EDITORIAL

It is with much pleasure that we welcome readers to the December 2018 edition (citation: GSLTR 2018/4) of our ground-breaking journal and on-line database (www.gsltr.com): Global Sports Law and Taxation Reports (GSLTR).

As usual, the past year has given rise to a wide range of interesting and challenging sports legal and tax issues and we would mention some of the highlights of them as follows.

On 2 October 2018, the European Court of Human Rights (the Court) rendered its long-awaited land-mark decision in the combined cases of Claudia Pechstein, the German speed skater, and Adrian Mutu, the former Romanian professional football player.

Both their claims, that they had not received a fair trial before the Court of Arbitration for Sport (CAS) in breach of art. 6 of the European Convention on Human Rights, were dismissed by the Court, which held that the CAS had acted fairly and independently.

However, the Court awarded moral damages of € 8,000 to Pechstein, who had requested a public hearing but was denied one. This, the Court held, was in breach of her human rights to a fair hearing.

On this point, the ECHR stated as follows:

The public nature of the judicial procedures is a fundamental principle of Article 6 § 1 of the European Convention on Human Rights; such principle is also applicable to non-State courts ruling on disciplinary and/or ethics matters. In the case of Claudia Pechstein, the CAS should have allowed a public hearing considering that the athlete had requested one and that there was no particular reason to deny it.”

Following this particular ruling by the Court, the CAS may well have to open its doors to the general public when hearing cases in the future.

To date, CAS hearings have been held in private and only the parties and their legal representatives and any witnesses have been present. This is in line with the general nature and attractiveness of arbitration proceedings, which are confidential. In fact, sports persons and bodies prefer not to “wash their dirty sports linen in public” but have their disputes settled “within the family of sport”. In other words, behind closed doors. This particular practice, it seems, will now have to change.

Addressing this specific issue in its Media Release on the Pechstein and Mutu cases, issued on 2 October 2018, the CAS commented as follows:

ICAS [the Governing Body of CAS] has already envisaged the possibility of having public hearings at its newer and much larger future premises at the Palais de Beaulieu in Lausanne.”

So, CAS is on the move to bigger headquarters, where it appears that it will have better facilities to accommodate any public hearings in future.

The issue now before the CAS is whether, under revised procedural rules (the Code of Sports-related Arbitration), it will be the norm to hold hearings in public in all cases; or whether CAS will only allow them on a case-by-case basis, that is, in those cases where the parties have expressly requested a public hearing.

This is a tough call for CAS, which is handling around 550 cases a year, and one, it might even be said, on which perhaps its very future may depend!

The Pechstein and Mutu ECHR cases were reviewed by Dr. Thilo Pachmann in his post of 3 October 2018 on the GSLTR website. Likewise, the full text of the CAS Media Release, headed “The ECHR recognises that CAS fulfils the requirements of independence and impartiality”, was posted on the website on the same date.

Once again, association football (soccer) has dominated the sporting legal and tax headlines during the past year.

According to the 2018 Deloitte Annual Review of Football Finance[1], the European football market is now worth a record £ 22 billion (€ 25.5 billion).

The 2018 Summer “transfer window” produced its usual crop of surprises. Cristiano Ronaldo moved from Real Madrid to Juventus in a £ 105 million transfer deal. Incidentally, he also faces a rape allegation, dating back to 2009, which he “firmly” denies.

In the English FA Premier League, the “transfer window” for the first time closed on 9 August (three weeks before the rest of Europe) and a total of £ 1.27 billion was spent! That figure was down from the record £ 1.4 billion spent in the 2017 Summer “transfer window” and the total number of transfers was also down from 384 in 2017 to 282 in 2018.

However, the world record fee for a goalkeeper was beaten not once, but twice. On 19 July 2018, Liverpool FC completed the deal for Brazilian national goalkeeper, Alisson Becker, for a then world record fee for a goalkeeper of £ 66.8 million, signing him from Italian club AS Roma. Some three weeks later, on the transfer deadline day, Chelsea broke the goalkeeper transfer record with the £ 71 million signing of Kepa Arrizabalaga from Athletic Bilbao. It is quite remarkable that the transfer record for a goalkeeper was broken twice in three weeks, considering that the record had stood since 3 July 2001, when Juventus paid € 53 million for Gianluigi Buffon from Parma Calcio 1913.

Some other English Clubs’ transfer highlights:

–  Wolverhampton Wanderers, with close links to Portuguese super-agent, Jorge Mendes, continued to add Portuguese players to its ranks, with the addition of goalkeeper Rui Patricio and midfielder Joao Moutinho. Additionally, the club beat its transfer record with the purchase at £ 18 million of Adama Traore from the championship club, Middlesbrough FC.

–  Liverpool FC spent over £ 170 million in its pursuit of closing the gap on Manchester City. In addition to the arrival of Alisson Becker, Liverpool also purchased midfielder Naby Keita from the German club RB Leipzig FC for £ 52.8 million; Brazilian midfielder Fabinho from AS Monaco FC for £ 40 million; and Swiss midfielder Xherdan Shaqiri from Stoke City FC for £ 13 million.

–  It was a quiet transfer window for Manchester United with only Brazilian midfielder Fred, signing from FC Shakhtar Donetsk for £ 43.7 million and defender Diogo Dalot from Porto FC for £ 19 million.

–  Tottenham Hotspur did not purchase a single player this summer.

 

Another surprise was the announcement Gianni Infantino, the President of FIFA, the world governing body of association football, made on 31 October 2018, that he would like to bring forward the expanded version of FIFA’s flagship tournament from the 2026 World Cup, to be jointly hosted by the United States, Canada and Mexico, to the 2022 edition of the event, to be hosted by Qatar.

Speaking at the AFC national football associations meeting in Kuala Lumpur, Malaysia, he gave details of this unexpected initiative in the following terms:

We have decided to increase the number of teams participating in the World Cup final tournaments from 32 to 48. It will happen in 2026. Will it happen in 2022? You know me. It is possible. It is possible. Why not?

FIFA are in discussions with the Qatar Supreme World Cup Organising Committee and also with other football authorities in the region. If it happens, this will mean that some of the games in 2022 will need to be played in Qatar’s neighbouring states, which, at the time of writing, are in a diplomatic and trade blockade “war”. An interesting political nut to crack!

Whilst on the subject of football, a brief mention should be made of “Brexit” – whose deadline of 29 March 2019 is fast approaching – and its possible effect on sport in the UK. Certainly affected would be football and the transfer of players from the remaining 27 members states of the EU, as the freedom of movement of workers, which include football players (decided in the famous Bosman case), would no longer apply in the UK. The immigration and work permit implications of player transfers from the EU are not yet clear and will depend upon the final overall deal on Brexit, if, in fact, one is forthcoming.

Such lack of detail and certainty is making contingency planning for UK football clubs and players for a post-Brexit future difficult, if not impossible.

There would be a post-Brexit impact on smaller clubs of the potential loss of accessing young EU players under the age of 18, as the exemptions under art. 19 of the FIFA Regulations on the Status and Transfer of Players (RSTP) would no longer apply in the UK. Thus, football clubs located in the UK will no longer be able to transfer young talented players between the ages of 16 and 18 from clubs affiliated to a national football association in the EU/EEA. Furthermore, international transfers of minors to a UK football club will only be possible in cases where the player’s parents move to the UK for reasons not linked to football or under the specific conditions laid down in art. 19.3.c of the RSTP.

Also, the entitlement to training compensation under art. 6.3 annexe 4 of the RSTP, in respect of players moving from one association to another inside the territory of the EU/EEA, could be affected by a “hard Brexit” as explained by Frans de Weger and Thibault Dochy, of BMDW Advocaten, Haarlem, The Netherlands, in their post of 14 October 2018 on the GSLTR website.

It may be added that, apart from the freedom of movement situation in relation to football, horseracing will also be affected in a similar way by Brexit, as it currently relies on the free movement of horses and their mounts. What would the effect be of a “hard Brexit”, therefore, on next year’s world-famous “Grand National” event, which is scheduled to take place on 6 April 2019, just a few days after the UK is due to leave the EU on 29 March 2019?

A brief mention should also be made of the outcome of the long-running battle of the “corporate titans” to takeover Sky, the European pay-TV group, by the US cable company Comcast, and the major American film studio Twentieth-Century Fox. In September 2018, Comcast outbid Twentieth-Century Fox in an unusual auction, demanded by the UK Takeover Panel, to acquire Sky for a US$ 40 billion price tag, thus defeating the ambitions of Rupert Murdoch to control Sky completely. And, on 9 October 2018, Comcast announced that it held almost 77% of Sky shares, thus making its takeover wholly unconditional. Comcast chairman and CEO, Brian L. Roberts, told the world’s media that:

Our combined global leadership in technology and content paves the way for us to accelerate investment and growth in Sky’s brand and premier platforms.

Perhaps the jewel in the Sky crown for Comcast is the ownership of the major TV rights to the English Premier League matches.

Finally, a couple of other sporting developments are worthy of a mention.

–  A new Sports Law Clinic has been launched in October 2018 in the Caribbean, with the aim of providing adequate legal representation to the plethora of talented but financially handicapped Caribbean athletes. At the same time, this new body is expected to contribute to the development of a “lex sportiva” in the region, which is very active in a variety of sports, not least cricket and athletics.

–  Also, a woman has been appointed to one of the top jobs in professional football. Susanna Dinnage, from the Discovery Media Organisation, is to be the new chief executive of the English Premier League and will take over at the beginning of next year and one of the matters that she will oversee, is the introduction to the League of VAR (Video Assistant Referee) during the following season, 2019-2020, after its successful introduction in the 2018 FIFA World Cup, which was deemed a success!

Turning now to the articles in this issue. On the sports legal side, we publish articles on a variety of topical subjects as follows: the latest jurisprudence of the FIFA Regulations on the Status and Transfer of Players on the fast track 12bis procedure; “buy-out” clauses in professional football transfer agreements in Spain; the legal challenges in doping posed by low concentrations of non-threshold substances found in athletes; risk exposure and management of professional sportspersons; Guernsey image rights registrations six years on; and power in negotiating sports rights and business deals.

Turning now to the sports tax side, we include some interesting articles on esports and taxation; the taxation of football referees; and possible tax opportunities in double tax treaties for Belgian sportspersons.

So, another year is drawing to an end and, as mentioned, has brought with it its own veritable crop of interesting and significant developments in sports law and sports-related tax law. No doubt, the new year will also be full of other challenging sports legal and tax issues, which will keep sports lawyers and sports tax advisers well and truly – metaphorically speaking – on their toes!

We would also mention that many of this year’s sports legal and tax developments have been covered on our dedicated website www.gsltr.com and also in our journal, which all goes to show the need for them. We hope, therefore, that existing subscribers will spread the word about GSLTR amongst their colleagues and contacts, to encourage new subscribers and thereby help us to increase our global footprint and continue to provide a must-have resource and service for the international sporting community and their legal and tax advisers.

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 www.gsltr.com. A number of you have already responded to this invitation, but, as they say, the more of you who do so, the merrier!

So, now read on and enjoy this information-packed December 2018 edition of GSLTR as we take this opportunity of wishing all our existing and new readers our sincere compliments of the season and also all the very best in their sporting endeavours in 2019!

 

Dr. Rijkele Betten (Managing Editor)

Prof. Dr. Ian S. Blackshaw (Consulting Editor)

 

December 2018

 

[1] See www2.deloitte.com/uk/en/pages/sports-business-group/articles/annual-review-of-football-finance.html (accessed 3 December 2018).