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The Integrity of the Game and Shareholdings in European Football Clubs

Masterarbeit 2009 47 Seiten

Jura - Zivilrecht / Handelsrecht, Gesellschaftsrecht, Kartellrecht, Wirtschaftsrecht


Table of Contents

I. Introduction

II. Organisation of Professional Football

III. The UEFA’s Regulation on Multi-Club Ownership
(A) The ENIC Judgement
(1) Facts of the Case
(2) The CAS Decision and Evaluation
(a) Multi-Club Ownership and the Integrity of the Game
(b) European Competition Law and Fundamental Treaty Freedoms.
(3) Evaluation of the Judgement
(B) Further Implications
(1) The Proper Meaning of Control
(2) The Rule’s Impact on Clubs

IV. National Regulations on Multi-Club Ownership.
(A) England, Spain, France and Italy
(B) Germany and its “50+1 Rule”
(C) Differences and Similarities of the Rules

V. Cross Ownership and Investments of “Club-Involved” Persons
(A) UEFA Competitions
(B) Germany, England and Spain

VI. Risks not Covered by the Current Regulations

VI. Ensuring Protection of Integrity

VII. Conclusion


I. Introduction

Ownership in European football clubs received substantial attention with the ENIC Case[1] before the Court of Arbitration for Sports (CAS).[2] In that case, the Court held that controlling shareholdings of a person in more than one club might cause concerns as regards the game’s integrity. According to the CAS, the notion of integrity of the game mainly refers to the authenticity of results. This comprises, first, the honesty and uprightness of all partiesinvolved, but also and in particular public perception of such an authenticity. Following the ENIC judgement, the UEFA and national associations, orother league organisers, respectively, implemented restrictions on multi-club ownership to assure this integrity. However, the integrity of the game may not only be negatively affected by multi-club shareholdings of investors who might misuse their control. Problems may also arise with shareholdings of so-called “club-involved” persons, such as players, coaches, officials, and clubs themselves.

After a brief introduction to the organisational structure of professional football, the paper examines the current UEFA regulations on multi-club ownership. Particular focus lays on the legal assessment in the ENIC judgement before the CAS in 1999 and the rules’ practical impact on clubs. In a next step, national rules in England, Spain, France, Italy, and, in particular, Germany are compared in order to show differences and assess their consequences. The final chapter discusses shareholdings of clubs, players, coaches and other relevant club officials in other than their own clubs. This analysis finally allows for drawing a conclusion as to how intensively the integrity of the game is protected in regard to such shareholdings in UEFA competitions, England, Spain, and Germany.

Although other situations could also have an effect on the integrity of the game, such as multiple involvements (in any capacity whatsoever) of a person in more than one football club, those are not discussed in detail. The same applies to cumulative voting rights granted by contractual agreements with other shareholders or the club’s statutes.

II. The Organisation of Professional Football

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Before analyzing the protection of the integrity of the game and shareholding in football clubs, it seems necessary to briefly explain the organisational structure of European professional football and the role of the CAS as an independent court for sport arbitration.

The worldwide structure of football is formed in a pyramidal system. On top operates the FIFA[3] as world governing body, which has regulative powers mainly concerning the general rules of football and its competitions organised on an international level[4]. Currently, 208 national football associations and six confederations[5] ) are affiliated to the FIFA.

The confederations are continental umbrella organisations of the national football associations, such as, for Europe, the UEFA.[6] It has now 53 national football associations asmembers.[7] Besides the facilitation of football in Europe as a main aim, the UEFA is the only organiser of pan-European club championships. This includes,first, the UEFA Champions’ League, where usually the best national league teams are competing against each other.Second, the Europa League[8] involves teams usually ranked straight behind those qualified for the Champions’ League.[9]

As direct members of the UEFA and the FIFA, the national football associations have to comply with the rules and regulations passed by these organisations. The members of national associations are regional associations and league organisers, provided that the league is not organised by the national association itself.[10] The clubs regularly are also members of their regional association and/or members of their respective league organiser. Football players are employees of the clubs. They usually are not members of a national or any other football association, but rather bound to the associations’ regulations by virtue of the contract with their clubs.[11]

Via the above-mentioned pyramidal structure, even the regional associations are bound to FIFA regulations. Although they are no direct member associations of the FIFA, they are bound to the regulations of their national associations, which also require compliance with the statutes and regulations of the higher associations.

The CAS is a court of arbitration for sports and was founded in 1987. It has two chambers. One is responsible for disputes among sport associations and their members (e.g., clubs, athletes or other associations). The second chamber is responsible for disputes with an economic background. Arbitration is an alternative means of dispute settlement as long as it guarantees an equal legal protection for the parties. In contrast to ordinary courts, sports arbitration courts provide sportive expertise by specialised judges and diminish the duration of legal disputes as well as legal expenses for all parties. Furthermore, because arbitration is a voluntary means of dispute settlement, the parties need to be bound by this “special” jurisdiction either by a contractual agreement or the statutes of an association. Such an “arbitration clause” de facto leads to the equal ranking of arbitration and ordinary courts, although national courts are allowed to repeal a decision of the CASunder certain circumstances.[12]

III. The UEFA’s Regulation on Multi-Club Ownership

Multi-club ownership in football refers to cases where a person has controlling interests in more than one football club. The UEFA prohibits such shareholdings for its club competitions in the 2009/2010 season, namely the Champions’ League and the Europa League.[13] Both the provisions for the UEFA Champions’ League and the Europa Cup (in the following: UEFA rule) entail an identical restriction. Hence, in Article 3.01 c) of both regulations is stated[14]:

No individual or legal entity may have control or influence over more than one club participating in a UEFA club competition, such control or influence being defined in this context as:

i) holding the majority of the shareholders’ voting rights;
ii) having the right to appoint or remove a majority of the members of the administrative, management or supervisory body of the club;
iii) being a shareholder and alone controlling a majority of the shareholders’ voting rights pursuant to an agreement entered into with other shareholders of the club; or
iv) being able to exercise by any means a decisive influence in the decision-making of the club.

In summary, two conditions have to be met in order to trigger the UEFA rule: (1) an individual or legal entity needs to obtain control or influence over more than one club and (2) those clubs need to be qualified for a UEFA club competition.

The UEFA rule encompasses both direct and indirect control and influence by any (natural or legal) personin a club.[15] The notion of “club” must be understood to refer to every team, irrespective of its legal form, as long as it qualifies for either the Champions’ League or the Europa League. Due to the wording of the provision, (“…a UEFA club competition…”) it can be assumed that an overlapping control or influence, i.e., in a club participating in the Europa League and in a club competing in the UEFA Champions’ League, is also covered by the scope of the rule.

The important issue is when a person achieves control or influence over a football club. In this context, a distinction between the terms “influence” and “control” does not appear necessary, given that the UEFA rule does not clearly separate these two notions and establishes equal rules for both of them.[16]

The UEFA rule describesthe relevant forms of control and influence under lit. i) toiv). This list is conclusive. Lit. i) refers to a holding of the majority of voting rights. According to the CAS in the ENIC judgement, this means an absolute majority, namely more than 50% of the voting rights.[17]

Lit. ii)coversthe possibility to appoint or remove a majority of the members of the administrative, management or supervisory body of a club. This refers to, in particular, the possibility of a person to appoint/remove members of the board of directors without holding the majority of voting rights. Such a possibility could be granted, for example, under the club’s statutes or, in general, to persons who obtain influential positions (e.g., in the supervisory board) of more than one club.

Lit. iii) describescases in which a shareholder of a club enters into an contractual obligation not to use or to assign his voting rights to another shareholder of the club, who as a result obtains a controlling stake.[18]

Lit. iv), relating to the ability to exercise by any means a decisive influence in the decision-making of the club, can be deemed a “catch-all-provision”. The notion of “decisive influence” is an undetermined legal term, which grants UEFA the right to decide on a case-by-case basis whether a person exercises control or influence over a club.[19]

(A) The ENIC Judgement

The ENIC judgement was the first to evaluate the UEFA regulations on multi-club ownership. Since the judgement was passed in 1999, the UEFA regulations have been slightly modified. Nevertheless, the ENIC judgement provides for useful guidance on the issue because it laid down some fundamental criteria, which are still of importance. The CAS mainly assessed the UEFA rule under the law of the European Community (in particular competition law, Articles 81 and 82 EC, the freedom of establishment, Article 43 EC, and free movement of capital, Article 56 EC).[20]

(1) Facts of the Case

ENIC plc. wasa public limited company, incorporated under the laws of England and listed on the London Stock Exchange. At the time of the 1997/98 UEFA Cup Winners’ Cup quarterfinals, ENIC held, through fully controlled subsidiaries, stakes of more than 50% in three participants, namely AEK Athens, SK SlaviaPraha and Vicenza Calcio.[21] Although none of these clubs had been drawn against each other and only Vicenza passed to the next round, the UEFA felt impelled to intervene in order to protect sporting integrity. Thus, on May 26th 1998, approximately two weeks after the cup final in Stockholm, the UEFA informed all its member associations and ENIC about new regulations concerning multi-club ownership. These provisions[22] mainly comprised three issues:

(1) the prohibition of participation of clubs in other clubs,
(2) the prohibition of involvement of any person in the management, administration and/or sporting performance of more than one club at the same time and
(3) the restriction, that only one of two or more clubs may participate in the UEFA club competitions, if they are under common control.

While the first two rules basically prohibited any participation or involvement of the concerned parties, the latter did not completely foreclose ownership in more than one club, but rather restricted participation of clubs that are under the controlling influence of the same investor.

According to the UEFA, “control” is present:

ifan individual or legal entity

(a) holds a majority of the shareholders’ voting rights, or
(b) has the right to appoint or remove a majority of the members of the administrative, management or supervisory body, or
(c) is a shareholder and alone controls a majority of the shareholders’ voting rights pursuant to an agreement entered into with other shareholders of ongoing competition.

After having passed the regulations, the UEFA informed the common controlled clubs AEK Athens and SlaviaPraha that under the new rules, only SlaviaPraha would begranted admission to the UEFA cup season 1998/99.[23] In addition, the UEFA set a deadline for the Greek club to prove a change of control in compliance with those rules, otherwise the exclusion would come into effect.[24] Before the CAS, AEK Athens and SlaviaPraha primarily attacked lit. (3) of the UEFA rule, namely the restriction that “in case of two or more clubs which are under common control, only one may participate in the same UEFA club competition”.[25]

(2) CAS Decision and Evaluation

On August 20th 1999, the CAS handed down its judgement in the ENIC case. The Court rejected AEK Athen’s and SlaviaPraha’s claim against the contested UEFA rule.[26] It held that the rule was an essential feature for the organisation of a professional football competition and was not more extensive than necessary in order to serve the fundamental goal of preventing conflicts of interest, which would be publicly perceived as affecting the authenticity and consequently the uncertainty of results in UEFA competitions.[27]

(a) Multi-Club Ownership and the Integrity of the Game

Before assessing the legal and economic aspects of the UEFA rule, the CAS illustrated the regulation and organization of football in Europe.The Courtthen gave its opinion on the “integrity of the game-question”, whichthe UEFA had argued to have been its only motive behind the contested rule. The CAS described the notion of “integrity of football” both from a sporting and from a business point of view as:

“… crucially related to the authenticity of results, and has a critical core which is that, in the public’s perception, both single matches and entire championships must be a true test of the best possible athletic, technical, coaching and management skills of the opposing sides”.

In the opinion of the CAS, it is not sufficient that persons involved in the football competition are in fact honest, but rather the public must have the impression that especially players, coaches and also the management try their best for the club’s success.[28] The Court further discussed whether multi-club ownership within a competition has any effect on the integrity of the game and whether it could be publicly perceived as affecting the authenticity of sporting results.[29] In this context, the Court found three main problems to be crucial: (a) the allocation of resources by the common owner among its clubs, (b) the administration of commonly owned clubs in view of a match between them, and (c) the interest of third clubs.[30]

As regards lit. (a),that is the allocation of resources among clubs, the CAS touched upon the so-called “farm team” difficulty. It stated that, as a rule, it would be more efficient and economically productive to favour one team over the other and provide it with more resources. Because of that, a common owner may decide to allocate more resources (such as the best players) to a “first team”, which would be capable of competing at the top European level, while the other club (the “second team”) would be provided with less resources since it mainly serves to allow younger players to gain experience and qualify for being transferred to the first team.[31] But even if the clubs are on the same level and resources are distributed equally among them in the beginning, the business strategy of the investor may change later to the detriment of one team. This would apply, for example, if the investor eventually decides to sell one team and therefore transfers the (best) players of the team under market value to the other team.[32] Finally, even if there is no diverse treatment at all, the problem remains public perception of management decisions in multi-club ownership cases. In particular, the fans of either club will be inclined to doubt the legitimacy and motive of transactions. They may, for example, question whether transfer of a player or other management decisions are truly made in the best interest of their club rather than in the interest of the other club controlled by the same owner.[33]

Lit. (b) concernsthe administration of commonly owned clubs before a match between them. The CAS found that multi-club owners or executives may have various ways of affecting the performance of one club without violating the law or sporting regulations. One possibility would be the award of bonuses for team or player performances. High bonuses could be used as an effective incentive to encourage the players of one team, while low bonuses will discourage or less encourage the players of the other team.[34] A similar result could be achieved by the changeof team rosters before the match:For example, (irreplaceable) players or other staff members could be transferred or dismissed, even without prior knowledge/consent of the team coach, in order to diminish the club’s performance.[35] A third way for multi-club owners to negatively affect the performance of one team would be the use of “insider information” about clubs, which is easier to access by commonly controlled owners. This includes information on unpublicized injuries of players, training sessions, planned line-up or match tactics, which might be used by one team to the detriment of the other.[36] Finally, at least in theory, a team’s performance may also be affected by introducing negative surrounding conditions, such as the imposition of burdensome means of transport (e.g., bus instead of air plane), bad lodging and training conditions or the disregard of medical care.[37]

The last problem (c), which the CAS took into account, was the interest of third clubs. UEFA competitions like the UEFA Champions’ League or the Europa League usually encompass qualification rounds based on groups of teams playing each other home and away. For this reason, third clubs that are drawn into a group with two commonly owned teams may be or at least feel disadvantaged. The following scenario might serve as an example: Suppose that clubs A und B are owned by the same investor and are drawn into the same group for the Champions League. Club C, not owned by that investor, is also drawn into this group. Before the last group game, club A has already qualified for the round of the last sixteen, while club B as well as club C are still struggling. Now club A and B play against each other and B can only qualify for the round of the last sixteen if it succeeds against club A. If that actually happens, club C, including its fans, may suspect that there has been an agreement between club A and B to let B win because the clubs are owned by the same investor.[38]

Taking into account the above mentioned concerns, the CAS held that multi-club ownership in football indeed causes a conflict of interest and thus challenges the integrity of the game. Even assuming that multi-club owners, directors or executives always act in compliance with the law and do not try to directly fix up a match, situations could arise in which the economic interests of a multi-club owner or a parent company are at odds with sporting needs. This holds true at least with regard to public perception of the authenticity of results.[39]

In sum, the CAS held that multi-club ownership creates the risk of impairing the integrity of the game. Even if such risks or their actual realization may be difficult to assess or provenobjectively, public perception will generally be that there is a conflict of interest that potentially affects the authenticity of results. In the opinion of the CAS, this was indeed a cause of concern, in particular for sports regulators or organisers, but did not in itself justify the contested UEFA rule. Therefore, the CAS moved forward to evaluate legal questions, especially concerning European Community law.[40]


[1] CAS 98/200, AEK Athens and SK Slavia Praha / UEFA.

[2] In French: Tribunal Arbitral du Sport (TAS).

[3] The FIFA (Fédération Internationale de Football Association) is an association under the laws of Switzerland. It is located in Zurich (Switzerland).

[4] Worth mentioning are, among others, the FIFA Club World Cup, the FIFA World Cup, the FIFA Confederations Cup, the FIFA U-17 and U-20 World Cup and the FIFA Futsal World Cup (for further information, see; last visited: 26/06/09).

[5] Confederació Sudamericana de Fútbol (CONMEBOL); Confederation of North, Central American and Caribbean Association Football (CONCACAF); Asian Football Confederation (AFC); Oceania Football Confederation (OFC); Confédération Africaine de Football (CAF); Union des Associations Européennes de Football (UEFA).

[6] The UEFA is located in Nyon (Switzerland) and as the FIFA an association under the laws of Switzerland.

[7] The national football associations are therefore simultaneously direct members of the FIFA and the UEFA. Furthermore, the UEFA territory cannot be equalized with the territory of the European Union, since it comprises many more countries than the now 27 EU Member States.

[8] For the 2009/2010 season, the UEFA Cup has been modified and renamed into "Europa League". The Intertoto-Cup (additional qualifiers for the UEFA Cup) will end with the current season of 2008/09.

[9] For example, in the 2009/2010 season in Germany, the two first teams are directly qualified for the Champions' League, while the third team has to play the qualification. The teams ranked in places 4 and 5 are qualified for the Europa League.

[10] In most countries, the organisation of the professional football leagues has been transferred to a special league organiser. This development is caused by the fact that the national associations are still organised as non-profit organisations and thus benefit from tax advantages.

[11] For a brief overview of the organisation of sports in Europe, see, e.g., the European Commission’s publication “The European Model of Sport”, page 2 et seq.

[12] For further information concerning the CAS, see Hilpert, “Sportrecht und Sportrechtsprechung im In- und Ausland , pp. 341 et seq.

[13] The UEFA Cup was renamed into “Europa League” starting with the 2009/10 season. A Regulation on multi-club ownership for the UEFA Super Cup is not necessary, since its participants are the Champions’ League and Europa League winners.

[14] The full UEFA regulation text for the Champions’ League and the Europa League is accessible at UEFA home page (see bibliography for link).

[15] In the ENIC case before the CAS, ENIC plc. and its controlling stakes were held through different subsidiaries. AEK Athens was owned as to 78.4% by ENIC Hellas S.A. and ENIC Football Management Sarl owned Slavia Praha as to 53.7%. See CAS 98/200, AEK Athens and SK Slavia Praha / UEFA, page 2.

[16] It is possible to broadly describe “control” as the highest form of influence.

[17] See CAS 98/200, AEK Athens and SK Slavia Praha / UEFA, para 126, page 50 et seq.

[18] As mentioned before, lit. ii) and iii) are not assessed further here.

[19] See Geey/Ross/Rotkvic, “Club Ownership: Multiple Club Ownership: Disparities Between Rules”, page 7.

[20] Additionally, the CAS also applied Swiss civil and competition law. However, this did not have a different outcome and will not be discussed here. For further details, see for further details CAS 98/200, AEK Athens and SK Slavia Praha / UEFA, pages 23 et seq. and page 59 et seq.

[21] In addition, ENIC plc also held, through wholly controlled subsidiaries, stakes in the Swiss club FC Basel and the Scottish club Glasgow Rangers FC.

[22] For the original text of the regulation, see CAS 98/200, AEK Athens and SK Slavia Praha / UEFA, page 4 et seq.

[23] The other club Vicenza was not qualified for that season.

[24] The UEFA decided for Slavia Praha because according to specific UEFA rules for such scenarios, from among commonly controlled clubs that club would be admitted to the concerned UEFA club competition that had the highest “club coefficient” (based on the club’s results of the previous five years); if the club coefficient were the same, the club with the highest “national association coefficient” (based on the previous results of all the teams of a national association) would be admitted; if the commonly owned clubs were even also as regards this criteria, lots would be drawn. Furthermore the UEFA advised the Greek Association to replace AEK with the club that had finished the domestic championship immediately below AEK in the previous season. See CAS 98/200, AEK Athens and SK Slavia Praha / UEFA, page 4.

[25] CAS 98/200, AEK Athens and SK Slavia Praha / UEFA, page 8.

[26] The two clubs and ENIC at least achieved a partial success, since the CAS also held that the UEFA violated its duties of procedural fairness with respect to the 1998/99 season. Here the Court found that the UEFA may not change its cup regulations without allowing the clubs sufficient time to adapt their operations to the new rules. Finally the rule came into effect for the 2000/01 season because at the time of the award of the CAS, the 1999/00 season had already been started. See for further information CAS 98/200, AEK Athens and SK Slavia Praha / UEFA, paras 159-163, pages 62-63.

[27] CAS 98/200, AEK Athens and SK Slavia Praha / UEFA, page 1.

[28] CAS 98/200, AEK Athens and SK Slavia Praha / UEFA, para 25, page 15.

[29] CAS 98/200, AEK Athens and SK Slavia Praha / UEFA, para 28, page 16.

[30] CAS 98/200, AEK Athens and SK Slavia Praha / UEFA, para 31, page 16. The Court stated that this analyses was based on two assumptions, that is to say (1) that directors or executives of commonly owned clubs do not try to directly fix a match and always are in compliance with any relevant laws and sporting regulations; and (2) that the multi-club controlling individuals or a company’s executives are in constant contact with the controlled clubs’ own executives and structures, as is normal within a group of companies (vide CAS 98/200, AEK Athens and SK Slavia Praha / UEFA, para 32, page 17).

[31] CAS 98/200, AEK Athens and SK Slavia Praha / UEFA, para 35, page 18. According to the CAS, this situation especially arises if the commonly owned clubs are located in different countries, as is generally the case, since at national level there frequently are rules prohibiting multi-club ownership (see CAS 98/200, AEK Athens and SK Slavia Praha / UEFA, para 33, page 18).

[32] CAS 98/200, AEK Athens and SK Slavia Praha / UEFA, para 37, page 19.

[33] CAS 98/200, AEK Athens and SK Slavia Praha / UEFA, para 37, page 19.

[34] CAS 200/98, AEK Athens and SK Slavia Praha / UEFA, para 39, page 20.

[35] CAS 200/98, AEK Athens and SK Slavia Praha / UEFA, para 40, page 20.

[36] CAS 200/98, AEK Athens and SK Slavia Praha / UEFA, para 41, page 20.

[37] CAS 200/98, AEK Athens and SK Slavia Praha / UEFA, para 42, page 20.

[38] CAS 200/98, AEK Athens and SK Slavia Praha / UEFA, paras 43-44, page 19 et seq. The CAS explained that this can happen among single owned clubs as well, but that multi-club owners have additional ways to facilitate this process. In reality, there already have been several cases where unspoken understandings were concluded. One example is the “non-aggression-pact of Gijón” / “Shame of Gijón” in the 1982 FIFA World Cup in Spain, where Germany and Austria shifted down their play after the early German lead, which ensured qualification for both teams to the next round.

[39] CAS 200/98, AEK Athens and SK Slavia Praha / UEFA, para. 45, page 21.

[40] CAS 98/200, AEK Athens and SK Slavia Praha / UEFA, para 48, page 23.


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Tilburg University – Faculty of Law
Integrity Game Shareholdings European Football Clubs




Titel: The Integrity of the Game and Shareholdings in European Football Clubs