THE NEWSLETTER EOR THE SPORTS BUSINESS
VOLUME 07 ISSUE 07 JULY 2009
Chelsea players in
breach of UEFA
regulations
UEFAs Control and
Disciplinary Board suspended
two Chelsea FC players on 17
June, for insulting the referee by
making offensive comments,
an act which is illegal under
Article 10 of UEFA's
Disciplinary Regulations, which
allows for players to be
suspended for a 'specified
period for pestering or insulting
any match official'. ; General for Education and
Didier Drogba and Jose
Bosingwa have been suspended
for six and four UEFA club
competition matches respec-
tively following the incident at
the Champions League semi-
final second leg match against
Barcelona, on 6 May,
Chelsea FC was also fined
€100,000 under Article 11 of
the Regulations for the
improper conduct of its players
and for the inappropriate
behaviour of its supporters.
'Disciplinary measures may be
taken against member associa-
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
our response", said a spokesper-
son for Chelsea FC.
The club and/or the players
have until 20 June to appeal.
Player contracts
Matuzalem case 03
Comment Parliament
football report 08
Italy Serie A breakaway
challenges 08
Broadcasting
Australian inquiry 10" ^
Dispute resolution
FIBA Arbitral Tribunal 14
The European Commission has
said that it supports the princi-
ple of sporting organisations
selling a 'right to bet' to betting
operators. "In principle, we take
a positive view of the French
idea of creating exploitation
rights of sport event organisers
from the sports betting opera-
tors", said Michal Krejza, Head
of the Sport Unit, Directorate
Culture at a meeting organised
ahead of the UK Central
Council for Physical
Recreation's European Sport
Summit on 16 June. "The draft
French law says that if a sports
organisation concludes an
agreement with a sports betting
operator, then it has a legal
obligation to offer similar
conditions to other betting
operators. What sports organi-
sations expect is that a number
of other Member States will
probably take the French law as
a model for themselves."
Krejza also said that the
England's Rugby Football
Union (RFU) has told four
former Bath players to appear
before an RFU disciplinary
panel, where they will be
charged with conduct prejudi-
cial to the interests of the game'
under Rule 5.12(f) of the RFU's
Membership rules, following
allegations that they have taken
prohibited substances and
refused to take drug tests.
Justin Harrison, Michael
Lipman, Alex Crockett and
Andrew Higgins resigned from
Bath Rugby on 1 June, stating
Commission could examine the
situation if BSkyB buys
Setanta's two packages of TV
rights to football's Premier
League - the Football
Association Premier League
(FAPL) said, on 15 June, that it
would put all 46 of Setanta's live
matches for the 2009/10 season
c
up for auction, if Setanta does
not meet certain contractual
requirements of the Premier
League on or before Friday 19
June 2009'
"The decision, of course,
remains valid", said Krejza,
referring to the Commission's
decision to not allow the FAPL
to sell all its TV rights packages
to one broadcaster
(IP/05/1441). "The Directorate
General for Competition would
perhaps have to look again at
certain aspects in case there is a
situation where only one broad-
caster would be willing to be in
this particular market". Setanta
secured two FAPL TV rights
packages for 2007-2010, while
that the allegations - following
an investigation and tests by
Bath Rugby under their
employment contracts - were
'scurrilous and unsubstanti-
ated' and were 'damaging' to
not only their own careers, but
also to rugby union. They are
considering legal action.
Rule 5.12(f) allows the RFU to
discipline clubs and players 'for
any conduct which is prejudi-
cial to the interests of the Union
or the Game. The Union may
terminate or suspend member-
ship of the Union or impose
WWW.E-COMLAW.COM
BSkyB secured the other four.
Krejza also reiterated that
while the Commission "recog-
nises the validity of some of the
underlying ideas behind the
rule", it remains opposed to
FIFA's '6+5' proposal to require
clubs to field six players eligible
for the national team of the
nation in which that club is
based, as a "rule based on direct
discrimination on the basis of
nationality".
The Comniission will make
public its study on the role of
Players' Agents, said Krejza,
towards the end of this year,
however emphasised that the
Directorate General is not yet
convinced that regulation of
agents is necessary. A confer-
ence on licensing systems
within sport is planned for
September, and tenders for the
Commission's study on the
financing of sport in Europe are
being evaluated, with results
planned for November or
December next year.
any other appropriate punish-
ment for any such offence.' A
hearing date has yet to be set.
"WADA understands that the
testing was initiated by the club
under its employment terms,
and not by an anti-doping
organisation under the rules of
the World Anti-Doping Code",
said a spokesperson for World
Anti-Doping Agency. "This is
therefore an internal conduct
issue for the club, and WADA
has no jurisdiction over this
situation in terms of anti-
doping rules".
ITALY
Lega Serie A breakaway
issues and challenges
The Serie A clubs of the Lega
Nazionale Professionisti (LNP)
recently decided to break away
from the LNP to form its own •
independent league, the Lega Serie
A, Luca Ferrari, a Partner at CBA
Studio Legale e Tributario, explains
the plans, potential issues with them
and Serie B's planned opposition.
The Italian football system has
recently been shaken by a
unilateral decision taken by almost
all (19 out of 20) Serie A clubs of
the Lega Nazionale Professionisti,
(the authority which currently
manages the top two Italian
football divisions - Serie A and
C
Serie B - hereinafter the LNP') to
break away from the LNP. Under
the chairmanship of Maurizio
Beretta, former Director of the
Italian Employers Association, a
new association has been formed
recently among all Serie A clubs
(the 'Lega Serie A). The new entity
will apply to the Italian Football
Federation (FIGC) to be appointed
as the new organiser of the top
national football championship,
starting with the 2010/2011 season.
This startling event brings to
mind the 1991 breakaway of the
English First Division clubs from
the Football League. In that case,
the English High Court ruled hi
favour of the First Division's
decision to form the new League,
currently the FA Premier League.
In the case at hand, the legitimacy
of the Serie A clubs' decision has
yet to be challenged. However, the
creation of a new Serie A League
entails significant consequences. As
in the English case, the problem
involves the economic and
competitive integration between
the two 'Series'. Unless new
solidarity mechanisms are put in
place between the two new
professional Leagues, the rupture
of the tenuous financial
08
equilibrium which has been held
so far within a unique League
could cause a wave of bankruptcies
among the Serie B clubs.
One key, preliminary issue
concerns the economic context: is
there a common market involving
all professional clubs and in
particular, the top two professional
'Series', or can we consider the
Serie A and the Serie B as two
separate markets? If one considers
the pyramidal structure of football
and how promotion and relegation
links the different categories, there
certainly is an argument to sustain
the thesis of an integral market.
The allocation of market income
poses a major dispute with this
split of the League. Pursuant to the
newly enacted TV rights collective
ownership and commercialisation
law (Law no. 106 dated 19 July
2007, and the subsequent
Legislative Decree no. 9 dated 9
January 2008, hereafter the 'Legge
Melandri' or 'Melandri Law'), the
LNP - collectively the marketing
agent of the top championships'
audiovisual rights - must reserve a
percentage of TV rights revenue
for the lower division clubs. This
'solidarity contribution' by statute
in favour of Serie B and the
remaining two lower pro-leagues,
assures the sharing of income
between the 'Series', which is
considered necessary for the
sustainability of the professional
football system as a whole and to
the ultimate benefit of Serie A.
However, is this financial
contribution afforded by the
Melandri Law sufficient to
maintain a reasonable and fair
balance between the top two
Series? With a degree of
simplification, such mandatory
mutuality would count overall
10% of the total revenue generated
from the sale of Serie A rights.
Under current estimates and the
redistribution mechanism put in
place by the Legge Melandri, Serie
B would end up receiving
substantially less than what is
currently being afforded under the
LNP's collective resources and
mutuality agreements. Hence the
split between Serie A and Serie B,
insofar as it would put an end to
current LNP's 2005/2014 mutuality
agreements, would cause
significant financial damage to the
lower division clubs. Would the
Serie A clubs be liable for such
damage?
The LNP organises: the Serie A
and B championships, Coppa Italia
and Supercoppa (the match
between the championship and
cup winners). In addition, the LNP,
on behalf of its Serie A and B
football club members, negotiates
and enters into the Collective
Agreements with the Football
Players Association (AIC), the
Football Trainers Association
(AIAC) and the Football Directors
Association (ADISE). The LNP is
also a party to all contracts
concerning the licensing of
relevant collective brands and
properties, as well as various
collective services agreements.
Whereas before, the Legge
Melandri clubs would seE their live
broadcasting rights individually
and leave the championship's
highlights and Coppa Italia to the
LNP's collective selling, currentiy
the LNP - as already mentioned -
has been designated by Legge
Melandri as the co-owner and
exclusive marketing agent of all
audiovisual rights, to be later
allocated among clubs according to
statutory guidelines, ensuring a
certain degree of pro-competitive
redistribution within each Serie. In
addition, the Melandri Law assigns
to the LNP the duty to define a
percentage of all TV rights
licensing fees - no less than 10% -
to be divided among Serie B, the
two lower professional divisions
and a special 'foundation for the
mutuality in sports', for uses of
world sports law report July 2009

general interest (stadia
development, to name one). This
'mutuality' obligation and the
LNP's role in defining its
percentage value, as well as its
distribution among professional
clubs below Serie A, ignited the
Serie A rebellion.
Indeed, the crisis erupted in
relation to the amendment of the
LNP's byelaws, which were made
necessary by the new regulatory
context. Serie A's 20 clubs - the
generators of almost all resources
deriving from the licensing of TV
rights - were keen on taking over
the LNP's governance, whereas the
Serie B's 22 clubs - while accepting
a minority position - were not
willing to be totally excluded from
key decisions affecting both
categories, namely the definition of
mutuality percentages and the
management of collective (A+B)
resources, such as the Coppa Italia
and League sponsorships.
It is clear that the Melandri Law is
going to reduce significantly the
income that top Serie A clubs were
accustomed to receiving from the
individual licensing of their own
rights. Not surprisingly, the top
Serie A clubs are the driving force
behind the newly established elite
League, whose Byelaws,
Memorandum of Association, and
Regulations were signed before a
notary public on 14 May.
Serie B clubs have decided to
retaliate and oppose such a move.
While diplomacy may be at work
at the higher football federation
and government level, Serie B has
identified the legal reasons
standing against the LNP's breakup
in a letter that was sent to all top
division clubs on 1 June. The main
legal issues raised are:
The split will meet its first obstacle
in the statutory provisions, and
particularly in the Melandri Law,
world sports law report July 2009
which is written on the assumption
that Serie A and B championships
are both organised by the LNP. A
legislative adjustment would
therefore be necessary.
Contractually, the separation
would require a collective
withdrawal of the Serie A clubs
from the LNP. However, at time of
writing, the LNP has received no
notice of resignation. In fact, such
a withdrawal could not be effective
until the end of the upcoming
2009/2010 Serie A and B
championships, the last ones to be
organised by the LNP. Accordingly,
the association structure and the
related contractual relations still in
force between the two major
'Series' augurs serious conflict
between the LNP and the new
'Lega Serie A, as the latter will
solicit the attention of sporting and
political institutions for its
programs and priorities, or will
seek to manage its affairs in
relation to the marketing of
audiovisual rights. Moreover, long-
lasting agreements on distribution
of financial resources have been
struck between the two 'Series*
within the LNP.
is
paralysing the LNP
As a consequence of the Serie B
clubs' refusal to approve the new
LNP regulations proposed by Serie
A, not only did the Serie A clubs
decide to establish the new League,
but they also left the general
assembly of the LNP, which was
summoned not only to adopt the
new byelaws, but also to elect the
new President and council. The
resulting impasse forced the
federation to appoint a
Commissioner {FIGC assigned the
ITALY
task to its own President, Giancarlo
Abete) to manage the day-by-day
activities of the LNP.
It can be cogently argued that Serie
A's decision constitutes a breach of
the rules on competition (Articles
81 and 82 of the EC Treaty).
According to well-established
jurisprudence, football clubs can
be qualified as 'undertakings' and,
as such, they fall within the scope
of Art. 81 of the EC Treaty. Thus,
Serie A's decision to create its own
'Lega' and, consequently, to
commandeer the exclusive right to
determine the amount and
allocation of the mutuality
contributions imposed by the Law,
constitutes not only a breach of the
Melandri Decree, as seen above,
but also an (illicit) agreement in
restraint of competition (namely
on the audiovisual rights market)
pursuant to Art. 81 of the EC
Treaty. Moreover, Serie A controls a
substantial share of the audiovisual
rights market. Therefore, it is
arguable that Serie A clubs have a
collective dominant position. In
this respect, the ECJ stated that in
order to assess an abuse of a
collective dominant position the
actual economic power shall be
considered, regardless of the
existence of an express
arrangement between the
1
undertakings for this scope . In
light of diis jurisprudence, the
secession of Serie A clubs may
constitute an abuse of a collective
dominant position as per Art. 82 of
the EC Treaty, in so far as it effects
trade and fair competition within
the relevant market or the
competitive development thereof.
Luca Ferrari Partner
C8A Studio Legale e Tributaiio
luca.ferrari@cbalex. it
1 .ECJ C-395-96, P Compagnie
Maritime Beige cfes Transports SA v.
Commission.
09