Royal Decree Law 5/5015 passed on 30th April 2015 introduces a new legal framework for the trading of exploitation rights of audiovisual content of professional football competitions.
The government justifies the introduction of this regulation because of the financial and entrepreneurial dimension that modern football has taken on and also because of the social impact of the sport. The explanatory memorandum, of considerable length, contains concrete data in this regard, and states that 48% of the population is interested in football, although they do not play themselves, and 74,5% of football team supporters watch their team’s matches, including by pay television.
What are the new developments?
a) An obligation is established for the transfer of the audiovisual rights of sports entities to the competition organisers: PROFESSIONAL FOOTBALL LEAGUE (LFP) and the ROYAL SPANISH FOOTBALL FEDERATION (RFEF). It is thus hoped that, with the collective bargaining for television rights, higher earnings shall be obtained than if negotiations with each sporting entity were to take place.
b) The regulation provides for a system of distribution of earnings, so that the majority of revenue is not held by just two football clubs (Madrid and Barcelona). The economic reality has shown that more than half of first division clubs were insolvent and unviable, unless their earnings increase substantially.
c) Sports entities receiving revenue should also contribute with a part of said earnings in order to compensate those teams who are relegated and to improve the sport generally.
In particular, the main features of this new system for collection and distribution are as follows:
- It recognises that the ownership of the broadcasting rights of professional football sporting events belong to the football club.
- The “events” are defined as those events, which are held at the sports stadium, as from 2 minutes before the start thereof until 1 minute after its end.
- The participation of the club in an official football competition shall automatically imply the transfer of the faculties for the negotiation of said rights in favour of the organisers (Professional Football League or the Royal Spanish Football Federation).
- The general conditions for trading the rights shall be made public.
- The club where the event shall be held shall reserve the right to broadcast a delayed transmission of the match, on its own channel (few clubs have their own channels, therefore this seems to be a concession to only the big football clubs). They may also broadcast the match live within the stadium facilities.
- The trading of the rights may be carried out on an exclusive or non-exclusive basis.
- The duty of exploitation is introduced, in such a way that if the tenderer of the rights were not to exploit them, the trading entities may terminate the contract and adjudicate them to another tenderer.
- The conditions of trading shall be submitted to the control of the National Competition and Markets Commission, by way of a prior report. Furthermore, the conditions shall be made public.
- Distribution criteria of money raised:
– The Professional Football League shall distribute the amounts raised.
– 90% of revenue shall go to First Division teams and the rest to Second Division teams.
– From said amounts (50% in the First Division and at least 70% in the Second Division) shall be distributed among the teams equally.
– Once said percentages have been deducted, the rest shall be distributed variably, taking into account the sporting results in the last five seasons (First Division) and the most recent season (Second Division). Thus, the highest classified team shall receive 17% of this amount and the last 0,25%.
– In any case, the difference between the clubs with the highest earnings and those with the lowest may not be more than 4.5 times. And if total earnings for the sale of rights were to exceed 1,000 million Euro, the difference shall decrease progressively up to a maximum of 3,5 times (when 1.500 million or more is collected).
The settlement of all of these amounts shall take place before the end of the calendar year in which the sporting competition is initiated.
– Obligations of sports entities: in relation with the League (La Liga), the clubs or participating entities shall have to contribute financially, in proportion to their earnings, with the aim of improving and promoting the competition and the sport in general:
– 3.5% for teams relegated from the First and Second divisions.
– 1% for the Professional Football League (Liga de Fútbol Profesional – LFP).
– 1% for the Sports Council.
– Up to 0.5%, also for the Sports Council, for aid to feminine sport, aid to the Second Division B and football associations, referees, managers and trainers.
– The management of the broadcasting rights of the League (Liga) shall be controlled by a body incorporated within the Professional Football League, and which shall be renewed each season. It shall be formed by the two clubs/entities with the highest earnings derived from broadcasting rights during the previous 5 years; two entities from the First Division selected from the participants of this Division; a club from the Second Division, also selected from the participants of this Division; and the President of the Professional Football League, who shall have the deciding vote in case of a draw. The competences of this body shall include the management of the trading and exploitation of the broadcasting rights and the control, revision and audit of the business management.
– The management of the rights in case of the Copa del Rey and Supercopa shall correspond to an organism incorporated within the Royal Spanish Football Federation. However, the exploitation of the broadcasting rights of the final of the Copa del Rey are excluded from its faculties.
– Debts with the Public Administration: it is important to point out that the Professional Football League may use image rights as a guarantee in order to obtain financing so that sports entities may pay their debts with the Public Administration. When collateral or a guarantee exist on broadcasting rights, the Professional Football League and the Royal Spanish Football Federation may even respond jointly together with sporting organisations in the face of debts with the Treasury or Social Security Departments.
Eduardo Vilá
Vilá Abogados
For more information, please contact:
8th May 2015
