamentally reject the entirety of the FFP regulations; it solely focuses on the ‘break-even’ aspect of FFP. Dupont and Striani consider aspects of the regulations, such as the requirement for transfer fees to be paid in a timely manner (and therefore overdue payments resulting in punishments such as withdrawal from continental competitions) as being a plus for European soccer and that it could bring further veracity to the game, which is currently lacking.
The EC’s response to the complaint has been somewhat muted. They have stated that they intend to dismiss the complaint, but are awaiting the outcome of the Brussels court before making that decision. They are of the belief that Striani brought the challenge against UEFA and FFP with ulterior motives, and it is speculative in its nature, as UEFA had actively engaged with the EC when drawing up the FFP regulations and therefore the regulations do not break EU competition legislation. The EC believe that the Belgian court is “well placed” to resolve the dispute, “as they can make a reference to the ECJ” (http://fairplayfc.org/blog-3/page/2/). The EC believes that the regulations are solely aimed at ensuring the fiscal stability of soccer clubs, and not players; and therefore that any impact on Striani will be indirect of the regulations themselves. The EC also holds that Striani has not fully substantiated his complaint that the transfer market will be negatively affected by the FFP regulations.
This challenge could fundamentally alter the landscape of soccer in Europe, ironically with the challenge being litigated by the lawyer who enacted the last major change. Indeed, a number of stakeholders hold a keen interest in the outcome of this complaint, with supporters—groups from Paris Saint-Germain and Manchester City—filing civil suits against the lawfulness of the FFP regulations (with these being the two clubs that have been majorly impacted in the first round of FFP sanctions — and who are two of the richest soccer clubs in Europe). Indeed, including the Striani complaint, there are now legal actions being pursued in four separate jurisdictions into the lawfulness of FFP.
There are additional implications from the U.S. perspective. The core being the issue of whether players will be able to be freely transferred between clubs as widely as they currently are. European soccer is a breeding ground of talent, and has undoubtedly aided the progress of some current U.S. Men’s National Team players; but if clubs are not able to spend money on transfer fees, this may hinder the progress of talent progression (with clubs looking to build internally rather than through the transfer market). The Major League Soccer Players Association and Major League Soccer will also be keen observers as the outcome of the complaint could have an impact on future collective bargaining agreement negotiations.
While there are a number of potential outcomes to the challenge including: dismissal; referral to the ECJ; or nullifying the FFP regulations all together; this challenge has highlighted the autocratic nature of UEFA and soccer authorities in general, and despite their claims of consultation, they still believe that they hold the higher authority in decision making in soccer. Precedent has been set with the Jean-Marc Bosman case, as well as other sports-industry cases that show that sport cannot be considered to be outside of the realm of EU competition legislation. Undoubtedly, this litigation will run for some time to come and could, potentially, lead to another Bosman-esque ruling in the coming years.
James Harwood is a doctoral student at Florida State University
