Pedro Madeira Froufe [Editor of this blog and Coordinator of the Group "Studies in European Union Law" (CEDU), of JUSGOV - Research Centre for Justice and Governance, University of Minho).
1. Football currently calls for multiple angles of analysis. In recent decades, as an economic activity, it has developed universally. It is a very specific economic activity that involves notable movements of capital and human resources, sociological and cultural aspects. It increasingly involves a technological, television and audiovisual aspect. It is common to say about football, that it – as a phenomenon – “moves passions and crowds”. In parallel, there are manifestations of local, regional and national identity associated with football. This has, directly and indirectly, a very significant economic weight.
For example, according to a study/record of international transfers of football players, called “Transfer Matching System (TMS)”, between 2011 and 2020, the positive net balance of player transfers from Portugal to other countries would have been greater than 2.5 billion Euros.[1] Progressively, football developed its professional-economic aspect, inserted in its own relevant market, which was also being built, solidified and growing in recent decades. The so-called “football industry” (a relatively common expression) is overlapping, on a global scale, with the dimension of football as a mere sporting, educational and leisure activity.
2. Article 165 of the Treaty on the Functioning of the European Union (TFEU) – formerly Article 149 of the Treaty on the European Communities (or TCE) – stipulates the following:
“1 – The Union will contribute to the development of quality education, encouraging cooperation between Member States and, if necessary, supporting and completing their action, fully respecting the responsibility of Member States for the content of education and the organization of the system educational, as well as cultural and linguistic diversity.
The Union contributes to the promotion of European aspects of sport, simultaneously taking into account its specificities, its structures based on volunteering and its social and educational function.
2 – The Union aims to: (…)
– Develop the European dimension of sport, promoting equity and openness in sporting competitions (…)”.
This provision was sometimes invoked to defend a thesis that advocated the exclusion of sport in general from the field of application of European Union Law (specifically, Internal Market Law). Professional football, even if developed as an economic activity, generating one or several relevant markets, would therefore be outside the scope of integration policies. This thesis is, consensually and clearly, discarded. The Court of Justice was even concerned, on several occasions, with the almost pedagogical clarification of the scope of application and the ratio of the current Article 165 of the TFEU. This rule does not exclude professional sport and, in particular, football or the so-called “football industry”, from the rules of the Internal Market – namely, the rules of competition and “economic freedoms”. Indeed, among others, the Superleague[2] Judgment explains that “in so far as it constitutes an economic activity, the practice of sport is subject to the provisions of EU law applicable to such activity (see, to that effect, judgments of 12 December 1974, Walrave and Koch, 36/74, EU:C:1974:140, recital 4, and of 16 March 2010, Olympique Lyonnais, C‑325/08, EU:C:2010:143, recital 27)”.[3] In effect, “[o]nly certain specific rules which were adopted solely on non-economic grounds and which relate to questions of interest solely to sport per se must be regarded as being extraneous to any economic activity. That is the case, in particular, of those on the exclusion of foreign players from the composition of teams participating in competitions between teams representing their country or the determination of ranking criteria used to select the athletes participating individually”.[4]
In reality, Article 165 of the TFEU must be interpreted together with Article 6(e) of the TFEU. This paragraph e) provides that the Union has the competence to develop actions aimed at supporting, coordinating or complementing the action of Member States in the fields of education, professional training, youth and sport. Article 165 of the TFEU is a provision that implements paragraph e) of the aforementioned Article 6 of the TFEU, indicating, as the Court states, “both the objectives assigned to Union action in the areas concerned and the means which may be used to contribute to the attainment of those objectives”.[5]
3. Thus, professional sport (the “professional sports markets”) – namely, football – is an economic activity that is subject to the rules of European Union Law, namely, Internal Market Law. Although there are certain aspects of the regulation of professional sporting activity that can be excluded from these rules of European Union Law – aspects that arise from and define the essential characteristics of sporting competition, itself – professional sport and the regulation of the respective markets are subject to the application of the Internal Market Law.
4. That being said, within the scope of the jurisprudence of “professional sports markets”, we highlight the recent Judgment of the Court of Justice of the European Union, BZ Judgment, of October 4, 2024, Case C-650/22 – already known as “Lassana Diarra Judgment”.
In summary, the dispute that gave rise to this Judgment, delivered within the scope of a preliminary reference, initiated by the Court of Appeal of Mons, in Belgium (“Cour d’Appel de Mons”), opposes the former French player Lassana Diarra, to FIFA and to the Belgian Football Association, regarding FIFA rules that regulate international transfers of football players and respective procedures, imposed, precisely, by FIFA. Strictly speaking, the applicable rules are in question, in cases of termination without just cause and on the initiative of the athlete of the sports contract (the employment contract that links that athlete to his employer, that is, to a football club), as well as the impact of these rules on the cross-border recruitment of professional football players.
This Judgment of October 4, 2024 – together with the future Judgment resulting from the litigation that pits the Portuguese Competition Authority against the Portuguese Professional Football League and several national clubs, regarding an alleged agreement/entente not to sign players during the period of the Covid-19[6] pandemic –, as well as the aforementioned Superleague Judgment, could reconfigure some relevant aspects of the economic and sporting practice of professional football. They could, as a whole, encourage (at least) a voluntary change in FIFA’s own rules – as, moreover, has already been admitted by this entity: “FIFA to open global dialogue on article 17 of the Regulations on the Status and Transfer of Players following Diarra ruling”.[7] There have already been those who considered that the recent Judgment of October 4, 2024 (and, in essence, the set of decisions of the Luxembourg Court previously mentioned) could be understood as a relevant and, in a certain way, disruptive milestone within the scope of relations between European Union Law and the regulation issued and imposed by FIFA. Such decisions by the Court of Justice could have a major impact, even causing a reconfiguration of typical relationships between football players and clubs and, therefore, a change in the functioning of the respective “professional sports market”.[8]
5. As explained in the Judgment itself (see recital 6), FIFA (Féderation Internationale de Football Association) is an association (association under private law), with headquarters in Zurich (Switzerland), governed by Swiss Law. Its aim being “drawing up regulations and provisions applicable to the game of football and related matters and ensuring compliance with them”, as well as “controlling all types of association football, taking appropriate measures to prevent violations of the Statutes, regulations or decisions of FIFA or the laws of the game” (Article 2 of the respective Statutes). FIFA, in accordance with Articles 11 and 14 of its Statutes, functions as a kind of grouping of supra-federations/national associations. Thus, any “federation responsible for the organization and supervision of football” in a given country can become a member of FIFA, as long as it is already a member of one of the six continental confederations recognised by FIFA itself and referred to in Article 22 of the same Statutes. One of these confederations is the Union des Associations Européennes de Football (“UEFA”).
As explained in the Judgment of October 4, 2024, the aforementioned federation must, first of all, commit to respecting the statutes, regulations, directives and decisions of FIFA, as well as those of the continental confederation of which it is already a member. FIFA currently counts among its members more than 200 national football federations, which are obliged, under the terms of articles 14 and 15 of the FIFA Statutes, in particular, to “ensure that their own members comply with the Statutes, the regulations, directives and decisions of FIFA bodies” and to ensure that they are respected by all entities involved in football, especially leagues, clubs and professional players. Furthermore, “clubs, leagues or any other groups affiliated to a member federation are subordinate to that federation and are recognized by it” (see recitals 4 and 5, Judgment of October 4, 2024).
FIFA is, therefore, in the context of world professional football markets, the institution that manages, develops, regulates and organizes said markets, directly or indirectly. Furthermore, it ensures compliance with football as a game/sport and its rules (currently called “Laws of the Game”). It ensures self-regulation of professional football, on a global scale. In fact – that is, regardless of possible international legal acts (particular international law) – FIFA guarantees the uniformity of the rules of the game and ends up imposing effective regulation and supervision of the practice and, to a large extent, of the market(s) of professional football. Football as we know it today is, inescapably, a creation of FIFA.
6. As part of this self-regulation, the “Regulation (FIFA) relating to the Status and Transfer of Players”[9] came into force on August 1, 2014. Under the terms of this Regulation, FIFA has a regime in force relating to situations in which there is unilateral and unjustified termination of an employment contract by a professional player which, in summary, is characterised by the following:
– The club that hires a player in this situation will be jointly and severally liable, with the player in question, for the payment of any compensation that this player may incur, towards his former club (former employer), also incurring sporting sanctions.
– The Federation of the club with which the player in question has unilaterally terminated the contract will not be able to issue and therefore send the so-called “International Transfer Certificate” to the Federation of the new club that has signed the player.
– The Federation in which the new contracting club is part cannot register the player without receiving such an “International Transfer Certificate” – therefore, in the end, in this situation, the player in question will not be able to take part in any competition protected, directly or indirectly, by FIFA. In practice, the player will not be able to play in any official match – meaning any match relating to any competition, national or international, in which that club participates.
7. In the case of Lassana Diarra, this former football player, in 2013, signed a contract with the club “FC Lokomotiv Moscow”. A year later and following disagreements between the player and the club (which even reduced the player’s salary), the contract was terminated due to non-compliance allegedly attributable to the player. Diarra was then ordered, following this litigation and non-compliance, to pay compensation of EUR 10,500,000. Subsequently, in 2015, a Belgian club, namely the “Royal Charleroi Sporting Club”, intended to sign Lassana Diarra. However, it made the entry into force of this new contract dependent on a guarantee, to be issued by FIFA, to the effect that the club would not be jointly responsible for the compensation, nor would it incur sporting sanctions. The existence of this guarantee would function as a suspensive condition for the validity of the contract. FIFA, however, based on the “Regulation relating to the Status and Transfer of Players”, did not comply with the Belgian club’s request and did not issue the required guarantee. Therefore, Diarra was unable to continue his career at the “Royal Charleroi Sporting Club”. However, the player, understanding that the regime established in the aforementioned “FIFA Regulation” prevented other clubs from signing him, filed a lawsuit against FIFA and the Belgian Football Federation (Union royale Belge des sociétés de football association – URBSFA), invoking and claiming damages of EUR 6,000,000.
It was in the context of this legal dispute, with the case being processed at the Court of Appeal of Mons, that it submitted a preliminary question to the Court of Justice of the European Union which, in short, questioned whether the principle of free movement of workers (Article 45 of the TFEU) and the prohibition of anti-competitive entities (Article 101 of the TFEU) could, or could not, be violated by the FIFA regime (provisions of the “Regulation on the Status and Transfers of Players”) that imposed:
i) the joint responsibility of the player and the club that intends to sign him, for the payment of compensation due to the club with which the contract was terminated without just cause, as well as sporting sanctions and, eventually, financial sanctions for the club that intends to sign him the player, and
ii) the possibility that the federation on which the player’s previous club depends does not issue the “International Transfer Certificate”, necessary for the signing of the player by a new club, if there is a dispute between the former club and the player.
8. The Court of Justice declared that the FIFA regime in question (enshrined in the “Regulation on the Status and Transfers of Players”) may effectively be incompatible with the right to free movement of workers, enshrined in Article 45 of the TFEU. In fact, from the perspective enunciated by the Court, that regime (that self-regulation) imposes on players who find themselves in a situation similar to that of Lassana Diarra and on the clubs that intend to sign them, an excessive sanctioning and joint responsibility regime, making it disproportionately difficult the international transfer of athletes within the Union, restricting their right to free movement. Although the Court recognised that limitations on player transfers could be justified, in the abstract, with a view to guaranteeing the regularity and fairness of competitions, the Court concluded that those FIFA rules, in concrete terms, go beyond what is necessary to ensure achieve this objective (regularity and competitive loyalty).
On the other hand, the Court of Justice of the European Union also considered that the FIFA regime in question restricts, without justification, competition in the player signing market, in terms similar to those of a non-contracting agreement. In effect, to the extent that the FIFA regime discouraged the signing of players who found themselves in a situation similar to that of Diarra, the effect caused in the respective relevant market would end up being equivalent to the effect produced by a non-signing agreement (“no-poach agreement”). Therefore, such a FIFA regime could cause a violation of competition law, and therefore a violation of Article 101 TFEU is in question.
9. The CJEU Judgment of October 4, 2024, in line with the Superleague Judgment, points towards the clear conformity of “professional sports markets” to the rules of the Internal Market and, in particular, to the rules and policy of “defence of competition”. However, a period of some uncertainty and possible reconfigurations of certain aspects of the functioning of these markets (namely, the hiring of professional football players) may emerge. The Judgment of October 4, 2024 and the subsequent non-application of the FIFA regime assessed in that Judgment could have a perverse effect: encouraging the contractual release of players, especially with the aim of them being subsequently signed by clubs with greater economic and financial capacity. This, if applicable, would also end up jeopardising stability and competitive integrity. In other words, it would perhaps contribute to professional football emphasising its mercantile and transnational side even more, definitively diluting the more strictly sporting aspects and sociological representations and regional identities. Less “passion and emotion” and definitely more market reason…
[1] Lusa, “Portugal é o país que mais lucra com transferências internacionais de jogadores de futebol”, Jornal de Negócios, 30 August 2021, accessed December 2, 2024, https://www.jornaldenegocios.pt/empresas/detalhe/portugal-e-o-pais-que-mais-lucra-com-transferencias-internacionais-de-jogadores-de-futebol.
[2] Judgment CJEU Superleague, 21 December, 2023, Case C-333/21, ECLI:EU:C:2023:1011.
[3] Judgment CJEU Superleague, 21 December, 2023, Case C-333/21, recital 83.
[4] Judgment CJEU Superleague, 21 December, 2023, Case C-333/21, recital 84.
[5] Judgment CJEU Superleague, 21 December, 2023, Case C-333/21, recital 96.
[6] Case C-133/24, CD Tondela and Others: Request for a preliminary ruling from the Tribunal da Concorrência, Regulação e Supervisão (Portugal) lodged on 16 February 2024 – CD Tondela – Futebol, SAD and Others v Autoridade da Concorrência.
[7] Press Communication, “FIFA to open global dialogue on article 17 of the Regulations on the Status and Transfer of Players following Diarra ruling”, Inside FIFA, 14 October 2024, accessed December 5, 2024, https://inside.fifa.com/legal/football-regulatory/news/fifa-to-open-global-dialogue-on-article-17-of-the-regulations-on-the-status-and-transfer-of-players#_msdynmkt_linkid=f598e4a9-318f-4ff7-974a-8f53cdf1ddfd.
[8] There are those who foresee, in relation to the “BZ” Judgment of October 4, 2024, as well as in relation to all the aforementioned Judgments, an impact equivalent to that of Judgment Bosman, 15 December 1995, case C-415/93, ECLI:EU:C:1995:463. Regarding the “effect” (of the Bosman Ruling) on the professional football market, we transcribe, among many others, a note taken from the press, accessed on December 5, 2024, https://www.ladepeche.fr/2024/10/04/transferts-dans-le-football-formidable-pour-les-joueurs-desastreux-pour-les-clubs-la-decision-de-lue-va- t-elle-vraiment-revolutionner-le-mercato-12240497.php.
[9] FIFA Clearing House, “Regulations and Explanatory Notes”, Inside FIFA, accessed December 5, 2024, https://inside.fifa.com/legal/football-regulatory/clearing-house/regulations-and-explanatory-notes.
Picture credits: by Mike on pexels.com.