The European Super League: An overview of legal challenges

Twelve football clubs announced on Sunday, 18 April 2021 that they will create the European Super League (ESL). Since then, most of the clubs have withdrawn, but the idea of a breakaway competition left open a question whether such a move can be legally challenged and if the likes of FIFA and UEFA can prevent any rival competitions in the future.

Background

The twelve football clubs include six Premier League clubs (Arsenal, Chelsea, Liverpool, Manchester City, Manchester United and Tottenham), three Serie A clubs (Inter Milan, AC Milan and Juventus) and three La Liga clubs (Atletico Madrid, Barcelona and Real Madrid). The announcement is reported to have been as a result of falling revenues from broadcasting rights and discontent about how these revenues are distributed, the COVID-19 pandemic and the inability to find a solution with UEFA that would suit those clubs.

Both FIFA and UEFA stated that participation in the ESL would lead to the clubs’ players being banned from participating in international football events and various other sanctions that would be imposed on the clubs in question.[1] The FA, the national governing body of football in England, equally disapproved of the plans for a breakaway league.

All six Premier League clubs have since withdrawn from the competition following the widespread negative reaction they received, including from their own fans. The rest of the teams apart from Real Madrid, Barcelona and Juventus have also formally withdrawn from the competition.

Legal challenges

There are football specific regulations that govern the game in addition to various international and domestics laws that have to be complied with.

The ESL stated that a legal action was under way to stop UEFA and FIFA from preventing the competition going ahead. The actions that could have been taken were likely to involve interim relief available in the domestic courts such as injunctive relief in England that can prohibit, for instance, the FA from taking any measures against the Premier League clubs until the dispute is resolved.

The ESL itself violated UEFA statutes, in particular article 49 (3) which states that:

“International matches, competitions or tournaments which are not organised by UEFA but are played on UEFA’s territory shall require the prior approval of FIFA and/or UEFA and/or the relevant Member Associations in accordance with the FIFA Regulations Governing International Matches and any additional implementing rules adopted by the UEFA Executive Committee.”[2]

This meant that the clubs who wanted to create the ESL were required to seek permission from UEFA before holding the competition in those countries regulated by UEFA.

It should also be noted, that a number of executives leading the ESL were privy to confidential and commercially sensitive information related to UEFA such as revenues, strategy etc. For instance, Andrea Agnelli, chairman of Juventus, was also chairman of the European Club Association (“ECA”), which represents interests of clubs in UEFA, and he resigned on the day the ESL was announced. It is possible that UEFA has a cause of action for breach of confidentiality to the extent that the confidential information that the executives were privy to was used when working on the ESL project to gain unfair advantage.

At the EU level, both the establishment of the new league and the potential measures which FIFA and UEFA threatened to take would have engaged competition law.

Competition law

The EU courts have consistently found that sport and the activities of sporting bodies are subject to competition law. There are no blanket exceptions for sport or for purely sporting rules. In assessing the compatibility of a sport body’s rules, no infringement of competition law would be found if a sport association’s restrictive practices and/or conduct have a legitimate objective and are inherent and proportionate to the objective.[3]

It is likely that any measures taken by the relevant sporting bodies against the ESL or its member clubs and players would have attracted competition law scrutiny. Recent jurisprudence on the subject has examined whether these types of measures could constitute an agreement between an association of undertakings having the object of effect of preventing, restricting, or distorting competition in breach of Art. 101 of the Treaty on the Functioning of the European Union (“TFEU”) or an abuse of a dominant position in breach of Art. 102 TFEU.[4]

Currently, UEFA is the sole organiser of the two current European club competitions – the Champions League and the Europa League. The ESL would have been a new entrant on the market for European club competitions, competing against the Champions League. This potential development raises important questions as to the permissibility under competition law of breakaway leagues. A similar structure exists in European basketball, as part of the club owned and operated Euroleague Basketball, which has been the subject of dispute before the European Commission.

The ESL’s proposed format highlights the relevance of the European sporting model and the specificity of sport under EU law. Art. 165 TFEU provides that EU action shall be aimed at “developing the European dimension in sport, by promoting fairness and openness in sporting competitions”. Likewise the European Commission White Paper on Sport states that there is a need to “preserve a competitive balance between clubs taking part in the same competition” as well as maintaining “a pyramid structure of competitions from grassroots to elite level and organised solidarity mechanisms between the different levels and operators”.

Existing case law addresses the importance of equality as between clubs, notably in the Bosman decision of 1995,[5] and the UEFA Champions League decision of 2003.[6] Moreover, the EU courts have held that sporting bodies do have the power to authorise alternative sports events if such power is subject to restrictions, obligations, and review.[7]

The European Commission or a relevant national court may also have had to tackle the issue of athlete participation in a non-authorised event. The EU General Court decision of December 2020 in the International Skating Union case is the most recent authority on this issue.[8] The General Court held that the ISU’s eligibility rules, providing for a ban on athletes participating in events not approved by the ISU, were considered in breach of Art. 101 TFEU. These rules were not inherent or proportionate to the pursuit of a legitimate objective.[9]

It is clear that competition law will continue to remain an important consideration for stakeholders in the sports industry at all levels. The European Commission, national courts, and national competition authorities will likely be faced with the above issues in the coming years as the current European structure of professional sport is challenged.

Court of Arbitration for Sport (“CAS”)

It is possible that any disputes relating to the ESL would have been subject to arbitration before CAS in Lausanne, Switzerland. Both UEFA and FIFA’s statutes provide for arbitration before CAS in a wide range of disputes. Moreover, CAS would have specific jurisdiction over any dispute where both parties agree to it. Arbitral awards from CAS can be challenged before the Swiss Federal Tribunal on a limited number of grounds.

CAS would have been a likely forum for any dispute concerning the ESL, examining whether any possible sanctions imposed by sporting bodies against clubs or players would have breached relevant laws or regulations, including any arguments raised by the parties as to whether the relevant rules are anticompetitive.

Employment law

One of the potential sanctions that UEFA and FIFA announced was a ban on players preventing them from playing for their country in European and international competitions. Arguments have been made that such a ban may potentially violate the principles of ‘restraint of trade’ which state that an individual should be free to follow their trade without undue influence and is part of the common law in England and Wales.

This could also put the players in a difficult position with their clubs. It has been reported that the ESL did not consult the players when creating the breakaway league. If that is correct, the fact that any potential sanctions may affect the players directly, could lead to a breach of the duty of trust and confidence by the clubs which every employer owes to its employees.

It has been suggested that the creation of a breakaway competition could constitute a serious enough breach of contract between the clubs and the players to give the players a cause to terminate a contract if they wish to. The Premier League Handbook contains standard clauses of a player contract which include an obligation on the clubs to follow and abide by the FA, UEFA and FIFA rules [10]. However, in practice it is unlikely that the players would take this action given the commercial realities such as the ability of other clubs to afford paying salaries at the same level as the ESL clubs.

Comment

With the news that the clubs have formally withdrawn from the ESL, governing bodies might nevertheless still decide to impose sanctions to deter clubs from attempting to create breakaway leagues in the future. That said, any such sanctions may be challenged either under EU law or otherwise. There has been much speculation that any sanctions may arrive in the form of points deductions and/or removal from competitions but in reality such sanctions could be seen to punish the players, managers of the clubs and, of course, the fans, all of whom came out strongly against the ESL proposal and were not involved in the decision making behind the ESL. As is always the case in any disciplinary matters, any sporting sanctions issued by governing bodies should aim to strike the careful balance between being dissuasive, reasonable and proportionate in all the circumstances. Also, the ESL is only the latest attempt at creating a new elite European league as this has been discussed by leading clubs on several occasions over the last 20 years. Despite the almost universal condemnation the ESL has received, it would be rash to assume that this is the last we will hear of breakaway leagues.

[1] https://www.uefa.com/insideuefa/news/statement-by-uefa-the-english-football-association-the-premier

[2] https://www.uefa.com/MultimediaFiles/Download/uefaorg/General/pdf

[3] Case T-313/02 Meca-Medina. Such legitimate objectives include the protection of athletes’ health, functioning event calendars, unform rules of the sport, and integrity of sport.

[4] See e.g., International Skating Union, EU General Court (2020); Deutsche Ringer-Liga v. Deutsche Ringer-Bund & United World Wrestling, Nuremberg Court of Appeal (2021); Federation Equestre International v. Belgian Competition Authority, Brussels Court of Appeal (2016).

[5] Case C-415/93 Bosman (1995): “In view of the considerable social importance of sporting activities and in particular football in the Community, the aims of maintaining a balance between clubs by preserving a certain degree of equality and uncertainty as to results […] must be accepted as legitimate.”

[6] Case COMP/C.2-37.398 UEFA Champions League (2003) in which the “Commission understands that it is desirable to maintain a certain balance among the football clubs playing in a league because it creates better and more exciting football matches” and the “Commission recognises that a cross-subsidisation of funds from richer to poorer may help achieve this.”

[7] Case C-49/07 MOTOE (2008).

[8] Case T-93/18 International Skating Union.The ISU has appealed the decision to the European Court of Justice.

[9] CMS has previously done a detailed analysis of the case in one of our Law Nows which can be found here.

[10] https://resources.premierleague.com/premierleague/document.pdf