With great pleasure, we welcome readers to the December 2015 edition (citation: GSLTR 2015/4) of our ground-breaking journal and on-line database (www.gsltr.com/): Global Sports Law and Taxation Reports (GSLTR).
Another year has passed and brought with it its own veritable crop of interesting and significant developments in sports law and sports-related taxation law. No doubt, the New Year will also be full of other challenging sports legal and tax issues, not least with the Summer Olympic Games, which will take place in Rio de Janeiro, Brazil. Many of this year’s developments we have covered on our dedicated website and also in our GSLTR journal, which all goes to show the need for our journal. We hope that existing subscribers will spread the word about GSLTR, amongst their colleagues and contacts, to encourage new subscribers and help us to increase our global footprint and continue to provide a must-have resource for the international sporting community and their legal and tax advisers.
Probably the most important and enduring sports story of the year has been the almost daily revelations of the extent of corruption within FIFA, the world governing body of association football, especially at the highest levels of the organisation, culminating in the provisional suspension of the FIFA president himself, Sepp Blatter! All of this, combined with allegations of corruption against others in the highest echelons of world and European football, including Michel Platini, the president of UEFA, who has also been provisionally suspended for 90 days, has turned “the beautiful game” into the “ugly game”. Incidentally, both have lost their appeals to the FIFA Appeal Committee against their suspensions and are appealing to the Court of Arbitration for Sport. Criminal investigations are ongoing in the United States and also in Switzerland, where FIFA has its headquarters. The extent of the corruption and the sums involved is veritably mind blowing and the stuff of novels. Apart from all of this alleged wrongdoing, the real question is: can FIFA reform itself from within and will the new president of FIFA, due to be elected on 26 February 2016, be able to make a real difference? The proper governance of any sport is a very important issue, not only for those who participate in that sport, but also for the fans that watch and support it. This, a fortiori, is even more important when the sport concerned is the world’s most favourite and lucrative one. It will be very interesting to see how matters pan out in the near future, particularly who takes over the reins of FIFA next year!
Athletics has not been without its scandals either! Included are allegations made at the beginning of August 2015 by the British Sunday Times newspaper of covering up doping offences and failing to pursue offenders, based on new evidence and analytical techniques – headlined by the newspaper as “sport’s dirtiest secret”. Also, the former IAAF president, Lamine Diack, placed under criminal investigation for allegedly taking some € 200,000 from Russian officials in return for covering up positive doping tests of their athletes. Furthermore, Gabriel Dolle, the former director of the IAAF anti-doping department, is also facing a criminal investigation relating to the corruption charge. According to the French National Financial Prosecutor, Eliane Houlette, Lamine Diack’s son, Papa Massata Diack, is also said to have played a “very active role” in the alleged corruption. On 9 November 2015, an independent commission appointed by WADA (World Anti-Doping Agency) to enquire into alleged cases of doping by Russian athletes delivered a damning report with implications not only for the Russian Athletics Federation and its officials, but also for the IAAF itself. See the GSLTR website post of 9 November 2015 for the background to and the terms of reference of this important independent commission report on the extent of systemic doping in Russian athletics and also its hard-hitting and widespread recommendations. Russia’s Athletics Federation has been provisionally suspended by the IAAF on 13 November 2015. The extent of corruption revealed by this report makes the current scandals at FIFA, to a certain extent, pale into relative insignificance! So, let us hope that the new president of the IAAF, Lord Sebastian Coe of the UK, will be able to get to grips with the situation and clean up the IAAF and its tarnished image, as the world governing body of track and field, and restore confidence in the sport!
Whilst on the subject of corruption in sport, we publish an article by Nicholas Cropp, a London barrister, entitled “Fighting corruption in sport: a new problem or an old chestnut?” In his article, he focuses on football and athletics and reaches the following dire conclusions:
“Widespread institutional and cultural change is the only real solution, to bring football and athletics back to their rightful place as examples of extraordinary human achievement, sportsmanship and genuine effort. Anything less will lead to both sports being crippled by ongoing scandal and, by its corollary, an increasingly sceptical and disbelieving public. Such fundamental reputational damage could be permanent.”
Another significant sporting development in the last twelve months, but, for a change, on the positive side, has been the unanimous approval at the 127th IOC Session, meeting in Monaco on 8 December 2014, of the so-called “Olympic Agenda 2020”, initiated and drawn up by the relatively new IOC president, Dr Thomas Bach, and comprising forty recommendations described as a strategic road map for the future of the Olympic Movement. Bach hailed this development as “a very important and positive day for the IOC and the Olympic Movement”. Perhaps the most important recommendations are those relating to reforming the bidding process to host the Olympic Games; reducing the costs of organising and staging them; and a greater emphasis on the legacy of the Games and, in particular, what they can bring to the bidding countries and their citizens, including what the Games would contribute to their social, environmental and long-term development. So, it will be very interesting to see how many of these recommendations, all of which are highly laudable, are implemented and within what time scale!
In this issue, we feature the first part of a major two-part article by one of our regular and distinguished contributors, Prof. Steve Cornelius, the head of the Private Law Department and a founder member of the International Sports Law Centre at the University of Pretoria, South Africa, on “The expendibles: do sports people really assume the risk of injury?” The second part will be published in the March 2016 issue of GSLTR.
In his article, Prof. Cornelius examines, in the light of the modern world of competitive sport, the traditional legal defence of “volenti non fit injuria” (“consent to injury”) in relation to injuries suffered by sports persons on the field of play, which, according to his extensive research, he notes are on the increase and, in some quarters, are accepted as a necessary evil and inevitable result of the high octane and competitive sport that we see around the world today, where the maxim “no gain without pain” seems to hold sway!
He illustrates his article with cases from all over the world and draws from them the necessary inferences on whether and to what extent “consent to injury” is relevant in determining legal liability for injuries sustained on the field of play by sports persons. He also considers the relevance of the rules of the game in relation to such injuries. A fascinating subject and a challenging one!
We also publish an article by Athena Constantinou, the managing director of APC Sports Consulting, Nicosia, Cyprus and London, UK, on “Financial vulnerability of professional athletes” in which she analyses this problem and suggests some solutions. In introducing the subject, she writes:
“There is widespread public belief that athletes after retirement are financially set for life, living in mansions with unlimited money to spend. At the same time, stories of athletes going bankrupt, during or after their playing career, very often appear in the media.
Research on how athletes cope financially after the end of their careers, shows the magnitude of the problem and underscores why athletes should be considered as some of the most financially vulnerable persons of our times.”
And she concludes as follows:
“We have shown why athletes are considered one of the most financially vulnerable groups of our times and why that is the case. One of the main reasons, financial illiteracy, can be altered by the implementation of financial education programs by all sports industry stakeholders.
Sports governing bodies, leagues, clubs, players’ associations and, generally, all stakeholders in the sports industry can contribute in order to alleviate the problem and help take preventive action.”
One can only agree with her!
Whilst on the subject of money and sport, mention should also be made of the record transfer fees paid in the Summer 2015 “transfer window” in the English FA Premier League, and we include an article reporting and commenting on the impressive English Premier League’s finances by Paul Rawnsley, a director of the Sport Business Group, at Deloitte’s, which follows closely football finances and regularly publishes authoritative reports on them. As he points out, the 20 English Premier League clubs generated record revenues of £ 3.26 billion for the 2013-2014 season, a £ 735 million (29%) increase on the revenues recorded in 2012-2013, which was largely attributable to the uplift in broadcast revenues.
Also in this issue, on the sports legal side, we feature articles on doping by Markus Manninen, a leading Finnish sports lawyer; and on challenging CAS arbitrators by Prof. Dr. Ian Blackshaw.
On the sports tax side, we include an article by Dr. John Karaffa on “United States of America: Tax planning for incoming individual professional athletes and artists”. As he writes in his introduction, the US Internal Revenue Service is clearly out to tax foreign professional athletes, who practise their sports in the United States:
“Little doubt exists about the resolve of the United States’ government towards its tax collection and enforcement efforts aimed at foreign professional athletes. Just ask Brazilian Indy Car driver Helio Castroneves, South African golfer Retief Goosen, and Spanish golfer Sergio Garcia, about their high-profile tangles with the Internal Revenue Service (IRS). In fact, the IRS had instituted a task force, called an Issue Management Team, which focuses exclusively on improving US income reporting and tax payment compliance by foreign athletes and entertainers who work in the United States.”
We also publish an article on tax planning for incoming individual sportspersons and artists in the United Kingdom by Jonathan Hawkes. The key areas covered in his article are: the determination of UK tax residency; the employment or business status of the individual; the position of the UK non-resident and resident individual; image rights and endorsement income; and social security and pensions considerations. He also deals with the treatment of third party payments and the application of tax treaties.
We also include an article on the taxation of individual sportspersons and artists in Turkey by Benan Arseven; and also one on the response of the UK Tax Authority (HMRC) to the OECD July 2014 update to art. 17 of the Model Tax Convention and Commentary by Euan Lawson.
Finally, and as always, we would welcome and value your contributions in the form of articles and topical case notes and commentaries for our journal and also for posting on the GSLTR dedicated website at www.gsltr.com. A number of you have responded to this invitation, but the more of you who do so, the merrier!
So, now read on and enjoy this information-packed December 2015 edition of GSLTR and we take this opportunity of wishing all of our existing and new readers the compliments of the season and all the very best in their sporting endeavours in 2016!
Dr. Rijkele Betten (Managing Editor)
Prof. Dr. Ian S. Blackshaw (Consulting Editor)