Exemptions for sports such as Football from business competition rules

Football as a business

Football, most notably in Europe, is a hugely lucrative business with the top European Clubs making vast sums of money through such things as ticket sales, sponsorship, television rights and transfers of players.

There are also huge sums of money spent by some of these top clubs generating this revenue, but in other cases smaller clubs without the same amount of revenue, on the purchase of players. In many cases this can lead to those clubs experiencing financial difficulties when they purchase players and do not recoup what they expect to in terms of revenue.

If football is treated as a business in much the same way as any other industry it follows that the competition laws on the European market should thus apply to the football industry also.

Do the competitions laws apply specifically to football?

Currently sport occupies a tenuous position in relation to the law. Often sporting governing bodies will be able to make their own decisions when this simply has an impact upon the sporting nature of the competition. However, when these decisions impact upon the legal rights of the individuals or clubs involved it may be time for the legal world to step in.

The competition laws of the European Union will apply to the business of football when decisions are made that significantly reduce the competition on the European football market. In this context the football industry will be seen as just that, an industry, rather than just a sport.

Which competition laws may be affected by decisions of sporting governing bodies?

A decision made by the European Governing Body of football, UEFA, which may affect the European football market will often come about following an agreement between UEFA and the body representing the top European football clubs – the European Club Association.

In this respect this kind of decision may be seen as an agreement which significantly reduces competition and be contrary to Article 81 of the EC Treaty.

Has this become a reality?

Over the last year UEFA in an agreement with the ECA have put forward proposals to regulate the spending of football clubs and therefore reduce the debt by imposing strict conditions on those clubs wishing to participate in European competition.

These proposals are termed the European Financial Fair Play proposals.

Would any aspects of these proposals fall foul of Article 81 EC?

One of the initial proposals put forward by UEFA was that clubs would only be able to spend a certain percentage of their overall revenue on salaries and transfers.

What was the reason for this proposal?

The reason behind this proposal was that it would increase fair play on the European market as it would stop certain clubs spending vast amounts of money on transfer fees and also wages to temp players to play for them.

For example if a club was just taken over by a wealthy investor this proposal would limit what they can spend on players as it is a percentage of the revenue the club generates that can be spent on players not a percentage of the money the owner brings into the club.

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For more information on:

  • Would this be likely to fall foul of Article 81?
  • How would this be the case?
  • What would be the reasons behind capping the amount spent on transfers in this manner?
  • Should football be treated as any other business for the purpose of competition law?
  • What is meant by this concept of solidarity?
  • Is it likely that this transfer cap will be exempted from European Law?