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This edtion is led by

Mark Miller

Legal Counsel
Lagardere Unlimited

Law Firm Panel Chair

Julian Pike

Partner and Head of Sports
Farrer & Co.
The changing landscape of financial regulation & governance in sports

Led by Mark Miller, Legal Counsel at the media and entertainment wing of French conglomerate Lagardere. Chairing the law firm panel for this edition is Julian Pike, Partner and Head of Sports at London law firm Farrer & Co.

Since the inception of UEFA's Financial Fair Play regulations, football leagues around Europe have been looking at mechanisms to encourage compliance with its principles, such as the financial break-even rule. In the UK, the Premier League and the Football League have introduced regulatory changes prior to the start of the current season.

In Europe, in sports such as basketball, inter alia, studies into regulatory changes along the lines of UEFA's "Financial Fair Play" are being initiated.

Elsewhere, in Argentina as just one example, new rules were introduced to prevent money laundering in football, while the push for European-level regulation on the transparency of sports club ownership appears to be gaining momentum. Clearly, the global landscape is changing in sports law for all corporations and entities involved in this sector.

Mark’s questions for each jurisdiction are:

Question 1) In your local jurisdiction, has the football league passed new measures?  Do they in any way set higher standards in financial transparency or governance than UEFA?

Question 2) Do you expect greater financial scrutiny to lead to significant changes in the governance of clubs as quickly as some observers predict and what major changes in the law would you expect in this regard in the 10 years to come?

Question 3) It is reported that the break-even rule has initiated a rethink within clubs about the separation of their business entities (corporate hospitality, stadium ownership & naming rights etc.) in order to re-incorporate essential revenue streams within the core structure of the club. What new legal trends have you started to identify and do you expect others to develop in the near future?

Question 4)
What effect is this new trend starting to have on players’ employment contracts and salaries? Are we seeing remuneration packages increasingly dependent on sporting success? The Football League is currently experimenting with a salary-control system called the Salary Cost Management Protocol. How likely is it that major European sports leagues move towards a North American–type salary cap in forthcoming years and what is the reaction from and position of your jurisdiction’s main stake holders?   

The legal experts joining Julian on his panel so far are:

England & Wales: Julian Pike, Partner, Farrer & Co.

Ireland: A&L Goodbody (Coming soon ...)

Spain: Félix Plaza Romero, Partner, Garrigues

Switzerland: Olivier Niggli, Partner, Carrard & Associes

DISCLAIMER: Any opinions, statements or other information expressed in TalklawGlobal by the respective author(s) do not necessarily state or reflect those of TalklawMedia, the chairperson or their employer, the firm to which the author belongs or other panellists. The information submitted by the legal experts is for educational purposes only and does not create an attorney-client relationship between the reader, their firm, or any lawyer in their firm, and does not prevent any lawyer in any firm on this panel, from representing a party in any matter or manner (including taking a different position to that which he/she might have expressed or endorsed in TalklawGlobal) or serving as arbitrator, mediator, dispute board member or in any similar position based on the expression of his/her opinions on the various subjects published on TalklawGlobal. No information published on TalklawGlobal may be quoted or reproduced elsewhere without the prior written consent of the author and TalklawMedia.

Julian Pike

Farrer & Co.
London, UK
Tel: +44 (0)20 3375 7217

England & Wales:
Julian Pike, Partner, Farrer & Co.

Answer 1) In England, the Premier League has ratified measures dealing with financial fair play, which apply from the 2013-14 season.  Clubs have broadly agreed two key measures.  First, no Premier League club is permitted to make a total loss of over £105m over the period of the 2013-14 to 2015-16 seasons.  This is slightly lower than the €45m per season limit that is currently imposed by the UEFA rules, which sit alongside the Premier League rules and separately govern a club's involvement in UEFA competitions (namely the Champions League and Europa League).  Secondly, no Premier League club with a wage bill greater than £52m per year may increase its wage bill by more than £4m per season over the same period, unless such money derives from its own match day revenues, sponsorship or other commercial income.  This second measure is designed to prevent the increases in television money for Premier League clubs (arising in part due to the advent of BT Sport) from further inflating player wages.  The UEFA rules do not currently contain any such salary cap provision. 

The Football League predated the Premier League in its adoption of tailored financial fair play rules, with its measures coming into force at the start of the 2012-13 season.  These measures apply to clubs playing in the Championship, League 1 and League 2.  The Football League rules are split into two categories.  One set of rules apply to clubs in the Championship, and another set of rules apply to clubs in League 1 and League 2.  

The Championship financial fair play rules broadly mirror the UEFA financial fair play rules. Each club is required to provide annual accounts to the Football League by 1 December every year. Using this information, the Football League determines a “Fair Play Result” for each club (which is effectively an adjusted profit and loss figure).  Clubs must either have a “break even” Fair Play Result, or

Félix Plaza Romero
Madrid, Spain
Tel: +34 91 514 52 00

Ana Carrete
Senior Associate

Félix Plaza Romero, Partner, Garrigues

Answer 1) The Spanish National Professional Football League (“LNFP”) has recognized the similarities between the aims of UEFA’s new rules on financial fair play and the aspirations of the Clubs and Sports Companies (Sociedades Anónimas Deportivas, “SADs”) belonging to the Spanish football divisions, as well as the particular need to establish pertinent control mechanisms for all their members.

Accordingly, the LNFP has approved and included in its General Regulations, with effect as from the 2013/14 season, a new Book X containing the “Economic Control Regulations on the Clubs and SADs belonging to the National Professional Football League”. These Regulations were ratified on May 17, 2012, by the Executive Committee of the National Sports Council (“CSD”).

These supervisory and economic-financial control rules, which were approved in accordance with the rules set by UEFA, notably include, in first place, that in order to become or remain members of the League, the Clubs and SADs must file the following documents:

° Separate and consolidated financial statements.

° Interim separate and consolidated financial statements.

° List of debts relating to players bought and transferred.

For these purposes, as of December 31 no Club or SAD can have outstanding transfer debts.

° List of debts and loans with employees.

The Clubs and SADs must evidence that as of December 31 they have no outstanding debts with their employees.

° List of debts with public authorities, and certificates evidencing that they are current in payment of

Olivier Niggli
Carrard & Associes
Lausanne, Switzerland
Tel: +41 21 349 19 16

Olivier Niggli, Partner, Carrard & Associes

Answer 1) A number of football clubs in the top division in Switzerland – the Super League – have faced financial difficulties in recent years. Indeed, these difficulties have in certain cases even led to bankruptcy; this was the case in the much publicized Neuchatel Xamax FC, which was declared bankrupt in January 2012.

Such difficulties are very often linked to the fact that many Swiss clubs are dependent on financial contributions from private owners (due to the comparatively small revenue from TV and sponsorship compared with major European leagues) If those contributions are withdrawn the club may be left in a financially unsustainable position.

In order to avoid similar problems in the future and assure the financial health of Swiss football clubs, a number of more stringent provisions (vis a vis the UEFA regulations) have been introduced.

Introduction of the so called “Lex Chagaev”, named after the former investor of the Neuchatel Xamax FC (art. 8quinquies of the Regulation concerning the Grant of Licenses of the Swiss Football League, hereinafter referred to as the “Licensing Regulation”) the sale of a club is subject to prior approval of the Swiss Football League (SFL). The buyer must demonstrate it has the financial means to run a professional football team.

Where a Swiss football club balance sheet reveals over-indebtedness (surendettement) in accordance with article 725 II of the Swiss Code of obligations, i.e. that the company’s liabilities are no longer covered by its assets., the license will not be granted unless further documentary assurances are given, e.g. an irrevocable bank guarantee, waiver of debts, postponement of