More beautiful business than game

Date: 04/06/1998

With less than a week to go before the planet's biggest sporting event, the World Cup, the public's appetite for football and its spin-offs appears insatiable. But as those at the top of the game cash in on its success, EU regulators are racing to catch up. Tim Jones reports

THE last time the World Cup was hosted by the old continent, football was still a game.

Granted, when Argentina kicked off against Cameroon in Rome eight years ago, football was a rich game. Gianluigi Lentini had just transferred from Torino to Milan for 12 million ecu and Luciano Pavarotti's version of the Nessun Dorma aria, which was used as the BBC's theme song for the tournament, topped the charts for weeks.

Yet a game it was. Clubs were still clubs, and not multi-million-ecu businesses, highly restrictive rules still determined who could play for them and the sport was riddled with 'business' practices which would have seen executives behind bars if they had been applied to any other economic sector.

That was then. Eight years on and the France '98 tournament which Scotland and Brazil will open next Wednesday (10 June) has become an Expo for a European business success story, with all the advantages and drawbacks which that entails.

The public's appetite for the game and its spin-offs - from 70-ecu replica home and away team shirts to Arsenal shower gel or striped Ajax custard - is seemingly infinite.

Even a recent admission by two executives of Newcastle United that their replica shirts were vastly overpriced (the club is raking in a 900% margin on them) failed to put off the fans. The same supporters are prepared to spend 40 ecu per month to subscribe to satellite and cable football channels.

Money is cascading into the sport or, at least, into its élite. More than a dozen clubs, including Ajax Amsterdam, Manchester United, Bologna and Glasgow Celtic, have turned themselves into public limited companies and issued close to 2 billion ecu of stock on to Europe's equity markets.

European regulators have scurried to catch up. Football has become that worst nightmare of regulator and consumer alike: a cash-rich business with amateurs in the boardroom, rigged buying and selling practices, and areas shielded from market disciplines.

But one event revolutionised football and was used by the European Commission as a crowbar with which to break into the game and overhaul its 'Spanish practices'. This was the decision of the European Court of Justice in favour of Belgian footballer Jean-Marc Bosman.

Having reached the end of his contract with the now defunct RFC Liège, Bosman accepted a new position with French club Dunkerque but was prevented from moving by differences between the two clubs over the transfer fee. He was forced to stay at Liège on a quarter of his salary.

The Court of Justice ruled that both the existing transfer system and the 'three-plus-two' rule, which allows clubs in European competitions to field only three foreign and two naturalised players, violated Article 48 of the Treaty of Rome on the free movement of workers.

The Bosman case freed up the market for footballers and accelerated a process allowing emerging talent to gravitate towards the big-money leagues in Italy, Spain and England.

This has not made everyone happy. The abolition of the three- plus-two rule has produced bizarre results. When west London club Chelsea won the European Cup Winners' Cup in April, its player-coach and goal-scorer were Italian, its goalkeeper Dutch and its central defenders Romanian and French. In fact, only three Englishmen played.

Italian Deputy Premier and Juventus fan Walter Veltroni has had enough. He paid a visit, together with four other EU sports ministers, to Competition Commissioner Karel van Miert and Social Affairs Commissioner Pádraig Flynn last week to plead the case for reintroducing curbs on fielding foreign players.

In the run-up to the German elections in September, some politicians in Bonn are echoing Veltroni's call for sport's exemption from the normal EU competition rules.

Unfortunately for them, the Bosman case has unleashed a wave of quasi-litigation involving sports stars and impresarios.

"The Bosman case has become something of a watershed in the popular perception of the interaction of sport and competition law," admitted Alexander Schaub, the Commission's director-general for competition, in a recent speech. "The case has brought about a much greater awareness of the role of Community law in sports and has come at the same time as new developments relating to broadcasting, sponsorship and the technical specification of sporting goods."

Such developments are also spreading outside football, as the market which has engulfed the 'beautiful game' flows over into basketball, martial arts, the newly professionalised rugby union and rugby league.

The key area for intervention has become the application of anti-cartel rules to the broadcasting activities of sports organisations. Some sports, including football and snooker, rely heavily for financing on sponsors which are only prepared to sink investment into the championship if their logos are broadcast. This has encouraged the sale of exclusive broadcasting rights for sports events.

The Commission has tended to let these go so long as the exclusivity of the deals is short (a year appears to be the maximum), and limited in scope and effects.

The Directorate-General for competition (DGIV) was prepared to compromise in the case of the five-year exclusive agreement between BSkyB, the BBC and the Football Association to show live English matches in the early Nineties.

This was because Sky was testing new technology on the market and required a long lead-in. However, such exemptions are unlikely to be allowed again.

The regulators have even turned their attention to balls. In March 1996, Commission officials launched dawn raids on the English, Danish and French football associations after German sports goods retailers complained that the Fédération Internationale de Football Association (FIFA), the world game's governing body, was insisting that only balls carrying its logo could be used in 'official' matches. That investigation is still continuing.

As far as the Commission is concerned, complaints from sporting bodies about its application of normal rules of competition are sterile and miss the point.

Officials say the football establishment, in particular, would be using its time more effectively if it devised schemes to encourage some of the cash at the top of the game to trickle down to clubs where young players serve their apprenticeships.

Some of these clubs have disappeared in recent years and others are dying.

"The principle of solidarity between large and small football clubs, which seems to be of such an obvious importance and to which Commissioner Van Miert has been appealing from the outset, has not found much of an echo from the big clubs," said Schaub.

"These have preferred to expand their business activities, become quoted companies on the stock exchange, insist on retaining control over broadcasting rights, and put more and more distance between themselves and the smaller clubs."

Major feature on the EU's increasing regulatory interest in football.