Has European Court Judgement Brought European Super League Closer?

The Court of Justice of the European Union (CJEU) delivered its judgement in relation to proposals for the establishment of a European Super League (ESL) in soccer just before Christmas.[1] The judgement found that FIFA and UEFA rules, which prevented the establishment of the ESL, were in breach of EU competition law and freedom of establishment rules. The rules in question provide that clubs affiliated to national associations could not participate in international inter-club competitions without receiving prior authorisation from FIFA and/or UEFA. They also provide for significant penalties for any club in breach including exclusion from UEFA club competitions such as the Champions League, along with a potential ban on players playing for their national teams in competitions such as the World Cup and European Championships. The CJEU judgement was heralded by some media reports as paving the way for a re-launch of the ESL. The reality is somewhat more complex. The Court judgement also raises some interesting questions for an economist about the potential for competition between rival sports leagues.

Both FIFA and UEFA rules include prohibitions on the formation of cross-border competitions without their prior approval. For example, FIFA’s Article 22(3)(e) requires each of its regional confederations, which include UEFA, “to ensure that international leagues or any other such groups of clubs or leagues shall not be formed without its consent and the approval of FIFA”.[2] Similarly UEFA’s Article 49(3) states

“International matches, competitions or tournaments which are not organised by UEFA but are played on UEFA’s territory shall require the prior approval of FIFA and/or UEFA and/or the relevant Member Associations in accordance with the FIFA Regulations Governing International Matches and any additional implementing rules adopted by the UEFA Executive Committee.”[3]

Other rules prevent European clubs from playing in a league in another country. This rule has prevented proposals for Celtic and Rangers to join the Premier League in England, for example, as well as proposals for a merger of the Dutch and Belgian leagues.

Following the announcement of proposals for the formation of the ESL, FIFA and its six continental confederations including UEFA issued a statement indicating that “such a competition would not be recognised by either FIFA or the respective confederation. Any club or player involved in such a competition would as a consequence not be allowed to participate in any competition organised by FIFA or their respective confederation.”[4]

The judgement in the ESL case arose on foot of a referral from a Spanish Court under Article 267 of the Treaty on the Functioning of the European Union (TFEU). The ESL had challenged the validity of FIFA and UEFA rules before a Spanish Court which sought clarification from the CJEU as to the correct interpretation of various aspects of EU law. The CJEU judgement is thus clarifies certain aspects of EU law. Specifically, it simply addresses the legal questions raised by the Spanish Court. It is up to the Spanish Court to reach a judgement on the facts of the case in light of the clarifications provided by the CJEU regarding the correct interpretation of EU law.

Crucially the CJEU judgement did not state that the relevant FIFA and UEFA rules were per se in breach of EU law. Indeed, it specifically stated that sporting bodies were entitled to have rules relating to prior approval and participation by clubs and players. Rather the problem lay in the absence of substantive criteria and detailed procedural rules for ensuring that these rules are transparent, objective, precise and non-discriminatory. FIFA and UEFA may have rules requiring prior approval and participation, but they cannot simply arbitrarily block rival competitions. Nevertheless, theoretically FIFA and UEFA could amend their rules so as to avoid infringing EU law by ensuring that they are transparent, objective, precise and non-discriminatory.   

Key to the finding that the rules were anti-competitive was the fact that, in the CJEU’s view, it would not be possible for clubs to leave FIFA and UEFA and set up their own rival competitions. However, there is no analysis of this in the judgement, which addresses it in a single paragraph which largely considers it to be self-evident.

“In that regard, it is irrelevant that FIFA and UEFA do not enjoy a legal monopoly and that competing undertakings may, in theory, set up new competitions which would not be subject to the rules adopted and applied by those two associations. Indeed, as is apparent from the statements of the referring court, the dominant position held by FIFA and UEFA on the market for the organisation and marketing of international interclub football competitions is such that, in practice, at the current juncture it is impossible to set up viably a competition outside their ecosystem, given the control they exercise, directly or through their member national football associations, over clubs, players and other types of competitions, such as those organised at national level.”[5]

While the term is not used, there is arguably a suggestion that leagues or at least UEFA membership constitutes an essential facility implicit in the judgement. This is despite the fact that the CJEU in Bronner[6]set a very high threshold for an essential facility claim. The suggestion that sports leagues constitute an essential was rejected by the US Courts in Mid-South Grizzlies[7],a case involving a team refused admission to the NFL having previously been a member of a failed rival league. Similar issues arose in the South Sydney[8]case where the Australian courts upheld the right of the league to reduce team numbers following a merger between rival leagues.

The judgement also involves an implicit underlying assumption, that, in the absence of the rules in question, rival soccer tournaments would have emerged. Real world evidence suggests this might not be the case. There are plenty of examples of competing sports leagues none of which survived.

All of the major US sports have witnessed episodes of entry by rival leagues. None of these competing leagues survived. They either merged with the incumbent league or went out of business.

Similarly, in the decades following the establishment of the English Football League in 1888, several rival leagues emerged but failed to survive. The Combination League, which involved some unsuccessful Football League applicants, was also launched in 1888 but failed to complete its inaugural season. A number of these clubs then formed the Football Alliance the following season. It lasted for three seasons before merging with the Football League. The most durable of these rival leagues was the Southern League which commenced in 1893 and was quite a serious rival in the early years of the 20th century with one of its member clubs, Tottenham Hotspur, winning the FA Cup in 1901, the only non-Football League club to do so since the league’s formation. Ultimately, however, the Southern League was unable to compete, and, in 1920, all of the clubs in its top tier defected to the Football League, although they were only admitted as associate members in a new third division. The Southern League continues to this day but after 1920 it was no longer a serious rival to the Football League.

Australia also witnessed a short-lived attempt to launch a rival to the established Australian Rugby League (ARL) during the 1990s. This resulted in a legal challenge to loyalty and commitment provisions included in the ARL’s membership agreements. On appeal the Full Court of the Federal Court held that the commitment agreements had been entered into for the purposes of preventing the supply by the clubs of teams to other competitions, and the acquisition by the clubs of the services of another competition organiser and therefore constituted exclusionary arrangements which were prohibited under Australian competition law.[9] However, it soon became clear that two competing leagues were not commercially viable and after two seasons, the entrant merged with the incumbent league.   

All of the above examples involve attempts to establish rival leagues involving teams that were not members of the incumbent league. The establishment of such leagues requires that the incumbent league has left several viable locations unexploited and that several entrants, not just one, are willing to suffer significant financial losses until the new league becomes established. This facilitated many of the attempts to launch rival sports leagues in the US, but this option no longer remains as the incumbents have expanded to the point where there are insufficient locations available to support enough professional teams for a new league. The pyramidal league structure in soccer has also meant that there are insufficient suitable team locations for new leagues. This has led to some debate in the sports economics literature as to whether rival leagues constitute a long-run equilibrium outcome.

The ESL proposal differs from all of the examples cited above in that it would be made up of teams which currently play in national leagues and in UEFA competitions. The ESL shareholder and investment agreement provided that its establishment was conditional on obtaining (a) recognition from FIFA or (b) legal protection to enable the professional football clubs having the status of permanent members to participate in the Super League without that affecting their membership of or participation in the national football associations, professional leagues or international competitions in which they had been hitherto involved.”[10] It thus appears that the ESL member clubs wished to establish a rival tournament to the existing national and UEFA competitions, while continuing to participate in those competitions, at least in the short-term.

The CJEU issued two other judgements in cases involving the rules of sporting bodies in conjunction with its ESL judgement. In one the CJEU found that UEFA and Belgian Football Association rules which required soccer clubs to include a minimum number of “home-grown” players on their team rosters and match day squads infringed EU competition and freedom of movement rules.[11] The third judgement, involving the International Skating Union ISU, found that rules requiring that no skating competitions could be held without the ISU’s prior authorisation, infringed EU competition law.[12] There are obvious parallels between this and the ESL judgement.       

[1] Case C-333/21 – European Super League Company SL v FIFA and UEFA, judgement of 21.12.2023.

[2] ESL Judgement at ¶6.

[3] ESL Judgement at ¶21.

[4] ESL Judgement at ¶30.

[5] ESL Judgement at ¶149.

[6] Case C-7/97 Bronner v Mediaprint [1978] ECRI-7791.

[7] Mid-South Grizzlies v National Football League, 467 US 1215 (1984).

[8] South Sydney District Rugby League Football Club Limited v News Limited, [2001] FCA 862; (2001) 181 ALR 188.

[9] News Limited v Australian Rugby Football League Limited [1996] FCAFC 870; (1996) 139 ALR 193, 249.

[10] ESL Judgement at ¶27.

[11] Case C-680/21 – UL, SA Royal Antwerp Football Club v Union Royale Belge des Societes de Football Association ABSL (URBSFA), judgement of 21.12.2023.

[12] Case C-124/21P – International Skating Union v EU Commission, judgement of 21.12.2023.

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