Update: On 14 April footballleaks released a series of documents concerning Sporting de Gijón. Therefore, I have updated this blog on 19 April to take into account the new information provided.  

Doyen Sports’ TPO (or TPI) model has been touted as a “viable alternative source of finance much needed by the large majority of football clubs in Europe". These are the words of Doyen’s CEO, Nélio Lucas, during a debate on (the prohibition of) TPO held at the European Parliament in Brussels last January. During that same debate, La Liga’s president, Javier Tebas, contended that professional football clubs, as private undertakings, should have the right to obtain funding by private investors to, among other reasons, “pay off the club’s debts or to compete better”. Indeed, defendants of the TPO model continuously argue that third party investors, such as Doyen, only have the clubs’ best interests in mind, being the only ones capable and willing to prevent professional football clubs from going bankrupt. This claim constitutes an important argument for the defendants of the TPO model, such as La Liga and La Liga Portuguesa, who have jointly submitted a complaint in front of the European Commission against FIFA’s ban of the practice.[1]

The eruption of footballleaks provided the essential material necessary to test this claim. It allows us to better analyse and understand the functioning of third party investment and the consequences for clubs who use these services. The leaked contracts between Doyen and, for example, FC Twente, showed that the club’s short term financial boost came at the expense of its long-term financial stability. If a club is incapable of transferring players for at least the minimum price set in Doyen’s contracts, it will find itself in a financially more precarious situation than before signing the Economic Rights Participation Agreement (ERPA). TPO might have made FC Twente more competitive in the short run, in the long run it pushed the club (very) close to bankruptcy.

More than four months after its launch, footballleaks continues to publish documents from the football world, most notably Doyen’s ERPAs involving Spanish clubs. For this blog, our dataset will cover the two ERPAs between Doyen and Sporting de Gijón (found here and here); the ERPAs between Doyen and Sevilla FC for Kondogbia and Babá; the ERPAs between Doyen and Getafe for Abdelazziz Barreda and Pedro León; the ERPA between Doyen and Granada CF for Luís Martins; the ERPA between Doyen and Atlético Madrid for Josuha Guilavogui; and the ERPA between Doyen and Valencia CF for Dorlan Pabón.

The first part of this blog will provide background information on the recent economic history of Spanish football. The posterior in-depth analysis of the ERPAs will thus be placed in context. The blog will also include a table with the relevant facts from the ERPAs completed with the information included in an Excel document showing a map of deals and transactions allegedly conducted by Doyen and recently published on footballleaks. Relevant facts and figures that are not found in the ERPAs or in the Excel document, will be taken from the website www.transfermarkt.de. Based on the outcome of the analysis, we will attempt to conclude whether, and to what extent, the ERPAs have been profitable for the clubs involved, from a financial and competitive perspective.

Financial misery and TV rights inequality off the field

The financial misery

Spain was one of the countries most affected by the global financial crisis that commenced in 2008. The unemployment rate was above 25% for a long period of time and its budget deficit was about 10% from 2008 to 2012. The (professional) football sector also suffered from this general financial crisis. A study on the financial situation of Spanish clubs during the period 2007-2011 shows that by June 2011, 80% of La Liga clubs had a negative working capital. This meant that the clubs’ short term assets were not enough to cover the short term debts. The study further explains that the main reason for the financial difficulties is the excess of expenditures on players, i.e. paying transfer fees and salaries that clubs cannot afford. Not surprisingly, by 2011, half of the clubs from the Spanish first and second division had entered bankruptcy proceedings. A large part of the total debt was owed to the Spanish public authorities. In 2012, clubs in Spain's top two divisions collectively owed some €750 million to the tax authorities and another €600 million to the social security system. One of the teams who signed ERPAs with Doyen, Atlético Madrid, was known to have a tax debt which accounted for a fifth of the entire league’s tax debt. In fact, their tax debt of over €120 million amounted to over 60% of their annual revenue. Almost 40% of the clubs in the top two divisions presented negative equity, meaning that they were in clear need for funds from other parties. The general economic crisis prevented clubs to get these funds through normal means, like shareholders, members, sponsorships and bank loans. Local authorities were many times willing to aid their clubs. For example, the municipality of Gijón had rescued Sporting de Gijón by relocating its youth training facilities and subsequently buying the facilities for €12 million. Another example is that of Valencia CF. In its ambition to grow, the club decided to build a new stadium. The idea was to finance the new stadium by selling the old stadium. Once again, due to the financial crisis, and particularly the collapse of the housing market, it suddenly was incapable of selling the old stadium for the required price. The construction on the new stadium had already commenced with loaned money which could not be paid back. The municipality’s decision to place a State guarantee on this loan has been the subject of a formal State aid investigation by the European Commission.

TV Rights income inequality

One of the most important ways to generate income for professional football clubs is through the selling of TV rights. The Spanish clubs combined generated roughly €700 million per year from the selling of TV rights between 2010 and 2015.[2] This is slightly more than the €628 million the German Bundesliga was making per year between 2013 and 2016, but less than €940 million the Italian league was making in the 2012-13 season. The English Premier League is in a league of its own in this regard, which is making about €1.2 billion per year from the 2013-14 season onwards.[3]

Notwithstanding the total €700 million a year, most Spanish clubs do not derive enough money from selling the TV rights to compensate their losses. One has to keep in mind that where the clubs of Europe’s other major football leagues (e.g. England, Germany, France and Italy) were selling their TV rights jointly, Spanish clubs were still selling their TV rights individually. By means of the individual selling system, Spain’s two most popular clubs, Real Madrid and FC Barcelona, were capable of selling their TV rights for much more money than the other clubs. In the 2010/11 season for example, out of the €641 million generated in total, FC Barcelona got €163 million, whereas Real Madrid got €156 million. The remaining 16 clubs of La Liga had to share the remaining €322 million, which is slightly more than €20 million per club on average. By contrast, the ‘smaller clubs’ of the English Premier League were still making at least €49 million in that same season, which is two-and-a-half times as much as their Spanish counterparts.[4] Even the club that was earning least money in Italy in 2012, Pescara, was earning more per year from the selling of TV rights than the average Spanish club (€25 million).

Calls for a fairer distribution of TV rights income in Spain have been heard for years, particularly from the smaller clubs, but the switch to a joint selling system will only take place as of the start of the 2016-17 season. It is believed that continuous lobbying by Real Madrid and FC Barcelona against the joint selling system is the main reason for this delay. In a way, it could be argued that apart from reckless risks on the transfer market and the effects of the Spanish financial crisis, the dominant position of Real Madrid and FC Barcelona is what led to many Spanish clubs being in severe financial difficulties. The urge of these clubs to turn to investment companies like Doyen becomes more understandable, given that the system itself did not allow them from obtaining funds from other ‘normal’ sources.    

The ERPA’s and its aftermaths explained

On the day of writing this blog (12 April 2016), nine ERPAs between Doyen and Spanish football clubs were published on the website of footballleaks. The ERPAs are divided in two groups: Firstly, the ERPAs that proved to be successful for both the club and Doyen are analysed; the second part combines all the ERPAs in which the players concerned were either not sold for high enough profit, or not transferred at all. As will be shown, these ERPAs had mostly negative financial consequences for the clubs.

The successful ERPAS: Kondogbia and Barrada

Sevilla’s recent sporting successes, most notably winning the Europa League four times since 2006, are said to have been the result of a high level youth academy combined with an excellent scouting network. However, it has never been a secret that Sevilla made use of the services provided by Doyen, including the signing of ERPAs. In a well-publicised seminar on TPO that took place in April 2015, Sevilla defended the TPO model and made clear that it was against an outright ban of the practice. The ERPA concerning Geoffrey Kondogbia and his subsequent transfer to AS Monaco can explain why Sevilla is in favour of the TPO model. Kondogbia was transferred from RC Lens to Sevilla on the same date as the signing of the ERPA (26 July 2012) for €3 million. With the objective of obtaining 100% of the Economic rights, Doyen paid RC Lens the full amount of the transfer fee. In turn, Sevilla would buy from Doyen 50% of the economic rights for €1.65 million. Even though the minimum transfer fee was set by the parties at €6 million, Kondogbia was sold only one year later to AS Monaco for a staggering €20 million. An excellent deal for Doyen, which registered a profit of €7.89 million.[5] This ERPA is an example of a collaboration between a club and an investment fund, which has been highly profitable for both. With the “help” of Doyen, Sevilla managed to sign a young player and sell him for a profit not long after. However, as can be seen below, even Sevilla has signed ERPAs that have not been very beneficial for the club.

A second “successful ERPA” signed between Doyen and a Spanish club was the ERPA between Doyen and Getafe for Barrada. Similar to many other ERPAs, it stipulated that Getafe was not able to obtain financial support from the banking system due “to the current financial crisis”. Therefore, Getafe decided to sell 60% of the economic rights of one of its most promising young players for €1.5 million to Doyen. Both parties agreed that the minimum transfer value of Barrada was €5 million. Consequently, as can be deducted under paragraph 7 of the ERPA, Doyen’s minimum return would always be at least €3 million (60% of €5 million), guaranteeing Doyen a profit of €1.5 million (€3 million minimum return minus €1.5 million grant fee). The minimum return was easily surpassed after Barrada was transferred to Al-Jazira for €8.5 million in 2013. In accordance with Doyen’s own figures, the investment fund obtained €3.35 million for this transfer, a profit of 223%.[6]

The many “failed” ERPAs

Atlético Madrid was no novice to the practice of TPO when it sold 50% of Joshua Guivalogui’s economic rights for €5 million to Doyen. As can be seen from the ‘Map of Deals’, Atlético had previously sold 33% of the economic rights of the highly successful Atlético player, Falcao, to Doyen for €10 million. His later transfer to AS Monaco for €43 million was probably also economically beneficial for Atlético. Guivalogui, however, has been less successful wearing an Atlético shirt. He has played seven games in total for the club in two-and-a-half years, having been loaned to St-Étienne for the 2013-14 season, and to VfL Wolfsburg for the 2014-15 and 2015-16 seasons. If Wolfsburg decides to lift the option it has to buy Guivalogui for €4 million[7], Atlético Madrid will probably need to pay an additional amount to Doyen in order to reach the agreed minimum fee of €6.5 million.[8]

As regards Sevilla FC, where the ERPA concerning Kondogbia can be seen as “successful”, Babá’s ERPA tells a completely different story. Sevilla sold 20% of Babá’s economic rights for €660.000 to Doyen in 2012. Nonetheless, Babá never managed to secure a spot in the Sevilla squad and he was loaned out to Getafe and Levante between 2013 and 2015. After his contract expired with Sevilla in the summer of 2015, he moved back to his former club Marítimo as a free agent. Although Sevilla did not receive a fee for this transfer, Doyen still obtained a guaranteed profit of €148.000, as can be seen from the ‘map of deals’.

The Guivalogui ERPA and the Babá ERPA tell a similar story. Both players did not fulfil the expectations the clubs had of them at the moment Doyen bought parts of their economic rights. As a result, they were transferred, or are going to be transferred, for an amount well below the agreed minimum return. A similar run of events occurred with Luís Martins and Dorlan Pabon. Both players were not successful at Granada and Valencia respectively, and were transferred at a loss for the club. The exact figures of the transfers can be found in the table below.

The ERPA’s signed between Doyen and Sporting de Gijón are particularly interesting in terms of “failure”, because they illustrate perfectly the desperate situation the club found itself in. Sporting has been on the verge of disappearing not once, but several times in the last 10 to 15 years. In 2005, its total debt amounted to €51 million, with more than half owed to the public authorities. As a result, the club entered bankruptcy proceedings. In 2007, a settlement was reached between the club and its creditors. Even though the club still had a debt of €35.8 million, a Spanish court decided to terminate the bankruptcy proceedings. By the second half of 2011, the club presented a positive balance sheet at the shareholders’ general assembly for a fifth year in a row, but in reality Sporting was still acute financial difficulties, as the club would admit later on. It is this acute need for money that made the club turned to Doyen twice in less than a year. The fact that Sporting de Gijón is still alive today (albeit in danger of relegating to the second division), makes one wonder whether the ERPA with Doyen actually aided the club in its fight for survival or whether it worsened the situation in a similar way as FC Twente’s.

The first agreement concerns the purchase for €2 million of part of the economic rights of nine players who, at the time of signing, were registered as Sporting players.[9] Future transfers of one or more of these players would need to generate a profit of €7 million for Doyen.[10] The lifespan of the first agreement was not very long, as it was replaced by a second ERPA on 22 March 2012. Indeed, Sporting de Gijón stated officially on 23 February 2016 that the first ERPA never deployed any legal effects.

The first ERPA and the second ERPA between Doyen and Sporting show some clear similarities. For an amount of €2 million, Doyen buys 25% of the economic rights of all the players of both the first team and Sporting B (the second team).[11] This percentage remains 25% until Doyen obtains an amount of €7 million from the transfers of Sporting players to other clubs. Once this amount is reached, the percentage will be reduced to 15% until a further €3 million is earned by Doyen. Therefore, the minimum return Doyen should get is that of €10 million. Should Doyen not have received €7 million or more by 31 January 2015, the percentage of the economic rights owned by Doyen of all the Sporting and Sporting B players will be increased to 35%. Doyen's share of the economic rights would also increase to 35% if the club relegates from the first division (clause 2.5). A further important element of the ERPA is clause 4.1, by which Sporting names Doyen as the exclusive agent (intermediary) of the club for all transfer and loan operations of Sporting players. 

By using the ‘map of deals’ and transfermarkt, we have listed all Sporting and Sporting B players sold after March 2012. These players were:

-          Davud Barral – sold for €2 million to Orduspor on 5 July 2012;

-          Alberto Botía – sold for €3 million to Sevilla FC on 11 August 2012;

-          Miguel de las Cuevas – sold for €1.2 million to CA Osasuna on 1 July 2013;

-          Óscar Guido Trejo – sold for €2.7 million to FC Toulouse on 19 July 2013;

-          Borja López - sold for €2.2 million to AS Monaco on 2 August 2013;

-          Stefan Scepovic - sold for €2.56 million to Celtic FC on 1 September 2014.

A closer look at the ‘map of deals’ shows one important discrepancy compared to the ERPA of 22 March 2012. The share of economic rights owned by Doyen were not 25% (as stipulated in the ERPA), but 45%. Thanks to footballleaks' release of the so-called 'Escritura de Liquidación' on 14 April we now know what caused this increase. Firstly, in accordance with clause 2.5 of the ERPA, the economic rights owned by Doyen of all the Sporting players (except Botía and De las Cuevas) increased to 35%, since Sporting relegated to the second division in May 2012. Secondly, being an intermediary in all of these transfers, Doyen was entitled to an additional 10% of all the income generated from the transfers.[12] The ‘map of deals’ shows that the transfers of Sporting players has so far led to Doyen receiving more than €3.5 million, a profit of about €1.5 million for their €2 million investment. Nonetheless, this figure is still well short of the minimum return Doyen expects to get of €10 million. In other words, should the ERPA still be in force, Sporting is still required to sell more players if it is to meet its obligations towards Doyen.

Table summarizing the analysed ERPA’s signed between Doyen and Spanish clubs

Conclusion

The reason that many Spanish clubs decided to sell economic rights of players to companies like Doyen from about 2011 to 2015 (the year FIFA banned the practice) is relatively straightforward: The financial crisis was heavily felt in Spanish football, with many clubs incapable of paying off high debts owed to the public authorities. Moreover, the difference between the financial and competitive power of Real Madrid and FC Barcelona on the one hand, and all the other clubs on the other was only getting bigger. Not only did competing at national level become close to impossible, even smaller clubs from England were generating more than twice the revenues of Spanish clubs. The chances of being successful at European level were at risk.

Doyen was basically at the right place, at the right time. The ‘small’ Spanish clubs were in desperate need for money, either to compete or simply to survive, and Doyen was willing to give them this money in return for (part of) the economic rights of their football players. From the outside, it looks like a perfect match between club and investment fund. However, was TPO profitable for Spanish football clubs from a competitive and financial perspective?

From a financial perspective, the business is clearly lucrative for Doyen. As can be seen in the table, by investing €19.335 million it so far made a profit of €15.757 million.[13] In other words, an 81.5% profit! The same cannot be said for the clubs. Only the transfers of Barrada from Getafe to Al-Jazira and Kondogbia from Sevilla to AS Monaco were profitable. For all the other ERPAs, it appears that an a posteriori compensation to Doyen was necessary, because the amount obtained through the transfer could not cover the minimum return secured to Doyen in the ERPAs.

The legal discussions on TPO to a large extent focused on whether the practice leads to an unauthorized influence of third parties on the internal governance and policies of a club; and on whether a complete ban is contrary to (EU) competition law. Yet, the aspect that remains underexposed in the author’s opinion is the severe negative financial effect TPO can have on a football club. As we have discussed a couple of months ago in a blog on FC Twente, the financial position of the Dutch club deteriorated after signing the ERPA to such an extent that the club is now in serious danger of disappearing all together.

It is possible, though unlikely, that FC Twente’s downfall was an exception.  However, one should not underestimate Sporting de Gijon’s current financial situation, for example. A closer look at the ‘map of deals’ tells us that in March 2015 Sporting had only paid €250.000 of the €3.5 million it owed Doyen. A total debt of at least €3 million was confirmed in an official joined statement, dated 29 February 2016. The statement further holds that this debt has to be repaid before 2019, but one cannot help thinking that, for a club like Sporting de Gijón, this is easier said than done. Getting the money from future transfers should be complicated if Sporting only partially owns the economic rights of its own players, plus a looming relegation to the second division at the end of this season will not be beneficial either.[14]

[1] More information on the TPO ban can be found in our previous Blogs, such as “Blog Symposium: FIFA’s TPO ban and its compatibility with EU competition law – Introduction”.

[2] The total amount generated for the 2010/11 season was €641, see Mail Online, “Barca and Real consider sharing TV rights to make La Liga more competitive”; The total amount generated for the 2014/15 season was €742.5 million, see Marca, “Así será el reparto del dinero televisivo”.

[3] As of the 2016-17 season, The English Premier League will make €2.1 billion per year, see Mail Online, "Premier League set for £3bn windfall from global TV rights as rival broadcasters slug it out to screen England-based superstars"

[4] More information on the selling of TV rights in football can be found in our previous Blogs, such as “Why the European Commission will not star in the Spanish TV rights Telenovela”.

[5] See: Map of deals and transactions updated until 10 March 2015.

[6] See: Map of deals and transactions updated until 10 March 2015.

[7] Transfermarkt - Josuha Guilavogui.

[8] The original minimum return of €5.5 million set in September 2013 was increased every year by €500.000 until 1 September 2015, since Doyen continued to own 50% of the Guilavogui’s economic rights.

[9] The players concerned were Roberto Canella Suárez, Álvaro Bustos Sandoval, Alejandro Serrano García, Abdou Karim Tima, Mendy Formose, Juan Muñiz Gallego, Sergio Álvarez Díaz, Óscar Guido Trejo and David Barral Torres.

[10] In the first phase, Doyen receives a percentage of 50% of the economic rights of the nine players until Doyen received an amount of €5 million for the transfer of one or more of those players. After Doyen receives its first €5 million, Doyen’s ownership of the economic rights of the remaining players is to be reduced to 40% until Doyen received an additional €1 million. Once Doyen receives this additional €1 million, Doyen’s ownership of the economic rights of the remaining players would be reduced to 30% until Doyen again receives €1 million from the selling of those players. Consequently, the agreement stipulates that Doyen is to receive an amount equal or superior to €7 million for the transfer of players in which it partly owned the economic rights.

[11] As an exception, Doyen only gets 10% of the economic rights of the players Alberto Botía and Miguel de las Cuevas.

[12] Moreover, the 20% of the transfer fee for De las Cuevas that Sporting owed Doyen consisted of 10% for the economic rights and 10% as an agency fee.

[13] This figure might even get higher when taking into account that Doyen had a share in all Sporting de Gijón players and the fact that Pedro León is still registered as a Getafe player.

[14] With seven matches to go, Sporting finds itself in 17th place.

Since last year, Doyen Sports, represented by Jean-Louis Dupont, embarked on a legal crusade against FIFA’s TPO ban. It has lodged a competition law complaint with the EU Commission and started court proceedings in France and Belgium. In a first decision on Doyen’s request for provisory measures, the Brussels Court of First Instance rejected the demands raised by Doyen and already refused to send a preliminary reference to the CJEU. Doyen, supported by the Belgium club Seraing, decided to appeal this decision to the Brussels Appeal Court, which rendered its final ruling on the question on 10 March 2016.[1] The decision (on file with us) is rather unspectacular and in line with the first instance judgment. This blog post will rehash the three interesting aspects of the case.

·      The jurisdiction of the Belgian courts

·      The admissibility of Doyen’s action

·      The conditions for awarding provisory measures

I.      The jurisdiction of the Belgian courts

Doyen was not the only party to the dispute dissatisfied with the first instance ruling; FIFA and UEFA also appealed the decision challenging the territorial competence of the Belgian Court to hear the claims raised against FIFA’s TPO ban. They consider that the Swiss courts are solely competent to deal with civil disputes involving its rules and decisions.

As in first instance, the thrust of the ruling on this question turns on the interpretation of the Lugano convention of 2007 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. In principle, under Article 2(1) of the Convention: “Subject to the provisions of this Convention, persons domiciled in a State bound by this Convention shall, whatever their nationality, be sued in the courts of that State.” Thus, translated to the present dispute this would imply that FIFA and UEFA, which are Swiss Associations, are in principle to be sued in front of Swiss courts.

Moreover, to support their view that Swiss Courts have an exclusive jurisdiction, FIFA and UEFA also invoke Article 22(2) Lugano Convention stipulating that “proceedings which have as their object the validity of the constitution, the nullity or the dissolution of companies or other legal persons or associations of natural or legal persons, or of the validity of the decisions of their organs, the courts of the State bound by this Convention in which the company, legal person or association has its seat. In order to determine that seat, the court shall apply its rules of private international law”. Yet, the Appeal Court is of a different opinion and refers to the jurisprudence of the CJEU indicating that Article 22(2) should be interpreted as referring to disputes lodged based on company law or their statutes against decisions of a company or association.

The principle enshrined in Article 2 Lugano Convention is not absolute, many exceptions are provided in the Lugano Convention itself. In particular, Article 5(3) Lugano Convention foresees that in delictual matters the court of the place where the harmful event occurred or may occur is competent. This entails both the place were the harmful conduct was put in motion and the place where the harm was felt. In the present case, the Appeal Court argues that it is “difficult to contest that by hindering the appellant to execute their partnership agreement and enter in future TPO or TPI agreements over specific players, the attacked ban is producing harmful effects on the Belgian territory”.[2] Furthermore, the TPO agreement between Doyen Sports and the ASBL RFC Seraing is not deemed fictitious, as it has been invoked by FIFA to hand out disciplinary sanctions to the ASBL RFC Seraing.[3]

Additionally, the Court derives also its competence from Article 6(1) Lugano Convention. This article provides that a party can be sued “where he is one of a number of defendants, in the courts for the place where any one of them is domiciled, provided the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings”. The key question is whether there is sufficient connectedness between the claims raised against l’URBSFA, FIFA and UEFA. The Court refers to the recent case law of the CJEU, which is relevant to the interpretation of the Lugano Convention, on the identical provision in the Brussels Regulation (notably the case C-352/13 at para. 20). It is of the view that “FIFA and URBSFA share a regulatory and disciplinary power that enables them both, acting jointly or separately, to adopt the contested ban, to enforce it and to adopt an individual decision susceptible to block, compromise and/or restrict the execution of the contract signed by the appellants”.[4] Thus, “the autonomous regulatory power of the URBSFA justifies its participation in this proceeding, alongside FIFA in order (i) to obtain that both be prevented to act; (ii) that each of them be deprived of the opportunity to contest the opposability of a decision to which they would not have been part and lastly (iii) to deny FIFA the possibility to circumvent an interdiction pronounced against it by having recourse to the regulatory power of the URBSFA”.[5] Finally, the Court argues “if the appellant were forced to lodge a claim against FIFA in front of the Swiss courts and against URBSFA in front of the Belgian Courts, this could potentially lead to irreconcilable solutions”.[6] As far as the claims against UEFA are concerned, which has not contrary to FIFA explicitly banned TPO, the Appeal Court is also convinced of their connectedness. It is so because UEFA “imposes to the clubs needing a license to participate in its competitions that they comply with the statutes and regulations of FIFA and, thus, with the disputed TPO ban “.[7]

This is again a powerful reminder that Sports Governing Bodies (SGBs) seated in Switzerland cannot evade the jurisdiction of the national courts of EU Member States when EU competition law is involved.[8] Under Article 5(3) Lugano Convention, EU Member States courts will be competent to deal with a civil liability claim based on EU competition law if the damage caused by the disputed measure/decision/regulation can be felt on the national territory of a Member State. Furthermore, if, as is usually the case for sports regulations, the rules have to be implemented by national sporting associations, the claims raised against the national SGBs will most likely be deemed connected to the original decisions/regulations of the international SGBs and justify the jurisdiction of the court of the domicile of the national SGB.[9]

II.    The admissibility of Doyen’s action

In this proceeding, as well as in the one initiated in front of the Paris court (FIFA’s legal submission in the Paris procedure has been published by football leaks), FIFA argues that Doyen’s action is not admissible due to the fact that the wrong administrator has initiated it. Indeed, under article 11.1 of Doyen’s own statutes the judicial representation is to be exercised by the local administrator designated by shareholder A acting in conjunction with the local administrator designated by shareholder B or by any other person designated by the general assembly. Yet, in practice Nelio Lucas, who fulfils none of the relevant criteria and was thus not authorized to act in Doyen’s name in judicial matters, lodged the action. However, Doyen could have under Belgium procedural rules ratified the judicial initiative taken by an incompetent organ. Doyen tried to do so but failed to organize the general assembly necessary to ratify Nelio Luca’s decision. Thus, the Court deems the action initiated by Doyen inadmissible. Luckily for Doyen it was not the sole party to the proceedings as the ASBL RFC Seraing joined the procedure. The Court believes the intervention of RFC Seraing in the proceedings is admissible and its interest to act is acknowledged. On this latter point, FIFA was arguing that RFC Seraing’s interest to act was inexistent due to the fact that the partnership agreement between Doyen and Seraing was contrary to the public order. However, in light of the divergent positions regarding the legality of TPO/TPI and of the on-going proceedings before various national courts and the European commission, the Belgium court is reluctant to admit that the interest of Seraing to act in this matter is illegitimate.

III.  Doyen’s (un)likelihood to prevail

Concerning the likelihood to prevail, however, the Court sided with the federations and refused to admit that the TPO/TPI ban was likely to restrict article 101(1) TFEU. On the one hand, as indices of the compatibility of the ban with EU law, it pointed out that the Commission was inclined to support the TPO ban, that FIFPro was clearly opposed to TPO and invokes fundamental values in support of the ban, and that the ban was adopted after a collective reflection involving many stakeholders and is aimed at tackling the negative externalities listed by the first instance court.[12] On the other hand, it refers to an academic article authored by Marmayou contesting the compatibility of TPO with EU law (this reference appears poorly chosen as the article is dedicated primarily to the FIFA regulations for intermediaries, for a stronger challenge to the compatibility of the TPO ban with EU law see Lindholm).[13] In any case, “it is obvious that a preliminary assessment cannot lead the Court to conclude, with sufficient certainty, that the ban would be contrary to EU competition rules”.[14] Finally, and this is the part of the ruling that seems to have been slightly misinterpreted by the press. The Court pointed out that Seraing and Doyen were asking in the main proceedings for a preliminary reference to the CJEU and that they were, therefore, conscious that they are not certain to prevail. However, the Appeal Court cannot, in the framework of a procedure involving provisory measures, ask a question to the CJEU, as it is unable to comply with the CJEU’s requirements for the admissibility of preliminary references (see the failed attempt in the UEFA FFP case). Hence, it is for the Commercial Court of Brussels, which is competent in the main proceeding, to decide whether it is necessary to do so. The Appeal Court (and the claimants as it cheekily points out) seems to believe that it could be needed, as it is not at all clear that the ban is contrary to EU competition law.

Conclusion

There are number of lessons that can be drawn from the judgment of the appeal court. Three stand out:

1. FIFA and UEFA cannot evade the jurisdiction of EU courts. Indeed, if an EU competition law violation of their rules is invoked they can be brought before the jurisdictions of the Member States
2. Doyen messed up in its original court filing by failing to abide by the procedure enshrined in its own statutes. This has no dire consequences in the Belgium proceedings due to presence of Seraing, but it might be a different story before the Paris court, where Doyen stands alone and the same procedural irregularity is invoked by FIFA.
3. To FIFA’s great satisfaction, the case against the TPO ban is not deemed strong enough to allow for the adoption of provisory measures blocking its implementation. As pointed out in our previous blog (and here) EU competition law is not a golden bullet that can be invoked easily to strike down FIFA or UEFA regulations. There is a high justificatory burden and the claimants will face an uphill battle to demonstrate that the ban is disproportionate (especially in light of the broad support for the ban amongst many key stakeholders).

This was only a small skirmish in a long legal war still before us. It will not be definitely over until the CJEU decides the matter (in 2018 at the earliest) or Doyen bows out of the game in the face of the high legal fees incurred. What is already certain is that the way EU law applies to sport is not straightforward and does not entail an economic/neoliberal logic blindly favourable to an unrestricted freedom to invest.

[1] Cour d’appel Bruxelles, Doyen Sports et ASBL RFC Seraing United c. URBSFA, FIFA et UEFA, 2015/KR/54, 10 mars 2016.

[2] “Il est difficilement contestable qu’en empêchant les appelantes de poursuivre l’exécution de leur convention de collaboration et la conclusion de nouvelles conventions « TPO » ou « TPI » spécifiques à des joueurs, l’interdiction litigieuse produit des effets dommageables sur le territoire belge.” Ibid, para.50.

[3] “C’est également en vain qu’il est soutenu que la convention de collaboration litigieuse ne serait qu’un artifice destiné à saisir les juridictions belges. En effet, elle a connu une exécution par des payements de sommes de Doyen Sports à l’ASBL RFC Seraing et surtout, son existence a été invoquée par la FIFA pour mener des poursuites disciplinaires contre le club dirigé par l’ASBL RFC Seraing et lui infliger une sanction.” Ibid.

[4] “L’URBSFA et la FIFA se partagent donc un pouvoir réglementaire et de contrainte qui leur permet, à l’une et à l’autre, agissant ensemble ou séparément, d’adopter l’interdiction litigieuse, de la mettre en œuvre et de prendre une mesure ou une décision à caractère individuel de nature à empêcher, compromettre et/ou entraver l’exécution du contrat conclu entre les appelantes.” Ibid, para.57

[5] “Le pouvoir règlementaire autonome de l’URBSFA et son pouvoir d’action propre justifient sa présence dans la procédure, en même temps que la FIFA afin (i) d’obtenir l’empêchement d’agir de l’une et de l’autre ; (ii) de priver chacune d’elles de la possibilité de contester l’opposabilité d’une décision judiciaire qui serait rendue dans une cause à laquelle elle serait demeurée étrangère et enfin (iii) d’empêcher la FIFA de contourner une interdiction qui serait prononcée à son encontre en recourant au pouvoir réglementaire de l’URBSFA.” Ibid.

[6] “Si les appelantes étaient dans l’obligation d’attraire la FIFA devant les juridictions suisses tout en citant l’URBSFA devant les juridictions belges, cette situation serait susceptible de conduire à des solutions inconciliables […]”, ibid. para.58.

[7] “En ce qui concerne l’UEFA, la connexité existe également. En effet, si elle n’est pas l’auteur des dispositions réglementaires et si elle n’est pas intervenue comme soutien dans l’exercice de poursuites disciplinaires menées contre le RFC SERAING, elle impose aux clubs qui doivent obtenir une licence pour participer aux compétitions qu’elle organise, de se plier aux statuts et aux règlements de la FIFA et à l’interdiction en cause.” Ibid., para.59.

[8] The same solution was adopted in 2012 by the French Cour de Cassation (Highest French Civil Court) in a dispute opposing the French agent Piau to FIFA. See Cour de cassation, civile, Chambre civile 1, 1 février 2012, publié au bulletin.

[9] This solution was also adopted by the OLG in the Pechstein ruling, see Oberlandesgericht München, 15 January 2015, Az. U 1110/14 Kart, para.A.I.1.a)aa) and bb).

[10] « L’urgence est établie. L’ASBL RFC Seraing est sous le coup d’une sanction disciplinaire dont seule l’exécution a été suspendue et elle est susceptible d’encourir de nouvelles poursuites et sanctions pour le cas où elle conclurait de nouvelles conventions TPO/TPI avec Doyen Sports ou toute autre société menant des activités de financement similaires.” Cour d’appel Bruxelles, Doyen Sports et ASBL RFC Seraing United c. URBSFA, FIFA et UEFA, 2015/KR/54, 10 mars 2016, para.78.

[11] « Ensuite, il n’est pas douteux que l’interdiction de poursuivre la convention de collaboration du 30 janvier 2015 et de conclure de nouvelles conventions TPO/TPI la prive d’une source de financement, sans qu’il soit démontré par les intimées qu’elle pourrait lui trouver un substitut adéquat par des emprunts classiques auprès de tiers.”Ibid.

[12] « D’un côté, il faut constater que :
- la Commission paraît s’être orientée vers la condamnation de la TPO;
- la FIPpro y est clairement opposée et invoque à cette fin des valeurs essentielles;
- l’interdiction est le résultat d’une réflexion collective à laquelle ont participé de nombreux interlocuteurs - et non pas seulement l’UEFA ou certains de ses membres - et elle est l’aboutissement de plusieurs constats que relève le premier juge dans son ordonnance : opacité, absence de contrôle des instances dirigeantes, importance du phénomène puisqu’il concerne le marché mondial, environnement ouvert à la corruption et aux pratiques frauduleuses, importance des sommes en jeu, etc...” Ibid, para.81.

[13] « De l’autre, de sérieuses réserves sont émises à propos de la légalité de l’interdiction de la TPO/TPI (voir ainsi l’article de J.M. MARMAYOU, « La compatibilité du nouveau règlement FIFA sur les intermédiaires avec le droit européen » Les cahiers de droit du sport, 2015, p. 15, pièce 38bis des appelantes).” Ibid.

[14] « Il est patent qu’un examen en apparence ne permet pas de conclure, avec la force nécessaire, que l’interdiction porte atteinte aux règles de la concurrence.” Ibid, para.82.