Sports Law Window: octubre 2014

CAN LUIS SUAREZ PLAY THE ‘CLASICO’?

DATE: 22^nd of October 2014

CAN LUIS SUAREZ PLAY THE ‘CLASICO’?

In Spain has been published that the Luis Suarez’s ban ends on 25^th of October, regarding the CAS’ resolution. This argument is based on the fact that the media release issued by the CAS on 14^th of August stipulates the period of the punishment all of us know (4 months) starts on 25^th of June. This source (MARCA.com, AS.com and StadiumNews.com) states that the disciplinary measure about match suspension should be complied until the 25^th of October (including itself) because the term starts to run the following day (that is the 26^th of June, “from day to day” term). This reasoning also implies that Luis Suarez is not able to play the match against Real Madrid this Saturday (25^th of October) and Barça could be punished for an incorrect line-up.

The point is that the CAS explicitly specifies the date when the ban starts on 25^th of October, when the sanction to the Uruguayan player as well as the Uruguayan Federation was notified to him on 26^th of October. This change of date could not be a coincidence. In fact it should not taking into account the circumstances. It is fair thinking that this episode was alleged at the hearing.

In a press release published on the FC Barcelona website, the Catalan football club reported that “Luis Suarez can play in the ‘Clásico’ at the Santiago Bernabéu on October 25 at 6.00 PM CET. The Court of Arbitration for Sport (CAS) has confirmed to FC Barcelona that the Uruguayan’s suspension will end at midnight on Friday 24 October, thus clearing him to appear in first official fixture for his new club, against none other than Real Madrid, should Luis Enrique opt to play him.”

The interpretation which stands that Suarez cannot play the ‘Clasico’ is based on a wrong translation of the Spanish Law about the terms to this case. This source has confused the periods to appeal and the periods of execution of penalties or sanctions. Moreover the applicable law on this subject is not the Spanish law. However the applicable law is, obviously, FIFA Regulation, and more specifically, the FIFA Disciplinary Code, and in alternative, the Swiss Law (FIFA ban).

There are no grounds to uphold this thesis due to the article 106 FIFA Disciplinary Code provides that the decisions “come into as soon as they are communicated.” It is true that the FIFA statement is notified on 26^th of October and from here, except interruption or temporary suspension (it has not been), should be counted four months including the 26^th of June, therefore the term would end at 11:59pm on 25^th of October and Suarez could not play the match. But we should bear in mind that the CAS established the term of the ban started to run on 25^th of June, not the 26^th. The reason could be that the Suarez’s lawyers claimed at the hearing a compensation for the delay to communicate the sanction due to the incident occurred on 24^th of June and FIFA Disciplinary Committee “ad hoc” at Rio de Janeiro adopted the sanction on 25^th of October and the statement was known by the Association and the player the following day, namely 1-day delay.

Therefore, despite the sanction was known by Suarez on 26^th of June, the CAS’ decision it is clear establishing that the ban starts in the 25^th and we need to be taken into consideration the CAS’ resolutions are final, conclusive and binding on the parties.

Moreover, to reaffirm this position, FIFA communicated yesterday that Luis Suarez "will be empowered to play in official matches with Barcelona from October 25, 2014", said to the media agency DPA a FIFA’s spokesman.

In conclusion, Luis Suarez can play the ‘Clasico’ against Real Madrid at the Santiago Bernabeu if Luis Enrique deems it is necessary, because the end of the ban is on 24^th of October at 11:59pm, based on the CAS resolution.

THE ECONOMIC CONTROL OF “LA LIGA” (LFP). HOW IT WORKS? SPECIAL REFERENCE TO THE “PEDRO LEON CASE”

DATE: 10^th of September 2014

THE ECONOMIC CONTROL OF “LA LIGA” (LFP)

HOW IT WORKS? SPECIAL REFERENCE TO THE “PEDRO LEON CASE”

The idea of this financial control comes of the aim to adopt the famous “Financial Fair Play UEFA” in Spain. It is born to create a due diligence handling the football clubs by their executives. Creating the need to an economic viability and in this way they can be economically viable. Most of their methods to manage the clubs were not the most appropriate. Even though we can find a great number of teams in bankruptcy.

The keys of this Economic Control appear in the ‘Economic Control of the Clubs and Sports Companies affiliated to La Liga Regulation’.

First of all, it should be noted that this Regulation is based on the Sport Law 10/1990, 15^th October. In its article 41.4.b) grants LFP exclusive jurisdiction about the protection functions, control and financial supervision for the associates of the LFP, as it is explicitly written in the preamble to that regulation.

The articles 12 and following deal about the documentation duty on the economic area. The football clubs should submit the required documents by these dispositions to the Committee of Control of the LFP. The documents shall be drawn up between the 15^th and the 31^st of March of each financial year. Among those documents are: the list of debts transfer activities and acquisition of players, list of debts and loans to employees, listing debts to government (and the certificates issued by them), calculation of the break-even, among others…

Another point in the Regulation is referred to economic-financial requirements that on 31^st of December the teams ought to comply. The first of them, it should not have outstanding debts (arts. 16 to 18) in relation to any transfer with other club of any league or federation. Secondly, it should not exist debts with the employees. And finally it shall be prove that there are not outstanding debts with the public administration (Social Security or Tax Agency). In the “Annex II” of the Regulation delimits the concept “outstanding debts”, these debts will be “payable and required amount”.

Another important aspect of this Regulation appears in the articles 20 and following, it makes reference to indicators of possible future financial situation of economic imbalance. This is the break-even requirement and it is exactly the same as the UEFA Regulations on Financial Fair Play. This break-even is established by the difference between ‘relevant incomes’ and ‘relevant expenditures’. The Regulation allows an acceptable deviation of 5m€ in the First Division and 2m€ in the Second Division. This amount could be exceeded until 45m€ (this season) it is covered by shareholders or related parties. And the amount could exceed in 30m€ until the season 2017/18.

Another indication of possible future financial situation of economic imbalance occurs when the amount of the annual economic costs associated with the first team (for all concepts, players and coaches) exceeds 70% of the relevant income. Which means that clubs and SADs, cannot allocate more than 70% of their income to the cost of the first team (Pedro Leon case, discussed below).

And finally, it must also comply with a ratio of net debt at 30^th of June in relation to the relevant income if the net debt exceeds 100% of the relevant income of the season in question. It is important, in relation to these indicators represent how much "expenditures", "as" relevant income "and" net debt ". These definitions appear in the Annexes to the Regulation.

How could it be otherwise, and all the dispositions with the vocation of penalize, there is a disciplinary regime to apply when some football club breach the previous commitments. This Regulation does not specify bans for these breaches and refers to the LFP Statutes, more specifically to the art. 78.bis. The same article 78.bis provides that violations of economic control may be classified as very serious, serious or minor. We are going to talk only about the very serious for reasons of space and interest in the theme of the post (Pedro León case).

The rule regards as very serious offenses: altering or include incorrect information on the documents required by the Control Committee or the Head of Department of Economic Control, in order to verify the obligations laid down in Articles 12 to 18, 20 and 22 to 24 of the Economic Control Regulation. Another is the breach to pay debts that are laid down in Articles 16 to 18 of Regulation and the breach of the break-even in a percentage higher than 1% (Article 20). Nothing says about the breach of the ‘70% rule’ of relevant revenues destined for the first team or 100% of relevant incomes that exceed the net debt.

The ban that this article stipulates to such breaches is a fine between 10.000 and 300.506’05 euros in the case to failure the documentation duty and secondly can be added the prohibition of registration of players during a season of any entity that fails on its obligations listed above.

Once explained the functioning of the Economic Control of the LFP, we should mention the case has brought up this post: the case of the license of Pedro Leon.

Pedro Leon, who has seen how the LFP has forbidden his right to play football as a result of a breach of the 70% rule by Getafe FC, which sets maximum spending in the first team at 17 million euros. He has been deprived of his right to practice their profession effectively considering such a situation, a substantial change in working conditions (article. 41 Workers’ Statute). And this has been upholding the Supreme Court in its judgment of 28^th of April of 2010 (2492/2010 STS –Aquino Case-). The legal support to this point is found in Article 4.2.a) of the Workers' Statute, where is recognized the right to the effective occupation and more specifically in Article 7.4 of the RD 1006/85, which states that "professional athletes are entitled to the effective occupation, being impossible, except in suspension or injury, be excluded from training and other preparatory activities for the exercise of the sport". This is understood, by analogy, that it is applied to the competition, and this is the reason due to an athlete trains or perform other preparatory or instrumental activities to be in a good physical condition to carry out his job. Not being a technical decision, but being a legal impossibility for the exercise of his profession. Attempting to his right to train, dignity and professional future due to the specificity of sport. Which provides the unilateral termination of the contract for just cause by Pedro Leon and a compensation for the damages caused to the worker.

CAN LUIS SUAREZ PLAY FRIENDLY GAMES WITH HIS NATIONAL TEAM?

DATE: 22^ndof August 2014

CAN LUIS SUAREZ PLAY FRIENDLY GAMES WITH HIS NATIONAL TEAM?

This post is due to these days have been published news based on the words of Mr. Alejandro Balbi, member of the Executive Commission of Uruguayan Federetion, who represents Luis Suárez at the CAS, jointly with FC Barcelona lawyers.

These declarations said that the player did not be able to be called for his national team for the friendly games in Korea and Japan on 5^th and 8^th October, because they “do not want to take unnecessary risks”. His reasons were the following: “We do not have already the grounds of the judgment and the sanction. Until we do not have the grounds of the ban we are not going to do anything. The most convenient is not to call him, if we call him it is possible that we receive a fine”. When Mr. Balbi talks about “a fin” he is referring to the ban that the Uruguayan Federation would receive if Suarez would play those games.

The Uruguayan lawyer, cautiously, prefers do not have any problem in relation with the ban to the footballer. But to eliminate the doubts, we are going to analyse the FIFA’s ban and the CAS decision published as a press release the last 14^th August. Even though is not the decision with all of its grounds, as Balbi says.

First of all and taking the first ban imposed by FIFA as a reference, the CAS overturns the sanction related with the entrance to the stadiums (art. 21 FDC) and the prohibition of taking part in any kind of football-related activity (art. 22 FDC) for a period of four months. This allows the player to train with his team and teammates. The CAS understands that this punishment is excessive because the penalty already exists on the offense, adding that also takes into account the impact that can generate this in the player after the end of the sanction. Upholding the proportionality of the ban of 4 months without playing an official match, as well as 9 games with his national team.

In relation to the ban of the 9 official games for his national team, the article 38.2.a) FDC is emphatic stating that if the penalty occurs in the FIFA World Cup will be fulfilled "in the next official match representative team affected”. That is, in the qualifiers for the 2018 World Cup. In this case, it is not the case for the friendly games in Japan and Korea.

But the "quid" of the issue and the reason because I suspect that the lawyer of the Uruguayan Football Association seems so cautious, is the penalty is 4 months. The CAS in the first paragraph of its statement dispelled these doubts, establishing the following: "However, the 4-month suspension will apply only to official matches and no longer to other football-related activities handler (such as training, promotional activities and administrative matters)." This means that this is applied to official matches exclusively.

These facts lead us to the next step, the surveillance of the FIFA definitions about what an “official match” is. The Regulation on Status and Transfer of Players establishes the definition of “official match”, which is the following: “matches played within the framework of organised football, such as national league championships, national cups and international championships for clubs, but not including friendly and trial matches”. This, carry us to take a look to the definition of “organised football” (it is below the last on the Regulation): “association football organised under the auspices of FIFA, the confederations and the associations, or authorised by them”. This definition creates the necessity to go to know what FIFA understands by “association football”, this meaning appears in the FIFA Statutes, “the game controlled by FIFA and organised in accordance with the Laws of the Game”.

All of this adding that the friendly game is celebrated in “FIFA date” and it is valid for the Ranking FIFA we could conclude that it is an official game due to the analogy, because the definition is too ambiguous in my opinion.

My conclusion is that it is possible that based on the terminology used by the rules in their definitions can be regarded as "official", the international friendly match. However, the limits of each concept are not clear enough. But taking in mind the precedent of the Spain-South Africa, where we spoke about the the match as an official one, I think to avoid problems, the best is consider the match as "official". Although the issue leaves me doubts. I think FIFA should step forward or they shall make a press release "ad hoc" clarifying this point about the case of Luis Suarez, or be more specific defining an international friendly match. Just to avoid misunderstandings.

THE FINANCIAL FAIR PLAY AND THE ‘AFFAIRE’ DI MARIA-PSG

DATE: 19^th of August 2014

THE FINANCIAL FAIR PLAY AND THE ‘AFFAIRE’ DI MARIA-PSG

- WHAT IS THE UEFA FINANCIAL FAIR PLAY?

Everybody has heard about the Financial Fair Play (hereinafter referred to as “FFP”) . Now, we are going to explain how it works. This system was created in 2011 by UEFA. And this was a duty imposed to all the teams that get the classification to the UEFA Champions League or UEFA Europa League.

This process is based on Club Licensing and Financial Fair Play Regulations, which verify all the economic results of the registered teams. The FFP forces to the football clubs to do not have losses and they should look for a balance sheet (break-even requirement) between their income and expenditure. Thereby laying a limit on loss. Besides the obligation that there are no outstanding debts with other football clubs, players or the Tax Agency (Revenue) of their countries. According to UEFA, "the clubs have to pay their players or transfers as specified in the contracts they sign, and if it is not they will be punished by the competent authority." Understanding then, that the debts should be liquid, due and payable (enforceable obligations).

The limit was established in 5 million euros over the incomes. Being this one, an “acceptable covered deviation”. However it exists the called “acceptable non covered deviation”, it allows to football clubs to exceed this level up to the 5m€ amount if the excess is covered by contributions from equity participants and/or related parties. We can see this method at the table below:

LA DESVIACIÓN ACEPTABLE
Period (Season)	Years	FINANCIAL YEARS			ACCEPTABLE DEVIATION
Period (Season)	Years	FINANCIAL YEARS			COVERED	NON COVERED
2013/2014	2	NO	2012	2013	45M€	5M€
2014/2015	3	2012	2013	2014	45M€	5M€
2015/2016	3	2013	2014	2015	30M€	5M€
2016/2017	3	2014	2015	2016	30M€	5M€
2017/2018	3	2015	2016	2017	30M€	5M€
2018/2019	3	2016	2017	2018	<30M€ (*not determined)	5M€

Nevertheless if the equity participant or the related party invest in the football club through a company that belongs to him or it is directly related to him the value of this agreement/transaction (prior investigation by UEFA) will adjust to the fair market value. For instance, when PSG and Qatar Tourism Authority agreed a sponsorship agreement. This body belongs to Al Khelafi’s family (PSG’s owner). Agreement Value: 200m€; Fair Market Value fixed by UEFA: 100m€.

To calculate the “break-even requirement”, we should exclude on the expenditures all the investment in the stadium, training fields and the developing of the youth squads.

There are different types of disciplinary measures to be based on the failure. We con see from a warning, a reprimand, a fine and points deduction as less harmful measures for the economy of the club. And on the other hand, retention of income earned in UEFA competitions, prohibition of registration of new players in UEFA competitions as well as the restriction of players, the match disqualification (current or future), including the removal of the title or award; all as more stringent disciplinary actions.

- OBJECTIVES

The main idea of this system was stopping the debts of the football clubs with players, others clubs and tax agencies. Moreover UEFA pretends that they operate at the market with common sense and with the necessary rationality to avoid economic difficulties. Another short-term goal could be reducing inflation of the wages and do not generate more debts. And the last objective could be the investment in youth football, the strengthening of the youth squad, its infrastructure and its resources.

- DI MARIA TO PSG: A FAILED DEAL.

Last May UEFA banned PSG, among another football clubs ((Dnipro, Bursaspor, Rubin Kazan, Galatasaray, Crvena, Anzhi, Zenit, Levski Sofia y Manchester City).

The PSG’s ban was due to break the ‘break-even requirement’. The Parisians couldn’t convince to the Club Financial Control Body (CFCB) that its agreement with the Qatar Tourism Authority was fair. The agreement was settled in 100m€ and because of this they failed this rule.

The disciplinary measure, after an agreement between the parties, was that the French football club couldn’t register more than 21 players (instead 25) in the next Champions League. Additionally they agreed to not increase the expenditure in wages in the next 2 years (limit: 240m€). Also, do not have losses for the next season over the 30m€ and any loss in the season 2015/16.

A ban of 60 million euros that will be reduce if they respect all the UEFA Regulations, besides the above sanction, the next two years. Moreover they couldn’t spend more than 60 million euros in signings this season (amount reached with David Luiz).

Those are the reasons because of PSG couldn’t close the deal. They do not want to let out any star and try to carry out the Di Maria’s deal.

CAN LUIS SUAREZ PLAY THE ‘CLASICO’?

THE ECONOMIC CONTROL OF “LA LIGA” (LFP). HOW IT WORKS? SPECIAL REFERENCE TO THE “PEDRO LEON CASE”

CAN LUIS SUAREZ PLAY FRIENDLY GAMES WITH HIS NATIONAL TEAM?

THE FINANCIAL FAIR PLAY AND THE ‘AFFAIRE’ DI MARIA-PSG

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