Italian Competition Authority concludes investigation professional football

26 March 2007

Eutimio Monaco

The Italian Competition Authority (AGCM) has concluded its investigation into the professional football sector and has recommended a number of changes in relation to the sharing of proceeds from the sale of TV rights, contractual relationships between players and the clubs, transfers of players and the relationship between the Italian Football Federation (FIGC) and the leagues. This follows on from the recommendations that the AGCM made in May 2006 in relation to the regulation of sports agents.

The AGCM concluded its fact finding investigation into professional football on 21 December 2006 and has proposed a number of changes to current practices. The final report will be submitted to the FIGC as well as to the relevant government departments.

The AGCM found that whilst professional football clubs faced great uncertainty in the amount of revenues they can achieve, there was a heavy reliance on media rights for income with a poor use of alternative sources of income such as merchandising or sponsorship. Equally the existing system of media rights distribution and methods of allocating the proceeds exacerbates the economic imbalance between large and small clubs. The AGCM considers that the heart of the problem lies in the way the proceeds from the sale of media rights are allocated, although a voluntary system which centralises the sale of media rights could improve the situation. Therefore the AGCM has recommended that the task of allocating proceeds should be given to a third party and done in such a way to share a significant portion of the proceeds between the clubs, a significant proportion of which will be allocated on merit rather than based on other factors such as geographical location.

The AGCM also found that the current contractual arrangements between players and clubs in relation to termination rights are excessively restrictive, although it agreed that there is a need for players to remain within their teams for certain periods to achieve a level of stability in the game. Player transfers can also distort competition between the clubs. The AGCM has made recommendations regarding contractual provisions to allow for protected periods during championships where contracts cannot be cancelled and thereafter allowing one party to terminate for just cause. Transfers and loans of players should also only occur under certain circumstances and be limited during the season to minimise disruption.

The AGCM had previously in May 2006 approved a number of guidelines to be included in the new regulations for agents. This was the result of the AGCM’s findings that the FIGC regulations for agents contained provisions which risked inhibiting competition between the operators and possibly encouraged collusive behaviour. The proposals included: limiting agent-player exclusive dealing arrangements, allowing greater contractual freedom between players and agents, excluding restrictive clauses such as those which prevent termination prior to contract expiry, excluding restrictive clauses which ban active sales tactics and eliminating conflicts of interest.

The reform of the organisational structure of the football industry was also considered during the investigation. The AGCM had found that the football leagues exercised significant influence over not only the financial interests of the clubs but also the FIGC itself. However, it considered that it was important that the FIGC should not be subject to undue influence of the associations of football clubs as this compromised its ability to represent the interests of all parties involved in the football industry. Therefore, the FIGC should be responsible for approving contracts between clubs and players as well as drawing up model transfer agreements.

Source: AGCM press release dated 5 January 2007 at http://www.agcm.it