Multilaw Sport lawyers from 25 countries give their views on some of the key sports law issues to watch out for this year
Argentina | Australia | Bosnia and Herzegovina | Canada | China | Croatia | Cyprus | Dominican Republic | France | Germany | Ireland | Italy | Luxembourg | Macedonia | Mexico | Montenegro | Netherlands | New Zealand | Serbia | Slovenia | South Africa | South Korea | Spain | United Kingdom | United States | Uruguay
During 2018, one of the key issues that will continue to have an impact in Argentina is the FIFA-Gate investigation which is taking place in the US. It is of particular interest because one of the accused, is the ex CEO of an argentine company which owns the television rights to transmit soccer.
Within rugby, there is the commercialisation of the Unión Argentina de Rugby (UAR) rights regarding the upcoming Rugby World Cup in 2019 and the UAR are also developing and constructing an international first-class entertainment centre.
With the possibility of a return for F-1 to Argentina, 2018 looks to be a busy year for Argentinian sports.
Juan Manuel Quintana,
Zang, Bergel & Viñes Abogados
[email protected]
Among the legal issues in sport to watch in Australia in 2018 will be the framing and handling of concussion and related compensation claims from former players in the nation's football codes, following the commencement of a high profile group and individual actions by former Australian Football League and National Rugby League players. Still on football, the introduction of new women's leagues has raised the question of inclusion of transgender players, following the AFL's 2017 ruling to exclude Hannah Mouncey from its draft for the 2018 AFLW league.
More broadly, money and the business of sport continue to cause legal issues. More than ever before, athletes are deriving income from new streams in return for endorsements, including visibly through many social media platforms. We expect to see the continued impact of money in the areas of broadcasting rights (including the refusal of any Australian broadcaster to pay the asking price to broadcast the Indian Premier League), and collective bargaining and equality disputes between player-representative bodies and governing bodies (such as recently seen in cricket and football.
Scott Fitzgibbon,
Macpherson & Kelley
[email protected]
In Bosnia and Herzegovina, the sporting infrastructure seems to be the main topic for 2018. There are several plans for investment, including reconstruction of Skenderija sport centre in Sarajevo by Investment Corporation of Dubai and construction of a modern stadium with 15,000 seats which would be in compliance with UEFA standards by football club Sarajevo.
Unfortunately, some of the most successful clubs with long and rich histories are facing major financial difficulties and will require significant restructuring and additional funds otherwise there is a high possibility that they will cease to exist in the near future.
On the extreme sports front the Red Bull Cliff Diving World Championship, the most prestigious competition for the high diving, will be held in Mostar on September 8th, bringing numerous spectators and sponsors to this medieval city.
Jaka Simončič,
Karanovic & Nikolic
[email protected]
Head injuries in contact sports will continue to be a a significant legal story in 2018. Several of the major sports leagues in North America face class action law suits in which it is generally alleged that teams failed to provide players with appropriate medical treatment. The players claim the negligent treatment has resulted in significant cognitive impairments. As the discovery process continues, more evidence will surface on the very interesting issue of causation.
At the major junior hockey level in Canada (a key stepping stone for many players seeking to play professional hockey), a major issue will be class action lawsuits against the major junior hockey leagues that have been filed on behalf of junior hockey players. The lawsuits allege that the hockey players are in fact employees of the hockey teams and are therefore owed minimum wage, overtime pay, and vacation pay. The leagues allege, among other things, that the classification of the players as employees will threaten the financial viability of the teams and the leagues.
André Nowakowski and Dan Rabinowitz, Miller Thomson
[email protected]
[email protected]
How the Chinese Super League, as directed by the Chinese FA, handles attempts by clubs to avoid a 100 percent tax on transfers of foreign players that exceed RMB 45 million will be a barometer of how much control Chinese authorities can put on free spending in the sport, as well as accumulate funds that were intended to help with developmental programs.
Owners of European football clubs in particular will be looking to see how the Chinese government decides to implement 2017 rules categorising overseas investment in sporting clubs as "restricted". The vast amounts of money circulating in China sport also prompts speculation whether the industry could be a target of the country's continuing anti-corruption campaign.
Separation of the national associations and leagues from government control will also be watched to see whether fans can see world-class professional competition on the pitches and courts. Further reform may see the sporting stars getting more control over their careers-and income.
And will Shanghai's desire to become the esports capital of the world come true? While the market, players, fans, money, and technology seem there, questions remain how esports will be governed and competition monitored.
Jeffrey Wilson,
JunHe
[email protected]
In Croatia several sports clubs have been privatised or are expected to be privatised in the upcoming years. Issues arising from privatisation and the functioning as a private entity will become one of the main challenges in the near future.
Additionally, there is a rise in proceedings due to breaches of financial fair play rules and behaviour of football clubs' respective supporters at home and away matches, especially when it comes to domestic clubs, the national football association and UEFA.
Despite the Sports Act being in force since 2015, there are still several sports organisations and clubs that are not fully compliant with the Act. Therefore we expect there to be a focus on their constitutional documents and the performance of their respective business will have to be adapted further in 2018.
Construction of sports venues is another topic that we expect to be hot in 2018, as we await the decision on whether the construction of the new national stadium in Velika Gorica will proceed.
Jaka Simončič,
Karanovic & Nikolic
[email protected]
In January 2018, the president of the Cyprus Sports Organisation ("CSO"), Mr Kleanthis Georgiades, outlined the future of Cypriot Sport through the following priorities:
- The modernisation of sport legislation;
- The structure of the CSO's operation;
- The reassessment of the criteria of subsidies to the sport federations;
- The e-calendar of sport events in Cyprus;
- The creation of model qualifications for fitness instructors;
- The creation of model professional qualifications for coaches to ensure the legal protection of the profession of coach of each sport;
- The provision of supportive services to federations including central accountancy, electronic archiving, website creation and preparation of a manual for the strategic planning of federations;
- The electronic upgrading of the electronic health card system software by creating a sports folder etc.
The president also set some challenging targets regarding the formulation of minimum standards on the qualifications of coaches of each sport in order to achieve uniformity on the level of education and training of the coaches. This will lead not only to a good level of sport education/training and competition but will also contribute to an increased level of safety for the athletes.
Savvas Savvides,
Michael Kyprianou & CO LLC
[email protected]
Following the enactment of a set of rules for sports arbitration by the Center for Alternative Dispute Resolution of the Chamber of Commerce and Production of Santo Domingo, and its agreements with the Olympic Committee of the Dominican Republic, and Major League Baseball to administer arbitrations submitted to Sports Arbitration Tribunals, as well as disputes between clubs and their players, the tendency has been for plaintiffs to go directly to arbitration instead of ordinary courts. Baseball is the industry that has registered more arbitration disputes, but the expectation for 2018 is that the use of arbitration expands to other disciplines.
An issue that will resurface in 2018, given the expansion of arbitration, will be the nature of the relationship between athletes and the teams they play for and the validity of an arbitration clause in such contracts. This follows an August 2017 decision by the Supreme Court of Justice which allowed an appeal filed by a minor league baseball player against his team on the basis that labour disputes are of the exclusive jurisdiction of labour courts. The judgment does not analyse the nature of the relationship, only the object of the initial claim, but refers to the athlete as an employee.
Rosa (Lisa) Díaz,
Jiménez Cruz Peña
[email protected]
As of 1st March 2017 new provisions were introduced into French law regarding the following ethical and economic issues:
- Strengthening ethics in sport sports federations and professional leagues are required to implement good conduct charters and governance to tackle the manipulation of sports matches. This new law also requires legal representatives of sports federations, professional leagues and French national sport committees to submit an annual declaration of their financial interests to the French High Authority for Transparency in Public Life (“Haute Autorité pour la Transparence de la Vie Publique”);
- Reinforcing the means of control on transactions this relates to the transfer of players or sports club buyback operations. This new regulation also prohibits people convicted of tax fraud from obtaining a sports agent license;
- Enhancing sport associations and companies specific commercial agreements must be entered into with sportsmen for the commercial use of their image, their name or their voice. These contracts must now be separated from the employment contract. It is now allowed to set a royalty fee calculated on the revenues derived from such contracts.
Laurent Garrabos and Antoine Monteillet,
Lerins BCW
[email protected]
[email protected]
Similar to other economic sectors the sports industry is facing increasing challenges from digitalisation. Although the classical sports business appeared to be rather traditional (even with regard to distribution issues) - its ongoing internationalisation, combined with its worldwide commercialisation, is strongly connected with new players, new digital platforms and innovative content providers. The same applies to the growing field of cyber sports.
Furthermore, new audience expectations require new business models and a rather accelerated process of a digitalised chain of exploitation. No matter whether it is associations, clubs and athletes or sports agencies - all relevant players in the sports sector will be forced to substantially digitalise their business operations and check how far new digital channels can be used in order to generate revenues by a fragmented audience. As new operators arise, several rights with regard to events will be separated in classic and new distribution channels - it will be interesting to see how the audience reacts and if rights purchased by new providers can be refinanced. Creating a legal framework for the cooperation with innovative partners and generating significant revenues in a digital world remains a key issue for sports business in 2018.
Further, with 2018 hosting several major sports events, Intellectual Property rights and coping with ambush marketing issues will again be a key focus for rightsholders and advertisers.
Marcus Hotze,
Heussen
[email protected]
The takeover of Irish football clubs by international investors.
International takeovers of football clubs are more commonly associated with the English Premier League rather than the League of Ireland. However, recently Dundalk F.C. was taken over by a private equity firm Peak6 based in the United States.
It will be interesting to monitor developments over the next 12 months in particular as regards to how this takeover plays out in the following areas:
- Effect on domestic competition - it is likely that this takeover will result in investment in the playing squad which will enable Dundalk FC to offer more players full time positions (52-week contracts). This could give Dundalk F.C. a competitive advantage as the majority of League of Ireland outfits can only offer its players 40-week contracts. The potential result is that Dundalk F.C. may be uniquely positioned to achieve a dominant position in the League of Ireland and further build on their recent successful European campaigns (2016 Europa League resulting in prize money of over €6.5 million).
- Ownership model for League of Ireland football - League of Ireland clubs are traditionally owned by small consortiums of local businessmen and have historically struggled to remain solvent let alone generate profits. This acquisition marks a substantial departure from the traditional model of ownership in Ireland. Peak6 is no newcomer to investing in football clubs. It owns a 25% share in Premier League football club Bournemouth AFC and has a small interest in Serie A giants A.S. Roma. Whether any other international investors will see the League of Ireland as a worthwhile investment opportunity and look to follow suit remains to be seen. It will, however, be interesting to observe how the legal ownership structures of professional football clubs in Ireland develop and evolve over the next 12 months.
- Big fish, small pond - one theory which has been postulated as being behind this investment decision is that Peak6 has identified an opportunity to seek to establish Dundalk F.C. as a "big fish in a small pond" (as others have done in Bulgaria (Ludogorets) and Belarus (BATE Borisov)) and exploit the lack of serious competitors as a viable route to consistent Champions League football. It is worth noting that the base fee for a club in reaching the group stages of the Champions League is €12,700,000. Given the modest sums available in Ireland for league of Ireland clubs and the continued absence of any serious broadcasting deals in this jurisdiction getting Dundalk F.C. into the group stages of the Champions League would represent the most viable method for Peak6 to achieve a return on its investment.
We expect to see developments in League of Ireland football over the next 12 months in Ireland and in particular await with interest to see whether any regulatory steps are taken by the League of Ireland and/or the Football Association of Ireland to seek to regulate ownership of football clubs and in particular in relation to the individuals behind investment vehicles like private equity funds. It is likely that the nature of any response will determine how successful or otherwise Peak6's investment decision will turn out to be.
Eoin Brereton,
Philip Lee
[email protected]
The Italian Legislator, starting from 2018, introduced important innovations with reference to amateur sports clubs.
More precisely the reform introduced the possibility to carry out amateur sports activities for profit purposes, obtaining tax facilities. In other words, contrary to the previous regulation, amateur sports clubs - recognised by CONI (Italian National Olympic Committee) - will have no limits either on the level of the redistribution of profits, or on the level of turnover.
This change could represent a sort of "revolution" as it could mainly develop the amateur sector from an economic point of view, increasing also the social growth and the diffusion of the organised practice of sports activities.
Federica Fucito and Giorgio Pierantoni,
Astolfo Di Amato
[email protected]
[email protected]
Tax optimisation has been considered by many sportspeople as one of the most important issues in the management of their image rights, however, we recently have seen too many athletes trapped in an inescapable spiral of tax problems with a huge impact on their brand image. Reputational Damage can lead to serious financial impacts (sponsors, social networks...) with a cost much more important than the tax savings.
With BEPS* action plan and the new developments in the intellectual property right management, tax compliance is not an option for the value of their brand images. Today, athletes have to consider the protection and the management of their image rights and their life time good reputation as a key issue.
* Base erosion and profit shifting (BEPS) refers to tax avoidance strategies that exploit gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations. Under the inclusive framework, over 100 countries and jurisdictions are collaborating to implement the BEPS measures and tackle BEPS.
Bernard Felten,
Felten & Associes
[email protected]
Macedonia, with few bright exceptions, has been generally struggling to keep sports going in the recent years. In its latest attempt to inject funding to sports teams, the Macedonian government introduced in early 2017 amendments to the Law on Profit Tax which foresees a limited tax exemption for companies that will finance sports clubs and athletes, as well as sports federations and the Macedonian Olympic Committee. Whether this measure will have any real influence in Macedonian sports will be interesting to watch through 2018.
Jaka Simončič,
Karanovic & Nikolic
[email protected]
After several unsuccessful attempts for football players to organise a professional association, 2017 witnessed the launch of a new professional football players association (AFMpro). The association was publicly recognised in October 2017 by the Mexican football association (FMF). Adjustments to the structure of the FMF were made to include AFMpro, such as a new dispute resolution regulation. AFMpro's participation in the summer transfer market will mark the first participation of an athlete association in the draft scheme that governs transfers of players in Mexico. An affiliation to FIFpro is on the lookout.
A shift in broadcasting rights for sporting events is also expected. Historically, the market was dominated by two over-the-air networks (having even ownership of multiple clubs each). After changes in club ownership rules and a more aggressive negotiation by cable networks and streaming platforms, broadcasting of sport events has been dispersed from their legacy concentration. In addition to this competition, over-the-air networks struggle to adapt to modern business models, impacting their ability to cover a broad scope of sports. An indirect effect of the proposed acquisition of 21st Century Fox assets by Disney will further influence this issue, since several sport related stations are operated in Mexico.
Daniel Guaida Azar,
Gonzalez Calvillo
[email protected]
In Montenegro, the main sports governance issue in 2018 will be adoption of the new Law on Sports. A draft of the law is prepared, and it is planned that this law will introduce certain novelties and follow EU practice in governing sports law. The Idea is to enhance investments in sport and sport infrastructure, and to move Montenegro towards modern trends in this area.
Jaka Simončič,
Karanovic & Nikolic
[email protected]
The employment status of (Olympic) athletes will be a topic in 2018 - especially the desirability of collective agreements with regard to athletes and coaches. The possible introduction of quality marks for intermediaries in football could also be a new topic, as the Dutch Football Association recently proposed an initiative thereto.
Another topic will be the effects of the report of the Dutch investigation commission into sexual intimidation and abuse in sports, published in 2017. The report concluded that sexual intimidation and abuse occurs frequently; 12% of Dutch adults have had at least one sexual negative experience in their childhood.
Finally, the Dutch tax climate is under close scrutiny of the EU. Will the Netherlands still be attractive as tax haven for Intellectual Property rights and Royalty earnings by the end of 2018?
Janina Maduro,
Bosselaar & Strengers
[email protected]
The gender pay gap, under intense worldwide scrutiny, is an issue in New Zealand professional sport and will likely remain in the spotlight. The issue gained significant traction late last year when the Black Ferns (New Zealand's women's rugby team) won the 2017 Rugby World Cup, despite most players having full time work commitments outside the sport, and other talented players unable to participate due to work and monetary pressures.
The lead up to the 2018 Commonwealth Games will revive the tension between professional contractual obligations and representing New Zealand for some of our top athletes. Key examples arise in cycling and sailing, with a number of New Zealand's top athletes already confirming professional commitments that conflict with the timing of the Games.
Cheating remains an ugly and unfortunate reality in New Zealand like elsewhere, with violations striking a blow to New Zealand's culture of fair play and integrity. In December 2017, up to 80 athletes, including school age athletes, from a range of sports were caught up in a doping investigation. Drug Free Sport NZ is under pressure to take a hard line and in 2018 both the New Zealand Sports Tribunal and the Rugby Judiciary are likely to hear cases involving a large number of recreational athletes. Technology is also evolving to investigate and resolve other cheating claims, such as course cutting issues.
Another potential issue to watch is World Rugby's recently implemented ban on players writing messages on their strapping tape. A number of New Zealand's leading players have taken exception to the ban which they see as a breach of their freedom of expression. It will be interesting to see the player response to the ban when the rugby season kicks off later this year.
Kerri Dewe,
Lowndes
[email protected]
The main sporting event for 2018 will be the final four tournament of the Euroleague basketball competition which will bring with it a range of contractual issues in sports marketing and brand protection.
We also expect breaches of financial fair play rules by clubs and behaviour of their supporters at home and away matches to remain a hot topic this year.
Finally, due to the outdated infrastructure we expecta growth in projects driven by the compliance rules of UEFA and other international associations to enable the country to meet the criteria required for the organisation of the international matches.
Jaka Simončič,
Karanovic & Nikolic
[email protected]
In Slovenia we are eagerly awaiting decision of the International Volleyball Federation (FIVB) regarding the cooperation of the newly established Nations League. The Slovenian national team qualified to the elite volleyball competition last year. However, due to organisational changes regarding the format of the competition, it lost its right to compete on the big stage. The Slovenian national association filed an appeal with FIVB and is determined to pursue this to CAS if required.
Additionally several ski resorts are being offered for sale or facing significant financial issues or even insolvency. It will be interesting to see whether global warming will cause the slow decline of such resorts or will they be able to face the issues by sourcing additional funds to help them make required infrastructural improvements.
Jaka Simončič,
Karanovic & Nikolic
[email protected]
The application of competition law to the sports sector is likely to be a key focus. The Competition Commission fired the first salvo in October 2017 when it initiated a complaint referral to the Competition Tribunal against the South African Football Intermediaries Association (SAFIA) and 36 of its football agent members. The matter goes back to May 2015 when the South African Football Association (SAFA), acting on instructions from FIFA, sought to regulate the affairs of football agents, including reducing the commission paid to agents from 10% to 3%. This resulted in SAFIA filing a complaint with the Commission against SAFA based on the allegation that the 3% cap constituted price fixing. The complaint backfired on SAFIA. Following an investigation, the Commission decided not to prosecute SAFA but instead to investigate SAFIA and its members for fixing the commission they charge football players and coaches. The complaint referral is expected to be heard by the Competition Tribunal later this year. This case is likely to lead to an increased focus on the sporting sector by the competition authorities.
Brian Jennings, Garlicke & Bousfield
[email protected]
Following the Winter Olympics in Pyeongchang there are likely to be ongoing issues with trademark infringement, rights of publicity and ambush marketing.
South Korea also expects continued growth and advancement of the eSports market. This will include legal issues relating to disputes arising under league operation contracts and player employment contract. As the eSports industry as a whole increasingly bears resemblance to the traditional sports industry by attracting significant viewership, it will be interesting to monitor whether any progress can be made in areas that are typically crucial to the development and sustainability of a sports industry - such as player representation, competitive balance and overall management of league operation.
Chunghwan Choi,
Lee & Ko
[email protected]
Recent rulings from Spanish Courts have found that a free transfer of image rights from an athlete to a company that is controlled by the athlete himself and does not have the human and material resources to manage such rights, is a simulated transaction. The impact of these decisions will remain a key issue for 2018 as according to these rulings, the real cause of the transaction is not the transfer of image rights, since the athlete still controls them, but the concealment of part of his income from the Public Treasury.
As the Spanish General Tax Act provides that the taxable event is the one actually carried out by the parties, and not the simulated one, the tax authorities include the income received by the company in the athlete's Income Tax without deducting expenses.
Since most professional athletes are taxed at the maximum marginal rate for this tax (around 50%), the amounts levied by the tax authorities from them are usually higher than 120,000 euros per year, resulting in severe economic fines and even threats of imprisonment.
In order to avoid this, it is necessary for the company to have enough resources to effectively manage the image rights transferred, and for the athlete to receive an arm's length payment for the transfer.
Claudi Garces,
Ventura Garces
[email protected]
The employment status of athletes will come under the spotlight again following the 'green light' for athlete Jess Varnish's claim to proceed over allegations of bullying and discrimination after being dropped from the Olympic squad. This, alongside the long-awaited independent investigation into historic child sex abuse due to be completed later in the year, also touches on the wider issues of duty of care and athlete welfare that became so prevalent in 2017.
The potential impact social media companies may have on the new round of negotiations for the Premier League rights which commences later this year could also be an interesting development in the content market and how those rights align with the global strategies of those respective businesses;
The tax structures behind image rights of athletes has recently come under intense scrutiny from HM Revenue & Customs and we expect this to become a mainstream issue in 2018.
Finally, as we continue to march towards the Brexit door, what this means for athletes and governing bodies and for sports generally, should become clearer.
Andrew Haywood,
Penningtons Manches
[email protected]
First is the reduced opportunities for tax exempt and public financing of new stadia. With dramatic increases in both the reported value of professional sports franchises and the salaries paid to professional athletes, legislative bodies will feel increased pressure to eliminate tax-favoured treatment for stadium land acquisition and construction.
Second, the sports industry will continue to be challenged by the ongoing tension between team players and owners on the question of who should profit from the sale of merchandise bearing a player's name, image, and likeness. The increased reluctance of players to waive or assign their rights of publicity has already resulted in a restructuring of the merchandising model at the collegiate level and will likely affect the professional model as well.
Furthermore with the enormous revenues generated in US by collegiate athletics, there is a rising friction between what is suitable compensation for athletes, together with issues of amateurism and employment status, that will need to be resolved.
Finally, US courts will continue to wrestle with the issue of when professional athletes are engaged in "work time" for purposes of US wage payment laws.
George Yund,
Frost Brown Todd
[email protected]
Although there have not been new regulations related to sports law in Uruguay in 2018 to date, the anticipated key issues will be:
- Prohibition of third party ownership and its impact on the transfer of football players.
- The outcome of a series of claims made (or to be made) by professional football players regarding their image rights, which has been going on since 2016.
- The outcome of an assessment of the estimated market value of the broadcasting rights of the Uruguayan Championship and the Uruguayan National team matches, undertaken as a result of an agremeent between the Uruguayan Football Association and MEDIAPRO, which may facilitate the appearance of new entities bidding over the rights in the future.
Federico Susena,
Guyer & Regules
[email protected]