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THE NEWSLETTER EOR THE SPORTS BUSINESS

VOLUME 07 ISSUE 07 JULY 2009


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Chelsea players in
breach of UEFA
regulations
UEFAs Control and The European Commission has Commission could examine the BSkyB secured the other four.
Disciplinary Board suspended said that it supports the princi- situation if BSkyB buys Krejza also reiterated that
two Chelsea FC players on 17 ple of sporting organisations Setanta's two packages of TV while the Commission "recog-
June, for insulting the referee by selling a 'right to bet' to betting rights to football's Premier nises the validity of some of the
making offensive comments, operators. "In principle, we take League - the Football underlying ideas behind the
an act which is illegal under a positive view of the French Association Premier League rule", it remains opposed to
Article 10 of UEFA's idea of creating exploitation (FAPL) said, on 15 June, that it FIFA's '6+5' proposal to require
Disciplinary Regulations, which rights of sport event organisers would put all 46 of Setanta's live clubs to field six players eligible
allows for players to be from the sports betting opera- matches for the 2009/10 season for the national team of the
c
suspended for a 'specified tors", said Michal Krejza, Head up for auction, if Setanta does nation in which that club is
period for pestering or insulting of the Sport Unit, Directorate not meet certain contractual based, as a "rule based on direct
any match official'. ; General for Education and requirements of the Premier discrimination on the basis of
Didier Drogba and Jose Culture at a meeting organised League on or before Friday 19 nationality".
Bosingwa have been suspended ahead of the UK Central June 2009' The Comniission will make
for six and four UEFA club Council for Physical "The decision, of course, public its study on the role of
competition matches respec- Recreation's European Sport remains valid", said Krejza, Players' Agents, said Krejza,
tively following the incident at Summit on 16 June. "The draft referring to the Commission's towards the end of this year,
the Champions League semi- French law says that if a sports decision to not allow the FAPL however emphasised that the
final second leg match against organisation concludes an to sell all its TV rights packages Directorate General is not yet
Barcelona, on 6 May, agreement with a sports betting to one broadcaster convinced that regulation of
operator, then it has a legal (IP/05/1441). "The Directorate agents is necessary. A confer-
Chelsea FC was also fined obligation to offer similar
€100,000 under Article 11 of General for Competition would ence on licensing systems
conditions to other betting perhaps have to look again at within sport is planned for
the Regulations for the operators. What sports organi-
improper conduct of its players certain aspects in case there is a September, and tenders for the
sations expect is that a number situation where only one broad- Commission's study on the
and for the inappropriate of other Member States will
behaviour of its supporters. caster would be willing to be in financing of sport in Europe are
probably take the French law as this particular market". Setanta being evaluated, with results
'Disciplinary measures may be a model for themselves."
taken against member associa- secured two FAPL TV rights planned for November or
Krejza also said that the packages for 2007-2010, while December next year.
tions or clubs in case of
inappropriate behaviour on the
part of their supporters, includ-
ing:,..the throwing of objects',
reads the Regulations.
"We've received the UEFA
verdict and we'll now take time
to assess it in full and consider England's Rugby Football that the allegations - following any other appropriate punish-
our response", said a spokesper- Union (RFU) has told four an investigation and tests by ment for any such offence.' A
son for Chelsea FC. former Bath players to appear Bath Rugby under their hearing date has yet to be set.
The club and/or the players before an RFU disciplinary employment contracts - were "WADA understands that the
have until 20 June to appeal. panel, where they will be 'scurrilous and unsubstanti- testing was initiated by the club
charged with conduct prejudi- ated' and were 'damaging' to under its employment terms,
Player contracts cial to the interests of the game' not only their own careers, but and not by an anti-doping
Matuzalem case 03 under Rule 5.12(f) of the RFU's also to rugby union. They are organisation under the rules of
Comment Parliament Membership rules, following considering legal action. the World Anti-Doping Code",
football report 08 allegations that they have taken Rule 5.12(f) allows the RFU to said a spokesperson for World
Italy Serie A breakaway prohibited substances and discipline clubs and players 'for Anti-Doping Agency. "This is
challenges 08 refused to take drug tests. any conduct which is prejudi- therefore an internal conduct
Broadcasting Justin Harrison, Michael cial to the interests of the Union issue for the club, and WADA
Australian inquiry 10" ^ Lipman, Alex Crockett and or the Game. The Union may has no jurisdiction over this
Dispute resolution Andrew Higgins resigned from terminate or suspend member- situation in terms of anti-
FIBA Arbitral Tribunal 14 Bath Rugby on 1 June, stating ship of the Union or impose doping rules".
ITALY

Lega Serie A breakaway


issues and challenges
The Serie A clubs of the Lega equilibrium which has been held B would end up receiving
so far within a unique League substantially less than what is
Nazionale Professionisti (LNP) could cause a wave of bankruptcies currently being afforded under the
recently decided to break away among the Serie B clubs. LNP's collective resources and
from the LNP to form its own • One key, preliminary issue mutuality agreements. Hence the
independent league, the Lega Serie concerns the economic context: is split between Serie A and Serie B,
there a common market involving insofar as it would put an end to
A, Luca Ferrari, a Partner at CBA
all professional clubs and in current LNP's 2005/2014 mutuality
Studio Legale e Tributario, explains particular, the top two professional agreements, would cause
the plans, potential issues with them 'Series', or can we consider the significant financial damage to the
and Serie B's planned opposition. Serie A and the Serie B as two lower division clubs. Would the
separate markets? If one considers Serie A clubs be liable for such
the pyramidal structure of football damage?
The Italian football system has
recently been shaken by a and how promotion and relegation The LNP organises: the Serie A
unilateral decision taken by almost links the different categories, there and B championships, Coppa Italia
all (19 out of 20) Serie A clubs of certainly is an argument to sustain and Supercoppa (the match
the Lega Nazionale Professionisti, the thesis of an integral market. between the championship and
(the authority which currently The allocation of market income cup winners). In addition, the LNP,
manages the top two Italian poses a major dispute with this on behalf of its Serie A and B
football divisions - Serie A and split of the League. Pursuant to the football club members, negotiates
C
Serie B - hereinafter the LNP') to newly enacted TV rights collective and enters into the Collective
break away from the LNP. Under ownership and commercialisation Agreements with the Football
the chairmanship of Maurizio law (Law no. 106 dated 19 July Players Association (AIC), the
Beretta, former Director of the 2007, and the subsequent Football Trainers Association
Italian Employers Association, a Legislative Decree no. 9 dated 9 (AIAC) and the Football Directors
new association has been formed January 2008, hereafter the 'Legge Association (ADISE). The LNP is
recently among all Serie A clubs Melandri' or 'Melandri Law'), the also a party to all contracts
(the 'Lega Serie A). The new entity LNP - collectively the marketing concerning the licensing of
will apply to the Italian Football agent of the top championships' relevant collective brands and
Federation (FIGC) to be appointed audiovisual rights - must reserve a properties, as well as various
as the new organiser of the top percentage of TV rights revenue collective services agreements.
national football championship, for the lower division clubs. This
Whereas before, the Legge
starting with the 2010/2011 season. 'solidarity contribution' by statute
Melandri clubs would seE their live
in favour of Serie B and the
This startling event brings to broadcasting rights individually
remaining two lower pro-leagues,
mind the 1991 breakaway of the and leave the championship's
assures the sharing of income
English First Division clubs from highlights and Coppa Italia to the
between the 'Series', which is
the Football League. In that case, LNP's collective selling, currentiy
considered necessary for the
the English High Court ruled hi the LNP - as already mentioned -
sustainability of the professional
favour of the First Division's has been designated by Legge
football system as a whole and to
decision to form the new League, Melandri as the co-owner and
the ultimate benefit of Serie A.
currently the FA Premier League. exclusive marketing agent of all
However, is this financial
In the case at hand, the legitimacy audiovisual rights, to be later
contribution afforded by the
of the Serie A clubs' decision has allocated among clubs according to
Melandri Law sufficient to
yet to be challenged. However, the statutory guidelines, ensuring a
maintain a reasonable and fair
creation of a new Serie A League certain degree of pro-competitive
balance between the top two
entails significant consequences. As redistribution within each Serie. In
Series? With a degree of
in the English case, the problem addition, the Melandri Law assigns
simplification, such mandatory
involves the economic and to the LNP the duty to define a
mutuality would count overall
competitive integration between percentage of all TV rights
10% of the total revenue generated
the two 'Series'. Unless new licensing fees - no less than 10% -
from the sale of Serie A rights.
solidarity mechanisms are put in to be divided among Serie B, the
Under current estimates and the
place between the two new two lower professional divisions
redistribution mechanism put in
professional Leagues, the rupture and a special 'foundation for the
place by the Legge Melandri, Serie
of the tenuous financial mutuality in sports', for uses of

08 world sports law report July 2009


ITALY

general interest (stadia which is written on the assumption task to its own President, Giancarlo
development, to name one). This that Serie A and B championships Abete) to manage the day-by-day
'mutuality' obligation and the are both organised by the LNP. A activities of the LNP.
LNP's role in defining its legislative adjustment would
percentage value, as well as its therefore be necessary.
distribution among professional
clubs below Serie A, ignited the It can be cogently argued that Serie
Serie A rebellion. A's decision constitutes a breach of
Indeed, the crisis erupted in the rules on competition (Articles
relation to the amendment of the 81 and 82 of the EC Treaty).
LNP's byelaws, which were made Contractually, the separation According to well-established
necessary by the new regulatory would require a collective jurisprudence, football clubs can
context. Serie A's 20 clubs - the withdrawal of the Serie A clubs be qualified as 'undertakings' and,
generators of almost all resources from the LNP. However, at time of as such, they fall within the scope
deriving from the licensing of TV writing, the LNP has received no of Art. 81 of the EC Treaty. Thus,
rights - were keen on taking over notice of resignation. In fact, such Serie A's decision to create its own
the LNP's governance, whereas the a withdrawal could not be effective 'Lega' and, consequently, to
Serie B's 22 clubs - while accepting until the end of the upcoming commandeer the exclusive right to
a minority position - were not 2009/2010 Serie A and B determine the amount and
willing to be totally excluded from championships, the last ones to be allocation of the mutuality
key decisions affecting both organised by the LNP. Accordingly, contributions imposed by the Law,
categories, namely the definition of the association structure and the constitutes not only a breach of the
mutuality percentages and the related contractual relations still in Melandri Decree, as seen above,
management of collective (A+B) force between the two major but also an (illicit) agreement in
resources, such as the Coppa Italia 'Series' augurs serious conflict restraint of competition (namely
and League sponsorships. between the LNP and the new on the audiovisual rights market)
'Lega Serie A, as the latter will pursuant to Art. 81 of the EC
It is clear that the Melandri Law is Treaty. Moreover, Serie A controls a
solicit the attention of sporting and
going to reduce significantly the substantial share of the audiovisual
political institutions for its
income that top Serie A clubs were rights market. Therefore, it is
programs and priorities, or will
accustomed to receiving from the arguable that Serie A clubs have a
seek to manage its affairs in
individual licensing of their own collective dominant position. In
relation to the marketing of
rights. Not surprisingly, the top this respect, the ECJ stated that in
audiovisual rights. Moreover, long-
Serie A clubs are the driving force order to assess an abuse of a
lasting agreements on distribution
behind the newly established elite collective dominant position the
of financial resources have been
League, whose Byelaws, actual economic power shall be
struck between the two 'Series*
Memorandum of Association, and considered, regardless of the
within the LNP.
Regulations were signed before a existence of an express
notary public on 14 May. arrangement between the
1
Serie B clubs have decided to undertakings for this scope . In
retaliate and oppose such a move. is light of diis jurisprudence, the
While diplomacy may be at work paralysing the LNP secession of Serie A clubs may
at the higher football federation As a consequence of the Serie B constitute an abuse of a collective
and government level, Serie B has clubs' refusal to approve the new dominant position as per Art. 82 of
identified the legal reasons LNP regulations proposed by Serie the EC Treaty, in so far as it effects
standing against the LNP's breakup A, not only did the Serie A clubs trade and fair competition within
in a letter that was sent to all top decide to establish the new League, the relevant market or the
division clubs on 1 June. The main but they also left the general competitive development thereof.
legal issues raised are: assembly of the LNP, which was
summoned not only to adopt the
new byelaws, but also to elect the Luca Ferrari Partner
new President and council. The C8A Studio Legale e Tributaiio
resulting impasse forced the luca.ferrari@cbalex. it
The split will meet its first obstacle
federation to appoint a 1 .ECJ C-395-96, P Compagnie
in the statutory provisions, and
Commissioner {FIGC assigned the Maritime Beige cfes Transports SA v.
particularly in the Melandri Law, Commission.

world sports law report July 2009 09

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