The European Court of Justice's Bosman ruling created huge waves as regards the football transfer market. Football clubs are just about coming to terms with the fallout from that decision but controversial issues of state aid and unsustainable levels of debt could lead to another crisis, says Toine Manders.
In an exclusive interview, EurActiv sounded out the views of a liberal Dutch MEP (ALDE), a former lawyer who has been particularly active in asking the Commission a string of pertinent football-related questions. Manders is on the Internal Market Committee for the next Parliament. Click here to read the shorter interview news.
Do you think the Commission's football state aid probe into the 'big five' will unearth any illegal activities? Are any of the 'big five' guilty on any of the points of inquiry and, if so, which ones?
It's difficult to say but there is very much a legal vacuum surrounding this issue. There are lots of problems with all professional European football clubs but football is a tricky issue because it's such an emotive subject for the public. In Spain, Real Madrid effectively have a free training complex. The government bought it off them to build new appartments and shops. In Germany a new stadium to be used for the World Cup will mostly benefit Bayern Munich. Take the Netherlands, which is probably one of the more minor 'offenders'. A study by KPMG says that state aid has amounted to around 300m euros in the last ten years.
In both situations a case could be made to say that the facilities have a wider public benefit - i.e. that they are 'multipurpose'. But this needs to be more clearly defined. Both cases appear to have been shelved by the Commission but the underlying problem is that there are so many grey areas. What's needed is more legal certainty. For that you need clear EU guidelines which would be agreed by key stakeholders such as the Commission, Member States, UEFA and national football authorities.
Currently the Commission and national authorities treat football with kid gloves because it is so politically sensitive and they don't want to make themselves unpopular with EU citizens. The Commission don't dare start infringement procedures because they don't know what might happen next.
Supposing a complaint was made to the Commission. Now if that one inquiry led to the conclusion that there was state aid in a particular case, this could have a domino effect. Around 700 European clubs are suspected of receiving state aid. If one case were to be successfully made others would surely follow and there is a danger that football clubs would collapse like a pack of cards.
To avoid that scenario I would advocate clear rules so that everyone knows where they stand. Then, in say five years time, infringement proceedings could be started against those who are breaking the rules.
Are there any other particular issues relating to state aid at EU level?
State aid is extremely difficult to define. Football is a business but it is also a social and cultural event. Most governments pay out considerable sums for infrastructure which benefits the sport - eg security outside stadiums and transport. The question is where to draw the line between what is legitimate expenditure and what is state aid to a club.
Some have argued that EU money that has undoubtedly benefited the Euro 2004 football championships and the Olympics amounts to a form of state aid. Portugal has received around 600m euros and Greece has received around 1.4bn euros. It is important to establish clearer guidelines on what exactly falls under the term state aid.
What is your view of Italy's Salvacalcio law? Do you think that the Italian authorities should be given some slack given the parlous state of football finances there?
I think that the Salvacalcio law, which would allow Italian clubs to write players' salaries off over ten rather than three years, does constitute state aid. Neither Parmalat nor Fiat would be allowed to do that so why should this be any different? Besides Monti, the Commissioner for the Internal Market, Fritz Bolkestein, has attacked the proposed law, based on an alleged violation of EU accounting principles. This Italian 'solution' merely stores up problems for the future and is not fair to other teams in other EU countries.
Take the Netherlands, where clubs are not allowed to rack up huge debts. Their assets and liabilities have to be far more balanced. If they are not then they are given a 'yellow card'. This means they have two months to sort out their finances. If they still haven't done so then they are docked points in the league. Although the EU is supposed to be a single market, the Dutch clubs are competing in the Champions League at a disadvantage because they are not allowed the higher indebtedness which would allow them to buy the more expensive (and therefore theoretically better) players.
Again, it shows what a legal minefield this is. What is needed are clear rules. A think tank made up of 'wise men' drawn from all the various stakeholders could start this process.
Is BSkyB's 'victory' over the Commission as regards the broadcasting package of Premiership matches in the UK a big blow for the Commission?
The fact that BSkyB ended up with all the broadcasting rights despite a tendering procedure is not good news for consumers. In another case, FIFA sold the exclusive rights for the World Cup in 2002 to the German company Kirch. There was an abuse of monopoly here because Germans who wanted to watch the football had no choice but to pay 17 euros per match on a pay per view basis.
Here again, greater legal certainty would benefit all those involved in football. Following a parliamentary question by Manders the Commission said that rights must be sold to at least two broadcasting stations so that there is some consumer choice.
Do you have any concrete solutions to help ensure the financial health of football clubs throughout Europe?
I believe there will be an 'EU league' within ten years. There are so many distortions in the market. A level playing field across Europe is what's needed. By my reckoning there would be promotion and relegation in this 'EU league' and the play-offs would be held in Brussels every year. Players earning above a certain threshold would pay a percentage of their salary into a solidarity fund which would pay players' salaries where clubs went bankrupt.
Of course the details would need to be carefully worked out but this would also create more of an EU market. Currently, given their smaller domestic markets, clubs in smaller countries have nothing like the turnover to compete with the bigger countries. In the future, my view is that there is no reason why any EU club should not join any league based in the EU. This would mean that Glasgow Rangers, who were looking into joining the English Premiership, would have the legal right to do so.
What are your views on the introduction of sport into the Constitution and the European Year of Education through Sport (EYES)?
It was a wise move to introduce sport into the Constitution. Amateur sport, at school and local level, needs to be encouraged and it is well worth investing money in policies to educate children via sport and to stave off the threat of obesity. As the distinction between amateur and professional sport is becoming increasingly unclear, clearer definitions (as agreed by the key stakeholders) of these terms would serve a useful purpose. There really needs to be a threshold above which individuals are deemed to be making a substantial part of their earnings from sport and are therefore 'professional'.
As for EYES, I think that such initiatives are useful when they comprise more than just subsidies for projects as this is short term thinking. The added value lies more in increased policy attention to for example obesity. The various policy initiatives adopted are often targeted at combating the symptoms of obesity and of being overweight, instead of taking a structural approach to tackling the causes of the problem (namely too little sport and not enough exercise). In this respect, an idea would be to take steps to propose a policy to promote sport and exercise in the Member States and, where possible, to require, for example in connection with educational curricula or employment, or wherever possible, that they be linked - as a requirement - to European financial assistance.
The Italian Olympic Committee have controversially ruled that, from 2006-07, Italian squads must comprise at least 50 per cent 'home grown' players? Is this a legitimate rule in your view?
I have no problem with this ruling provided that it applies only to amateur sport and national teams. But it should not apply to clubs, which the European Court of Justice has said are enterprises and should be treated as such.