# Multiple club ownership rules : legal analysis (France)

Marc Peltier

► To cite this version:

Marc Peltier. Multiple club ownership rules : legal analysis (France). World Sports Law Report, 2008, pp.15. hal-05024058

HAL Id: hal-05024058

https://hal.science/hal-05024058v1

Submitted on 23 Apr 2025

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# MULTIPLE CLUB OWNERSHIP RULES : LEGAL ANALYSIS (FRANCE)

Sport features some particular characteristics which are generally referred to as the “specificity of sport”. The necessary interdependence between competitors is one of these particular characteristics. Whereas, in other economic areas, the disappearance of competitors might be satisfactory, sporting events require the upholding of other teams at a level which ensures the uncertainty as to the result. Sport competition must remain fair and loyal. In order to preserve the equity of sporting events and to avoid any intrigue, an investor should not control several clubs. Results could be questioned if clubs were controlled by a same individual or legal entity. Previous articles already dealt with multiple club ownership in the Premier League, Bundesliga, Liga and under UEFA rules (WSLR December 2007, p. 6 and January 2008, p. 12). As far as France is concerned, rules on multiple club ownership are laid down by the state and not by national associations.

A few words may be useful to recall French legislation on sport companies. French clubs were originally organised as non-profit-making associations. It is only since the *Mazeaud Act* of 1975 that professional clubs can form a company. Special types of companies have been created for professional clubs. Most of them are based on the rules of the public limited company (plc). Once the company is formed, the association remains and becomes a shareholder of the company. The company runs all professional activities while the association is in charge of amateur teams, especially the academy for young players who aspire to become professionals. French law used to provide that the association should have a direct control of the sport company it created. Multiple club ownership was not an issue then. It has become one since associations are allowed to be minority shareholders of the sport company they incorporated. As far as rules on multiple club ownership are concerned, French law evolved from restrictions on shareholding to restrictions on control.

## First step : restrictions on shareholding

In France, pursuant to an Act of 13 July 1992, it was strictly forbidden to hold, directly or indirectly, stocks of more than one company operating in the same sport. Holding stocks of two or more companies operating in different sports was allowed.

Such a prohibition was probably too severe as far as community law is concerned. According to the White paper on sport adopted by the European Commission, rules preventing multiple ownership in club competitions are organisational sporting rules "that – based on their legitimate objectives – are likely not to breach the anti-trust provisions of the EC Treaty, provided that their anti-competitive effects, if any, are inherent and proportionate to the objectives pursued". The limitation of the freedom of action of investors which the rule entails should not go beyond what is necessary to ensure its legitimate aim, the integrity of sporting events.

Therefore, French rules, which prohibited investment in more than one company operating in the same sport, were out of proportion with the legitimate aim in the eyes of the European Commission.
## Second step : restrictions on control

A new act was adopted on 15 December 2004 which softens the ban<fnref n="1" />. Pursuant to article L. 122-7 of the French sport code, it is now the control of more than one company operating in the same sport which is prohibited. Any operation (transfer of shares, merger, asset disposal, partial business transfer...) that would have the effect of giving an investor the control of a second company operating in the same sport is void<fnref n="2" />. In its decision concerning the constitutionality of the rule, the French Constitutional Council held that this new law guarantees the sincerity of sporting events and respects the principle of equality (Constitutional Council, decision n° 2004-507 DC, 9 December 2004).

This new principle is a reference to article 2.1 of the Regulations of the UEFA Champions League which provides that “no individual or legal entity may have control or influence over more than one club participating in a UEFA club competition”. Such control or influence is notably defined in this context as holding a majority of the shareholders’ voting rights. Minority investments in several clubs are allowed under UEFA rules.

Under French law, the definition of control is based on article L. 233-16 of the commercial code. This text distinguishes sole and joint control. Sole control of a company exists when an investor (i) holds the majority of the voting rights ; (ii) has designated the majority of the members of the administrative structures for two successive financial years<fnref n="3" /> ; (iii) exerts a dominant interest by virtue of a contract or the terms and conditions of its memorandum and articles of association. Joint control exists when a limited number of shareholders share the control of a company and decisions are made on the basis of an agreement between them. Article L. 122-7 of the French sport code does not seem to have in view the notion of significant influence over a company’s management, which is deemed to exist when an investor holds at least one fifth of the voting rights. The same investor could then exert a significant influence over two or more sport companies as long as it does not control them.

## Conclusion

The new law offers a wide range of possibilities :

- A same investor may hold shares of several sport companies even if they operate in the same sport. LNR (Ligue Nationale de Rugby) is currently focusing on a situation where an individual is the minority shareholder and chief executive officer of two rugby union clubs (one is playing in Top 14 ; the other in Pro D2). As far as the multiple club ownership rule is concerned, this does not seem to be contrary to the law even though, in the eyes of the LNR, it may be contrary to the integrity of sport.

- A same investor may also control companies operating in the fields of different sports.

<footnote n="1">¹ This act does not modify the legislation which forbids the shareholder of a sport company to lend money to or to stand security for another sport company operating in the same sport. Such a rule is penalized as a criminal offence.</footnote>

<footnote n="2">² For some sport companies, those incorporated under the SAOS (société anonyme à objet sportif) status, transfers of shares are subject to a control by the local prefect who can check if the purchaser already controls another sport company.</footnote>

<footnote n="3">³ The investor is deemed to have effected such designations if, during that financial year, it held a fraction of the voting rights greater than 40%, and if no other partner or shareholder directly or indirectly held a fraction greater than its own.</footnote>
- A French sport company may hold shares of another sport company. It is only the control of a sport company by another sport company operating in the same sport that could be forbidden, as indirect control is prohibited. Some sport regulations are yet against the participation of a sport company in the capital of another sport company. For instance, article 2.1 of the Regulations of the UEFA Champions League provides that "no club participating in a UEFA club competition may, either directly or indirectly hold or deal in the securities or shares of any other club participating in a UEFA club competition". Apart from that special prohibition, such a practice may develop in France<fnref n="4" /> and allow partnerships between clubs.

Marc Peltier

Senior Lecturer at the University of Nice Sophia Antipolis
Member of the sport law centre (ERMES research laboratory)

<footnote n="4">⁴ A few years ago, OL, a football club, held 12.5 % of the capital of ASVEL, a basket-ball club.</footnote>