Mishcon Sports Law Academy Student Briefing

July 2017

1

CONTENTS

1. INTRODUCTION ........................................................................................................................ 2

2. MATCH-FIXING AND DOPING IN ESPORTS: THE NEED FOR REGULATION ..................................................................................................................................... 3

3. THE ‘MILKSHAKING’ PROBLEM ........................................................................................ 6

4. DENNY SOLOMONA’S CONTRACT ROW AND ITS FUTURE IMPLICATIONS ON THE RFL ................................................................................................... 9

5. THE CASE OF PECHSTEIN AND THE INDEPENDENCE OF CAS ....... 11

6. HMRC V RANGERS FC "THE BIG TAX CASE" .................................................... 14

7. FOOTBALL FAN CHANNELS: A LEGAL EPISODE? ........................................ 16

8. CLIENT BRIEFING ON THE LONDON STADIUM AND STATE AID IN EUROPEAN UNION LAW .............................................................................................. 19

9. RASENBALL SPORT LEIPZIG AND A 50+1 RULE ............................................ 22

10. THE COMMERCIAL AND LEGAL IMPLICATIONS OF A SECOND ENGLISH DOMESTIC TWENTY20 COMPETITION ............................................. 25

11. LEGAL IMPLICATIONS OF BREXIT FOR FOOTBALL ................................. 27

12. REVISITING THE CASE TO STRENGTHEN THE PREMIER LEAGUE'S HOME GROWN PLAYER RULE IN A POST-BREXIT SCENARIO .............. 31

2

1. INTRODUCTION

At Mishcon de Reya we have a dedicated team of sports lawyers who are passionate about the business of sport. We believe it is important to share our knowledge and experience with future generations of lawyers and therefore we established the Mishcon Sports Law Academy.

Now in its fourth season, the Academy has gone from strength to strength. Through a series of evening seminars, students learn from lawyers in the Mishcon Sports Group about sporting disputes, employment and immigration, commercial negotiations, corporate transactions and sports integrity issues. The students are encouraged to engage with the legal, commercial and practical approaches to the various disciplines through real-life case studies and group discussion.

Each year the students are invited to prepare a briefing on a legal issue in sport. The 2016/17 cohort submitted articles on a wide range of topics. To recognise their efforts we have pulled together a selection of the best briefings which we hope will be of interest to you.

Liz Ellen Partner, Head of Sport Mishcon de Reya LLP liz.ellen@mishcon.com +44 20 3321 7456

The Mishcon Sports Law Academy is part of the firm's graduate recruitment process. It is open to aspiring lawyers who are able to attend a series of evening seminars in London.

Please see www.mishcongraduates.com for more information or to apply.

3

2. MATCH-FIXING AND DOPING IN ESPORTS: THE NEED FOR REGULATION

Edmund Irvine-Fortescue

Though it is often acknowledged to be a nascent industry, the rapid growth of eSports cannot be ignored and is already attracting crowds in excess of 40,000 people to major tournaments, with projections for 2019 estimate that eSports will reach a global audience of 420 million people and generate over a billion dollars in direct revenue. If this rate of expansion continues, many expect it to soon become one of the world’s top sports.

What are eSports?

ESports entail individuals or teams playing computer games competitively. It is a unique field in that not only are games played virtually, but unlike other sports in which participants compete in individual disciplines and in associated leagues, eSports competitors can partake in numerous leagues and games organised by multiple game developers. Whilst there is overlap between the leagues, their publishers and their promoters, there is also a lack of collaboration between them. As a result of their independence, eSports does not have a generalised set of rules but rather a general etiquette to match play and competition-specific regulations.

There is much debate surrounding eSports’ classification as a ‘sport’ but as the industry has continued to develop and gain popularity, it has also displayed characteristics akin to those of major sporting competitions and has become affiliated with sporting brands. Both in parts of America and across Asia it has become a spectator sport. Streaming online, live television broadcasting and sponsorship generate extensive revenue and the potential for brand advertisement within eSports is being increasingly capitalised upon by both game-oriented and sporting organisations. For example, both Manchester City F.C and West Ham United F.C employ professional gamers to represent them on an international virtual stage, as do the French football club Paris St-Germain who have created an eSports team to compete in both football focused and non-sporting games. Additionally, P1-A visas, officially designated to ‘internationally recognised athletes’ have been issued to professional eSports players travelling abroad. There is much evidence, therefore, to categorise eSports as a ‘sport’; for this reason, this paper shall acknowledge it as a sport also.

As with many sports however, corruption and doping pose major threats to the legitimacy of this field. Several recent attempts to fix matches highlight the prevalence of corruption within eSports and emphasise the need for overarching governance in a so far inadequately regulated industry. Should eSports continue to be classified as a ‘sport’, these legal issues will therefore become sports oriented. If there is any hope for eSports to develop further, the necessary sporting regulations and governing bodies must be established.

The appeal of doping and match-fixing

Whilst the financial returns of the eSports industry are growing, the mediocre size of prize pools in many competitions combined with relatively short player careers have given rise to match-fixing at all levels in eSports. The average wagers of events are far larger than official competition earnings and consequently, even the most respected competitors have

4

become involved in unregulated eSports betting markets. This occurs both on individual and team levels and fines and bans have been allocated in several instances. Players and teams have been caught betting against themselves, collaborating with their opponents to split prize money and deliberately throwing matches. In the past year alone, an industry-renowned teenage player received a lifetime ban for losing two matches in return for a fee seven times the amount of the first-place earnings and more than twenty players received permanent bans for match-fixing and illegal betting.

Unlike other sports, doping in eSports involves hacking an opponent’s software to gain a technological advantage or using performance enhancing drugs, such as Adderall and prescription ADHD medication, to maintain concentration and boost cognitive function. The latter form is especially widespread in eSports circles and, with the exception of one organisation’s efforts, is not addressed. The Electronic Sports League (ESL) acknowledge the unfair advantage performance enhancing drugs give players and have started to implement random drug tests accordingly. They also work alongside the Esports Integrity Coalition (ESIC) to introduce an anti-doping policy. Many eSports participants have been banned or have received sanctions due to doping but, given that numerous players recently admitted to having used Adderall, efforts so far have clearly been ineffective.

What is being done and why does the issue remain?

Tournament organisers and game publishers have reacted strongly to uncovered instances of corruption and doping in eSports. Bans and fines are issued and, in some extreme cases, individuals have been imprisoned for their actions. Furthermore, eSports regulatory organisations have developed anti-corruption and anti-doping programmes aiming to educate players and have also attempted to establish player councils. The World eSports Association (WeSA), for example, developed a court of arbitration and an executive players council in 2016.

These measures, however, have not made extensive progress within the sport for several reasons. Firstly, bans set in place by one publisher do not prevent eSports players from participating in other publisher’s leagues and games. Additionally, whilst the eSports ‘governing bodies’ all aim for some degree of player protection, league regulation, fraud prevention and integrity within the sport, they all act independently and have different members. Consequently, when teams within one body, such as WeSA, compete against teams associated with another, confusion arises over whether the competition regulations laid down by one organisation apply to both teams or just their own. The lack of collaboration between overseers such as WeSA, ESIC, the British Esports Association (BEA) and France Esports (FES) also directly effects integrity and fraud within eSports. A parallel can be drawn between the current state of eSports and that of international tennis in 2008. Following a significant gambling scandal within tennis, groups such as the Association of Tennis Professionals (ATP) and the Women’s Tennis Association (WTA) established the Tennis Integrity Unit (TIU) to act as an overarching anti-corruption body. A combined regulatory body within esports would be able to monitor betting patterns across the sport, standardise doping, gambling and player protection laws and diminish inter-league uncertainty.

5

Conclusion

If eSports is to continue to be recognised as a ‘sport’ and to fully achieve its global potential, overarching rather than arguably competing regulatory bodies must be established. Only in this manner will competitors and organisers fully acknowledge laws to be more than guidelines. Though eSports provides heightened scope for corruption due to its potential for in-game virtual betting as well as external gambling, integrity can be achieved through appropriate policies and player education. The industry needs to create both game-specific and general regulations in order to ensure appropriate match-play, sufficient player protection and minimal corruption.

6

3. THE ‘MILKSHAKING’ PROBLEM

Dannielle Jones

Background

Professional athletes’ use of illegal performance enhancing drugs (PEDs) is a pertinent issue in sport today. With the Russian athletes doping scandal making the headlines of 2016, their ban from the 2017 World Athletics Championships highlights the value of clean, ethical sporting competition. However, a sport that has stayed comparatively out of the limelight concerning issues of illegal PEDs is horse racing. The administration of performance enhancing drugs to equines is an issue to the sport; yet perhaps not receiving deserved media attention.

This is of great interest, especially when we consider that sport as an industry has the economic value of approximately £20 billion in the UK, with horse racing contributing £1.1 billion. Further, racing is the second best attended sport in Britain, after football, and enables a lucrative betting industry.

Introducing ‘milkshaking’

‘Milkshaking’ is fundamentally illegal doping of equines. It is the administration of alkalising agents to horses in order to improve their performance. By using a ‘milkshake’ the lactic acid produced by the horse whilst running is neutralised, therefore preventing muscle fatigue and improving performance. It is the same idea as bicarbonate loading, which athletes in short-duration, high intensity sports use. Interestingly, the World Anti-Doping Association does not specifically ban bicarbonate loading for use by human athletes. However, the British Horse Racing Association (BHA) has deemed use of ‘milkshakes’ as inherently anti-competitive.

The BHA first successfully prosecuted use of ‘milkshakes’ in 2009, showing that it is a relatively new issue.

British Horse Racing Association’s stance

Equine welfare is a top priority to the BHA, demonstrated in their campaign ‘The Horse Comes First.’ They have a zero tolerance policy to doping. Section 2.5.1 of the Equine Anti-Doping Rule Violations states that administration by any person to a horse of any prohibited substance is prohibited at all times. Similar to UK Anti-Doping, BHA has extensive regulations on the prohibition of performance enhancing drugs. There are penalties for failing to file horses’ whereabouts (2.8.1) and for missed tests (2.8.2).

Schedule 1 outlines the prohibited list. ‘Milkshaking’ is banned under Section 11 ‘Alkanisation.’ Further, part 4 to 27 of the General Manual states that it is an offence to administer a prohibited substance to a horse with the intention of affecting its racing performance.

However, ‘milkshaking’ is particularly difficult to identify. It will be administered approximately four hours before the race and will not be traceable once the race is completed.

7

Further, one of the more concerning findings of ‘milkshaking’ is its ability to mask the presence of other PEDs. This highlights the need to maintain funding for research into testing. It must be noted that the BHA have been largely successful in deterring use of PEDs in the sport so far.

Case study

A disciplinary panel case in 2012 heard of licensed trainer, James Boyle, administering a ‘milkshake’ to horse, ‘New Den,’ to improve the horse’s performance in Lingfield. New Den was required to give a sample on the day of the race, which was found to have the prohibited ‘milkshake’ substances in. This was in breach of Rule C(50) that a sample must not contain a prohibited substance. Boyle was fined £3,500 and restricted from entering races for 2 months.

This case highlights another difficult implication of investigations surrounding illegal use of equine PEDs: The involvement of many parties. ‘New Den’ was owned in partnership, which included the breeder. The vet, Mike Byers, had prescribed a ‘remedy for cramps and stiffness’ earlier in the week, which was then administered by the head stable lass in the morning. Then, the rider rode New Den in the race. Whilst all but Boyle escaped liability due presumably to their lack of knowledge about the situation, this highlights how difficult the investigation can be without an answering equine! Further it shows the many possible liabilities. We can also see how many high value claims of damages could arise after such an issue.

Implications on the betting industry

Whilst previous cases of ‘milkshaking’ have not involved bettor knowledge, illegal betting, race fixing and illegal doping could work hand in hand, with trainers providing knowledge to bettors on when they intend to dope equines. Unfairly informed betting would hugely cost the betting industry, a large industry in the UK with punters spending an estimated £10 billion annually.

This year it was announced by the Government that the future Levy to be charged from April 2017 is 10% on all betting operators’ gross profits on British racing. This will ensure that gambling enterprises that take bets from British consumers will have to pay 10% of their gross profits to support the equine industry.

In the interest of clean betting, which is of priority to both the betting industry and the BHA, it would perhaps be of interest to invest some of this money into further anti-doping research.

Ethical issues

‘Milkshaking’ also poses some ethical issues surrounding cruelty to animals. To administer the ‘milkshake’ requires a process called tubing. This is when a tube is inserted into the horse’s nose and runs into its’ stomach. Whilst supposedly this does not cause pain to the horse, it is interesting to consider it alongside The Animal Welfare Act 2006, which makes it an offence to cause unnecessary suffering to an animal (Section 4.1). Further, The Riding Establishments Act 1970, Section 2(5), states that horses being kept, as part of an equine establishment, will be adequately supplied with suitable food. Again there’s a question surrounding the suitability of ‘milkshakes.’

8

Future implications

‘Milkshaking’ could merely be seen as bicarbonate loading and perhaps far from amongst the most concerning of offences, especially in comparison to the use of steroids in the sporting industry more widely. However, is ‘milkshaking’ a steppingstone to more serious doping violations?

The BHA has adopted a strict approach to keeping the sport clean, implementing a zero tolerance to anabolic steroids policy in 2015. However, this perhaps demonstrates BHA forecasting an increase in the use and range of PEDs in horse racing.

9

4. DENNY SOLOMONA’S CONTRACT ROW AND ITS FUTURE IMPLICATIONS ON THE RFL

Alec Dufraisse

Introduction

In December of 2016, rugby league star Denny Solomona decided to walk out on the remaining two years of his contract with the Castleford Tigers, switching codes to join rugby union outfit Sale Sharks. The Auckland-born winger was able to do so by initially announcing his retirement from the game and then joining Sale until 2018, effectively utilizing a loophole in his contract. Castleford have now initiated legal proceedings against Solomona, his agent, and Sale in the hope of receiving compensation for damages as well as preventing such walkouts from occurring in the future.

Background

Rugby players switching codes is by no means a new phenomenon: it happens every season with stars from the thirteen-man sport chasing lucrative deals and more international recognition in rugby union. Solomona’s case, however, is different: the fact that he announced his ‘retirement’ from the game to sever his contract with Castleford and switch codes may open the door to other players following in his footsteps depleting the RFL from its main source of talent and revenue. After scrum-half Chris Sandow also walked out of his contract at Warrington to return to Australia this year, there have been increased concerns over the enforceability of contract in the Super League and thus, the RFL has committed its full support to Castleford in this case. Now more than ever, the RFL has a vested interest both from a sporting and financial perspective to ensure that its brightest talents do not defect in mass.

Legal issues

The main problem faced by the complainants at this point is that in announcing his retirement from the sport, the defendant has utilized a legal loophole under which Castleford may not enforce his contractual obligation. To compound this issue further, there is no overarching governing body, capable of dealing with this case, closing the existing loophole between both sports. Though both parties may refer this issue to the Court of Arbitration of Sport, one could imagine that the future volume of cases would be better dealt with internally, by a body that understands the nature of Rugby, much like FIFA in the case of footballing disputes. Though there would be challenges in terms of the logistics and legitimacy of such a body, it is undeniable that it would help protect the integrity of the sport, and ensure that ‘code hopping’ was done legitimately

For the moment, the case has been adjourned and it is believed that both parties will seek to settle this outside of court. Castleford are thought to be asking £500,000 in damages including exemplary damages, against Sale Sharks and his agent Andy Clark for "inducing" him to breach his contract. The fee is similar to that involved with Sam Burgess’ move from the NRL to Bath Rugby club, as compensation for ending his contract early. This however may not be wholly beneficial to the RFL: a court ruling would set precedence for future cases of this nature, resolving this issue going forward. It would therefore not be surprising to see the RFL step up its involvement in the case especially from a financial perspective.

10

Conclusion

In announcing his retirement from rugby league, star winger Denny Solomona did more than just walkout of his contract with the Castleford Tigers: he opened up a loophole which may lead to further talent, integral to the sport, leaving for better deals in rugby union. This case has highlighted certain underlying tensions in the rivalry between both codes, which will have to be addressed in order to avoid future legal disputes.

Though both parties may resolve this issue outside of court, it is clear that Castleford, the RFL and the Super League will seek to gain more than just damages for losing their star player but to protect “the integrity of all sports including rugby union clubs” as “all contracts are sacrosanct in professional and amateur sports” as stated by the Tigers’ chief executive Steve Gill.

11

5. THE CASE OF PECHSTEIN AND THE INDEPENDENCE OF CAS

Jacob Tidy

Background

On the eve of the International Skating Union (ISU) Allround World Speed Skating Championships in Norway 2009, a blood sample taken from Claudia Pechstein showed an abnormal increase in reticulocytes (immature red blood cells) when compared with her biological passport, a blood profile compiled from previous test samples. This was suggestive of potential blood doping and consequently Pechstein was found guilty of doping and handed a two-year ban by the ISU; Pechstein was the first athlete to be banned based solely on her blood values having never tested positive. The legal journey so far has thrown up a number of issues to do with sport and the law, most notably the suitability of the Court of Arbitration for Sport (CAS) and its independence.

The long road to redemption

Pechstein has since returned from her ban and has added to her already impressive collection of medals at international competitions. Despite this, Pechstein has always sought to clear her name and revive her reputation as a clean athlete. This has led her down a long and seemingly never ending path of court rulings and new appeals. After the initial ban by the ISU, Pechstein appealed to CAS but this was dismissed on the grounds that doping was the only possible explanation for her blood values. In general, CAS is seen as the ultimate arbitrator for sport and decisions are not usually challenged, however appeals can be made to the Swiss Federal Tribunal (SFT). Pechstein appealed twice to the SFT and both were dismissed, despite providing a possible explanation for the abnormal reticulocyte levels.

In any normal situation this would be the end. However, Pechstein was not willing to stop there and proceeded to take her case through the national courts in her home country of Germany. Pechstein began the journey through the national courts at the Local German Regional Court in Munich (Landesgericht) whilst also issuing a complaint to the European Court for Human Rights (ECtHR). The Landesgericht held that it was seized of jurisdiction and that the arbitration agreement was in breach of article 6 of the European Convention on Human Rights. However, the principle of res judicata meant that the CAS award was enforceable, despite its apparent illegitimacy.

Next, Pechstein appealed to Higher regional court of Munich (Oberlandesgericht), which overturned the decision as they found that the arbitration clause in Pechstein’s contract with the ISU violated German anti-trust law (abuse of dominance) due to the inability of CAS to guarantee the independence of the panel of arbitrators and consequently ruled the CAS award as invalid.

However, the most recent decision to come out of this saga came from the German Federal Court of Justice (Bundesgerichtshof/BGH), the highest civil and criminal court in Germany. The BGH reversed the previous decision, noting that despite the apparent dominant position of sport governing bodies and their prominence inside CAS, CAS is still a wholly neutral and independent body. The court pointed out the advantages and necessity of having a quick and uniform justice system for sport and at the same time a

12

number of reasons as to why CAS is truly independent. The next step for Pechstein will be to take her case to the German Constitutional Court (Bundesfervassungsgericht) and also continue to await the decision from the ECtHR.

Is CAS truly independent?

Any athlete who is unhappy with a decision they have received from CAS, are free to challenge this decision in the SFT. This is an argument that is used to show the independence of CAS, because any decision they make can be challenged in a national court. Despite this, many believe that the SFT are not only reluctant to overturn any decision, but openly indicate their benevolent attitude towards CAS by adopting a very narrow approach to challenges under Swiss law. Until 2012, the court had never rendered a decision overturned and thus, as the BGH argued that the access to the SFT suggests that legal remedy is not completely limited by the arbitration clause. It is possible that this is just used as a paper tiger to discourage further scrutiny.

Many athlete’s unions and academics have been outspoken about the failings of CAS (UNI, FIFpro), they believe CAS is inexperienced and lacks expertise in dealing with human rights and this is unfair as current sport’s regulations deny access to traditional courts in favour of this. FIFpro most notably have been actively involved in the Pechstein saga. They helped to fund the ongoing battle and issued a statement about how there are many stakeholders waiting in wings, ultimately hoping for success, believing that the decision by the OLG highlighted a number of issues to do with the impartiality and independence of CAS. They also believe that the structure and process provided for footballers, and other athletes is inherently unfair and is weighed in favour of the governing bodies.

To further improve the independence of CAS, the International Council of Arbitration for Sport (ICAS) was set up to appoint arbitrators to the CAS closed list. This was the most important issue raised by the OLG and it certainly is a convincing one for a number of reasons. Ultimately, ICAS decides on the most significant issues regarding the institutional matters of CAS and therefore the independence of ICAS is incredibly important with regards to the decisions made by CAS. The current make up of ICAS is institutionally biased towards SGBs, with effectively 12 chosen by SGBs or International Sports Federations. The remaining 8 members are then chosen by the first 12, which does not leave any room for potential input from the athletes themselves. A rebuttal of this is that there is a shared interest between the organisations involved and the athletes in the fight against doping. However, if you compared this to the criminal justice system this would seem absurd. On the other hand, a case of sui generis could be argued as sport is different from any other situation and therefore the law needs to reflect this.

Conclusion and steps for the future

An international system is needed for to provide uniform standards and speedy decisions due to the nature of sport. As well as this, many courts are reluctant to delve into the issue of sports law as they lack the relevant expertise. Both CAS and ICAS can be seen as a necessary evil in order for the smooth functioning of the global sporting world. However, this does not mean that we shouldn’t always strive to improve and, to its credit, ICAS have understood and realised this. Following on from the ongoing Pechstein

13

saga, ICAS have heeded the concerns of the OLG and others and have since reached out to the global commissions representing athletes, requesting their input on how to reform and further ensure the independence of CAS.

One potential change for improvement could be done by altering the make-up of ICAS. By limiting the number of representatives chosen by SGB’s and having an input from athlete’s unions/athletes themselves. This will help to ensure that a balance in power between SGBs and athletes. Additionally, just because someone is appointed by an SGB, does not mean that they are biased. However, to further safeguard against this, new rules or procedures can be introduced to further cement the impartiality of those selected.

Finally, it will be interesting to see the outcome of future decisions expected from the Bundesfervassungsgericht and the ECtHR where hopefully a final decision will be reached that will help to reform ICAS/CAS and at the same time allow for these bodies to continue functioning as the global sports arbiter that is needed.

14

6. HMRC V RANGERS FC "THE BIG TAX CASE"

Alisha Phillips

In March 2017, the UK Supreme Court will hear a test case between the tax authority, HMRC, and Rangers FC liquidators, relating to the use and abuse of Employment Benefit Trust Loans (EBT). This could see Rangers FC, and potentially others clubs, left with a £48 million bill to be paid to HMRC for non-payment of tax between 2001- 2010. If Rangers FC are unsuccessful there will be strong calls for the 14 trophies they won during this timeframe to be expunged from the history books. This so-called “financial doping” may have assisted in attracting the services of high profile players; which in turn tarnished the already-damaged image of football clubs and brings into question the sport's integrity.

Background

EBTs (a mechanism alleged to give players and staff a higher percentage of their gross salary) rose to prominence in late 1990s when the popularity of foreign players was increasing. EBTs can allow up to 50% of wages to be hidden in an interest free loan; which would then be paid by the trust fund to the player, enabling tax and national insurance tax not to be collected, and the loan being left outstanding. The controversial use of such an operation is difficult to establish as EBTs are kept confidential and out of the public eye.

If Rangers FC had not lied, misled and withheld information in 2004 when the investigation was first started by HMRC, the club would have been left with a bill of around £12m and not the eye-watering numbers suggested now. Additionally, Rangers FC liquidation in October 2012 could have been handled better with less impact on the club’s reputation and position in the Scottish league.

Rangers FC were successful in both the 2012 and 2014 tribunals against HMRC; however, the discussion was reversed at a Court of Session Appeal. Lord Drummond Young stated it was “common sense” that the payments were work related and therefore the funds need to be considered as earnings. Furthermore, had the EBTs not being in operation it would be reasonable to believe that players would have provided their services elsewhere and not at Rangers FC.

The Supreme Court

A judgement in favour of Rangers FC would see the Club escape bankruptcy and future investigation by the tax authority. Consequently the targets will now become the players, past and present, who under new legislation currently being drafted with the aim of being in place by 2019 will be left liable.

The legal and practical implications for players would be colossal; Rangers FC players currently under contract could arguably use any opportunity to seek a move away to another club, whereas retired players would potentially face financial ruin with bankruptcy being a real and serious consequence. This may be construed as harsh, however this course of action would fit into the already established structure of the HMRC who like to make examples of individuals who do not play by the rules. A feasible option for these players could be to commence legal action against previous

15

agents and accountants for negligence, if they can prove they relied on their professional knowledge when entering into such EBTs.

If the Supreme Court rule in favour of the HMRC it could be the catalyst to cripple players and clubs in one fell swoop. There will be no upper limit the HMRC can seek and undoubtedly it will demand non-payments and additional funds for interest and penalties. The final nail in the coffin could see the HMRC hit Rangers FC and players with accelerated payment notices (APN) giving them only 90 days to contest the outcome or pay the outstanding bill.

Wider implications

It is already reported that other Premier League and Championship clubs have sought legal advice on their position with EBTs. An outcome in favour of the HMRC could see these clubs being pursued for unpaid income tax and national insurance. Moreover, this outcome could set precedent for other sports, e.g. Rugby League and Rugby Union, that potential have similar schemes in place to help circumvent the salary cap system implemented by the Rugby Football Union and Rugby Football League. Arguably football could survive such financial and reputation damage, however, rugby collectively is still not in the same financial universe as some of the Premier League teams on their own.

Regardless of the outcome of the case in the Supreme Court it is inevitable, given the media coverage of this test case and proposed future legislation in 2019, the law will eventually catch up with those involved. In order to protect the image of the club and players an early settlement would be advisable, as some clubs have already sought. Although, it must be stressed that the HMRC will not cut any deals and will not settle for less tax from EBTs than would if they took it to court.

Conclusion

For a case that has stretched for over 13 years there still seems to be no immediate end in sight. Those involved, directly and indirectly, will anxiously be waiting for the outcome of the test case that could potential set an important precedent in the UK’s sports law. However, fair or unfair the outcome of the case might be on clubs and individuals, it is crucial to remember an important moral principle of sport- integrity, and the responsibility of those involved in sport to uphold it and provide a level playing field for all.

16

7. FOOTBALL FAN CHANNELS: A LEGAL EPISODE?

Jordan Rinsler

Introduction

“You’re nothing, you’re a fool, you’re a waste of time!”

“Fella, don’t talk about spend. Talk about net spend.”

“IT’S TIME TO GO!”

You might be forgiven for dismissing these as merely the angry rants of a football fan at the pub, consoling themselves after another defeat and calling for the manager’s sacking. You wouldn’t be entirely wrong.

These quotes are actually taken from football fan channels that have sprung up across social media and taken the online football fan world by storm. The Redmen TV (Liverpool FC) have over 154,000 subscribers on YouTube, FullTimeDEVILS (Manchester United FC) have over 336,000 and most infamous of all ArsenalFanTV (Arsenal FC) have over 413,000. That Gary Neville referred to ArsenalFanTV during some post-match analysis on Sky Sports in February, demonstrates the degree of outreach that fan channels have had, seeping into online popular culture and the elite echelons of professional football alike.

Yet as these fan channels grow, what are the potential civil legal implications?

Copyright issues

Whilst the majority of football fan channels’ content is made up of interviews with fans outside the stadium, they have produced the odd video from within stadiums to promote the atmosphere. But with a real emphasis on continued growth and innovation, there is a danger that these channels could divert to distributing clips of match highlights seconds after they happen. Their main social media platforms including YouTube, Twitter, Facebook and Snapchat would certainly facilitate this.

However, there is huge potential for this to be in breach of copyright laws. In English Cricket Board (ECB) and Sky UK Limited v Tixdaq Limited and Fanatix Limited (2016), it was held that an app which allowed users to post 8-second clips of live cricket matches infringed copyright. The legal arguments centred around two main points:

1. Can it be argued that apps are capable of broadcasting a “substantial part” of matches?; and

2. If so, did this harm Fanatix’s wider defence of “fair dealing” under s. 30(1) of the Copyright, Designs and Patents Act 1988?

Summating, the High Court held whilst users could only post 8-second clips and thus were not able to broadcast a quantitatively “substantial part” of the game, the fact that they were able to broadcast key moments such as wickets and sixes meant that the app allowed users to distribute qualitatively “substantial parts” of matches. Therefore, Fanatix were in breach of copyright law. Additionally, it was held that the app’s primary aim of video

17

clip distribution was for commercial purposes rather than for journalistic motives.

Both of these points would very much apply to football fan channels as:

1. Should fan channels progress towards releasing match highlights, the likelihood is that they would be releasing videos of goals, whether from open play or from set-pieces. This would fall under the category of ‘qualitative substantial parts’ and would mean that fan channels were breaching copyright law; and

2. Whilst they might argue that releasing clips was aimed at breaking news to fans on social media, in reality that incentivised enormous commercial gain. Today, self-styled ‘YouTubers’ earn money based on viewing numbers, with the more successful ones make a living from it. There is every chance that fan channels might consider releasing live highlights, knowing that this brand new feature would increase their viewing numbers and subsequently, increase their income. Clearly, this could not be defended as a “fair dealing” and would also breach copyright.

Defamation

Deliberately exposing the public to misinformation (‘fake news’) has had considerable recent media coverage. Not least in the football fan community has this been exploited, with social media voicing pure myths as the truth. Football fan channels can be a hotbed for such activity.

Many fan channels claim that their primary aim is to give ordinary fans a voice and allow them to give their opinions on the state of their club, no matter how outlandish these might be. Could this ardent defence of freedom of speech come at a price, with just a single unsavoury and explicit interview leading to a case of defamation being raised in the courts? Does this sound far-fetched?

Fan channels and their broadcast platforms are far less regulated in terms of video content compared with traditional media sources. Is it right then that supporters can appear on fan channels, explicitly berate individual players and almost certainly get away with it? To outdo them, might other supporters then be more shocking, potentially pushing such scenarios into the realm of libel?

Monroe v Hopkins (2017), demonstrates that unacceptable social media output can be controlled by the requirement in s. 1(1) of the Defamation Act 2013, namely: that the statement is “likely to cause serious harm to the reputation of the claimant.” Through their use of Twitter, YouTube and alike, fan channels can air defamatory opinions to a vast audience and subsequently may be found responsible for causing serious reputational harm to its targets. By promoting raw emotion and encouraging uncensored anger, fan channels may expose themselves to being challenged in the courts for defamation.

Is suggesting fan channels having the influence to cause such reputational damage exaggerated? Given the influence that ArsenalFanTV has had on vociferous ‘Wenger Out’ protests, perhaps Arsène Wenger’s legal team may feel by now having defamed their client, they must surely seek to remedy this in the courts.

18

Conclusion

Whether ultimately civil law bites is predicated on just how much fan channels can grow. Perhaps, say within a year, the novelty could have worn off with fan channels suffering from declining viewing figures. Alternatively, they might continue to develop, using tactics such as broadcasting live match day highlights and more shocking interviews to promote themselves. If that transpires; that this will test the law will be inevitable and compelling.

19

8. CLIENT BRIEFING ON THE LONDON STADIUM AND STATE AID IN EUROPEAN UNION LAW

Lewis Whiteoak

Introduction

Recent developments in European sports law have demonstrated the increased importance of the case-by-case interpretation of EU competition laws surrounding State aid provisions. Cases regarding European football clubs have seen the European Commission appear to cater – to varying degrees – for sport’s specific role in society (TFEU Art. 165). Mishcon de Reya’s sport clients considering relocation or facing financial problems, such as Tottenham Hotspur and Leyton Orient, are advised to review recent cases, see the likelihood of a favourable decision, and see how to be proactive in informing authorities of any State assistance.

Background – the London Stadium

The London Olympic Stadium has been leased to West Ham United for 99 years on grounds that it needed a long-term tenant to sustain regular usage at a higher seating capacity. The stadium cost £700 million to develop, yet West Ham will pay only £2.5 million per season in rent, plus a £15 million contribution to the £272-325 million conversion into a football stadium. The remaining £257 million is being debited to a joint venture between the developers and Newham Council. This has sparked concerns of investigation by the European Commission into the existence of and lawfulness of State aid. Should it be decided that West Ham stand to gain a competitive advantage through these resources; this would be seen to distort the market and therefore violate Articles 107 and 108 of the TFEU. The case is yet to be formally brought to The Commission, but can be compared to the following recent decisions.

Spanish state aid (2016) (reference case)

An ongoing investigation assessed the lawfulness under Article. 108 of the TFEU, of State aid in the form of reduced corporate tax granted to Spanish football clubs. In 1999, Real Madrid, Barcelona, Osasuna, Atlético Bilbao were exempt from converting to sport limited companies (which are taxed at 30%), and remained non-profit organisations (taxed at a reduced rate of 25%). The clubs qualified as undertakings under EU law, meaning organisations that exert an economic effect, and were therefore ruled to benefit from a “selective advantage” through State aid in 2016. They had potential to distort competition and trade since revenues in football are linked to competitive performance for clubs, and these clubs were key international and domestic players. Therefore, the Spanish State had acted unlawfully and was ordered to end the privilege scheme to the clubs and recover the differences in taxes for the previous 16 years.

Dutch state aid (2016) (reference case)

The same day, The Commission posted a decision on a case concerning State aid received by Dutch side PSV, also questioning its potential to distort market conditions under Article 108. The aid was granted following liquidity issues for PSV, through a financial transaction whereby the municipality of Eindhoven purchased the land under PSV’s stadium and leased it back to the club over a 40-year period. The preliminary decision found this as

20

another example of selective advantage, yet was overturned since Eindhoven acted in a way that a market investor in a comparable position would have reasonably done to make a profit, known as the market economy investor principle. Eindhoven paid €48.38 million; €7.22 million above the independent valuation of the land, which would suggest an unjustified financial aid. However, they were deemed to have purchased a long-term fully-leased asset with a steady income. This is because the club agreed to pay Eindhoven rent that accounted for future inflation, alterative use of the land (such as apartment buildings), and a risk premium of 1.5%; making this a commercially logical move for the municipality and therefore not State aid. It should be noted that four other Dutch clubs were found to have benefitted from State aid, yet it was considered a lawful part of a restructuring plan to save them from financial difficulty.

Implications for West Ham United and clients

Given the financial figures, State aid seems to give a clear and unfair advantage to West Ham over its Premier League competitors. This is particularly true when compared with news that rival London clubs such as client Tottenham Hotspur and Chelsea FC are planning £750 million stadiums in the capital, who were bidding contenders for the Olympic Stadium. However, claims brought forward by Charlton Athletic Supporter’s Trust have initially been dismissed by the European Commission who have suggest that financial assistance did not constitute uncompetitive State aid as the stadium is technically a multipurpose arena fit for athletics, rugby and concerts, despite disproportionately benefitting West Ham United.

Overall, The Commission has positively ruled 15 from 21 cases as complying with the internal market and therefore lawful, notably those involving sporting infrastructure. This seems to grant the State and football club clients room to manoeuvre, with The Commission seemingly more in favour of State aid that has a tangible benefit to the local community, since it is labelled ‘State responsibility’ to develop local infrastructure. Despite the likelihood of a positive ruling, clients are advised to notify The Commission of any proposed grants or financial aid for sporting infrastructure to avoid unwelcomed and costly investigation.

References

Burt, J. (2017). Tottenham give taster of new stadium... with its own micro-brewery. The Telegraph: Retrieved 11 March 2017, from http://www.telegraph.co.uk/football/2017/01/20/tottenham-give-taster-new-stadium-micro-brewery/

Commission Decision on the measure implemented by the Netherlands with regard to the professional football club PSV Eindhoven: SA.41613 - 2015/C (ex SA.33584 - 2013/C (ex 2011/NN)) (European Commission 2016).

Commission Decision on the State aid implemented by Spain for certain football clubs: SA.29769 (2013/C) (ex 2013/NN) (European Commission 2016).

Concession Agreement - E20 Stadium LLP and West Ham United Football Club Ltd. (2013). Queenelizabetholympicpark.co.uk. Allen & Overy LLP: Retrieved 10 March 2017, from

21

http://www.queenelizabetholympicpark.co.uk/-/media/qeop/files/public/concession-agreement-2016.ashx?la=en

Consolidated Version of the Treaty of Functioning for the European Union: (2012). Official Journal of The European Union, 326/88-326-93. Retrieved from http://eur-lex.europa.eu/resource.html?uri=cellar:2bf140bf-a3f8-4ab2-b506-fd71826e6da6.0023.02/DOC_2&format=PDF

London Stadium: Sadiq Khan orders investigation over rising costs. (2016): BBC Sport. Retrieved 10 March 2017, from http://www.bbc.co.uk/sport/football/37842354

Whetstone, S. (2015): Olympic Stadium State Aid & European Commission question revisited. Westhamtillidie.com. Retrieved 10 March 2017, from https://www.westhamtillidie.com/posts/2016/04/24/olympic-stadium-state-aid-european-commission-question-revisited

Whetstone, S. (2016): What Brexit means to West Ham. Claretandhugh.info. Retrieved 10 March 2017, from http://www.claretandhugh.info/what-brexit-means-to-west-ham/

22

9. RASENBALL SPORT LEIPZIG AND A 50+1 RULE

Lukasz Chmielewski

Introduction

In the spring of 2016 the German Bundesliga was joined by the fearless club from Leipzig. In the club’s short 8 years history it had an opportunity to celebrate 4 promotions, including the most important one to the 1st division of German football. However, behind the doors of the club’s recent success, there is a growing concern over its governance and avoidance of the main rule in domestic football.

In order to compete in Bundesliga, the clubs must hold a majority of its own voting rights. The clubs are usually governed by member-controlled parent associations where a club board is made up of delegates selected by the clubs’ shareholders. Rule 16.2 of the Charter of the German Football Association states that: “The club holds a majority interest in the company […] if it possesses more than 50% of voting shares plus one additional vote in the shareholders assembly”.

What it means in practical terms is that although the clubs are allowed to govern themselves as private limited companies, the member-controlled associations protect the clubs from the influence of external, corporate capital. The opportunities for external investments of course still exist although the rule prevents the investors to have an overall control of direction of the club. Even though it seems that the clubs’ economic stability and the competition’s integrity are protected, the rule itself leaves a room for few exceptions and an opportunity for corporate owned teams like RB Leipzig.

This article briefly looks at the factual and regulatory evolution of the 50+1 rule, touches on long-established exceptions and predicts whether RB Leipzig will be able to form an exception and change the legal landscape in German football.

Leverkusen Lex, Wolfsburg Lex

The roots of German football clubs and league rules certainly trace back further than 1998 when the 50+1 rule was established. Therefore not to discriminate the clubs who were initially founded as company sports teams, the rule allowed a significant exception. Bayer 04 Leverkusen and VfL Wolfsburg were both founded by German corporate giants, Bayer and Volkswagen, and today the corporations hold 100% of the clubs’ voting shares respectively.

The exception allows the external investors to hold more than 49% of the club’s voting shares if they have considerably supported the clubs before the 1.1.1999. However, the companies are not allowed to sell or transfer their voting shares to anyone but the clubs.

The League’s charter states that “shares in the corporation must not be sold but may only be transferred back to the parent club free of charge. In the event of a sale of shares contrary to the rule or refusing to transfer the shares back to the parent club, the sporting license of the corporation will be revoked”.

23

Is it fair for someone not to have a majority of voting share in a club which he financially supported for more than 15 years? The issue arose at one of the current Bundesliga’s participants – TSG 1899 Hoffenheim. Until 17 years ago the club played between 8th and 4th tier of the domestic competitions. It would probably still compete at the lower levels of German football if it wasn’t for its ex junior player and multinational software corporation’s owner Dietmar Hopp. Over the past 17 years, Mr Hopp invested over 500 million euros into the club but still could only hold 49% of its voting shares. The 50+1 rule appeared to be more than a little bit harsh as the club would probably never have made it to the top tier of German football if it wasn’t for its investor. However in 2015, the League’s authorities have finally allowed Mr Hopp to take over the majority of voting shares due to his long-term investment in the club. It is significant to note that he will not be able to sell or transfer his shares to anyone but the club.

Are RB Leipzig breaking the law?

The effectiveness of the rule has been brought into question following the rise of RB Leipzig. The energy drink giant rebranded an amateur club SSV Markranstädt in 2009. Despite the fact that the League’s Charter strictly prohibits changing the club’s name for the sole purpose of advertisement, the club chose to change its name to RB Leipzig, its crest to two red bulls, and its kit to reflect Red Bull’s advertisements which are, by surprising coincidence, similar to the name, logo and aggressive marketing strategy of Red Bull energy drink.

Furthermore, the club as every other member of the German Football League, is governed by the member association which is usually open to new members. However, the membership fee at RB Leipzig is prohibitively expensive, and the association reserves the right to reject any application without a reason. Interestingly, Borussia Dortmund’s association has approximately 150,000 members and RB Leipzig’s only 17, all of whom are Red Bull employees.

But while the club created, governed and owned by Red Bull certainly violates the spirit of the rule and tradition deeply rooted in the history of German football, it doesn’t in fact break the law.

However the question arises whether the German League’s authorities will be able one day to grant another exception for the energy drink giants as they did with Hoffenheim following “Leverkusen/Wolfsburg lex”? Bearing in mind the company’s aggressive marketing strategy, controversy over the club’s governance and the fact that the company incorporated another four “Red Bull Clubs” in Austria, Brazil, Ghana and US from which it sources significant revenue, it seems unlikely.

Conclusion

The case of RB Leipzig demonstrates that despite the actual corporate ownership, the club is in fact still allowed to compete in the first division of German football and the rule has actually been unable to prohibit the founding of a new club, entirely owned and controlled by the corporate giant.

While at Hoffenheim, the League’s authorities have allowed a long-term local investor to obtain a majority of the club’s shares, it seems unlikely that the same will happen at RB Leipzig. The corporate governance and its

24

aggressive, revenue-focused strategy clearly omit the fundamental values of German football and for these reasons the League’s authorities will never grant an exception to RB Leipzig, regardless of how long the energy drink giant will financially support the club.

25

10. THE COMMERCIAL AND LEGAL IMPLICATIONS OF A SECOND ENGLISH DOMESTIC TWENTY20 COMPETITION

Matt Scola

Background

With Twenty20 the most popular cricket format worldwide, England have resisted calls to launch a lucrative ‘franchise’ domestic competition, in spite of the commercial success of the Indian Premier League and Australian ‘Big Bash’, which feature eight city-based sides and attract the game’s best players.

But recent developments mean an eight-team Twenty20 competition, featuring regional sides and with the majority of games taking place at test match venues, appears certain. It will run alongside the existing county Twenty20 tournament. Originally planned to launch in 2018, it is now expected to begin in 2020 to coincide with the end of current broadcasting deals.

Commercial potential of a new Twenty20: learning from India and Australia

England’s county ‘T20 Blast’ has broken attendance records in recent years, demonstrating the sustained popularity of the format. However, it does not rival the commercial strength of the IPL and Big Bash.

Heading into its tenth season the IPL’s value is estimated at US $4.2bn. Although an inflated figure due to the size of the Indian market in the country’s most popular sport, it demonstrates the commercial potential of a new English domestic competition. For example, the value of the IPL’s title sponsorship deal has increased by 50% since its inception despite significant corruption scandals in the league.

An English version of the competition could learn most from the Big Bash’s success. It is now one of the best supported leagues in the world, underlining the appeal of a short, intense competition with fewer teams and world-class players. The 2016/17 tournament had total spectators of over 1,000,000 across just 35 matches. Many of Australia’s stadia do accommodate substantially larger crowds, but the T20 Blast drew in just 827,000 spectators despite a much larger potential fanbase and more than triple the number of fixtures. Much of the T20 Blast spectators were also disproportionately concentrated in a small number of grounds.

An English competition could imitate the Big Bash’s current broadcasting deal. Its free-to-air arrangement, worth AUS $100m over five years, has seen viewing figures substantially outstrip initial pay-TV numbers for the tournament and exposed the game to new audiences. Consequently, the value of the rights will be significantly higher when they are up for renewal in 2018.

Although English domestic cricket is now broadcast exclusively on pay-TV, a strategy to award exclusive or partial rights to a free-to-air channel can bring long-term commercial benefits. Likewise, broadcasting games on free-to-air, or even digital platforms, can similarly expose the English game to a new audience. This is much needed in light of declining viewing figures and grassroots participation over the past decade.

26

Commercial risk: will two competitions successfully co-exist?

English counties want to retain the existing Twenty20 as it is an integral and profitable revenue source for them, particularly amidst the financial difficulties many face.

However, two domestic tournaments risks the number of games outstripping fans’ demand and reducing both tournaments’ commercial value. A ‘split’ fan base is a possibility, whereby existing county fan bases remain particularly loyal to the current competition, and a new one is limited to a new market of fans. Such a split may make neither tournament particularly profitable or appealing to potential commercial partners.

Yet should both competitions thrive it will certainly increase the financial security of smaller counties, who will be rewarded with an annual revenue share from the new tournament, as well as keeping income and sponsorship from the existing T20 Blast.

Navigating legal challenges

The arrangements of a new tournament will present many legal challenges. Considering some counties have misgivings over a new tournament, it will be complex to negotiate a deal that meets their demands, as well as producing a competition to satisfy broadcasters and rival the commercial strength of the IPL and Big Bash.

Questions will surround the ownership of the teams. The franchise model is largely alien to British sport. Therefore a system like the IPL, where teams are privately owned, is doubtful. Two solutions seem most likely. Either the England and Wales Cricket Board will own the teams, or a number of counties will control a side that is otherwise a separate legal entity. Either will require arrangements for stadia to be leased to the sides for the competition’s duration.

As proved by the ECB’s continued reluctance to release players for the IPL, contracting players to new sides in these competitions is difficult. Many international players are tied to central contracts with their national board. Others are contracted to counties and other global sides, and releases from these will need to be agreed.

Finally, the money associated with such a competition will further expose English cricket to potential corruption. Long bans have been handed out to players in the IPL and South Africa’s ‘Ram Slam’ tournament in recent seasons. Two franchises in the IPL are currently suspended from the competition due to corruption and match fixing, and numerous players have recently been suspended from the Pakistan Super League. Cricket Australia have expressed concerns that such corruption will infiltrate the Big Bash.

So whilst a new competition brings exciting commercial opportunities, there will be significant challenges to navigate as its precise format takes shape.

27

11. LEGAL IMPLICATIONS OF BREXIT FOR FOOTBALL

Sam Georgevic

Introduction

What was most surprising about the January transfer window, with Theresa May predicted to trigger Article 50 later this month, was the lack of transfers which were completed before the deadline. Once the PM does signal the UK's removal from the European Union, the legal status of European footballers, just like any other EU migrant, remains in the balance. Britain’s attempts to curtail immigration have come at the expense of having access to the free market. Limiting immigration inevitably has adverse effects on EU footballers coming into the UK. Speculation in recent weeks over whether no deal would be preferable to a bad deal, would suggest that there would be no system put in place to deal with EU employees. With this proving to be an unlikely scenario, it is likely that the Premier League will decide to adopt a default position of utilising the prolonged work permit structure used for non-EU nationals which would become applicable for EU players. Even if May managed to secure the preferred Government imitative of a ‘Hard Brexit’, the opportunities available to EU employees would not be offered in a sector by sector approach as this would be too difficult to micro-manage.

The Football Association’s rules on non-European Economic Area (EEA) players in the UK

From the beginning of the 2015/16 season, the Football Association changed its rules on the work permit system of non-EEA players in a bid to reduce the amount of ‘sub-elite foreigners.’ Once Britain has left the EU, EU nationals will be subject to the following criteria:

Players coming into the English leagues would need to be:

— “internationally established at the highest level”; and — “whose employment will make a significant contribution to the

development of their sport at the highest level”.

Eligibility would be based on appearances for respective national teams. This also depends on a national team’s ranking:

Official FIFA Ranking

Required % of international matches over previous 24 months

FIFA 1-10 30% and above

FIFA 11-20 45% and above

FIFA 21-30 60% and above

FIFA 31-50 75% and above1 If the player does not satisfy these stipulations, they are able to appeal through the Exceptions Panel which awards points based on salary and transfer fees. This panel is supposed to be far more stringent than the 1 Daniel Geey, "New FA Work Permit Regulations”, 2015 <http://www.danielgeey.com/the-foreigner-debate-the-fas-new-work-permit-regulations-explained/> [accessed 19 March 2017].

28

previous panel which accepted the majority of appeals. Through this system, the FA hopes to cut ‘sub-elite foreigners’ by 50%.

Implications of the quota system

Post Brexit, theoretically the Football Association have the ability to discriminate according to nationality as this stipulation falls under EU law. Therefore, a quota system limiting the number of European nationals within a team could be brought in for English clubs. It is likely that the Premier League will not want to jeopardise the quality of their league and therefore they will not be inclined to initiate their own quota system discriminating on nationality. However, a quota system discriminating on nationality could certainly appear in the FA Cup and Football League. Due to the requirement for players to satisfy the aforementioned eligibility criteria, this would further entrench the divide between the ‘oligopoleague’ of the Premier League and the rest of the Football League who are not able to attract the same level of talent. Having said this, for those who argue about the importance of nurturing home talent, the lesser quality European players who are dotted throughout the Football League have played a more significant role in preventing local talent from rising through the ranks than the higher-quality Europeans playing in the Premier League. Therefore, positive developments may be induced.

Implications of other EU stipulations which no longer apply

Bosman and the free transfer ruling:

1. when a European footballer came to the end of his contract he was free to sign for any European club he wished and that it was illegal for the club he had played for to hold on to his playing registration; and

2. as foreigner quotas were in operation in European competitions, such quotas which allowed for a limit of three "foreign" players in a team squad were also illegal.

After the infamous Bosman case in 1995, we saw the eradication of quotas from European competitions. With Britain exiting the EU, question marks will be raised whether the Bosman case which ensured the free movement of players at the termination of the contractual date, still applies under UK law. Nevertheless, EU law is likely to remain applicable, particularly when one of the parties involved in the negotiations derives from an EU member state. Therefore, it seems unlikely that new regulations would be enforced as this has been the status quo for quite some time.

With England currently a member of the EEA, Premier League teams are able to benefit from signing young talent who have long received their first professional contracts from the age of 16. Players such as Bellerin and Pogba have been able to benefit from the provision of coming from a member of the EEA, to train with clubs prior to the age of 16. This will also see the end of British clubs gaining preferential treatment of having foreign players satisfy the ‘home-grown’ ruling, if they trained with the team from the ages of 15-21.

29

FIFA Regulations on the Status and Transfer of Players

Article 19 permits the “transfers of minors between the age of 16 and 18 within the EU or EEA”.

Rather than paying a set transfer fee to the European clubs where the player has previously trained, clubs have merely received training compensation following a transfer. When Britain no longer is a member of the EEA, players will not be able to benefit from this provision as players will only be able to be signed from the age of 18 years old, thus requiring a transfer fee rather than training compensation. This creates significant practical issues on a football club’s recruitment but also means a greater focus on sourcing domestic talent.

What lies in store for the future?

Ultimately, the type of qualitative and quantitative criteria for particular industries as to the rights of EU nationals, remains speculative as we still have not triggered Article 50, let alone commenced negotiations with the European Union. Nonetheless, with a system needing to be put in place once the 2-year window of negotiations has ended, it is likely that the structure suited for non-EEA workers will become applicable. The administrative hassle of tackling each sport on a case by case basis will prove to be a disproportionate burden.

With only around 31% of the Premier League players being British, it is safe to say that both EU and non-EU nationals have aided to make the Premier League arguably the best league in the world. However, one of the unintended consequences of Brexit has a greater competitive advantage for UK players. With a greater reduction of non-UK players, the standard of English football may see a significant drop.

Bibliography

Akerman, Nick, "FA Announces Proposal To Cut Non-EU Arrivals In English Football By 50%", Bleacher Report, 2017: http://bleacherreport.com/articles/2201623-fa-announces-proposal-to-cut-non-eu-arrivals-in-english-football-by-50 [accessed 15 March 2017].

ESPNFC.com, "Could EU Brexit Significantly Limit European Premier League Players?", 2017 http://www.espnfc.co.uk/blog/marcotti-musings/62/post/2825545/eu-brexit-impact-on-european-premier-league-players [accessed 17 March 2017].

The Football Association, "Dyke: Work Permit Changes Will Benefit English Football", Www.Thefa.Com, 2015 http://www.thefa.com/news/2015/mar/23/england-commission-update-work-permits-fa-chairman-greg-dyke [accessed 17 March 2017].

Geey, Daniel, “Champions League And Premier League Quotas", 2015 http://www.danielgeey.com/UserFiles/Quotaarticle.pdf [accessed 15 March 2017].

The Football Association, "Dyke: Work Permit Changes Will Benefit English Football", Www.Thefa.Com, 2015 http://www.thefa.com/news/2015/mar/23/england-commission-update-work-permits-fa-chairman-greg-dyke [accessed 17 March 2017].

30

Daniel Geey, "New FA Work Permit Regulations”, 2015 http://www.danielgeey.com/the-foreigner-debate-the-fas-new-work-permit-regulations-explained/ [accessed 19 March 2017].

The Football Association, "Dyke: Work Permit Changes Will Benefit English Football", Www.Thefa.Com, 2015 http://www.thefa.com/news/2015/mar/23/england-commission-update-work-permits-fa-chairman-greg-dyke [accessed 17 March 2017].

Daniel Geey, "New FA Work Permit Regulations”, 2015 http://www.danielgeey.com/the-foreigner-debate-the-fas-new-work-permit-regulations-explained/ [accessed 19 March 2017]. Nick Akerman, "FA Announces Proposal To Cut Non-EU Arrivals In English Football By 50%", Bleacher Report, 2017 http://bleacherreport.com/articles/2201623-fa-announces-proposal-to-cut-non-eu-arrivals-in-english-football-by-50 [accessed 15 March 2017].

Daniel Geey, "Champions League And Premier League Quotas", 2015 http://www.danielgeey.com/UserFiles/Quotaarticle.pdf [accessed 15 March 2017].

"Could EU Brexit Significantly Limit European Premier League Players?", ESPNFC.Com, 2017 http://www.espnfc.co.uk/blog/marcotti-musings/62/post/2825545/eu-brexit-impact-on-european-premier-league-players[accessed 17 March 2017].

31

12. REVISITING THE CASE TO STRENGTHEN THE PREMIER LEAGUE'S HOME GROWN PLAYER RULE IN A POST-BREXIT SCENARIO

Nicola Gaiti

On the 23rd of June 2016, one of the biggest decisions of modern history was taken when the United Kingdom voted to leave the European Union. Given the sports industry's important role within the EU, as it employs 5.4% of its labour force, this decision is likely to have a strong impact on the sports market and specifically for football. This article will attempt to reconsider the Premier League's Home Grown Player rule in light of this recent development, suggesting that it should be reformed to mirror the political situation for the benefit of clubs, fans and the English national team.

Background

The Premier League's HGP rule was instituted in 2010 as an initiative to improve the chances of success for young English talent both at national and international level. A HGP is defined as one who has been registered with the FA/FAW for a period of three years before their 21st birthday, irrespective of nationality. Players such as Fabregas, Pogba and Lukaku would be within this group. As it stands, the general HGP rule states that the first team squad list of an English football club can only contain up to a maximum of 17 non-HGPs from a 25-man squad.

Proposed reform

In 2015, the former chairman of the FA, Greg Dyke, suggested that this rule should be amended with the introduction of the following points:

— Changing the definition for a HGP so that he must have been registered with the FA/FAW for a period of three years prior to his 18th birthday.

— Reducing the number of non-HGPs allowed in the first team squad list from 17 to a maximum of 13.

— Introducing a requirement that at least two of the HGP have been registered for three years at their current club before their 18th birthday.

He argued that implementing these ideas would help clubs, by allowing them to become more sustainable in the long term, and that ultimately the English national football team would benefit as its youngsters would have more opportunities to play competitive first team football.

This sort of approach, where national FAs try to implement regulations which are viewed as means to achieve long-term objectives involving the success of the national team, is not something unusual. In fact, the Chinese FA brought in restrictive laws on foreign player quotas in January 2017, prohibting Chinese teams to field more than three foreign players at once and obliging them to have at least two under 23 Chinese players in their starting lineup. Similarly, FIFA tried, unsuccessfully, to introduce the 6+5 rule a few years ago, where six of the starting 11 players must be eligible to play for the national team of the club's country.

Brexit: a real game changer

In the past, these types of restrictive rules and nationality clauses have been met with great scepticism from key European institutions and courts due to

32

its incompatibility with European Union law. The new political landscape that will come about post-Brexit means that it will be tougher for foreign players from EU member states to play in the Premier League. Moving back 2 years ago, talents such as Payet or Kante would probably not be able to receive the relevant visas to play in the UK in a post-Brexit scenario, due to rules on the percentage of official games that they need to have played for their national team, depending also on the country's FIFA ranking.

If the freedom of movement requirement will become more relaxed, this will allow the Premier League the possibility to adopt such measures as proposed by Dyke without troublesome interference. Unfortunately, we might not discover the new Kante or Payet in the Premier League, but if resources are deployed effectively and the large sums of money received from broadcasting rights are then invested in academies and youth development, we might discover many more Kane's and Vardy's.

A comparison with other top European leagues

The willingness to grow English local talent should not be attributed such negative connotations as it currently seems to receive. The Spanish, Italian, German and French leagues, which overall outperform English clubs and the national team, all have a stronger view on improving their local players. If we look at Borussia Dortmund, AC Milan, Olympique Lyonnais and Athletic Bilbao (all with a similar number of points during this season), they all have at least 14 players in their first team squad who can represent the country of the club that they play in. In fact, the latter team have only been playing Basque-born players since 1912, without any legal challenge having come their way. If we then take a similar Premier League club, such as Arsenal, who compete in top level football every year, we see that there are only six English players in the first team squad.

Some believe that English talent should be given a chance abroad for them to learn to adapt to different mentalities and styles of play. Although this is partially true, we have seen recently with examples such as Ravel Morrison's, who was deemed to be the next English superstar, that foreign clubs may not be as willing to give up their own talent's playing time to benefit other nations. Morrison only played four games during his stay at Lazio, with preference given to other Italian players such as youngster Cataldi or well-established national side players such as Mauri and Candreva.

In conclusion, the author believes that the proposed HGP rule amendments by Dyke should be introduced. With the departure of the UK from the EU, there should be more freedom to implement these type of laws, without necessarily having to be restrictive on other potential employee rights. Although many specific points regarding the laws on immigration still need to be decided upon, these measures should still be effective in attracting the best talent to the Premier League, maintaining its attractiveness and marketability, whilst at the same time allowing youngsters to flourish in an inviting environment.

33

Mishcon de Reya is a limited liability partnership, registered in England and Wales with registered number OC399969 and authorised and regulated by the Solicitors Regulation Authority, SRA number 624547.

Mishcon de Reya LLP Africa House

70 Kingsway London WC2B 6AH

T +44 20 3321 7000 F +44 20 7404 5982 E contactus@mishcon.com