Sports Law 2021 Comparisons

Last Updated March 31, 2021

Contributed By BluePort Legal

Law and Practice

Authors



BluePort Legal is a boutique law firm specialising in the areas of sports, media and entertainment with four founding partners and five associates based in Hamburg, Germany. The firm's market-leading sports team has decades of experience in the sector and has been involved in many national and international high-profile matters. BluePort offers legal services to all national and international stakeholders in the world of sports and esports, from clubs, federations, athletes, intermediaries, broadcasters, media agencies and start-ups to venture capital investors. It advises clients on player transfers, marketing deals, media rights and other commercial transactions as well as in litigation and arbitration matters. The firm's strength is a long-standing market expertise and an in-depth understanding of the industry from a commercial and legal perspective. In the field of media and press relations, BluePort represents athletes, celebrities, agencies and other commercial enterprises comprehensively in litigation and other legal matters against unauthorised media coverage.

Doping as a Criminal Offence

Until 2015, doping was only punishable under criminal law if illegal drugs were used. In this case, the unauthorised prescribing and/or trafficking of doping substances could be sanctioned. In 2015, the German anti-doping law came into effect. In addition to covering the criminal liability and punishment for possessing, marketing, manufacturing, trading and prescribing doping substances, the law regulates the prohibition and punishment of the use of doping substances (“self-doping”) to obtain an advantage in an organised sport competition. The German anti-doping law covers only specific doping substances, which are listed in the annex to the law. The list includes well-known substances, such as anabolic steroids, growth hormones, and EPO. Several prohibited doping substances are narcotics. If particular narcotics are used for doping purpose, criminal liability under German narcotics law may also apply.

The National Anti Doping Agency

The National Anti Doping Agency (NADA) is the central authority for clean sports in Germany. The goal of NADA Germany is to ensure fairness and equal opportunities in sports. As a non-profit civil law foundation, NADA is an independent body. NADA is financed according to the stakeholder model by the German state, sports, and business.

NADA is the competence centre for anti-doping activities in Germany. NADA’s tasks include doping controls, prevention, medical and legal advice, and international co-operation. In this way, NADA makes a significant contribution to upholding values in sports.

Implementation of the World Anti-Doping Code

In 2003, Germany committed itself to national implementation of the World Anti-Doping Code (WADC) requirements, which have been successfully translated into the National Anti-Doping Code (NADC). Over the years, the anti-doping regulations have been revised several times. In January 2021, the current NADC 2021 came into effect.

Jan Ullrich Doping Scandal

One of the most famous doping cases in Germany involved German cyclist Jan Ullrich, the 1997 winner of the Tour de France. In 2006, it was alleged that Ullrich received and used doping substances from the Spanish sports doctor, Eufemiano Fuentes. In 2007, Ullrich retired, stating that he “never once cheated as a cyclist.” In 2012, the Court of Arbitration for Sport (CAS) found Jan Ullrich guilty of anti-doping rule violations and retroactively banned him with all results gained since 2005 wiped from his slate. In 2013, he finally admitted to using blood doping during his career.

The Ban of Claudia Pechstein

During the World Championships in Hamar, Norway in February 2009, the most successful German speedskater, Claudia Pechstein, was accused of blood doping based on an abnormal level of immature red blood cells. After an oral hearing, the ISU Disciplinary Commission (DC) found Pechstein guilty of an anti-doping rule violation (blood doping) and banned her for two years. She was the first athlete to receive a suspension based not on a positive drug test, but on irregularities in her blood profile. Pechstein denied that she had doped and appealed to the Court of Arbitration for Sport (CAS) in Lausanne, claiming that she has an inherited condition that explains the abnormal measurements. The court confirmed the ban in November 2009, finding no evidence for an inherited condition in the expert testimony provided by Pechstein. Pechstein also unsuccessfully challenged this ban in front of German civil courts and the European Court of Human Rights (ECHR), claiming the arbitration process had been unfair.

National Law to Ensure Integrity

In 2017, the offences of sports betting fraud and manipulation of professional sports competitions were introduced to prosecute cheating players, coaches, officials and referees. These laws complement the fraud paragraph in the Criminal Code and the offence of bribery and corruption, which only apply to specific cases.

Measures of the German Football Association to Ensure Integrity

The National German Football Association (DFB) monitors betting on matches and engages in match-fixing prevention activities. The DFB has worked together with international (FIFA, UEFA) and national (the Deutsche Fußball Liga, or DFL) partners to set up several programmes to identify and prevent the manipulation of matches (eg, the "Together against Match-Fixing" project). In addition to comprehensive training and information programmes, the DFB and DFL have also appointed an ombudsman as an independent contact person for anyone who can provide information of actual and planned match-fixing. If players, coaches, referees, and officials have suspicions about match-fixing, they can seek advice from the ombudsman and help prevent manipulation, corruption, and fraud in German football. Moreover, the DFB has the authority to demand that betting providers hand over player data if analysis reveals suspicious betting transactions.

Match-Fixing Scandal in Tennis

In July 2020, several matches of a tennis tournament in Germany were suspected of having been manipulated. The systems of betting providers reported suspicious betting on individual games in certain sets and on the entire course of some matches. The Tennis Integrity Unit (TIU), which investigates and sanctions cases of betting manipulation in professional tennis, has not yet commented on the suspicious matches for “operational reasons.”

Gambling Regulations in Germany

While gambling law is primarily subject to regulation at the level of the 16 German federal states, the Interstate Treaty on Gambling (ITG) covers basic legal requirements for the organisation of all types of gambling across states. After years of legal uncertainty for sports betting operators, new gambling regulations, the ITG 2021, will come into force in July 2021. Despite opening the online sports betting market and largely legalising online sports betting, the ITG 2021 provides for very strict requirements for obtaining a licence to offer online sports betting (including security deposits, advertisement, and limitations on player accounts).

National Law on the Manipulation of Sports Competitions

According to the German Criminal Code, the manipulation of professional sports competitions constitutes a criminal offence, irrespective of whether betting was involved or not. Sports betting fraud or the manipulation of matches in professional sports competitions could lead to a fine or a term of imprisonment of up to three years, depending on the actual misconduct involved.

Prevention of Match-Fixing in German Football

According to the legal and procedural regulations of the DFB, players, managers, and officials of the clubs are prohibited from placing bets. This prohibition is also part of the standard employment contract for professional and contract players provided by the DFB, meaning that misconduct may also affect the players’ employment relationships. In addition, the regulations of the DFB prohibit match-fixing, which involves any actions of players, managers, officials, and referees to influence the course and/or the result of a football match. The prohibition of disclosure of inside information prevents players, coaches, club officials and referees from disclosing any sports betting-related information that is not accessible to the public. Breaches of these rules constitute unsportsmanlike conduct and will be sanctioned (eg, by sentencing suspensions and fines).

Since 2005, the DFL has co-operated with the Swiss company Sportradar AG to monitor all Bundesliga matches with regard to match-fixing.

Match-Fixing Scandal in 2005

In 2005, Robert Hoyzer, who at that time was referee in Bundesliga 2, admitted that he had fixed German Cup, second division and regional league matches in return for bribes from a Croatian betting mafia ring. Hoyzer was banned for life from any role in football and received a 29-month prison sentence.

Disciplinary Proceedings: The Example of Anti-doping Rule Violations

All German sports federations are committed to the prohibition of doping to protect players from damage to their health and preserve fairness in sports competitions. In close co-operation with NADA, anti-doping commissions carry out doping tests on a regular basis and perform tasks related to the observance and enforcement of the prohibition of doping and betting in sports. If an anti-doping rule violation cannot be excluded, the responsible anti-doping organisation may initiate disciplinary proceedings against the parties involved. The responsible disciplinary body for carrying out disciplinary proceedings is the body specified in the arbitration agreement between the athlete and the federation (eg, the German Court of Arbitration for Sport). Consequences for those involved range from fines to suspension and may also include the issuance of provisional measures. The responsible organisation and/or NADA may order a player penalised for a doping offence to undergo further doping tests.

Player Punished for Betting on Bundesliga 2 Matches

In 2016, Ivica Olić, at that time a player for a Bundesliga 2 club, was involved in betting on several second division matches. He was sentenced to a two-match ban and a EUR20,000 fine by the DFB Sports Court. Furthermore, his club imposed an additional fine. The player admitted that he had given his credit card to friends, who bet on matches. The relatively small penalty was justified by the fact that there were no signs of match manipulation. The “Betradar”, an early warning system against match manipulation, which was introduced after the Hoyzer scandal in 2005 (see 1.3 Betting), reported no irregularities. In addition, the fact that the bets were not placed on the player’s own club might have contributed to mitigating the accusations.

Commercial Rights

Especially (but not exclusively) for professional sports leagues and sports events which do not generate the majority of their revenue through broadcasting fees, alternative commercial rights are of mayor importance. Thus, the focus on ticketing, match hospitality and merchandising is still growing and is not only an important way to maintain a relationship with fans and supporters but also ensures important revenues for the clubs.

Various clubs and the DFL are incubators of tech start-ups in sports to promote technical development and generate additional sources of revenue.

Ticket Enforcement

Even though selling event tickets is not an offence under German criminal law, the secondary market for tickets raises different legal issues. Generally, reselling tickets breaches the ticket contract terms and conditions and, furthermore, can raise issues with regard to German competition law.

Merchandising

Clubs' merchandising has been significantly expanded and professionalised in the last decade. Merchandising does not only mean selling team shirts but exploiting the trade marks and the reputation of the clubs in the most lucrative way. We provide legal advice and actions to prevent and prosecute the illegal use of trade marks by third parties without letting that enforcement (both in court and out of court) have a negative influence on the relevant club's reputation and public relations.

Classic and Modern Types of Sponsorship

Sponsorships in sports are an attractive investment for companies to enhance and promote their brand and products. The recent developments from static brand placements to LED walls and virtual overlays give countless opportunities to create an attractive and catchy presentation of brands and products. In addition, social media (eg, Instagram, TikTok, Clubhouse) provide a fast-moving channel for emotional sponsorship integration with enormous potential reach.

Sponsorship Agreements

Sponsorship agreements are tailored for all different types of sponsorship deals (eg, main sponsorships, equipment supplier contracts, league partnerships and athlete sponsorships). Besides the standard elements, sponsorships agreements provide a detailed description of the rights which the right-holder grants to the sponsor, such as trade mark usage, TV visibility, naming rights, partnership events, and social media appearance. Often, sponsorship deals are designed as barter deals, so that the sponsor's consideration is not provided in money but in goods or services.

Broadcasting Rights

Broadcasting rights in Germany are sold through a public tendering. The big sports leagues in particular (eg, the Bundesliga) sell different kind of packages that allow the buyers to exploit the product at certain times (eg, live or rebroadcast), through certain channels (eg, tv, radio, mobile) and in a certain forms (eg, a complete live match or short highlights). In this context, the right-holders always have to walk the thin line between maximum exploitation (through, for example, maximising the number of kick-off times) on the one hand and keeping the product attractive to fans and spectators on the other.

No-Single-Buyer Rule

After a decision of the German Federal Cartel Office in the middle of the last decade, it is no longer allowed, under German antitrust law, to assign the live broadcasting rights for all matches of a competition (eg, the Bundesliga) to only one single buyer. This rule is meant to avoid tv monopolies and to ensure product improvements that are beneficial to consumers.

Householders’ Rights and Contractual Access Rights

There are no proprietary rights to a sports event under German law. However, organisers do have the householder’s right, which is part of or derived from the ownership of the grounds and buildings of the sports venue where the event takes place. It gives the organiser the power to deny anyone access to the site or to expel anybody from it and is only restrained by access rights that any individual has obtained by contract. So, the respective contracts with spectators and the media, etc, specify in detail the terms and conditions for access to the site and also sanctions for non-compliance. As it is impossible for organisers to negotiate every single contract and it is therefore necessary to use standardised terms, the legislation on general terms and conditions applies.

In some cases (a prominent example is the DFL) the organisers produce the footage themselves and the media only receive the final TV signal, rather than access with their own cameras.

Organisation and Management

How sports events are organised and managed depends on the size, budget and reputation of the event. In amateur sports or local events, it is common for the organisation to be done entirely by volunteer members of the organising club. In semi-professional sports or regional events, the club board often hires external organisers from, for example, event agencies and supervises them to realise the event in the club’s interest. In professional sports or at national or international level, the events are organised by sports governing bodies with special departments or their subsidiaries.

Participation

Participants can register for the event themselves following a call for entries by the organiser. The organiser then checks whether an entrant meets the requirements, if any are specified. Or, for some high-profile events, a personal invitation or nomination will be required. In most cases, the organiser will register the event with the relevant governing body and apply the official rules for sporting competition in the event and delegate the disciplinary process to the governing body. Participants agree to this by registering for the event or by explicit contract.

Liability of Sports Event Organisers

Sports events organisers do have to fulfil public safety obligations (Verkehrssicherungspflichten) on the grounds and in the buildings of the sporting location. This means, the organiser is obliged to minimise risks to, in particular, the physical integrity of participants and spectators. This includes but is not limited to protective measures against injuries caused by the sporting actions (eg, safety of tracks and fields for participants, or protective fences against the risk of balls or rackets flying into the public).

As the organiser will usually have contractual relations with anybody in the sports venue the liability will also result from those contractual obligations.

Liability Limitation

A limitation of liability is possible by contractual agreement between the organiser and their respective counterparty (participant, spectator, media, etc).

But liability for damage to life and limb, health and physical integrity cannot be excluded in general terms and conditions, and neither can liability for gross negligence or intent. Individual agreements could potentially cover these issues but are regularly impossible for factual reasons. So, liability is only excluded for ordinary negligence and financial damages in most cases.

If the event is cancelled for any reason and the spectators have already paid the entry fees in advance, the organisers have to refund them whether they were responsible for the cancellation or not (as in the COVID-19 pandemic).

Liability of Athletes

As athletes and spectators do not have a contractual relationship, athletes can only be liable for tort. As tortious liability requires at least simple negligence, it must be considered that the athlete will regularly be allowed to rely on the organiser’s public safety measures and does not really have to think about the safety of spectators. Liability between opposing athletes is excluded in dangerous sports (including contact sports such as football) if the damaging action was legal under the rules or only a simple breach of the rules.

Safety from Violence and Disorder

There is a borderline between inside and outside the sports venue regarding the safety from violence and disorder. Inside the stadium, venue, etc, the organiser is responsible for spectator safety and therefore engages security firms; outside it is a task of the state police. State police will only enter the sports venue if the situation is escalating or there is a high probability that it will. There is ongoing discussion as to whether organisers have to bear the costs of state police operations that are challenged by violent groups of spectators.

Origins in Amateur Sport

The original legal form of sports organisations is the registered association (eingetragener Verein, e.V.). This applies to professional and non-professional sports clubs as well as to sports governing bodies. The legal form of an association offers several advantages over partnerships or corporations:

  • simple formation (no minimum share capital);
  • no personal liability of members (but rather of the board);
  • no accounting or publicity obligations; and
  • possibly, tax advantages due to non-profit status.

Associations are basically democratically structured. There is no owner or shareholder, no distribution of profits to members (only remuneration to employees) and – usually – all members (for governing bodies: clubs; for clubs: natural persons) have the same rights.

These advantages lose their attractiveness the more professionally oriented the club or governing body is and the more it is dependent on developing extensive economic activities to maintain its high-level sporting performance.

Professional Sport

Therefore, in the professional area, subsidiary capital corporations of the clubs are often founded, which then take over the game operation and/or certain marketing activities. Legal forms can be the limited liability company (Gesellschaft mit beschränkter Haftung, GmbH), stock company (Aktiengesellschaft, AG) or limited partnership with shares (Kommanditgesellschaft auf Aktien, KGaA). This enables profit-oriented, professional corporate management and the integration of investors. The various types of capital corporations are then subject to the legal requirements that apply to the respective legal form in general and also outside of sports.

Football

The so-called 50+1 rule of the DFL states that there has to be a registered association (e.V.) that acts as the parent company and holds 50% plus one vote in the subsidiary capital corporation. It thereby limits the maximum share of investors to 50% minus one vote (GmbH, AG) or requires legal forms that exclude the investor from influencing the executive management (KGaA). Exemptions to this are granted only very rarely and are tied to high requirements.

National Law

National law does not provide a specific corporate governance code for sport. On the part of the state, the requirements resulting from the legal regulations for the respective corporate (legal) form apply. The obligations for the acting persons (representative bodies) also essentially result from the legal regulations applicable to the chosen legal form. So, there is no difference between sports clubs and non-sports corporations.

Sports Governing Bodies

However, corporate governance requirements do arise from the licensing procedure of the sport governing bodies and leagues. Clubs wishing to participate in a sports league must, in addition to their sporting qualifications, also prove their economic capabilities and, to this end, have their financial situation and planning as well as certain contractual relationships revealed and audited. This is to protect the conduct of match play throughout the season and the integrity of the competition.

Insolvency

Even if the sport governing bodies are actually primarily concerned with avoiding club insolvencies, they can provide in their regulations for the insolvency of a club to be penalised in a special way. In the top three football leagues, for example, a deduction of nine points is regularly imposed; in the leagues below, the insolvent club is automatically relegated to the next lowest division at the end of the season.

Professional v Amateur Sports

While the professional clubs in the popular sports are mainly financed by their own commercial activities, the less popular sports and amateur sports benefit from government or other public or private subsidies and members' fees.

The sources of income for professional sports clubs include, in particular, ticketing and hospitality, sponsorship, licensing, merchandising and media marketing. Fan bonds and investor participation offer further possibilities to generate the necessary funds in a crisis or before special investment measures.

Distribution of Money

There are several solidarity mechanisms put in place by the governing bodies to take some of the money from professional sports to fund amateur and semi-professional sports. This happens not only between the upper and lower leagues within the same sport, but also between different sports. For example, the German Football League Foundation also supports young athletes from other sports.

Government funds are either allocated directly by government agencies to sports organisations within their area of responsibility, or distributed to athletes and clubs within the governing body systems. Special sources of state revenue for sport promotion are state lotteries. Also worthy of note are the opportunities for athletes to be accepted into sports support groups of the German Armed Forces and the police.

COVID-19

COVID-19 has had a harsh impact on funding of professional sport as well as of amateur sport. Professional clubs lost their revenues from ticketing and hospitality, as well as some of their sponsorship revenues. It was vital for professional sports that scheduled events could take place even without spectators but be broadcast in the media. The amateur clubs who don't have media broadcasting revenues and must bear in addition a loss of members and membership fees are eligible for special COVID-19-related government funds.

The so-called 50+1 rule (see 4.1 Legal Sporting Structures), which limits the participation of investors in football clubs to minority shareholdings, is repeatedly the subject of discussion. Other than narrow exceptions, which are linked to particularly high requirements, all football clubs must be majority-controlled by one club.

At the international level, this restriction is partly seen by clubs as a competitive disadvantage compared to clubs from Spain, Italy, France, and England, which have more extensive possibilities for attract external investors.

On a national level, it is argued that taking on investors is the only way for smaller clubs to compensate for the additional income of the big clubs from participating in international competitions.

On a legal level, the discussion is mainly around whether the scheme is a restriction of competition in violation of antitrust law. So far, however, it has stood.

Especially in the emotional context of professional sports, trade marks represent values, tradition and identity and need to be protected. Market players need to register of all types of trade marks – such as word marks, picture marks and design patents – and enforce those trade mark rights, including through cease and desist letters, interim measures and proceedings at the German Patent and Trade Mark Office (DPMA).

The landmark case for trade mark protection in sports is Arsenal FC vs. Reed ruled by the European Court of Justice (ECJ, C-206/01 – Arsenal Football Club). The ECJ decided that printing the logo of a football club on shirts does create the impression that the shirt is offered by the club itself or at least by a contractual partner of the club and, therefore, constitutes a trade mark infringement.

The German Copyright Act (Urhebergesetz) is the centrepiece of a reliable legal system for the protection of intellectual property.

The scope of protection of databases under the German Copyright Act depends on whether the data base reaches a certain level of creativity (Paragraph 4 Section 2, Copyright Act) or merely constitutes a scientific database that contains plain, unadorned data (eg, in chronological or alphabetical order) (Paragraphs 87a et seq, Copyright Act).

The image right and its exploitation derive from the fundamental right of informational self-determination. In principle, the use and/or display of another person's images require the consent of that person. However, the "German law regulating art and copyright questions“ (Kunsturhebergesetz) allows exceptions if that person is significant for contemporary events, which usually applies to famous athletes. In the event of an infringement of the image right (or other IP) by a third party, the rights-holder has the usual claims for injunctive relief, information, and damages.

Generally, professional players assign their IP and the general right of personality (including their image right) to the club in the context of their employment relationship in order to allow the club to use these rights for centralised marketing.

Data usage and the corresponding data protection requirements have become increasingly important in the 21st century. Using the available data about athletes for analysing and enhancing performance is crucial for modern, professional performance analysis. Furthermore, clubs and other organisers of big sports events aim to collect as much data as possible about their fans and visitors to ensure the perfect event experience and to monetise this data with commercial partners.

GDPR and BDSG

The General Data Protection Regulation (GDPR) and the German Federal Data Protection Act (BDSG) are the two relevant statutes guaranteeing lawful processing of data in Germany. Performance analysis, online appearances (including social media), fan communication and direct marketing are a few of the many examples that raise data protection issues.

Transparent Fans

Modern opportunities to collect and analyse a vast amount of data about fans and spectators of sports events make it possible for clubs and other event organisers to maximise profits (eg, by offering tailored products to customers or selling the data to commercial partners that use it for personalised advertising). This concept of the "transparent fan“ underlines the tension between the maximum exploitation of the "new gold“ and compliant behaviour under German and European data protections laws.

General Jurisdiction of National Courts

In general, national courts have jurisdiction over all disputes, including sports disputes. However, civil procedure law requires courts to respect an arbitration agreement between the parties. National courts are precluded from hearing the matter if the arbitration agreement is valid.

Exhausting Internal Dispute Resolution Mechanisms

An obligation to exhaust governing bodies’ internal dispute resolution mechanisms is not enshrined in national law but is commonly implemented by the sports governing bodies in their respective statutes and regulations for disputes that arise from this internal legislation. In respect of the associations’ constitutional guaranteed autonomy, national courts will only accept a case after the internal pathway has been exhausted. The legitimating reason is that the claimant has accepted these statutes and regulations as binding either by contract or by membership. Nonetheless, national courts do consider themselves competent in cases of interim relief if exhausting the internal mechanism would take too much time for the claimant to be still able to obtain effective protection in front of the national courts afterwards.

Alternative Dispute Resolution

Contracting parties can agree on mediation or arbitration. Sports governing bodies regularly provide mediation bodies that can be called upon in cases such as employment disputes between the club and an athlete.

The German Institution for Arbitration (Deutsche Institution für Schiedsgerichtsbarkeit, DIS) has implemented the German Court of Arbitration for Sports (Deutsches Sport Schiedsgericht). However, like any other arbitration court, it is only competent for the case if the parties contractually agree so. The specialisation on sports results, inter alia, from the particular knowledge and experience of the arbitrators.

Arbitration

National courts are excluded from hearing cases if the arbitration agreement fulfils certain requirements, including the arbitrator or arbitration tribunal being an independent third party and not, for example an internal dispute resolution chamber or mechanism within the sports governing body or being under decisive influence of the latter. In this constellation, the arbitral award is generally binding. It is challengeable before the national courts only if core principles of procedural rules have been seriously violated. This is what former Olympic ice skater Claudia Pechstein had to experience in her dispute with the International Ice Skating Union before the Federal Civil Court when she tried to bring her claim before the national courts after having already lost her case before CAS.

Enforcement Power

If a final sporting sanction imposed by a sports club or a governing body is not accepted by an athlete or a club, this usually constitutes a further breach of rules (at least of the rule that declares the sanctions to be binding), which is itself sanctioned with harsher measures. For example, in the case of non-acceptance of a player suspension, the use of the suspended player would thus be sanctioned with a financial penalty for the club. Unpaid financial sanctions could be enforced by deducting points from a club, or relegating or excluding it. As the latter means the reduction or withdrawal of rights and positions that have been, and can only be, granted by the governing body, these sanctions are in a way self-executive. However, it is of vital importance that such a sanction is clearly foreseen in the enforcing bodies’ own statutes per se, and in relation to the specific type of infringement and proportionate to the concrete infringement in question.

Challenging Decisions

In order to challenge such decisions, it is mandatory that the internal dispute resolution pathway of the respective club or governing body be exhausted. Whether and how the final decision is challengeable itself depends on the situation. If there is an arbitration agreement, national courts are excluded from the matter. If national courts are competent, the scope of review of the decision depends on the status of the decision-making body. While decisions of club tribunals are subject to only limited revision by the courts with respect to their constitutionally guaranteed autonomy, the decisions of governing bodies’ tribunals are almost fully reviewed, which is legitimated by their monopolistic and thus powerful position in relation to the individual club or athlete.

Employment Relationships in Professional Sports

In professional sports, players are generally considered employees to the extent that they are involved in the organisation of a club in the context of a team sport. The DFL provides a model contract that standardises the relationship between clubs and players. The model contract is intended to be a non-binding proposal that can be adapted to individual needs and must be legally reviewed. In addition to the obligation to refrain from match-fixing and sports betting, the player undertakes to exclusively wear the contractual products provided by the equipment supplier during their activity for the club and allows the club to exploit their personality rights.

Salary Caps

A salary cap for players does not (yet) exist in Germany. In the course of the COVID-19 pandemic, many have argued that the introduction of a salary cap is a necessary imposition. However, salary capping is proving to be problematic due to the prevailing freedom of competition and the free movement of employees in the European Union.

Application of Labour Law to the Relationships between Athlete and Club

In general, German labour law applies to the relationship between athlete and club without any restrictions. However, the following examples show that the rules applicable to “regular” employment relationships under German labour law may not necessarily suit the characteristics of the employment relationships of professional athletes.

Fixed-Term Employment Contracts in German Professional Football

Because fixed-term contracts circumvent the protection against dismissal, the Part-Time Employment Act only permits fixed-term contracts without a material reason once up to a maximum of two years. Consecutive fixed-term contracts without objective justification are invalid. This regulation was invoked by former Bundesliga goalkeeper Heinz Müller, whose employment contract term, as standard practice in professional football, exceeded the two-year period. While the labour court did not see any objective justification for a fixed-term contract and upheld the goalkeeper’s claim, the higher labour court overturned this ruling on appeal, basing its decision on the special features of employment relationships in professional football. An employment contract of indefinite term would increase uncertainty for a club regarding the time period over which a professional football player can successfully be employed (including injuries, changed playing systems and age structure, replacement by better players). While these are reasonable considerations, the court’s decision would not stand up to judicial scrutiny outside professional football.

Working Hours of Underage Players

According to the German Youth Employment Protection Act, minors may only be employed until 8pm. If sports events take place after 8pm, underage players may not be part of the game. Despite the unambiguous wording, the trade supervisory authority in such cases applies the exemption regulation of the act, according to which minors are allowed to take part in musical performances and theatre performances until 11pm.

Capping of Foreign Players

In Germany, the rules regarding the use of foreign players have been amended several times in the past. Since the Bosman ruling of the European Court of Justice (ECJ) in 1995, the use of players from EU countries and UEFA member states has been permitted in unlimited numbers in the German national football leagues due to the free movement of workers. However, professional football clubs are subject to the regulations of the DFL, which specify the minimum number of German-licensed players, players trained in Germany, and players trained at the club.

Requirements for Foreign Athletes

Athletes from third countries (non-EU/EEA) require a valid residence permit for entry and residence, which permits employment. The permit must be applied for in advance. The residence permit for the purpose of gainful employment is generally issued for a limited period and for a specific purpose in accordance with the German Residence Act and requires a concrete job offer and the approval of the Federal Employment Agency (BA). The approval requirement is only waived in the case of professional athletes in licensed (ie, professional) leagues.

As part of the approval procedure, the BA carries out a labour market check, which consists of a priority check and an examination of the employment conditions. The purpose of this check is to prevent adverse effects on the German labour market and distortions of competition caused by the employment of foreign workers. The examination of the conditions of employment covers essential working conditions applicable to an employment relationship (eg, pay and working hours).

Esports in Germany

In recent years, esports have grown rapidly in popularity in Germany. While it is difficult to estimate the exact number of gamers, esports reaches around three million people all over Germany. The most played esports games in Germany are League of Legends, DOTA 2, Counter-Strike: Global Offensive, StarCraft II, and FIFA. A total of 40,000–150,000 esports players are loosely organised in teams, and 60 broader gaming associations exist. The German Esports Federation (ESBD) represents the interests of the organised gaming associations in Germany. Some of the leading esports organisations (eg, SK Gaming GmbH & Co. KG and G2 eSports) and ESL (one of the world's largest league/tournament organisers) are based in Germany. Legal issues that arise in relation to esports include those related to player employment contracts, transfers, sponsorship, and media rights.

In contrast to amateur players, professional players are part of sponsored teams and have extensive contractual obligations to their organisations. The number of professional esports players in Germany is unknown.

The ongoing COVID-19 pandemic has upended esports organisations’ plans for large in-person events for the foreseeable future. Due to health and safety concerns and governmental restrictions, the organisations have been forced to cancel regional and international esports events with audiences and move the competitions online.

New Issues

The COVID-19 pandemic has had quite a significant impact on professional sports and the corresponding law. Although German law and statutes claim to provide a legal solution for every situation, the pandemic has led to a variety of new interpretations and legal assessments that had not previously existed.

Freedom of Association

Can a competition be stopped in the middle of the season? Will the season then be considered as valid or invalided? Can a system and/or structure of a competition be changed with immediate effect to the current season? The associations (eg, the DFB and DFL) were able to act and answer these questions under their fundamental right of “freedom of associations” that allows them to adopt their own rules and laws and change them likewise, provided that this does not violate equal or higher ranked rights of third parties.

Private Law

In B2B and B2C relationships, on the other hand, parties had to make several compromises and find solutions applying the general statutes of German private law. Employment agreements needed to be interpreted regarding their duration and questions of payment. Services already rendered had to be reversed (eg, in the context of ticketing and sports travel). The former legal uncertainty in such extreme situations led to several changes in the field of legal drafting, especially in the area of terms and conditions.

Brexit has had a major impact on many areas of professional sports and the corresponding law. The inapplicability of EU freedom of movement principles will influence the transfer business in all professional sports leagues. The Premier League, for example, has already implemented certain restrictions for foreign players in order to protect and promote their own young talents.

Besides, sponsors (and other contractual parties) must answer different legal issues in the context of cross-border business with the UK (eg, tax issues, scope of trade mark protection and all kind of liability questions). Brexit-related legal advice should focus on the client's interest in gaining the best commercial results while avoiding negative effects on compliance and legal certainty. We expect this area of Brexit-related consulting to be very dynamic and that there will be a need for constant adaptations in the next couple of years.

BluePort Legal

Poststraße 36
20354 Hamburg
Germany

+49 40 4191200 0

+49 40 4191200 29

info@blueportlegal.com www.blueportlegal.com
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Law and Practice in Germany

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BluePort Legal is a boutique law firm specialising in the areas of sports, media and entertainment with four founding partners and five associates based in Hamburg, Germany. The firm's market-leading sports team has decades of experience in the sector and has been involved in many national and international high-profile matters. BluePort offers legal services to all national and international stakeholders in the world of sports and esports, from clubs, federations, athletes, intermediaries, broadcasters, media agencies and start-ups to venture capital investors. It advises clients on player transfers, marketing deals, media rights and other commercial transactions as well as in litigation and arbitration matters. The firm's strength is a long-standing market expertise and an in-depth understanding of the industry from a commercial and legal perspective. In the field of media and press relations, BluePort represents athletes, celebrities, agencies and other commercial enterprises comprehensively in litigation and other legal matters against unauthorised media coverage.