Sports Law Department

Sports Law
1
Quarterly Newsletter
Issue #1 - July 2012
News
How do Argentine football clubs
overcome Dollar restrictions?
Argentine clubs started paying contracts in national
currency, taking the frst step on a long way of protec-
tionist measures.
As a consequence of the foreign exchange regulations and
restrictions issued by the Argentine government, football
clubs will start negotiating contracts in Argentine Pesos
(the currency considered in this kind of contracts used to be
the US$). The frst problem to be faced both for representa-
tives and players is not only the current annual infation of
around 25% but the 40% gap between the offcial Dollar
rate and the illegal one.
In this scenario, applying a foating exchange rate band
from AR$ 4.5 to 8 for the contract duration (usually 2 to 3
years) would be a possible rushed solution.
Pesifcation of contracts may not only bring economic con-
sequences but also sporting ones. It is estimated that there
may be a decrease in the number of foreign players co-
ming to join the Argentine leagues. As a secondary effect, a
great number of players from the Argentine lower leagues
may become frst league stars. We believe football inves-
tors will focus their efforts on bringing up new professional
players and acquiring economic rights of young promising
players.
The Argentine Rugby Union
(UAR) boosts its fnances
The Argentine Rugby Union doubled its revenue in
sponsorships and currently manages a budget of 90
million pesos.
The UAR has doubled its revenues this year due to monies
provided by the sponsors, the International Rugby Board
(IRB), new businesses, ticket sales, contributions from
provincial governments, among other income sources,
increasing its budget for 2012 in approximately 90 million
pesos.
The latest frm to join Los Pumas sponsorships (Los Pu-
mas is the nickname for the Argentine national rugby team)
was Renault. The Argentine rugby is growing by leaps and
bounds. An example of this trend is the increase in the num-
ber of players registered between 2007 and 2011 which
has been duplicated - among different categories through-
out the country. This is the reason why Renault has chosen
rugby as the sport to associate its brand with. We consider
that other companies will emulate Renaults decision.
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Sports Law
Jurisprudence
The Swiss Federal Tribunal de-
clares the appeal of Olympique
des Alpes inadmissible
Lausanne, 23 July 2012. The Swiss Federal Tribunal has
put an end to the procedure involving UEFA and Olympique
des Alpes SA in ruling that Olympique des Alpes appeal
against the Court of Arbitration for Sport (CAS) award ren-
dered in this case on 31 January 2012 is inadmissible. The
CAS award therefore becomes fnal.
In its ruling, the CAS upheld a decision by UEFA to exclude
FC Sion from the Europe League 2011/2012 after the club
felded players in such competition that it had signed du-
ring a period in which it was banned from signing any new
players. Olympique des Alpes SA appealed the CAS award
to the Swiss Federal Tribunal requesting its annulment, ad-
ducing the lack of jurisdiction of the CAS and a lack of inde-
pendence vis--vis FIFA.
Two weeks after having received the parties written sub-
missions, the Federal Tribunal delivered its ruling which
simply stated that the appeal of Olympique des Alpes SA
was inadmissible to the extent that it was not disputable.
The judgment of the Federal Court will have an impact be-
yond this single case. Indeed, it establishes that the route of
appeal to the Swiss Federal Tribunal is not open to athletes
or clubs excluded from competition by a sports authority or
court and wishing to secure the annulment of such a de-
cision once the competition is already completed, even if
damages might be theoretically required in case of unlawful
exclusion.
In relation to the jurisdiction of CAS in general to rule on
cases concerning football, the Federal Tribunal did not f-
nally have to consider this point. This issue has however
been decided at the cantonal level: the courts of the can-
tons of Vaud, Bern and Valais have indeed all recognized
the jurisdiction of the CAS in the numerous proceedings ini-
tiated by Olympique des Alpes SA during recent months.
Source: Tribunal Arbitral du Sport Court of Arbitration for
Sport (TAS CAS): www.tas-cas.org/news
Articles
Investment in football: econo-
mic benefts related to federa-
tive rights
By Rodrigo Ortega Sanchez*
1. Introduction.
The transfers of professional players from one club to a-
nother are done through the cession of federative rights of a
particular player for whom the cessionary club pays an im-
portant price. That economic value is usually denominated
economic rights although we understand that the correct
term should be economic benefts derived from the federa-
tive rights.
The current economic downturn in the fnances of football
clubs leads them to actively seek liquidity. This statement is
supported by the recent apparition of rules related to fnan-
cial fair play or Platini law implemented by the UEFA with
the object of struggle against the serious fnancial problems
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Sports Law
faced by European clubs. This tendency also affects Ar-
gentina, where most football clubs need to receive funds
urgently for their own fnancing. Assigning the economic
benefts derived from the transference of federative rights in
favour of businessmen or investors in exchange of a fxed
sum of money became a habitual practice for the clubs,
which in most cases generates the major source of income.
In this light, it is important to briefy review the concept of
federative rights and the economic benefts derived from
them.
2. Federative and Economic rights.
2.1. The Federative rights.
Article 18 bis of FIFAs (International Federation of Football
Association) Regulations on Status and Transfer of Players
was modifed early in January 2008 in order to stop the in-
creasing intent of control of third parties regarding players
contracts as well as the sports activities of football clubs.
Article 18 bis. Infuence of third parties in clubs:

1. No club shall enter into a contract that allows any
other party of that contract or any third party to acquire the
ability to infuence in employment and transfer-related ma-
tters its independence, its policies or the performance of its
teams.
2. The FIFA Disciplinary Committee may impose dis-
ciplinary sanctions on clubs that do not observe the obliga-
tions set out in this article.
In brief, the article solely forbids that a club that has
assigned federative rights over a specifc player, could not
have the absolute freedom to transfer said player at its con-
venience thus losing control over the transfer of the player.
It is worth mentioning that football players belong, under
federation license, to a particular club (the kind of license
varies in the case of a professional or amateur player).
Thus, the club to which the player belongs to, holds the fe-
derative rights due merely to the fact that it has that player
inscribed within its lines.
On the other hand, Vicente Morales Flores states that the
concept of federative rights mostly accepted by legal doc-
trine and judicial practice is the right of an entity to inscribe
a particular sportsman in a particular offcial competition so
that he participates on behalf and in representation of the
entity
1
. On this particular, it is important to stress once more
that federative rights are born in the head of the Sports Club
with the registration of the player in the corresponding fe-
deration or association, and not with the performance of the
labour contract of professional football player, which can be
previous or even more in case of underage non pro-
fessional players, may not exist.
In this sense, in the case of a transfer, the club that holds
the federative rights is the only one authorized to transfer
or give those rights to another club that wants to register/
affliate a player. Regarding an international transfer, an
International Certifcate of Transfer must be released and
requested by the federation or association of the destina-
tion club to the federation or association of the origin club,
which must give its approval for the transfer.
2.2. Economic rights / Economic benefts.
According to a great part of the legal doctrine, federative
rights of a particular sportsman (in this case a football pla-
yer) contain an economic component, which is referred to
as economic rights derived from federative rights and
usually represents the economic proft that the club will re-
ceive for the transfer of the player to another club.
On the other hand, according to Boletn Especial N3819
Rgimen de Anotacin y Archivo de Cesiones de benef-
cios Econmicos, on the transfer of contracts of the Argen-
tine Football Association (AFA), economic rights were
defned as economic benefts for the contracts transfe-
rence. Defning them like this, AFA identifes the future fact
as a condition to the actual perception of money. Therefore,
we can see that AFA refers to economic benefts and not
economic rights, given that the denomination of rights
identifes an acquired right, the ownership over rights of
another, and the truth is in this case that the perception of
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1
Morales Flores, Vicente, Los Dere-
chos Federativos y su contenido profe-
sional, page 5, published in the website
Sport Doc.
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Sports Law
money will only occur in case of a transfer of federative
rights, or as it is commonly called the transfer of the foot-
ball player which expresses an alias (conditional) and not
an acquired right.
In this sense, not only legal doctrine and the applicable
rules on the matter, but also case law of the Court of Arbi-
tration for Sports (CAS) have recognized the absolute va-
lidity of rights or benefts related to federative rights, which
means that through the assignment of said rights the club
that owns federation rights can share entirely or in part with
another club or an investor, the economic value of the fe-
derative rights of a particular player.
However, it is important to clarify that the acceptance of
the existence and validity of economic benefts on behalf of
CAS will be produced whenever there is only one club that
owns the economic rights and that the player agrees with
the assignment of a percentage of those economic benefts
derived from the federative rights.
In this context, the legal instrument through which that eco-
nomic beneft is shared is the implementation of an eco-
nomic rights lease, taking special care that the legislation in
force and the applicable sport rules are taken into account.
On this point, it is important to highlight that according to
the sport regulation in force, in case economic benefts are
shared, the assignor club will never be able to hold less
than 30% of those benefts.
3. Conclusions:
Though part of the legal doctrine considers that economic
benefts cannot be assigned to third parties, this view is not
shared by the majority.
Legal doctrine and case law - both of national and interna-
tional courts such as CAS - guarantee the legal validity of
the assignment of economic benefts derived from federa-
tive rights.
We notice that the rules of FIFA only forbid the interference
of third parties in the transfer of contracts, that is, the infu-
ence of those in the rights/obligations of the club who owns
federative rights. Nonetheless, nothing forbids an investor
- since everything that is not forbidden is allowed - to own a
percentage of the economic benefts, when the implemen-
tation takes place within the framework of legal dispositions
and the sports regulations in force.
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* Rodrigo Ortega Snchez is an associate of Estudio Beccar
Varela. He received an LLM in French, European and interna-
tional business law from the University of Paris II Pantheon-As-
sas, France (2008). He is a Coordinator of the Commission of
Sports Law of the Association of French-Latin American lawyers.
He is also a Coordinator of the Commission of Sports Justice,
Arbitration and Mediation of the Latin American Association of
Sports Law.
Sports Law Department
Ramn I. Moyano
Email: [email protected]
Tel: (+54 11) 4379 6883
Rodrigo Ortega Snchez
Email: [email protected]
Tel: (+54 11) 4379 6831
Estudio Beccar Varela
Tucumn 1, 4th foor
(C1049AAA) Buenos Aires
Argentina
Tel: (+54 11) 4379 6800 / 4700
www.ebv.com.ar
2012 | All rights reserved