Sports Law 2022

The Growth of Sports Law

Not so long ago, judges and academics scoffed at the suggestion that there was such a thing as “sports law”. There may have been a burgeoning sports industry, but it did not generate its own substantive body of law. Perhaps the idea that something as frivolous as sport could generate its own jurisprudence did not seem possible or even appropriate to a rather conservative judiciary.

With those commentators now clearly part of ancient history, Chambers publishes its third Sports Law Global Practice Guide. Sports law is now not only an internationally recognised legal discipline in its own right, but has also generated a significant body of legal precedent. In particular, it provides a crucial framework for the operation and regulation of an industry that has grown at an astonishing pace.

Dispute Resolution

As sport as a business has developed, the contracts underpinning its commercialisation have become ever more sophisticated and the rules which governing bodies impose to control and regulate their sports have had to continually adapt. With higher value contracts and more detailed regulation, as with any industry, disputes have become both more common and more complex.

The first specialist court to hear sports-related disputes was created in Lausanne, Switzerland in 1983. Since then, the Court of Arbitration for Sport (CAS) has heard over 5,000 cases and expanded with further outposts in the USA and Australia. It has also created ad hoc divisions to provide quick resolution to “on-field” disputes at many of the world’s most significant sporting events. This demand for specialist dispute resolution for sport has in turn led to the creation of national bodies which exclusively serve the sports community, ranging from Sport Resolution in the UK to the National Sports Tribunal in Australia.

With the extraordinary growth in the financial value of football and, in particular, football transfer deals, not only has FIFA (Fédération Internationale de Football Association) created its own dispute resolution chamber, but this has spawned domestic equivalents with many national football dispute resolution chambers. Some standard transfer agreements now even refer to the “laws of FIFA”.

All of these tribunals and courts have contributed to a rich source of jurisprudence whose foundations remain the many decisions that have been published by CAS. This body of case law, taken alongside the rules and regulations underpinning international sport, has created the Lex Sportiva, a distinct international body of law specific to sport.

This Guide summarises the key principles of sports law in ten jurisdictions. Each jurisdiction is reviewed following the same 11-section format with sub-sections, allowing for easy comparisons on specific issues and concerns. It is designed to provide an easy to understand guide specific to each jurisdiction, whilst also demonstrating how certain areas of practice have reached a near homogenous position internationally.

Anti-doping Rule s

By way of example, as a result of the International Olympic Committee’s (IOC) support for the World Anti-Doping Agency (WADA) and its requirements, anti-doping is regulated and enforced in much the same way across the globe through the WADA Code. The Code was revised in 2009, 2015 and 2021, providing a robust and uniform set of anti-doping rules applied by all 206 nations comprising the Olympic movement.

Betting

Conversely, the regulation and exploitation of sports betting differs significantly in different jurisdictions. In the USA, prior to the Supreme Court decision in Murphy v NCAA (2018), sports betting was generally prohibited. That decision marked a sea change in American sports and over 20 states have now legalised sports betting. This, in turn, led to a flood of data and licensing deals between sports leagues and betting companies looking to offer accurate real-time betting services. France took a similar position, reserving sports betting to Francaise des Jeux, a heavily regulated state monopoly throughout the 20th century and beyond. It is only in the last decade that, following pressure from the EU, France set up the National Gambling Authority with a remit to grant sports betting licences to carefully selected commercial operators.

At the other end of the spectrum, sports betting in the UK has been an integral part of the commercial landscape for decades, with betting sponsors now accounting for eight of the 20 shirt sponsors in the English Premier League. However, as the USA and France liberalise sports betting, the UK is reviewing the Gambling Act 2005, with early indications that betting companies’ ability to sponsor sport will be restricted in some manner. Meanwhile, jurisdictions such as India continue to treat sport betting as, principally, an illegal activity.

Commercial Rights

The exploitation of sport’s commercial rights has been one of the biggest growth industries of all in the last 25 years or so. In 2020, the sports industry was worth nearly USD400 billion according to the Business Research Company, a staggering increase since the turn of the millennium.

As this Guide demonstrates, different countries take different approaches to the creation and ownership of the sports rights creating this extraordinary value. In the UK and the USA there is no standalone right in a sporting event or spectacle. Hence, the rights are exploited by a combination of commercial contracts, rights of access and a variety of intellectual property rights. Conversely, in France, event organisers enjoy automatic rights in the sporting spectacle itself, owning and controlling the commercial rights flowing from the events they organise. 

However, regardless of how sporting rights accrue, their exploitation is very much an international business. The contracts granting broadcasting, sponsorship, merchandising and licensing rights are now carefully tailored industry-specific documents ensuring the vagaries of national regulatory systems do not devalue the international nature of their exploitation.

In early 2022, termination of commercial agreements in particular has been a subject of significant debate. The Ukraine crisis has led many rightsholders to consider whether contracts can be terminated where brands are simply based in or linked to Russia. Conversely, sponsors of Chelsea FC have sought to terminate on the basis that the imposition of sanctions on the club's owner damages their reputation. Adjacently, some sponsors argued that Kurt Zouma’s mistreatment of a cat entitled them to terminate contracts with Zouma’s employer, West Ham. Disputes will invariably follow as the interpretation of “reputation-based” termination rights are scrutinised.

Broadcast Rights

Traditionally, broadcast rights have been the most valuable of these commercial rights. The IOC generates over USD4 billion in its four-year cycles capturing summer and winter versions of the Olympics. FIFA have a similar aggregation model, with one men’s World Cup every four years generating nearly USD3 billion. In both cases, these figures constitute well over half of their income. The contractual framework and legal system underpinning their exploitation has had to withstand the constant evolution of the means of production and distribution as well as, latterly, the viewing platforms available for consumption. Broadcasting now encompasses multiple techniques for delivering a feed to a consumer and requires a suite of specific contracts to paper those transactions.

At the time of writing, the sports industry is recovering from the effects of the COVID-19 pandemic. As organisers of live events, sports rights-holders have faced unprecedented challenges. Commercial contracts and particularly force majeure clauses have been scrutinised, with the future of some of these organisations resting on how a “boilerplate” clause was drafted. The force majeure clause will now be a key element of commercial negotiation rather than an afterthought, as was often the case before.

In January, we saw terms of participation, vaccination requirements and immigration law under scrutiny in Australia as the Djokovic vaccination controversy placed sport once again on the front pages. The consequences of COVID-19 and the interpretation of affected contracts will fuel litigation and disputes for years to come.

The Question of Insurance

Insurance is another area coming under scrutiny as a result of the pandemic. The All England Lawn Tennis Club (AELTC), owners of the Wimbledon Championships, were praised for their foresight as one of the very few organisations to have taken out event cancellation insurance which specifically included cancellation due to a pandemic. Their acumen ensured the protection of their financial position, despite cancellation (and in turn protected the share of profits which England’s tennis association, the LTA, relies upon). Going forward, insurance will be a key consideration for legal and finance directors, although the increased premiums will reduce the pool of event organisers who can even consider it.

Freedom of Goods and Services

In Europe, COVID-19 is not the only major event that sport has had to navigate in the last few years. In December 2020, the European Union Withdrawal Act was passed by the UK Parliament and the UK left the European Union on 1 January 2021. An immediate impact has been felt with regard to the transfer of professional athlete contracts, particularly in football. The fundamental principle of the free movement of goods and services within EU countries was critical to the operation of the football transfer system, as well as to many other sports. Those systems are having to adapt to the new reality and it will be interesting to see how they fare.

Early 2022 has seen the devastating consequences of the war in Ukraine also affect sport. Initially, this has led to many federations banning Russian teams from competition and withdrawing hosting rights. Already Russia has launched numerous appeals at CAS, which will have the difficult task of putting emotion aside to consider the legality of actions taken under the relevant constitutions and rules of participation.

The Future Awaits...

The events of last few years will have seen significant additions to the Lex Sportiva. It appears that 2022 will see sport emerge from the current crisis, with fans keener than ever to experience the passion, atmosphere and excitement that sport has to offer. As lawyers supporting this industry, we hope this Guide assists in navigating the challenges ahead.