I ORGANISATION OF SPORTS CLUBS AND SPORTS GOVERNING BODIES
i Organisational form
Depending on their size, level of sophistication and aims, sports clubs and governing bodies typically take one of the following forms:
- unincorporated associations;
- companies limited by shares;
- companies limited by guarantee; or
- one of a variety of charitable or community interest vehicles.
Clubs that have taken no formal steps to incorporating will be unincorporated associations that are, therefore, not separate legal entities, and all of their contracts will need to be entered into by a member of the club (such as a member of the managing committee and as dictated by the club's constitution). A private company limited by shares is the usual form taken by professional clubs that are operating with a view to making a profit and that wish to raise finance through the issue of shares. Some Premier League football clubs have listed their shares on public markets over the years (with varying degrees of success).
ii Corporate governance
Governance of sport in the UK has generally been left to sports governing bodies, with the state taking a hands-off approach. Sports organisations can be compelled to comply with certain corporate governance requirements as a condition of receiving public funds, such as from Sport England or UK Sport,2 or as a condition for participation in a competition. For example, the Premier League restricts persons from having an interest in, or having the power to influence the decision-making of, more than one club.3 The Sport and Recreation Alliance also maintains a Voluntary Code of Good Governance that it encourages sports bodies to adopt.
Beyond the above, there are no specific governance laws that apply only to sports organisations. Instead, organisations will need to comply with the applicable legal framework that is in place for its particular legal form. For example, if the organisation is incorporated as a company, it will need to comply with the Companies Act 2006.
iii Corporate liability
The laws of England and Wales do not include any specific statutory provisions covering the liability of officers of sports clubs or governing bodies. Most sports organisations are structured as companies (see Section I.i), and the directors of such companies are subject to the same duties and liabilities as directors of companies generally.
The Companies Act 2006 codified certain common law and equitable duties of directors for the first time. It sets out the general duties of directors, which include, inter alia:
- to act within their powers in accordance with the company's constitution, and to use those powers only for the purposes for which they were conferred;
- to promote the success of the company for the benefit of its members;
- to exercise reasonable care, skill and diligence; and
- to avoid conflicts of interest.
A director of a sports organisation will also be subject to a wide range of further regulation and legislation, including the Insolvency Act 1986, the Company Directors' Disqualification Act 1986, the Health and Safety at Work etc. Act 1974, and the Corporate Manslaughter and Corporate Homicide Act 2007.
Failure to comply with the relevant duties or obligations can result in personal liability (both civil and criminal) being incurred by a director of a sports organisation.
II THE DISPUTE RESOLUTION SYSTEM
The rules that govern the different sports in England and Wales typically specify the forum for disputes arising between the governing body and the participants in that sport. The rules may also specify how disputes between two participants (e.g., two clubs) are to be resolved. Where a dispute arises outside the rules of the sport, for example between a club and sponsor, the parties are free to choose how disputes between them are to be resolved.
i Access to courts
In the absence of an agreement to arbitrate, the courts have jurisdiction over sporting disputes.
Where a party seeks to challenge a disciplinary decision, the courts do not apply a de novo jurisdiction, but instead conduct a 'supervisory review' whereby they seek to ensure that the 'primary decision-maker' (the disciplinary body) 'has operated within lawful limits'.4
In essence, a challenge can be raised if a governing body has made a decision or exercised its regulatory functions in a manner that:
- is outside of its powers;
- is procedurally unfair or contrary to natural justice;
- takes into account irrelevant considerations or fails to take into account relevant considerations;
- has no factual basis;
- is contrary to legitimate expectation; or
- is unreasonable in the sense of being irrational, perverse, arbitrary or capricious.
ii Sports arbitration
Parties are free to resolve their disputes through arbitration. The relevant legislation, the Arbitration Act 1996, provides that for an arbitration agreement to be valid, it must be in writing.
By electing to submit disputes to arbitration, the parties are precluded from bringing proceedings in the courts, save that the courts always have jurisdiction to determine appeals arising out of arbitrations (the grounds of which are limited under the Arbitration Act 1996), and that there are functions (such as compelling an individual to give evidence) that the courts can exercise in support of arbitrations.
Many sports in England and Wales require that disputes are resolved through arbitration. For example, domestic football disputes are subject to the arbitration rules provided for by the Football Association (the FA), the Premier League or the Football League (EFL).
While there is no one standard arbitral process, many sports utilise the arbitration rules of Sport Resolutions (UK), a dispute resolution service that establishes tribunals and assists in resolving sports disputes. In other cases, such as anti-doping cases or where required by a sport's international federation, the Court of Arbitration for Sport will have jurisdiction.
Disciplinary sanctions, such as fines or suspensions, can be enforced by governing bodies through their rules.
In court cases, a party is able to utilise the full range of enforcement powers that are available to litigants when enforcing court orders.
Arbitral awards can be enforced through the domestic courts pursuant to Sections 42 and 66 of the Arbitration Act 1996.
III ORGANISATION OF SPORTS EVENTS
i Relationship between organiser and spectator
There is no proprietary or exclusive right in a sports event in the UK,5 so an event owner's relationship with spectators, athletes and clubs is governed by the relevant laws, including contract, intellectual property and real property legislation.
In relation to spectators, the organiser can restrict entry to the venue, and can stipulate the conditions for access through its ticket terms and conditions. These terms must be incorporated into the contract by being brought to the spectator's attention on purchase. This is traditionally done through 'small print' on the back of the ticket. This will not always be sufficient, however, as all terms must be legible and in plain and intelligible language, and must also comply with a range of measures designed to protect consumers from unfair terms.6 Typically, these terms and conditions will include restrictions such as on taking photos, on making recordings or collecting data, on the resale, transfer or use of the tickets as a promotion, and on the promotion of non-sponsors. Breach of these conditions would render the ticket void. In these cases, a spectator can then be evicted and the organiser may sue for trespass, breach of contract or both.
ii Relationship between organiser and athletes or clubs
Where the event organiser also acts as the governing body, it will typically form one part of a pyramid structure of sport organisation and regulation, which is the traditional model adopted in the UK and throughout Europe.7 This model sees tiers of governance with global organisers at the top (such as FIFA), regional bodies below them (such as UEFA), then national bodies (such as the FA), followed by clubs and players at the bottom.
Where the event organiser is separate to the governing body, such as in the Premier League or Premiership Rugby, a shareholder model is typically used. For example, each Premier League club is a shareholder of the Football Association Premier League.
In both arrangements, the event organiser can define the structure and format of the competition, along with a whole range of other measures such as commercial exploitation and distribution of revenues, through its rule book or participation agreement, which acts as a contract between the organiser and the clubs (and to which each player must also adhere).
iii Liability of the organiser
The civil liability of organisers of sporting events falls within two principal categories.
Occupiers' Liability Act 1957
The Occupiers' Liability Act 1957 enshrines in statute the duty that an occupier of premises (which includes those exercising control over the premises) owes to its 'visitors'. The duty of care is 'to take such care as in all the circumstances of the case is reasonable to see that the visitor will be reasonably safe in using the premises'.8
The above is in addition to the regime pursuant to the Safety of Sports Grounds Act 1975, which imposes certain further obligations on the owners of sports grounds, such as the requirement for stadia with a capacity of over 10,000 to have a safety certificate (which imposes various obligations on the owner).
Claimants must show that they were owed a duty of care, that such duty was breached and that the breach caused the loss or damage complained of. The general duty of care owed by an occupier is the same duty as is owed by anyone to his or her 'neighbour', as enshrined in English common law.9
The extent of the duty of care attracts much judicial deliberation. This duty, and the scope of people to whom that duty is owed, is fact-specific. However, as a general principle, the duty is said to be that of taking reasonable care to avoid injury to a person. In determining what is reasonable, the courts will consider the particular circumstances, such as the sporting context in which the alleged negligence took place.
iv Liability of the athletes
Athletes and participants may be held liable in negligence in respect of damage or injury caused both to spectators or to other athletes.
As regards liability to spectators, the duty is one of reasonable care, having taken into account the sporting context. As regards other athletes, liability can arise under the torts of trespass to the person or negligence.
Trespass requires the claimant to show that the defendant intended to injure him or her. This is a high hurdle that has limited the instances where such a cause of action has been successfully alleged.
Importantly, so far as negligence is concerned, athletes are taken to have accepted the risks inherent in sport (and particularly so in sports of skill and physicality). Courts are unlikely to find negligence where the relevant sporting rules have not been breached, but it does not automatically follow that a breach of the rules will lead to a finding of civil liability.10
The damages that may be awarded in sport can be significant, particularly where a professional athlete suffers a career-ending injury. For example, in Collett v. Smith,11 a player whose career was ended following an injury he suffered playing for Manchester United's reserve team was awarded around £4.3 million in damages.
v Liability of the spectators
Much of the statutory framework in this area is linked to prevention of football disorder or hooliganism. Pursuant to powers provided under the Football Spectators Act 1989, a football banning order can be made against a supporter. This is a civil sanction, and has the effect of banning an individual from attending football matches, both domestic and international, for a prescribed period of time. Such an order can be imposed owing to evidence of previous football violence, a previous conviction for football-related violence or during a control period (before, during and after an overseas match or tournament).
vi Riot prevention
Rioting, hooliganism and more general issues of crowd disturbance have been most commonly associated with football. These issues, which were at their peak in the 1970s and 1980s, led to the implementation of a variety of legislative measures aimed at curbing them; for example, legislation prohibiting standing at certain categories of football match (although this measure was principally introduced for safety reasons)12 and prohibiting the sale (or resale) of football tickets by unauthorised persons.13 Football supporters can also be the subject of banning orders pursuant to the Football Spectators Act 1989 (see Section III.v).
Clubs are obliged to pay for the attendance of police services at matches at their grounds.14 However, the police cannot charge clubs for the cost of crowd control and public order policing outside the immediate vicinity of the club's premises and policing that is on land not owned by, or under the control of, the club.15
IV COMMERCIALISATION OF SPORTs EVENTS
i Types of and ownership in rights
The key sports-related rights that can be exploited are broadcasting, sponsorship, merchandising and ticketing. Additionally, sports data is now an important revenue stream.
In relation to broadcasting, a secure venue allows the event organiser to stipulate that only officially appointed licensees can broadcast from the event. The ownership of the moving images will initially sit with the producer and director, and of the sound recordings with the producer.16 Copyright should be assigned to the event organiser (through the broadcaster) who will then license the rights back to the broadcaster for broadcast in a particular territory.
Broadcasting rights in many high-profile sports are sold collectively. The collective sale by the Premier League had been the subject of an investigation by Ofcom, the competition regulator, but this was dropped in August 2016. In any event, the sale of broadcasting rights should be done by way of a tender process that complies with the criteria in the Champions League, Bundesliga and FAPL cases.17
Sponsorship encompasses a wide variety of different rights and categories depending on the entity being sponsored. The rights holder can protect its sponsorship rights through maintaining trademark registrations for its team logo and emblems and through the tort of passing off.
ii Rights protection
In summary, the framework for the protection and enforcement of the above-noted rights is as follows.
A rights holder can register its brand names, logos and other brand indicators as a national UK registered trademark with the UK Intellectual Property Office. This allows a trademark owner to enforce his or her rights in the UK where an infringer uses an identical or similar mark in the circumstances detailed in Section 10 of the Trade Marks Act 1994 (TMA). Among other criteria, a trademark must be capable of distinguishing the goods or services of one undertaking from those of another.18 Therefore, it is not possible to register marks that are, inter alia, non-distinctive, generic or primarily descriptive.19
The EU Trade Mark Regulation20 currently affords protection for European Union trademarks (previously known as Community trademarks). In a sporting context, the importance of such protection is demonstrated in the EU General Court's recent ruling of bad faith over the attempted registration of the wordmark 'NEYMAR'.21 This protection is afforded throughout the UK but this may change once the UK leaves the EU (see Section X).
Copyright and database rights
Copyright arises automatically and can provide protection for 70 years for literary, dramatic, musical or artistic works,22 and 50 years for broadcasts23 and sound recordings.24 Not all unauthorised use of a copyrighted work will amount to infringement. For example, the 'fair dealing' exceptions allow copyright protected works to be used for the reporting of current events, provided sufficient acknowledgement is given.25
Neither literary nor database copyright will subsist in a fixture list, and fixture lists are not protected by the sui generis database right (SGDR).26 However, in Football DataCo, the courts confirmed that the SGDR subsists in a database of live match data27 if there has been a substantial investment in obtaining, verifying or presenting its contents.28
English law does not recognise a proprietary right in a person's image29 or a specific right of privacy.30 There is a web of laws, however, that can be stitched together to protect an individual's 'image rights'. If a sportsperson's image is used to endorse goods31 or on merchandise,32 without his or her authorisation, he or she could prevent further use of these items by bringing an action for the common law tort of passing off, provided he or she can demonstrate that he or she has goodwill or reputation attached to the goods or services and that damage was suffered as a result of the misrepresentation. When a sportsperson is photographed in circumstances that were obviously private33 and the photograph is offensive or is not being used lawfully and fairly,34 safeguards against its publication without consent can be obtained through actions for breach of confidence, misuse of private information (both when interpreted in accordance with the right to a private life)35 or infringements under the Data Protection Act 2018 (DPA).36
iii Contractual provisions for exploitation of rights
There are no mandatory statutory provisions in sponsorship agreements, and the final form of the agreement will depend on the negotiating position of the parties. Much of the contract will encompass the provisions and boilerplate typically found in any commercial contract.
The agreement should be a clear reflection of the commercial deal (i.e., what the sponsor is acquiring and the rights holder is receiving in return), and in this regard it is important to clearly state the scope of rights to be granted. For example, what rights is the sponsor acquiring? Will they be in a particular category or brand sector? Are they exclusive, and in what territories? Are there any key exclusions or matters reserved for the rights holder or its other commercial partners? On what terms can the sponsor access and commercially exploit the team or individual athletes? Will the rights holder have approval rights over merchandise produced?
Particularly relevant in individual sponsorship agreements are provisions addressing the situation where a player's conduct, while not necessarily being illegal, falls below the thresholds expected by the sponsor (morality clauses). The sponsor will want flexibility to suspend or even terminate the agreement should the player behave badly in their subjective view, whereas the player will push for a very limited termination right.
One other area that is generally heavily negotiated is the sponsor's rights in and around expiry of the deal. It is common for the sponsor to insist on having both an exclusive period to negotiate a renewal at the end of the agreement, and a right to be notified of, and to match, any bona fide offer from a third party. The exact parameters of these matching rights clauses need to be carefully considered and drafted to avoid giving sponsors exclusivity or greater restrictive powers over third-party offers than originally intended by clubs.37
V PROFESSIONAL SPORTS AND LABOUR LAW
i Mandatory provisions
Many sports, including major sports such as football, rugby and cricket, prescribe that standard form contracts are to be used to govern employment relationships between certain participants (most usually between clubs and players). These standard forms are set by the governing body following consultation with the relevant stakeholders (including the body that represents the players of that sport).
Most provisions are therefore not subject to negotiation on an individual basis. The standard contract will cover, inter alia, the primary obligations of the player and club, termination rights, grievance and dispute resolution procedures, and confidentiality.38
The standard terms must be used by the parties, but there is freedom to negotiate certain key terms – for example, remuneration (both as regards salary and image rights).
The parties are also free to negotiate duration. However, it should be noted that a contract of excessive duration may be held to be unenforceable. In Proactive Sports Management Ltd v. Rooney and Others,39 it was held that an eight-year image rights deal entered into by Wayne Rooney (then 17 years old) was void and unenforceable as it was in unreasonable restraint of his trade.
ii Free movement of athletes
This area is one that is likely to be affected by the decision by the UK to leave the EU; in that regard, the precise impact and changes to this area of law, will depend, inter alia, on the agreements arising from the Brexit negotiations. The position at the time of writing is set out in Section X.
This area is shaped by EU law and European jurisprudence, most notably the Bosman40 and Kolpak41 cases. In accordance with settled authority, any restriction on free movement within the EU must be justified on the basis of a legitimate objective and must be proportionate.
The English doctrine of restraint of trade has also been used in a Bosman-type case dating back to 1964. In Eastham v. Newcastle United Football Club and Football Association,42 the claimant (a footballer) successfully argued that the then rules of the EFL, which required a fee to be paid to release the player's registration, notwithstanding that his contract had expired, were in restraint of trade.
As regards permission to work in the UK, the current position is that nationals of the EU, European Economic Area (EEA) or Switzerland do not require a visa, while those from outside the EEA, Switzerland and certain Commonwealth countries do require a visa. The visa process is administered by UK Visas and Immigration. Under the current system, applicants require a sponsor and governing body endorsement. The government delegates the responsibility for the detail as to the eligibility for sponsor and governing body endorsements to the relevant governing body. By way of example, the FA's current system43 provides for automatic granting of visas if football players have participated in a minimum percentage of competitive matches for their home country's senior international team where they were available for selection during the two years preceding the date of the application (or the preceding 12 months for players aged 21 or under). The percentage of matches required is on a sliding scale depending on the relevant national team's position in the FIFA World Rankings.44 If a player does not meet the automatic criteria, an applicant club can make an application to an 'exceptions panel', which will consider, inter alia, the value of the transfer fee, the wages to be paid to the player and the league from which the player is joining.
iii Application of employment rules of sports governing bodies
Subject to the requirement to use standard form contracts, and thereby the requirement to incorporate mandatory provisions, parties are free to agree the terms of employment contracts.
VI SPORTS AND ANTITRUST LAW
Aside from issues of free movement, the key European legislative principles in this area are Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU). As with the rules regarding the free movement of persons, it is unclear at the time of writing the extent to which the EU competition law regime will apply to the UK on exiting the EU.
Article 101 TFEU prohibits agreements between undertakings, or decisions by associations of undertakings, which have as their object or effect the prevention, restriction or distortion of competition as between Member States. Article 101 is mirrored in domestic law by Chapter I of the Competition Act 1998 and, in essence, applies the Article 101 test to the UK market. Article 102 TFEU prohibits the abuse of a dominant position affecting trade between Member States. Article 102 is mirrored in domestic law by Chapter II of the Competition Act 1998, and, in essence, also applies the Article 102 test to the UK market.
The Meca-Medina case45 is authority for the fact that sporting rules are subject to competition law scrutiny.
Breaches of the competition rules in the sporting context can be enforced, inter alia, by the UK's Competition and Markets Authority or privately by those affected. Drawing from Meca-Medina and the Commission's analysis of the application of competition law to sport found in the White Paper on Sport46 and the accompanying staff working document,47 the test to be applied to breaches can, in basic terms, be stated as follows: is the sports association adopting a particular rule for an 'undertaking' or 'association of undertakings'? And does the rule restrict competition (Article 101) or constitute an abuse of a dominant position (Article 102)?
Applying Wouters,48 this will depend on the context and objectives of the rule, whether the restrictions are inherent in the pursuit of those objectives, and whether the rule is proportionate in light of those objectives. Proportionality is considered in light of whether the rule goes any further than is reasonably necessary to secure the rule's object, and whether it is applied in a transparent, objective and non-discriminatory manner:49 is trade between Member States affected? And does the rule meet the conditions of Article 102?
The English common law doctrine of restraint of trade can also be used to challenge the rules of domestic sports governing bodies. In summary, the test50 is as follows: the person bringing a challenge must show that the rule of a sports governing body prevents (or limits) his or her earning a living. Once established, the governing body must show that the restraint is reasonable and justified in the interests of the parties. 'Reasonable' in this context means that it is necessary and that it goes no further than reasonably necessary to achieve that aim. If this can be established, the third stage of the test is that the restraint must be reasonable in the interests of the public (not just the parties concerned). An action that restrains trade without justification is void and unenforceable.
VII SPORTS AND TAXATION51
For non-resident internationally mobile sportspeople, the UK tax regime is complicated. As well as being taxed on prize money and appearance fees earned in the UK (as is the case in most jurisdictions), under the UK's application of the provisions of Article 17 of the Organisation for Economic Co-operation and Development (OECD) Model Treaty, non-resident sportspeople are also taxed on a proportion of their global endorsement income. This is typically calculated by reference to their UK appearances as a proportion of global appearances during the tax year. The calculation typically has many variable factors to take into account (whether endorsements are 'linked' to the performance, whether training days should be included in the calculation, etc.) and, under the UK's self-assessment tax system, it is the sportsperson's responsibility to calculate the liability and submit his or her returns.
For team sports, where the competitors are usually 'employees', the position is clearer. It is assumed that players on teams from other countries are tax-resident in those jurisdictions, and subject to tax on their employment income in that territory. On that basis, the UK tax authorities would not typically seek to tax players employed by non-UK resident teams on their sporadic appearances in the UK, as this would not be deemed to be 'employment exercised in the UK' under Article 15 of the OECD Model Tax Treaty. The UK tax authorities have reserved the right to seek to tax a proportion of endorsement income of such players, in the same way as they seek to tax non-resident sportspeople. We understand, however, that no such enquiries have been raised to date.
Clubs competing in international events in the UK would not typically be subject to UK corporation tax as they would not create a tax presence (a permanent establishment) in the UK.52
VIII SPECIFIC SPORTS ISSUES
The World Anti-Doping Agency (WADA) implements a uniform, global code that regulates drug use in sport. Now in its third iteration, the latest version of the WADA Code came into force on 1 January 2015. The major (and many minor) sports in the UK are signatories.
The national anti-doping organisation in the UK is UK Anti-Doping, a public body entrusted with results management and case presentation for most sports in the UK.
Doping, per se, is not a criminal offence in the UK. There are, however, a number of substances on the WADA Prohibited Substances list53 that are also criminalised in the UK by virtue of the Misuse of Drugs Act 1971, including stimulants such as cocaine, narcotics such as methadone and cannabinoids.
The government has previously suggested that it will investigate the possibility of criminalising doping,54 although it appears that any such developments are in their nascency.
Betting is governed by the Gambling Act 2005. The Gambling Act established the Gambling Commission as the domestic body with responsibility for licensing betting operators and ensuring their compliance with the Gambling Act.
The Gambling Act includes powers that provide for information sharing with sports governing bodies.55 Aside from the Gambling Act, a number of information sharing agreements between sports governing bodies and betting operators are in place.
Betting, per se, is not illegal in England and Wales, although there are often links between betting and integrity issues (such as match-fixing).
With a view to maintaining integrity, some domestic sports governing bodies have banned betting by those involved in their sport. The precise approach and scope of such prohibitions differ for each sport, but are often widely drafted (to include not just players, but also coaches, club officials and employees) with sanctions ranging from a warning to a fine and expulsion (see, e.g., the approach taken by the FA in football56 and the Rugby Football Union (RFU) in rugby union).57
Match-fixing is not, per se, illegal under English law. Rather, a number of criminal offences may be applicable depending on the nature of the offence, including cheating or enabling others to cheat at gambling (Section 42 of the Gambling Act); bribing or being bribed (Sections 1 and 2 of the Bribery Act 2010); and conspiracy (Section 1 of the Criminal Law Act 1977).
There have been a number of high-profile criminal cases in this regard, particularly in relation to cricket.58 Successful convictions can lead to prison terms.
Outside the criminal framework, the primary responsibility in this area vests with the sports governing bodies, which, as part of their rules, prohibit manipulation. In monitoring and enforcing their rules, these governing bodies are aided by the information-sharing provisions contained in the Gambling Act and their agreements with betting operators.
Governing bodies may provisionally suspend or ban a participant if he or she is linked to betting arrangements that may give rise to integrity issues (such as match-fixing and result manipulation). By way of example, the British Horseracing Authority (BHA) suspended jockey Kieren Fallon following the initiation of criminal proceedings by the Crown Prosecution Service and pending determination of those charges. Mr Fallon unsuccessfully challenged that provisional suspension in the High Court.59 Having regard to 'the upholding of the perceptions of integrity of horse racing',60 the High Court upheld the BHA's suspension. Mr Fallon was not convicted in the criminal courts, and he returned to horse racing.
iv Grey market sales
Aside from where event-specific legislation has been passed (as was the case with the London 2012 Olympics),61 football is the only sport in England where it is an offence to sell or otherwise dispose of a ticket unless you are expressly authorised to do so.62 In other sports, the rights holder in question must bring an action for breach of the non-transferability provisions in the ticket terms and conditions (see Section III.i) to prevent the secondary sale of tickets.
The Consumer Rights Act 2015 includes disclosure requirements for those reselling tickets and the marketplaces where such tickets are resold. Online secondary ticket platforms must, inter alia, ensure that a buyer is given information regarding the seat and row number or standing area, any restriction that limits use of the ticket to particular persons (such as a youth audience) and the ticket's face value.63 A new requirement to provide a unique ticket number that may help the buyer to identify the seat or standing area or its location was introduced in 2018.64 These requirements give rights holders a means to identify the particular ticket being resold, which in turn assists in identifying those who are reselling tickets in breach of the ticket's terms and conditions. Further, in July 2018, a new law was introduced banning ticket touts from using automated software to buy more tickets for events than permitted.65
IX THE YEAR IN REVIEW
This year has seen a focus on football club finances. To ensure the integrity and stability of the game and to prevent clubs from writing off large debts and benefiting from a competitive advantage, Premier League and EFL clubs are subject to specific regulations on entering into an 'insolvency event'.
Volatility of finances in the EFL, which benefits from a comparatively low central fund, means EFL clubs are more likely to fall foul of these regulations and be subject to the corresponding sporting sanctions.66 An exacerbated breach of these rules led to Bury FC's membership of the EFL being rescinded on 27 August 2019, making it the first club to be expelled from the league since Maidstone United in 1992. Bury, having already entered into a company voluntary agreement, had failed to subsequently provide the requisite EFL assurances or to secure the club's sale (with a proposal collapsing over due diligence concerns). Another club, Bolton Wanderers, had faced the same deadline (themselves having appointed administrators), but managed to retain its league membership by providing sufficiently detailed financial plans for the 2019–20 season and completing the club's sale.67
ii Profit and sustainability
Regulation of spending, in one form or another, is a feature of a number of sports both domestically and elsewhere.
In England and Wales, both the Premier League and the EFL have in place regulations that seek to ensure that football clubs can, in essence, operate on the basis of their own revenues. Clubs that wish to compete in European competition must also comply with UEFA's financial fair play regime.
This year saw the EFL's outcome of the proceedings against Birmingham City for breach of its profitability and sustainability rules (P&S Rules).68 Under the P&S Rules, the maximum seasonal loss that can be sustained by a Championship club is £13 million, with such losses assessed over a three-year period (i.e., with the maximum permitted loss therefore standing at £39 million). Birmingham City incurred losses of £48.787 million over that period, with the bulk of those losses sustained in the latest season under review; a season that had seen the club replace the manager three times. Incoming managers were given sizeable transfer budgets by the club, which also resulted in an increase in wage spending (wages as a percentage of turnover increased from 120 per cent in 2016–17 to 195 per cent in 2017–18). The Disciplinary Commission noted that this trend of spending demonstrated a 'deliberate disregard of the rules'.69
Under the relevant rules,70 the Disciplinary Commission had a wide power to impose sanctions for breach, to include financial and sporting sanctions. Birmingham City was issued with a nine-point deduction in the 2018–19 season. The case is, therefore, notable as marking the first time domestic financial fair play rules have resulted in the application of a points deduction.
Following the charge being brought against Birmingham City, the EFL has promulgated sanction guidelines for breaches of P&S Rules. The guidelines provide for a 12-point deduction for breach of the P&S Rules, which can be increased or decreased depending on aggravating and mitigating factors such as the extent of overspend and trend of spending. As noted in the Birmingham City decision, such guidelines will serve to provide some measure of predictability for clubs moving forward.
X OUTLOOK AND CONCLUSIONS
On 29 March 2017, the United Kingdom gave notice to the European Council of its intention to withdraw from the European Union in accordance with Article 50 of the Lisbon Treaty. That notice triggered a two-year period for the UK and EU to negotiate and agree the terms of the UK's exit. Subsequent deadline extensions mean that at the time of writing, the UK is set to leave the EU by 31 January 2020 unless the European Council, in agreement with the United Kingdom, unanimously decides to further extend the period. Despite lengthy and often heated negotiations between the UK government and the EU, at the time of writing many questions regarding the UK's withdrawal from the EU remain unanswered. The UK government's position is that the free movement of persons between the EU and the UK should end on Brexit. The most recent formal position from the UK government is to replace free movement with a 'mobility framework', which will allow UK and EU citizens to travel to each other's territories, and apply for study and work.71 It is not envisaged that this will give sportspeople the same right of free movement as currently exists.
How Brexit will impact sport will very much depend on the terms of the UK's withdrawal from the EU. If the UK government's proposal is implemented and therefore EU nationals no longer have the right to freely move to the UK, this could leave open the possibility for the UK government to set specific entry criteria for all sportspeople (in a similar manner to the way in which non-EU nationals are currently treated – see Section V.ii). Negotiations are ongoing between the FA and the Home Office with the possible agreement of automatic visas to be issued to any players contracted to a Premier League club. Regardless, any new criteria are unlikely to restrict the ability of top professional clubs to attract elite, international stars with the impact more likely to be felt further down the sporting pyramid by those who have historically recruited less-established players from the EU.
Governing bodies could also consider introducing quotas based on nationality – thereby limiting the number of foreign players that can appear in matchday squads. Further, there are certain EU-specific provisions in sports rules and regulations. By way of example, UK football clubs currently benefit from an exemption in Article 19 of the FIFA Regulations on the Status and Transfer of Players, which permits them (subject to approval from FIFA) to sign players within the EU or EEA aged between 16 and 18. This has been a key recruitment strategy for many clubs in recent years. On withdrawing from the EU (and absent a change of these regulations), UK football clubs would lose the ability to sign these young players and instead would be subject to the general prohibition on the international transfer of players under 18.
Aside from free movement, clubs may be well advised to adopt an anticipatory approach in their transfer negotiations by considering currency and exchange mechanisms within receivable financing deals and player transfers. Any impact on the value of the British pound and on the sport itself is still too premature to predict, but any downward trend could increase pressure on club finances and risk greater exercise of those insolvency sanctions referenced in Section IX.72
1 Paul Shapiro and Ben Rees are managing associates at Northridge Law LLP.
2 UK Sport and Sport England, New Code for Sports Governance, 31 October 2016 available at www.uksport.gov.uk/news/2016/10/31/new-code-for-sports-governance-published.
3 Premier League Rules, 2019/2020, Section I.
4 Bradley v. Jockey Club  EWHC 2164 QB, upheld on appeal  EWCA Civ 1056.
5 Victoria Park Racing v. Taylor (1937) 58 CLR.
6 Consumer Rights Act 2015, Section 64.
7 See Commission Staff Working Document – The EU and Sport: Background and Context – Accompanying document to the White Paper on Sport (COM(2007) 391 final), Paragraph 3.4, for further discussion.
8 Occupiers' Liability Act 1957, Section 2(2).
9 The foundations of which are found in Donoghue v. Stevenson  AC 562.
10 Condon v. Basi  1 WLR 866.
11 Collett v. Smith  EWHC 1962 (QB).
12 Football Spectators Act 1989, Section 11.
13 Criminal Justice and Public Order Act 1994, Section 166.
14 Police Act 1996, Section 25.
15 Leeds United Football Club Ltd v. Chief Constable of West Yorkshire  EWCA Civ 115; Ipswich Town Football Club Co Limited v. Chief Constable of Suffolk  EWCA Civ 1484.
16 Copyright Design and Patents Act 1988 (CDPA), Section 9.
17 Commission decision of 23 July 2003, case 37398, Joint selling of the commercial rights of the UEFA Champions League, OJ 2003 L 291/25, Commission decision of 19 January 2005, case 37214, Joint selling of the media rights to the German Bundesliga, OJ 2005 L 134/46, Re an Agreement between the FA Premier League and BSkyB  EMLR 78, and Commission press release IP/06/356, 22 March 2006.
18 TMA, Section 1.
19 ibid., Section 3(1)(b) and Rugby Football Union and another v. Cotton Traders Ltd  All ER (D) 417 (Mar).
20 EU Trade Mark Regulation (207/2009/EC).
21 Case-no. T 795/17.
22 CDPA, Section 12.
23 ibid., Section 14.
24 ibid., Section 13A.
25 ibid., Section 30(2).
26 Football DataCo Ltd v. Yahoo, Brittens Pools and others  EWHC 841 (Ch).
27 Football Dataco Ltd and others v. Stan James plc and others; and Football Dataco and others v. Sportradar GmbH and another  EWCA Civ 27, 6 February 2013.
28 Copyright and Rights in Databases Regulations 1997, Regulation 13.
29 Elvis Presley Enterprises Inc v. Sid Shaw Elvisly Yours  RPC 567, Paragraph 597.
30 Douglas v. Hello! Ltd  UKHL 21, Paragraph 293.
31 Edmund Irvine & Tidswell Ltd v. Talksport Ltd  2 All ER 414.
32 Robyn Rihanna Fenty and others v. Arcadia Group Brands Ltd (t/a Topshop) and another  EWHC 2310 (Ch).
33 Campbell v. Mirror Group Newspapers Limited  UKHL 22.
34 Data Protection Act 2018, Section 2.
35 European Convention on Human Rights, Article 8.
36 Douglas v. Hello! Limited & Ors  2 WLR 992, Paragraph 55.
37 The High Court's imposition of a mandatory undoing injunction and prohibitive injunctions over Rangers FC following its attempt to contract with Elite Group (in spite of its existing agreement with SDI Retail), acts as a clear warning of the importance of considering the overall impacts of these matching rights clauses ( EWHC 2772 (Comm) (24 October 2018) 33). At the time of writing, the courts have found in favour of Liverpool FC (and refused New Balance's permission to appeal application) over the sponsor's claim that their existing matching rights should prevent the club from signing a new shirt manufacturing deal with Nike ( EWHC 2837 (Comm)). The case highlights the need to use clear and specific wording to maximise the prospects of the enforcement of matching rights.
38 See, by way of example, the standard form contracts for both EFL and Premier League players, found at Forms 19 and 20 respectively of the Premier League Handbook 2017/18 (www.premierleague.com/publications).
39  EWCA Civ 1444,  FSR 16.
40 Union Royale Belge des Sociétés de Football Association ASBL v. Jean-Marc Bosman (C-415/93)  ECR I-4921.
41 Deutscher Handballbund v. Kolpak (C-438/00)  ECR I-4135.
42  Ch 413.
44 The minimum percentage varies from 30 per cent (for national teams ranked in the top 10 in the FIFA rankings) to 75 per cent (for national teams ranked between 31 and 50 in the FIFA rankings).
45 Case C-514/04 P, Meca-Medina and Majcen v. Commission  ECR 1-6991.
46 See footnote 7.
47 SEC(2007) 935.
48 Wouters v. Algemene Raad van de Nederlandse Orde Van Advocaten (C309/99)  All ER (EC) 193.
49 SEC(2007) 935 at Paragraph 2.1.5.
50 See Nordenfelt v. Maxim Nordenfelt  AC 535.
51 The authors extend their thanks to Peter Hackleton, a tax partner at Saffery Champness, who contributed to this Section.
52 See footnote 50.
55 See, for example, the Gambling Act, Sections 30 and 88.
56 Rules of the FA, Rule E8.
57 RFU Rules and Regulations, Regulation 17.
58 The most high-profile case in recent times being the criminal convictions against the Pakistani cricketers Salman Butt, Mohammad Asif and Mohammad Amir relating to the bowling of no-balls in the test match against England at Lords' in 2010: R v. Majeed, Butt, Asif & Amir Cooke J, 3 November 2011; R v. Amir, Butt  EWCA Crim 2914.
59 Fallon v. British Horseracing Authority  EWHC 2030 (QB).
60 ibid. at Paragraph 62.
61 London Olympic Games and Paralympic Games Act 2006, Section 31.
62 Criminal Justice and Public Order Act 1994, Section 166.
63 Consumer Rights Act 2015, Section 90.
64 Digital Economy Act 2017, Section 105.
65 ibid., Section 106.
66 Three-quarters of EFL clubs recorded losses at a combined deficit of £388 million. In contrast, 12 of the Premier League's 20 clubs reported profits in their latest accounts, with a combined surplus of £304 million. EFL sporting sanctions include: a 12-point deduction; fixture suspension; and the forfeit of their share of central funds to be paid out to football creditors (EFL Rule, 12.3.1 and Article 48.2).
67 Bolton had previously been referred to the EFL (in March 2019) by the players' union for failing to meet players' wages and had subsequently appeared in the High Court over a £1.2 million unpaid tax bill.
69 ibid. at Paragraph 36.
70 EFL Regulations, Regulation 92.
71 The future relationship between the United Kingdom and the European Union, available at https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/725288/The_future_relationship_between_the_United_Kingdom_and_the_European_Union.pdf.
72 For example, as a result of weakened broadcasting agreement bids.