The special legal nature of sports: How the EU regulates sports
Sport is increasingly becoming more commercialised, with billions being spent in transfer fees, merchandising and endorsement deals of athletes throughout the world. Whilst the EU did not initially delve into the realm of sports, the increasing economic significance of the sector meant its intervention became inevitable. In this article, we will examine the special legal nature of sports, the impact of EU law in the sports sector, and how this might change after Brexit.
Sport has traditionally been perceived as a private activity which should not be regulated by external legal frameworks, but by private organisations. Indeed, the regulation of sport is usually conducted by corresponding Sport Governing Bodies (SGBs), such as FIFA for football and FIBA for basketball. These SGBs regularly argue that sports, due to their peculiar nature and objective, require special legal treatment. The argument that sports' regulation should be exempt from external legal frameworks has been dubbed as sport specificity.
The rationale behind sport specificity has been accepted by most legislators, as sports' regulation is commonly afforded with special treatment in most legal frameworks. This is definitely the case in the EU, as the EU's competence in sports under the Treaty on the Functioning of the European Union (TFEU) is extremely limited and only of a supporting nature.
The EU's influence on sports
Despite the limited remit that the EU had to intervene in matters of sport, EU regulations, have been highly influential in the operation and regulation of sports, due to the sector’s increasing commercialisation and economic relevance. The sports sector in the UK alone was valued at £23.8bn in 2017 and it was amongst the 15 most valuable commercial industries of the nation. The sports industry in the UK in 2019 was estimated to have provided employment to approximately 420,000 people. In the EU, the sports industry's Gross Domestic Product amounts to €279.7 bn, while the sector provides direct employment to about 1.3 million people. These are monumental figures which indicate the commercial and economic significance of sports.
In recognition of the increasing commercial value of sports, the European Court of Justice (ECJ) has established, through its case law, that the EU’s single market regulations are applicable in the sports sector, so long as the issue in question entails economic consequences. After all, EU regulations cover the whole of the economy, so that any sphere of activity which falls within the notion of ‘economic’ must adhere to them. This is regardless of the absence of an EU mandate to regulate sports. This approach was followed and expanded in various ECJ rulings, such as in the famous cases of Bosman and Deliege.
In Bosman, a landmark case known to many football fans, the ECJ decided that due to Art45 of the TFEU, which entails the right to free movement of labour within the EU, sports players were allowed to transfer to other clubs within the internal market at the end of their contracts without any restrictions. The case profoundly changed the transfer regime for players and altered the sport industry, facilitating the creation of the diverse sports teams we see today. Despite the lack of a mandate to regulate the sector, the ECJ argued that since the sport sector provides employment to millions and its operation entails significant commercial significance, EU law must be considered relevant and sport rules should not inhibit the single market.
The ECJ clarified that EU rules would not be applicable to sporting regulations which are of a purely sporting interest. For example, the ECJ would not scrutinise the actual rules of sporting games, such as the off-side rule in football or what constitutes a 3-point field goal in basketball. Instead, only the regulations around the operation of sports were to be affected by EU law.
Yet, the increasing commercialisation and economic relevance of the sports sector has meant that the ECJ is able to rule that most regulations regarding the operation of sports entailed significant economic consequences, even if they were originally perceived as of purely sporting nature. For example, in the case of Deliege, the rules around the eligibility criteria for an international judo competition were found to entail significant economic consequences, despite this being an amateur competition. This meant that the EU’s anti-discriminatory rules were relevant in determining the legality of the nationality-based criteria.
The ECJ seemingly abandoned its attempts to separate 'sporting' and 'economic' rules in the case of Meca-medina, which concerned anti-doping rules. The relevant SGB banned a swimmer from participating in future swimming competitions for 4 years due to finding a prohibited substance in his body. When new scientific evidence emerged proving that the prohibited substance could occur naturally in the human body, the swimmer sued the SGB in the European courts in an attempt to force them to reverse their decision.
At that time, anti-doping rules were seen as being of purely sporting interest and they were understood to be immune from EU law’s scrutiny. Yet, the potential to ban a person from participating in any professional competition for long time periods, or even indefinitely, meant that such rules could certainly entail an economic interest. Consequently, the ECJ ruled that even regulations of a seemingly purely sporting nature, such as the rules regulating prohibited substances, could be subjected to scrutiny and should be compatible with the EU’s single market rules.
In the end, the ECJ ruled in favour of the SGB, as it claimed that the relevant anti-doping rule was no more extensive than necessary to pursue the objective of fair competition. Nevertheless, the case indicates a departure from the approach in the case law, as it exhibited that the increasing economic relevance of the sports industry renders even some sporting regulations within the remit of EU law’s scrutiny. The impact of this case is that any sporting rule with economic effects should be no more restrictive than necessary to pursue a legitimate objective if it is to comply with EU rules.
Future after Brexit
With the completion of Brexit, the UK has now left from both the EU’s internal market and the jurisdiction of the ECJ. This means that transfers of athletes from EU countries to the UK will become more cumbersome, with a new legal regime set up to facilitate the sports industry. Similarly to non-athletes, sportspeople will also have to pass a points-based system to gain employment in the UK. These points are regulated by the relevant SGB for each sport and usually have to do with the level the athlete has previously performed at, as well as the athlete’s international standing. How other sporting rules are set to be affected by the newly acquired independence of the UK’s SGBs remains to be seen.
Yet, it must be understood that some of the EU’s influence on the UK’s sports sector is bound to continue. Pan-European SGBs, such as football’s UEFA, still have to consider EU law when regulating their sport. So long as the UK remains a participant in these pan-European SGBs, EU law will remain relevant for UK sports, especially at the highest level where participation in European competitions provides significant funding opportunities for UK-based clubs and sportspeople.
The influence of the EU’s single market rules in sports has been immense. The increasing commercialisation and economic relevance of sports has meant that EU rules are becoming more influential and lawyers in the sports sector should pay attention to EU rules to ensure they can provide adequate consultation. Brexit has only served to complicate matters further, as EU law and any diverging UK law will get tangled together to create a complex framework for SGBs and sportspeople, that lawyers will be called to unravel.