Unearthing all the Red Flags in the UEFA’s Swiss Model

[Author: Sidharth B. Pai & Abhinav Saikia , students of Law at Gujarat National Law University]

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The 1996-97 Premier League (EPL) finale didn’t disappoint when a 1-3 victory for 10-man Arsenal against Derby County proved insufficient for the Union of European Football Associations Champions League (UCL) qualification. And yet, the Gunners knew that they could aim to battle Europe’s best in the successive campaign. Nearly 25 years later, however, the Top Four wouldn’t matter anymore, if you’ve qualified for the Europa or Conference Leagues and you are royalty. Despite being the face of competitive balance and the European Super League’s (ESL) ardent attacker, Aleksander Čeferin is receptive to reforming the UCL rules. The organization is predicted to pick a path for the UEFA Club Competitions (UCC) by 2021, applicable from 2024-25 which would witness an increase of four teams in a championship instead of groups. The reforms fail to reconcile the wants of fans with those of the clubs – there’s a defenestration of sporting merit, an imminent, disproportionate surge in revenue for the elite, and a disregard for competitive balance. The authors discuss how these ramifications demand the EU step in to rectify this UCL model, which is but an ESL, by stealth.

The Disownment of Sporting Merit

The eligibility requirement under Article 4 of the UCL Regulations requires qualification on “sporting merit”, the definition of which is based on objective, transparent, and non-discriminatory principles. The proposed reforms betray merit in the manner of qualification and the structure of the competition. Two non-qualified teams are to be re-qualified on the basis of their historical presence and success in UCC, determined by their UEFA coefficients – this would have seen Spurs qualify for the UCL rather than the Conference League, despite finishing seventh in the 2020-21 EPL. This would therefore serve as a safety net for the big clubs of championships that benefit from a higher coefficient – guaranteeing both access and perpetual revenue. Secondly, teams would be ranked after just ten games, despite not all having played against the same opponents. This inequity is compounded by the increase in financial inequalities. The increase in teams corresponds to an increase in games between the top sides and an increase in the value of the UCL’s media rights. It would also mean a smaller domestic league, with matches accounting for only two-thirds of the overall schedule, resulting in a less level playing field on both the domestic and continental levels. 

The Disproportionate Surge in Revenue

There aren’t contrary views on increased matches when it’s incentivised by a surge in revenue. Although a club may not qualify on merit, the two additional coefficient spots would see an undeserving influx of at least €50 million. Over the years, the “nasty 12”, along with Bayern Munich and Paris Saint Germain, have been the major recipients of UCL-generated revenue, which gave birth to the “elite” and the consequent monopolies in domestic football over the past decade. The influx of these clubs would be so high post-reforms, that it may end the near-dead competition in the Eredivisie and other one-club dominant leagues. The premise that national markets are primary for TV coverage would indicate how the reforms would violate EU competition law. The number of clubs with a realistic chance of winning the UCL has declined lately, depicting how the competition has developed within national markets. Ajax has been fighting with the other teams in the Netherlands for the national market, which includes television viewers and merchandise and ticket sales. With the reforms, Ajax can eliminate competition, as fans would want to support a club at the highest level. PSV and Feyenoord will eventually fail to recruit fans, letting Ajax dominate the national market, widening the gap in the future and increasing fan costs. The major teams are the only beneficiaries, with lesser clubs and fans being thrown under Mourinho’s bus.

Disturbing Competitive Balance

Competitive balance is the measure of sporting rivalry’s intensity, defined as “the balance of competitiveness among the participants of a sports contest”. The 2007 EU White Paper on Sport defined the “specificity of sport” as “the need […] to preserve a competitive balance between clubs taking part in the same competition”. As the novel UCL model’s aim to reform the access of football clubs to UCC directly impacts competitive balance, the question, therefore, arises as to what extent EU law can be used to regulate this proposal with the goal of preserving the competitive balance within the EU sports system. Following the Treaty of Lisbon’s adoption, the arena of sports was included in the conferred competencies of the EU through Articles 6(e) and 165 of the Treaty on the Functioning of the EU (TFEU), incorporating the “specific nature of sport” approach in the White Paper into EU law, to address issues in the EU Sports System: the “conditional autonomy of the Lex Sportiva under EU law”. This has established conditional autonomy, instead of absolute self-regulation by EU sports federations. The scope of regulation of the competitive balance of sport in general and football, in particular, is therefore under Article 6 of the TFEU that the field belongs only to the “supporting competences” of the EU, implying that they can “only intervene to support, coordinate, or complement the action of EU countries”. 

Applicability of EU Competition Law

An entity’s qualification as an undertaking is required for its subjection to Community competition law. In the Höfner decision, the Court of Justice of the European Communities adopted a functional meaning that “an undertaking is considered to be any entity, irrespective of its legal status, which carries on an economic activity”, where “economic activity” refers to “an activity of production, distribution and service.” The EU considered the International Skating Union (ISU) to be an undertaking in 2017, in light of Article 101(1) of the TFEUas it “engages in economic activity insofar as it conducts commercial activities related to the organisation and commercial exploitation of international speed skating events”. The CJEU had ruled previously that the rules of eligibility issued by undertakings, generally fall within the scope of application of competition law. The ISU rules, therefore, issued by an undertaking, violated competition law because the lifetime exclusion of skaters, if they competed in a private competition in Dubai, was disproportionate. In light of the ISU case, the UEFA must be viewed as an undertaking, and their threat to expel football players who participate in the ESL from all international competitions would be a gross violation. As a result, the EU should conduct a proactive analysis of eligibility conditions, like an undertaking agreement, which promotes economic advancement and athletic competitiveness. It must protect pure economic competition and a balance between economic and sporting interests since we face a confrontation between football enterprises and sporting general interest. While the issue in the ISU case was that players were having financial issues in a low-income sport, football is a very different story, with global TV rights worth an estimated €4.9 billion per year. The reforms will widen the economic gap between small clubs that will be unable to compete in the new competition and large clubs that will directly gain from it, exacerbating the trend of declining competition within national marketplaces. Their coordinated acts are incompatible with EU competition law for all of these reasons. 

Call to Action

Andrea Agnelli’s support for the UCL’s reform has concerned many fans that it will have a lasting impact on the competitive balance of European football and will be a first step towards the eventual formation of this Super League. UEFA’s complacency and self-satisfaction in supporting the status quo, which lacks genuine competition in the football landscape and is doomed to deteriorate with time, just delays the inevitable and ensures an exclusive ESL sooner rather than later. To address or even redress the competitive balance in the EU sports system more effectively, sports could be integrated into the EU’s shared competencies, as defined in Article 4 of the TFEU, to allow the EU to adopt binding regulatory frameworks aimed at further harmonising the conditional autonomy granted to sporting bodies. Because the EU is the custodian of the EU’s public interest, as well as the interests of individuals and small businesses, it must consider their concerns when making policy decisions. It is the major purpose of EU competition policy, and it is critical for the EU to serve as the primary custodian of ethical, regulated football, interpreting competition law in a geostrategic manner. 

*For any query, feedback or discussion, the authors can be contacted at [sidharthpai26@gmail.com & abhinavsaikia56@gmail.com]

PREFERRED CITATION: Sidharth B. Pai & Abhinav Saikia, Unearthing all the Red Flags in the UEFA’s Swiss Model, SLPRR, <https://sportslawandpolicyreviewreporter.com/?p=1638> October 2, 2021.

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