From Bosman to Bernard Prof dr Frank Hendrickx

From Bosman to Bernard Prof. dr. Frank Hendrickx Faculty of Law, University of Leuven Workshop on Economics and Law of Sport, Leuven, 14 May 2013

1. Preface • Walrave and Koch, C-36/74, (ECJ, 12 December 1974) • 1. sport is subject to EU law only in so far as it constitutes an economic activity • 2. the prohibition of nationality discrimination does not affect the composition national teams, the formation of which is a question of purely sporting interest and as such has nothing to do with economic activity. 2

2. The EU – sport interaction 3

2. The EU – sport interaction European Union Fundamental Rights Int. market Soc. Pol’y Sports Pol’y Member States & Sports stakeholders 4

2. The EU – sport interaction • Legal structures • • • Deregulation (Re-)regulation Cooperation Guidance Incentives European Union • Integration • Positive • Negative • Subsidiarity • Vertical / horizontal Member States & Sports stakeholders 5

3. Specificity and Bosman 6

The issue of specificity • “Having regard to the objectives of the Community, the practice of sport is subject to Community law only in so far as it constitutes an economic activity within the meaning of Article 2 of the Treaty ” (ECJ, Walrave and Koch) • “reasons which are not of an economic nature, which relate to the particular nature and context of such matches and are thus of sporting interest only” (ECJ, Dona v. Mantero) 7

The issue of specificity • “it is certainly undeniable that the sports associations have the right and the duty to draw up rules for the practice and organization of the sport, and that activity falls within the association's autonomy which is protected as a fundamental right” (§ 216, AG, Bosman) • “only an ‘interest of the association which is of paramount importance’ could justify a restriction on freedom of movement” (§ 216, AG, Bosman) • “provisions (…) do not preclude rules or practices justified on noneconomic grounds which relate to the particular nature and context of certain matches. It stressed, however, that such a restriction on the scope of the provisions in question must remain limited to its proper objective. (§ 76, ECJ, Bosman) 8

The issue of specificity • specificity as a ‘doctrine’ to ensure that the specific characteristics (nature and context) of sport are recognised, – negatively: by avoiding or adapting rules of law (of the public legal order) in the area of sport – positively: by allowing autonomous sporting rules or sportorganisational rules, or by actively producing sport-related regulation 9

4. The sport article • Article 165 TFEU – The Union shall contribute to the promotion of European sporting issues, while taking account of the specific nature of sport, its structures based on voluntary activity and its social and educational function. – Community action shall be aimed at: developing the European dimension in sport, by promoting fairness and openness in sporting competitions and cooperation between bodies responsible for sports, and by protecting the physical and moral integrity of sportsmen and sportswomen, especially the youngest sportsmen and sportswomen. – The council: • Shall adopt incentive measures, excluding any harmonisation of the laws and regulations of the Member States • on a proposal from the Commission, acting by a qualified majority on a proposal from the Commission, shall adopt recommendations. 10

4. The sport article • With the New Treaty article: • • • Sport falls under the Treaty basis for EU activities: “shared political authority” The approach will be more than an “economic approach” A positive approach, besides a negative one Practical effect on case law ECJ ? 11

5. Football case law: from Bosman to Bernard 12

The Bosman ruling • Bosman case (C-415/93): • The free movement of workers precludes: – the application of rules laid down by sporting associations – under which a professional footballer who is a national of one Member State – may not, on the expiry of his contract with a club, – be employed by a club of another Member State – unless the latter club has paid to the former club – a transfer, training or development fee; 13

Bosman versus Bernard • • • Sport in so far as economic activity Free movement of workers Restrictions regardless of nationality Professional to professional End of (prof. ) contract Transfer fee To be paid by new club Limitation of free movement Justification possible Proportionate But violation Openings for training compensation • • • Sport in so far as economic activity Free movement of workers Restrictions regardless of nationality Trainee to professional End of training Damages To be paid by player Limitation of free movement Justification possible Proportionate But violation Openings for training compensation 14

Bosman versus Bernard • “ 109. However, because it is • impossible to predict the sporting future of young players with any certainty and because only a limited number of such players go on to play professionally, those fees are by nature contingent and uncertain and are in any event unrelated to the actual cost borne by clubs of training both future professional players and those who will never play professionally. ” “ 42. The returns on the investments in training made by the clubs providing it are uncertain by their very nature since the clubs bear the expenditure incurred in respect of all the young players they recruit and train, sometimes over several years, whereas only some of those players undertake a professional career at the end of their training, whether with the club which provided the training or another club (see, to that effect, Bosman, paragraph 109). ” 15

Bosman versus Bernard • 109. “The prospect of receiving such • fees cannot, therefore, be either a decisive factor in encouraging recruitment and training of young players or an adequate means of financing such activities, particularly in the case of smaller clubs. ” 44. (…), the clubs which provided the training could be discouraged from investing in the training of young players if they could not obtain reimbursement of the amounts spent for that purpose where, at the end of his training, a player enters into a professional contract with another club. In particular, that would be the case with small clubs providing training, whose investments at local level in the recruitment and training of young players are of considerable importance for the social and educational function of sport. 16

AG in Bernard • 52. First, since only a minority of trainee players will prove to have any subsequent market value in professional football, whereas a significantly greater number must be trained in order for that minority to be revealed, investment in training would be discouraged if only the cost of training the individual player were taken into account when determining the appropriate compensation. It is therefore appropriate for a club employing a player who has been trained by another club to pay compensation which represents a relevant proportion of that other club’s overall training costs. 17

AG in Bernard • 53. Second, it may transpire that the training of a particular player has been provided by more than one club, so that any compensation due should, by some appropriate mechanism, be shared pro rata among the clubs in question. 18

AG in Bernard • “ 55. I am less convinced by a third concern which has been voiced, namely that the liability to pay the compensation should lie only on the new employer and not on the former trainee. ” • (…) • “ 57. (…) if the player himself were to bear any liability to pay training compensation, the amount should be calculated only on the basis of the individual cost of training him, regardless of overall training costs. If it is necessary to train n players in order to produce one who will be successful professionally, then the cost to the training club (and the saving to the new club) is the cost of training those n players. It seems appropriate and proportionate for compensation between clubs to be based on that cost. For the individual player, however, only the individual cost seems relevant. ” 19

AG in Bosman • “ 237. The transfer fees cannot be regarded as compensation for possible costs of training, if only for the simple reason that their amount is linked not to those costs but to the player's earnings. ” • (…) • “Any reasonable club will certainly provide its players with all the development necessary. But that is expenditure which is in the club's own interest and which the player recompenses with his performance. It is not evident why such a club should be entitled to claim a transfer fee on that basis. ” 20

AG in Bosman • “ 239. That does not mean, however, that a demand for a transfer fee for a player would, following the view I have put forward, have to be regarded as unlawful in every case. ” 21

AG in Bosman • Such rules would in my opinion have to comply with: – First, the transfer fee would actually have to be limited to the amount expended by the previous club (or previous clubs) for the player's training. – Second, a transfer fee would come into question only in the case of a first change of clubs where the previous club had trained the player. – Analogous to the transfer rules in force in France, that transfer fee would in addition have to be reduced proportionately for every year the player had spent with that club after being trained, since during that period the training club will have had an opportunity to benefit from its investment in the player. – Moreover, it is not certain that even such a system of transfer rules could not also be countered by Mr Bosman's argument that the objectives pursued by it could also be attained by a system of redistribution of a proportion of income. 22

Summary • • • Training compensation can be adequate (ECJ Bernard) Compensation of real training costs (ECJ Bernard) Criteria determined in advance (ECJ Bernard) Paid by player / club (AG Bernard) Relevant proportion of overall training cost (AG and ECJ Bernard) Pro rata for training clubs (AG Bernard) Development is also in interest clubs (AG Bosman) Only in case of first change / reduced in time (AG Bosman) Not make free movement impossible (proportionality) (Bosman, Bernard) 23

Debate • Reasons for payment in employment law • Contract stability: damages for breach of contract • Fair competition: (Violation of) non-compete obligation • Training compensation • Reasons for payment in sport • Contract stability • Fair + balanced competition • Youth development • How to secure relative freedom of labour & sport specificity? 24