Does the Outsourcing of a Sports League Affect Its Evaluation under EU Competition Law?
Norros, Olli, The International Sports Law Journal
In Europe national sports leagues are usually organized to be overseen by a national federation of each sport. However, it is quite common that a national federation does not itself organize the league but assigns the organizing task to a separate legal entity, usually controlled by the teams that play in the league. The league corporation may be formed for example as a non-profit association, as a limited-liability company, or as a cooperative society. Professional sports leagues are a sensitive branch of business from a competition law perspective. The aim of this paper is to discover whether the outsourcing of sports league functions affects their evaluation from the point of view of EU competition law. The current prevailing view seems to be that the outsourcing of league functions could well be significant for different aspects of competition law. However, this paper argues that the outsourcing actually seems to be a neutral measure in light of competition law.
1.1 The aim of the Paper
The aim of this paper is to answer the following two-pronged question: is the evaluation of a sports league under EU competition law altered according to whether a national sports federation 1) organizes the league itself or 2) assigns the organizing functions to a separate legal entity such as a company owned by the league teams. As is described in more detail later, the current prevailing view seems to be that the outsourcing of league functions could well be significant for different aspects of competition law. However, this paper questions the prevailing view arguing that the outsourcing actually seems to be a neutral measure in light of competition law. Before defining the subject more precisely we must take a look on the two backgrounds of the theme, first outsourcing of league functions generally and then the application of competition law to league sports.
1.2 General Remarks on the Outsourcing of League Functions
Sports leagues are an important form of competition both in amateur and professional sports. However, an unambiguous definition of a sports league is difficult to determine. Usually a sports league is understood to be a series of matches involving team ball play, in which each team plays a predetermined number of matches against the other teams in the same league and receives points depending on the end result of each game. The champion of the league may be decided directly according to which team has achieved the most points, as has traditionally been the case in soccer leagues in most countries, or the competition may continue after the prescheduled matches as an elimination tournament as happens for instance in the North American National Hockey League (NHL).
In Europe national sports leagues are usually organized to be overseen by a national federation of each sport. For example, in the UEFA Statutes a league is defined as "a combination of clubs within the territory of a Member Association and which is subordinate to and under the authority of that Member Association". (1) However, it is quite common that a national federation does not itself organize the league but assigns the organizing task to a separate legal entity, usually controlled by the teams that play in the league. I refer to this kind of assignment hereafter as the outsourcing of league functions.
The initiative to outsource league functions usually comes from the league teams themselves, when they wish to increase their influence in the administration and commercial exploitation of the league. (2) The league teams' confidence in the national federation's abilities to administer the league may be reduced by the fact that the league clubs usually constitute only a small minority of all clubs that belong to the federation. This prevents the league clubs from exercising too much voting power in the federation even when the league clubs are unanimous in certain question. …