In 2011 the European Commission
announced that it would launch a study to analyse the exploitation of rights to
sports events (sports organisers’ rights) from the perspective of the EU legal framework.
This study was awarded to the T.M.C. Asser Instituut and Institute for
Information Law and is published HERE
Executive summery
The legal protection of rights to
sporting events (”sports organisers' rights”) is a contentious issue.
While in recent years distinct aspects
of the problem have been addressed by legislatures andcourts, both at the national and at the
European level, a great deal of legal uncertainty persists.
Divergent views on the appropriateness,
form and scope of such legal protection exist among stakeholders and other concerned
parties, reflecting the complex nature and multiple functions of sports in
modern society. The universe of sports and media is a complex network of social
and commercial relationships with a variety of stakeholders, each one of whom
can claim rights or specific interests in the value chain of organizing and
exploiting sports events, such as clubs, leagues, athletes, federations, fans,
media content providers, sponsors, owners of sport facilities, sports betting
operators and news media.
Consequently, the question of protecting
sports events is by no means a one-dimensional legal issue, and should be framed in a broader
socio-economic context. On the one hand, professional sport represents a large
and fast-growing sector of the European economy – and in no small measure this
is due to the commercial significance of sports media rights. On the other
hand, sports are widely regarded as playing a pivotal role as a “social
cohesive”, an agent of communal, and conveyor of moral, values. This helps
explain why major sports events qualify in various Member States as “events of
major importance” for society, subject to special media rules mitigating exclusive
rights of broadcasters to guarantee viewers’ access to these events via
free-to-air television.
The general objective of this study is
to examine and critically assess a number of the most pressing questions of
substantive law relating to the existence and exercise of sports organisers'
rights in the EU. The specific objectives of the study are:
- To map the legal framework applicable
to the origin and ownership of sports organisers' rights in the 28 Member
States;
-To analyse the nature and scope of
sports organisers' rights with regard to licensing practicesin the field of the media, taking into
account relevant EU law provisions;
- To examine the possibility of
establishing licensing practices beyond the media field, notably in the area of
gambling and betting;
- To provide recommendations on the
opportunity of EU action to address any problem that may be identified in the
above mentioned areas of analysis.
Protection
of sports organisers’ rights
Part
1 of the study focuses on the various types of legal protection presently available to the organisers of sports events. Property
rights are the first category to be addressed. Most sports events take place in
dedicated venues over which the sports organisers have either ownership or exclusive-use rights. This type of
exclusivity, carrying the power to exclude unauthorized individuals or media from the venue and
to allow entry subject to specific contractual conditions, serves as an
important legal instrument of protection for sports organisers. This scheme is
usually referred to as “house right” and while it has not been explicitly
recognized by the courts in all Member States, it most likely exists and is
enforceable everywhere in the EU.
Intellectual property rights comprise
the second category. In the case of Premier League v QC Leisure the (European) Court of Justice
(CJ) has clarified that sports events as such do not qualify for copyright
protection under EU law. The same does not hold true, however, for the
audiovisual production, recording and broadcasting of sporting events. The
images of sporting events attract the interest of constantly growing shares of
TV and on-line audiences, and are often of enormous commercial value. The
various media products resulting from the audiovisual recording and broadcasting
of sports events give rise to a variety of intellectual property rights, especially
in the field of copyright and rights related to copyright (neighbouring rights)
– areas that are largely harmonized at the EU level. These rights include the
copyright in the cinematographic work (filmwork) that, in many cases, is the
result of audiovisual coverage, as well as an array of related (neighbouring)
rights in the recording and broadcasting of the audiovisual registration of the
sports event. While many of these rights find their origin in EU secondary law,
some related rights occur only in distinct Member States, such as the special
sports organisers right that exists in France under the Code du Sport, or the
Italian sports audiovisual related right.
A third category of rights examined are
so-called “image rights” - rights that protect the commercial likeness of
sports players and athletes, based on a variety of legal doctrines, such as
personality rights and right to privacy. While image rights form a
heterogeneous legal category untouched by harmonization, most Member States do
accord some level of legal protection against unauthorized commercial uses of
players’ images. As recent case law in Germany and the Netherlands suggests, players
or athletes can, however, not invoke their image rights to prohibit, or require
remuneration for, audiovisual coverage of sports events in which they
participate.
As Part 1 demonstrates, the rights and
interests of sports organisers are generally well safeguarded at the
substantive legal level. The “house right” gives sports events organisers and
clubs (and indirectly the sports federations) a right to exclude unauthorized
media from the venue, and thereby creates leverage for the event organisers to
negotiate exclusive contracts regarding media coverage. In practice, these
contracts may or may not provide for complete or partial transfer(s) to the
sports organisers of the copyrights and neighbouring rights in the audiovisual
recording and transmission of the event. Sports events organisers or their
federations may, alternatively, elect to produce and distribute media coverage
of the sports events themselves. Either way, the combination of house right,
media contract(s), and intellectual property protection of the audiovisual
recording and broadcast effectively allows the sports event organisers to enjoy
complete ownership and/or control over the audiovisual rights in the sports
events.
Sports organisers’ rights management in the
field of media
Part
2 of this study examines how sports organisers’ rights are managed and licensed
in the field of media. Regarding the marketing of sports media rights, it
analytically describes the way in which these rights are sold and critically
analyses the compatibility of current and evolving licensing practices with EU
competition law and internal market law. Regarding the exploitation of sports media
rights, it looks into the limits posed to exclusivity in order to grant access
on free-to-air television for events of “high importance for the public”.
The
marketing of sports media rights: licensing practices
EU
competition law enforcement has had a major impact on the way premium sports
media rights are sold in the EU. Prior to the European Commission’s precedent
decisions on the joint selling of sports media rights (UEFA Champions League
2003, DFB 2005, FAPL 2006), the National Competition Authorities (NCAs) of
various Member States had prohibited this practice on the basis of their
national competition rules. The Commission, however, made clear that joint
selling can be deemed compatible with EU competition law, albeit under strict
conditions.
Ten years after the UEFA Champions
League decision, the joint selling of sports media rights has become the
dominant practice. Since Italy reintroduced the system of joint selling in
2010, Cyprus, Portugal, and Spain are now the last European markets in which
first division football clubs selltheir rights individually. Also for other
sports, the individual sale of media rights is exceptional.
The
comparative analysis of EU and national decisional practice reveals that for
the most part the NCAs have replicated the heavy-handed remedy package designed
by the European Commission.
The “no single buyer” obligation, a
remedy that was exceptionally imposed by the Commission in FAPL, is
increasingly being emulated at the national level. Only with regard to the
duration of exclusivity, more and more NCAs are demonstrating a readiness for a
more flexible approach (i.e. by accepting exclusive rights contracts exceeding
three years).
The
imposed remedies, facilitated by technological developments, have effectively
addressed concerns about output restrictions related to joint selling. The
problem of warehousing of rights or unused (new media) rights no longer seems
to be a concern. The positive impact of EU competition law intervention on the
supply-side dynamics is all the more evident when considering prevailing practices
in Member States where NCAs have not (yet) intervened. In these countries,
sports media rights are still sold in one exclusive bundle, for a long period
of time, and without a transparent public tender procedure.
EU
competition law intervention has been less successful in terms of challenging
existing market dynamics at the downstream level: the premium sports content
bottleneck continues to frustrate markets for the acquisition of premium sports
media rights. In various markets, the main vertical effect of the chosen
remedies has been that in the downstream market a duopoly emerged in the place
of a monopoly. This also has implications for competition in new media markets.
The emerging trend to market premium sports media rights on a platform-neutral
basis favours powerful vertically integrated media content providers. This
risks negating the progress that was made in enabling smaller operators to
acquire earmarked packages for certain platforms.
The
study also examined licensing provisions granting sports media rights on an
exclusive territorial basis in light of EU internal market law. While initially
the CJ’s Premier League v QC Leisure judgment was considered a game-changer for
the way in which sports media rights would be marketed in the EU, so far little
seems to have changed. The English Premier League has responded by introducing
new contractual provisions that, unfortunately, make consumers everywhere in
the EU worse off. The de facto imposition of the UK “closed period” rule for
Premier League matches across Europe, however, again raises questions about the
public interest dimension of this old-fashioned measure and may indicate
competition issues.
The
exploitation of sports media rights: right to short reporting
The
study further analysed the right to short reporting as enshrined in Article 15
AVMSD and as implemented in the national regulatory frameworks of the 28 Member
States of the European Union. Three scenarios have been tested. The first one
sought to determine the conditions of access to the signal of a domestic
broadcaster which has acquired exclusive TV rights on those events of high
interest to the public as well as the conditions and modalities of use of the
short extracts produced. The second scenario is similar to the first one,
except that it involved two broadcasters established in different EU
jurisdictions. It also sought to define which law is applicable to determine if
an event qualifies as an event of high interest to the public. The last
scenario tested the possibility for a broadcaster to get access to the venue of
an event of high interest to the public to exercise its right to short
reporting. In addition, the scenario checks whether the right of access to the
venue extends to a right to record images in margin of the events.
The right of short news reporting is an
important element of the EU legal order safeguarding the right of broadcasters
to have access to “events of high interest to the public”, such as important sports
events, which are subject to exclusive broadcasting rights. However, the way
this right is currently framed, allowing Member States the option of either
mandating access to the transmitting broadcaster’s signals, or requiring direct
access to the venue where the event takes place, has resulted in some
differences in implementation by the Member States (i.e. on the duration of the
short news reporting).
Sports
organisers’ rights management in the field of gambling
Part 3 of this study examines, from an
EU and national legal perspective, the possibility for sports organisers to
license their exploitation rights beyond the media field, notably in the area
of gambling. In the last decade or so, the advent and rapid rise of online
sports betting services has fundamentally altered the relationship between
professional sports organisers and the gambling industry, creating commercial
and promotional opportunities but also integrity threats for sport.
The analysis focuses on the existence of
a sports organisers’ right to consent to the organisation of bets (“right to
consent to bets”) and on legal limitations that restrict the licensing of other
exploitation rights to gambling operators.
A
sports organisers’ right to consent to bets
With the enactment of a new gambling law
in 2010, the French legislature, following case law precedent recognizing
sports bets as a form of commercial exploitation of sports events, introduced a
right to consent to bets. Apart from France, two other Member States have
legally recognized a right to consent to bets, namely Poland and Hungary.
Sports organisers in these countries, however, have so far no experience
(Hungary) or only limited experience (Poland) with the actual enforcement of
this right.
Numerous national and European sports
organisers have called for the adoption of a similar right at the EU or EU-wide
national level. This report dispels two general misconceptions that seem to persist
in the debate on the merits of a right to consent to bets.
First,
when sports organisers advocate the right to consent to bets as a mechanism to
enable a “fair financial return” from associated betting activity and to
preserve the integrity of sport, the arguments are commonly framed within a
perceived need for more legal protection. In essence, what
is asked is the recognition of a broad-scoped sports organisers’ right that
would cover all kinds of commercial exploitation of sports events, including
the organisation of bets. The analysis reveals however, that the financial and
integrity benefits attributed to a right to consent to bets could be achieved
well outside the framework of private law. A right to consent to bets can be
introduced as,a regulatory condition in gambling legislation without recourse
to an express recognition of a broad-scoped horizontal sports organisers’
right.
Second,
the right to consent to bet is not an efficient way to allocate revenue from
betting to all levels of professional and amateur sport. Whatever the fee
structure, the price paid in exchange for the right to consent to bets will
always be relevant to the volume of bets that a sporting event is able to
attract. Hence, financial benefits predominantly flow to professional sport and
more particularly to the organisers of premium sports events. Small or less
visible sports are unlikely to benefit from this instrument. Furthermore, there
is no evidence for a link between the financial return stemming from a right to
consent to bets and the financing of grassroots sports.
The
review of the experiences with the implementation of a right to consent to bets
in Victoria (Australia) and France further
highlights a number of challenges associated with the introduction of such an
instrument.
Since
the exercise of a right to consent to bets is capable of constituting a
restriction on the free movement of gambling services within the meaning of
Article 56 TFEU, it must be justified by an imperative requirement in the
general interest and comply with the principle of proportionality.
The CJ has accepted the prevention of
fraud as a legitimate objective justification. The financing of public interest
activities through proceeds from gambling services, on the other hand, can only
be accepted as a beneficial consequence that is incidental to the restrictive
policy adopted. It follows that a strict regulatory framework that genuinely
reflects a concern to prevent the manipulation of sports events must accompany
the introduction of a right to consent to bets. Of the existing regulatory
systems, only the Victorian (Australia) regulatory regime clearly demonstrates
a primary concern with safeguarding the integrity of sports events and is
therefore recommended as a best practice model.
Regarding
the institutional and operational requirements for the successful
implementation of a right to consent to bets, it must be concluded that the
transaction costs related to this instrument are particularly high. The
integrity and financial benefits of a right to consent to bets can only be fully
achieved when it is carefully managed by a national regulatory authority that:
1.
actively prosecutes illegal betting services (including the offering of sports
bets by licensed
operators without the sports organisers’
consent);
2. monitors the commercial exploitation
of the right to consent to bets to prevent discriminatory
or anti-competitive marketing
conditions;
3. provides for an ex post mechanism for
complaint handling and dispute resolution;
4. has the power to conduct on-going
monitoring of the parties’ compliance with the mutual rights and obligations
contained in the contractual agreements.
Given that a number of national
regulatory authorities suffer from limited staff and resources, it is questionable
whether they would be capable of fulfilling this challenging task.
Gambling advertising restrictions and
sports sponsorship
In
line with the principle of freedom of contract, sports organisers are in
principle free to choose the contractual partners for the commercial exploitation
of their rights. One main obstacle emerges, however. Restrictions on gambling
advertising at the national level (may) create difficulties for sports
organisers, clubs, and individual athletes to enter into sponsorship agreements
with gambling operators.
The
analysis of regulatory frameworks governing the advertising of gambling
services reveals a patchwork of different national approaches. The potential
for conflicting national restrictions causes in particular challenges for
organisers of cross-border sports events and for clubs or individual athletes
participating in such events (as they may be induced to infringe national gambling
advertising regulations or breach personal sponsorship contracts).
Over
and above the lack of consistency across Member States, a widely observed
absence of legal certainty appears to cause the biggest problem. Even when
national gambling advertising regulations exist, uncertainties remain about
their applicability to sponsorship agreements. For example, only a few national
gambling advertising regulations clarify the extent to which both parties to a
sponsorship agreement, i.e. the sponsored party and the gambling operator, can
be found liable for breaching these regulations. Inconsistencies in the
enforcement of the applicable regulations make it even more difficult to
anticipate the costs of non-compliance. This legal uncertainty undermines the
effectiveness of the measures that seek to protect consumers against the
financial, social, and health risks associated with gambling. Moreover, it
ultimately results in considerable market uncertainty and potential losses of
sponsorship revenue for sports organisers, clubs, and individual athletes.
Full study can be found HERE
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