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Potential new restrictions and requirements on foreign State investment into European football clubs

Aerial View of Football Stadium
Friday, 30 July 2021 By Maria J. Segura Catalán, Marianne Clayton

In a sector where competitiveness goes hand in hand with deep pockets, financial backing can bridge the gap between a sports club’s potential and its realisation. The European Commission (Commission) has however made clear that the EU rules on State aid made no exception for the sports sector[1]. Wherever public authorities/bodies using public resources grant an advantage to an undertaking on a market that is open to competition, the issue of State aid arises. Various cases on the Spanish[2] or the Dutch football clubs have illustrated that sports organisations need to be aware of the State aid rules and the possibility that their financing (from financial transactions to share acquisition through bank loans or taxes) may be reviewed by the European Commission.

Until now, due diligence did not extend to funding from non-European Union countries, as the Commission’s scrutiny was limited to financing from Member States of the European Union (EU). The situation is about to change. On 5 May 2021, the Commission published a proposal for a regulation on foreign subsidies distorting the internal market (Proposal)[3]. Interested parties had until 22 July 2021 to provide comments in the context of a public consultation.

The proposal seeks to address distortions in the internal market of the European Union caused by financing from countries outside of the European Union. It is a new tool to address a regulatory gap and ensure a level playing field as currently the Member States of the European Union are subject to strict and limiting rules to provide financial assistance to football clubs in the EU. However, the EU has no regulations in place to control the in-flow of funds to football clubs and other entities in the EU from third countries (who are not Member States of the EU). For example, while the Spanish Government was prevented from providing support to football clubs such as Barcelona, the takeover of Paris Saint Germain by Qatar Sports Investment (subsidiary of Qatar Investment Authority[4] which is Qatar’s sovereign wealth fund[5]) and subsequent funding of operations of the club was not.

If this regulation is passed, it would essentially impose restrictions on foreign investments in sports.

This article explores:

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Written by

Maria J. Segura Catalán

Maria J. Segura Catalán

Maria Segura, founder of the law firm Clayton & Segura, specialised in state aid, is a member of the Madrid and Brussels Bar (Liste E). Former Deputy Director of the Competition and State Aid Directorate of the EFTA Surveillance Authority, Maria Segura has been exclusively dedicated to state aid matters for twenty years also serving in different positions within the European Commission. She graduated in Law at the University of Zaragoza (Spain) and earned an Ll.M.Eur from the Europa Institut (Germany).

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Marianne Clayton

Marianne Clayton

Marianne Clayton, is one of the founders of the law firm Clayton & Segura specialised in state aid. She is a member of the Paris and Brussels Bar (Liste E). Former senior officer at the Competition and State Aid Directorate at the EFTA Surveillance Authority, Marianne Clayton has over 15 years of state aid experience within the regulators and major international law firms. Marianne Clayton graduated in law at the Universities of Kings College and Paris I – Sorbonne.

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