Photo Credit: Conti-Online.com
The FIFA World Cup and the UEFA European Cup are two of the biggest sporting events on the planet, generating staggering worldwide ratings and commanding lucrative television rights. At first glance, it seems as though FIFA & UEFA run moneymaking machines, but are these TV deals all that they can be? According to the two governing bodies, EU regulations are preventing them from collecting fair market value for the broadcasting rights of these competitions in the football-hungry United Kingdom. They are forced to receive bids exclusively from Free-To-Air (FTA) channels at the expense of Pay-Tv ones. Seeking to challenge this seemingly unfair practice, they took this issue all the way to the Court of Justice of the European Union, where their appeal was recently denied. After the break, we’ll explore the reasoning behind this decision, its effect on the two governing bodies going forward and what this all means for football fans in the EU.
To help put things into perspective, it is necessarily to examine the EU legislation at the source of this controversy: the “Audiovisual Media Services Directive” (AVMS). More specifically, we will be looking at two particular subsections found in Chapter V, concerning exclusive rights and short news reports in television broadcasting.
Art. 14(1): Each Member State may take measures in accordance with Union law to ensure that broadcasters under its jurisdiction do not broadcast on an exclusive basis events which are regarded by that Member State as being of major importance for society in such a way as to deprive a substantial proportion of the public in that Member State of the possibility of following such events by live coverage or deferred coverage on free television. If it does so, the Member State concerned shall draw up a list of designated events, national or non-national, which it considers to be of major importance for society. It shall do so in a clear and transparent manner in due time. In so doing the Member State concerned shall also determine whether these events should be available by whole or partial live coverage or, where necessary or appropriate for objective reasons in the public interest, whole or partial deferred coverage.
Art. 14(2): Member States shall immediately notify to the Commission any measures taken or to be taken pursuant to paragraph 1. Within a period of 3 months from the notification, the Commission shall verify that such measures are compatible with Union law and communicate them to the other Member States. It shall seek the opinion of the contact committee established pursuant to Article 29. It shall forthwith publish the measures taken in the Official Journal of the European Union and at least once a year the consolidated list of the measures taken by Member States.
Following the directive, the United Kingdom wisely chose to put the FIFA World Cup and the UEFA European Cup on its list of events that hold an importance to society. Protected events in the UK are actually split into two categories: Group A and Group B. Events in the “A” group require full live coverage on FTA channels which reach approximately 95% of the population. The “B” group allow for Live PPV coverage with highlights available on certain qualifying channels. Both competitions find themselves in the more protected group, and since each of them are filed as a single event rather than being fractioned into smaller groups of matches, this means that every televised match must find itself on a Free To Air channel.
The Governing bodies view this as an “unfair restriction on competition”, as it prevents Pay-Tv channels from entering into a bidding war over the rights to broadcast these events. This would have heavy ramifications on the ultimate value of such rights, driving down the price considerably. Their proposed solution would be to separate the events into different clusters of matches, some of which would remain in Group A (matches including the member state, semi-finals and finals), while others could benefit from Group B’s less restrictive regulations (group stage matches that don’t involve the member state, early knockout rounds).
To FIFA & UEFA’s dismay, the commission deemed the UK’s categorization as being compatible with EU law, and the General Court of the EU agreed. On appeal to the Court of Justice of the European Union, two primary legal issues emerged:
1) The extent of the commission’s power to check the list drawn up by the member states.
2) Whether there was an infringement to UEFA & FIFA’s right to property.
The first issue stems from the previously cited Art. 14(2) of the AVMS, as it is up to the commission to verify that the member states comply with EU law regarding the decision of what to include on the list of protected events. When the advocate general gave its recommendations to the court, it concluded that member states alone should determine what goes onto the national list, and any review by the commission should be limited to ascertain whether or not there was an error of assessment. Was there transparency and clarity in drawing up the list? Was there any discrimination on grounds of nationality? Have any of the choices or exclusions prompted a derogation of fundamental freedoms greater than those accepted by the EU? While we’re clearly facing an issue wherein certain services have been restricted, such a restriction was deemed to be justified as an inherent consequence of the power conferred on member states to draw their own national lists. Furthermore, it is also proportionate for the purpose of ensuring access by a large audience to events that are of “major importance to society”.
As for the second issue, it brings to light the ever-evolving importance of the relationship between media and sports. In this day and age, television rights can be seen as the lifeblood of various sporting leagues, organizations and associations the world over. FIFA & UEFA want to maximize potential revenue and faced with restrictions that prevent them from doing so, argued that their right to property has been infringed. Placed under legal scrutiny, such an argument holds little weight, as English law does not recognize a property right in sporting events (see: Victoria Park Racing v. Taylor). Moreover, the courts have rejected the notion of sporting events as “intellectual creations” that should be protected under copyright (see: Football Association Premier League Limited & others v. QC Leisure & others). Football matches are subject to the rules of the game, which leaves no room for freedom. As such, they can’t be considered “works”.
FIFA & UEFA’s appeal was ultimately denied on these grounds. Since there are no further routes of appeal, what does this mean for the governing bodies going forward? Essentially, they will be left with undervalued media rights in the United Kingdom, as the Pay-Tv channels will be unable to acquire exclusive rights to any matches. Considering how competitive and lucrative the UK broadcast market is, this has resulted in a big blow for both organizations. The future looks especially bleak if we consider that UK officials have hinted at the possibility of also including qualification matches onto the list of protected events.
There was, however, a small light at the end of the tunnel. In an obiter, the Court of Justice did not agree with the General Court’s assessment that such major football tournaments could reasonably be considered single events, as opposed to ones that could theoretically be divided into different smaller events, matches and stages. Eventually, FIFA & UEFA could attempt to lobby for a change in the way its competitions are included on the list.
Ultimately, this entire ordeal may be seen as a huge victory for the multitude of football fans themselves. The World Cup and Euro Cup hold a significant importance for national team supporters and often attract just as much attention from those that don’t traditionally follow the sport. In reaching this verdict, the CJEU has guaranteed that for the time being, these events will reach maximum exposure by staying on FTA airwaves rather than forcing people to purchase costly television packages. This will undoubtedly help businesses as well, since pubs, bars and restaurant will have an easier time airing matches without having to worry about licensing deals. FIFA & UEFA’s pecuniary loss may very well be society’s gain. [Sheridans]