[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |

Brussels, 11.7.2007

SEC(2007) 935

COMMISSION STAFF WORKING DOCUMENT

THE EU AND SPORT: BACKGROUND AND CONTEXT Accompanying document to the WHITE PAPER ON SPORT {COM(2007) 391 final}{SEC(2007)932}{SEC(2007)934}{SEC(2007)936}

TABLE OF CONTENTS

1. INTRODUCTION 6

2. THE SOCIETAL ROLE OF SPORT 7

2.1. Sport, physical activity and public health 8

2.2. The fight against doping 10

2.3. The role of sport in education and training 11

2.4. Volunteering, non-profit sport organisations and active citizenship 14

2.4.1. Volunteering 14

2.4.2. Non-profit sport organisations 15

2.4.3. Active citizenship 16

2.5. Social inclusion and equal opportunities 16

2.5.1. Social inclusion and integration 16

2.5.2. People with disabilities 17

2.5.3. The gender dimension 18

2.6. The prevention of and fight against racism and violence 18

2.7. Sport in the EU's external relations 21

2.8. The environmental dimension of sport 22

3. THE ECONOMIC DIMENSION OF SPORT 24

3.1. Statistics 25

3.2. The financing of sport 26

3.2.1. Public support for sport 27

3.2.2. State aid control 27

3.2.3. Taxation of sport activities 29

3.2.4. Sponsorship 31

3.2.5. Protection of sport-related intellectual property rights 33

3.3. Sport as a tool for regional development 34

3.4. Anti-trust 35

4. THE ORGANISATION OF SPORT 40

4.1. The European approach to sport 40

4.2. Free movement and nationality 42

4.2.1. Free movement of sportspeople 42

4.2.2. Nationality 44

4.3. Transfers 47

4.4. Players' agents 49

4.5. Protection of minors 50

4.6. Corruption, money laundering and other forms of financial crime 51

4.7. Licensing systems for clubs 52

4.8. Media 53

4.9. Supporters 56

5. FOLLOW-UP 57

5.1. Structured dialogue 57

5.2. Cooperation with Member States 58

5.3. Social dialogue 59

ANNEX I : SPORT AND EU COMPETITION RULES 63

1. INTRODUCTION 63

2. THE APPLICATION OF ARTICLES 81 AND 82 EC RELATING TO THE ORGANISATION OF SPORT 64

2.1 General principles 64

2.1.1 The Meca Medina judgments 64

2.1.2 The “test” for organisational sporting rules under Articles 81 and 82 EC 65

2.1.3 Undertakings and associations of undertakings 66

2.1.4 Restrictions under Articles 81(1) and 82 EC 67

2.1.5 Sporting rules pursuing legitimate objectives whose effects are inherent and proportionate to their objectives 68

2.1.6 Justification under Article 81(3) 69

2.1.7 Conclusions 69

2.2 Existing case law of the Community Courts and decision-making practice of the Commission 70

2.2.1 Examples of sporting rules unlikely to infringe Articles 81(1) and 82 EC 70

2.2.2 Examples of sporting rules that may infringe Articles 81(1) and 82 EC 73

2.3 Main pending and undecided issues 76

2.4 Conclusions 77

3. THE APPLICATION OF ARTICLES 81 AND 82 EC RELATING TO CERTAIN REVENUE-GENERATING ACTIVITIES CONNECTED WITH SPORT 78

3.1 Sports media rights 78

3.1.1 Introduction 78

3.1.2 Market definitions 79

3.1.3 Competition concerns resulting from the behaviour of sellers 81

3.1.4 Competition concerns resulting from the behaviour of buyers 86

3.1.5 Conclusion 89

3.2 Ticketing arrangements 89

3.2.1 Introduction 89

3.2.2 Market definition 90

3.2.3 Decision-making practice 91

ANNEX II : SPORT AND INTERNAL MARKET FREEDOMS 100

1 APPLICATION OF INTERNAL MARKET FREEDOMS TO SPORT 100

1.1 Application of the EC Treaty to sport 100

1.2 Application of the EC Treaty to sport federation rules 101

1.3 Free movement of workers and free provision of services 102

1.3.1 Freedom of movement of workers (Articles 39 to 42 EC) 102

1.3.2 Freedom to provide services (Articles 49 to 55 EC) 103

1.4 The specifity of sport 104

1.5 Sources of funding for sporting activities 105

2 LIST OF JUDGMENTS DIRECTLY RELATING TO INTERNAL MARKET FREEDOMS IN THE AREA OF SPORT 105

ANNEX III : CONSULTATIONS WITH STAKEHOLDERS 110

1. INTRODUCTION 110

2. DIALOGUE WITH THE EUROPEAN SPORT MOVEMENT 110

2.1 Consultation Conferences: “The EU & Sport: matching expectations” 111

2.2 Bilateral consultations 113

3. ON-LINE CONSULTATION 115

4. CONSULTATIONS WITH EU MEMBER STATES 125

4.1 EU Sport Ministers and Sport Directors meetings 125

4.2 Expert meetings (2005, 2006) 125

4.3 EU Working Groups "Sport and Health", "Sport and Economics", "Non-profit sport organisations" (2005, 2006, 2007) 126

4.4 Member State Working Group "White Paper" (2007) 127

5. RECENT STUDIES, SURVEYS, REPORTS 127

5.1 Studies on sport and education (2004), training centres (2007) 127

5.2 Eurobarometer surveys (2003, 2004) 128

5.3 EP reports (2004, 2007) 128

1. INTRODUCTION

The purpose of this Staff Working Document is to present the background, context and, where necessary, rationale of the proposals presented in the Commission's White Paper on Sport.

This document does not repeat the proposals presented in the White Paper and should therefore be read in conjunction with the latter. For ease of reference, the numbering of the sections of this document follows that of the White Paper as much as possible.

The White Paper marks the first time that the Commission is addressing sport-related issues in a comprehensive and coherent manner. It builds on a period of more than two decades during which sport has gradually become a topic on the European agenda.

The "Adonino Report" of the Committee for "the Europe of the Citizens" (1985) was the first Community document to recognise the importance of sport in European society and was endorsed by the Milan European Council in 1985. It initiated campaigns to raise public awareness of belonging to the Community by way of sport.

The Commission adopted a Communication to the Council and the European Parliament on the European Community and Sport in 1991[1] and a Report to the European Council with a view to safeguarding current sport structures and maintaining the social function of sport within the Community framework in 1999[2]. More recently, the Commission also presented a Communication to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on the EU action in the field of Education through Sport: building on EYES 2004 achievements[3].

The Heads of State and Government of the European Union adopted two Declarations on the occasion of the adoption of the Amsterdam Treaty (1997)[4] and of the Nice Treaty (2000)[5] to emphasise the social significance of sport and recognise its special characteristics. The "Nice Declaration" points out that sporting organisations and the Member States have a primary responsibility in the conduct of sporting affairs[6] but recognises that, "even though not having any direct powers in this area, the Community must, in its action under the various Treaty provisions, take account of the social, educational and cultural functions inherent in sport and making it special, in order that the code of ethics and the solidarity essential to the preservation of its social role may be respected and nurtured."

The results of the 2004 Intergovernmental Conference included sport among the “areas of supporting, coordinating or complementary action”.[7] The relevant article in the agreed text (Article III-282) recalled that the "Union shall contribute to the promotion of European sporting issues, while taking account of the specific nature of sport, its structures based on voluntary activity and its social and educational function", and pointed out that "Union action shall be aimed at developing the European dimension in sport, by promoting fairness and openness in sporting competitions and cooperation between bodies responsible for sport, and by protecting the physical and moral integrity of sportsmen and sportswomen, especially young sportsmen and sportswomen."

The European Parliament has repeatedly paid attention to European sport issues in recent years, most recently by adopting a resolution on the future of professional football in Europe.[8]

While preparing the White Paper the Commission has analysed a large number of relevant documents, such as e.g. the report and conclusions of the "Rules of the Game" conference on governance in sport organised in Brussels on 26-27 February 2001 by FIA and the European Olympic Committees[9] and the "Independent European Sport Review 2006", a document published at the initiative of the UK Presidency and financed by UEFA[10].

2. THE SOCIETAL ROLE OF SPORT

Sport is one of the areas of human activity that most concern and bring together the citizens of the European Union. Due to its capacity to reach out to everyone, regardless of age or social origin, sport can play various roles in European society:

- A health-promotion role: sport is often associated with the improvement of the public health of European citizens. It can play a role in the treatment of obesity and other health-related disorders. In an ageing society physical activity can have a positive impact on the health of the elderly.

- An educational role: sport can help in a number of ways in the education and training of children, young people and adults. Alongside the purely physical aspects, the social and educational values of sport also play an essential role, e.g. learning to be part of a team and to accept the principle of fair play. The European Union proclaimed 2004 as the "European year of Education through Sport" (EYES).[11]

- A social role: the vast network of clubs, associations and federations across Europe contributes to making sport the most important area of voluntary activity in Europe and provides a fertile ground for social inclusion.

- A recreational role: a Eurobarometer survey[12] conducted in November 2004 showed that 38% of EU citizens practiced a sportive activity at least once a week.

- A cultural role: the Amsterdam Treaty Conference emphasised sport's role in forging identity and bringing people together.

2.1. Sport, physical activity and public health

Sport and physical activity can make a major contribution to health promotion and disease prevention in areas such as overweight and obesity, diabetes and cardio-vascular diseases. The number of children affected by overweight and obesity is estimated to be rising by more than 400,000 a year, adding to the approximately 14 million EU citizens who are already overweight (including at least 3 million children).[13] Lack of physical activity and the occurrence of overweight and obesity have become a major societal problem. It is increasingly putting individuals at risk and is an economic burden as a result of the impact on health budgets and lower productivity due to the sub-optimal fitness in the workforce. It is estimated that obesity accounts for up to 7% of EU health care costs, and this amount will further increase given the rising obesity trend.[14]

In its White Paper "A Strategy for Europe on Nutrition, Health, Overweight and Obesity related health issues" the Commission calls upon sports organisations to work with public health groups to promote physical activity particularly among target populations such as young people or low socio-economic groups.

The recognised potential of the sport movement in fostering health-enhancing physical activity needs to be developed. The sport movement has a greater outreach than any other social movement. People view sport as attractive and it carries a positive image. However, sport organisations often focus narrowly on running a particular sport and their wider potential as regards health-enhancing physical activity remains under-utilised.

At EU level, the relation between sport and health is closely connected with the notion of Health-Enhancing Physical Activity (HEPA). This concept was defined in the framework of a Community-funded project in 1995-96[15], which led to the launch of a HEPA Network.[16] The Network is still active[17] and the HEPA concept has since then been energetically promoted by the World Health Organisation (WHO) and its Member States.

The World Health Organisation recommends 30 minutes of moderate physical activity per day to enhance health and prevent diseases.[18] Some studies tend to show that even more physical activity can be recommended. This suggests that guidelines to promote physical activity in the EU would be useful. Such guidelines could propose different recommendations for different age groups, such as children, adults and elderly people.

A Commission study on "young people's lifestyles and sedentariness and the role of sport" concluded that a network strategy is needed to halt the current alarming trend of rapidly rising overweight and obesity levels.[19] While it is important to address nutritional issues, physical activity (including sport) is equally crucial. Some studies show that it is not so much a higher calorie intake that causes overweight, particularly among children, but above all a lack of physical activity.

On the basis of the Commission study, conclusions were adopted at the meeting of Member State Sport Ministers in Luxembourg in April 2005. These "Luxembourg Recommendations" have led to a decision by Ministers to create a Working Group on Sport & Health (Liverpool, September 2005). Nine Member States currently participate in this Working Group with the objective to exchange good practices and develop physical activity guidelines. The mobilisation of the sport sector and the strengthening of school sport and physical activities are the key elements on the agenda.

The Commission has been keen to encourage sport organisations to join its Diet, Physical Activity and Health Platform[20] – an open, multi-stakeholder forum where industry, NGO and consumer organisations have committed themselves to actions to participate in the combat of obesity. Sport organisations have joined with their commitments, mainly on increased physical activity.

The link between sport and health goes far beyond the fight against overweight and obesity. Sport can make an excellent contribution to the reduction of other non-communicable health hazards, such as the risks posed by alcohol, tobacco, cholesterol, cardiovascular diseases, metabolic syndrome and cancer. Sport also supports psychological well-being. Potentially negative health effects of sport in the form of sport-related injuries have to be avoided through proper education and information.

Physical activity encompasses a range of activities from organised sports to "active commuting" or outdoor activities such as gardening. Pro-active steps need to be taken to reverse the decline in physical activity levels brought about by numerous factors in recent decades, such as the greater use of cars, other technologies such as computers and the internet, and other forms of sedentary activities, such as watching television and playing computer games.

Health-enhancing physical activity could be promoted at all levels and in a wide range of sectors, such as urban planning and building projects, transport, education, family and youth, the economic sphere, research, as well as in the workplace to improve employees' health and performance and reduce absenteeism. Physical activity as a determinant for health plays a particular role in urban and transport planning, for example by allowing more people to go to work on foot or by bicycle.

2.2. The fight against doping

Doping poses an important threat to European sports as it compromises the principle of open and equal competitions. It is demotivating for the amateur and puts the professional under unreasonable pressure. It also negatively affects the image of sport.

Doping also poses a serious threat to individual and public health. It has led to serious long-term degradation of individuals' health in the past and in some documented cases it has entailed serious conditions of permanent ill-health, disability or even death. Even among amateurs, doping is practised at unprecedented levels, which makes it difficult to follow and even more difficult to police. A special problem is posed in relation to children and young people as it is know that many start taking doping substances at an increasingly young age.

With regard to doping, responsibilities are distributed unsystematically because sport is organised differently in different Member States, because the degree of autonomy of sport organisations varies, because the problem tends to be defined differently and because bodies at several levels – international, national, regional and local – claim responsibility and authority. There are calls for action from various sides.[21] Action at EU level should complement that of other actors, but without changing the existing allocation of competences.[22]

In Member States, doping may be regulated by national law, rules from private organisations or any combination of these. Some Member States have doping laws, others do not. The 1989 Convention of the Council of Europe and the 2005 UNESCO Convention are the only hard law at international level. The World Anti-Doping Agency (WADA), set up in 1999, is a private law body although half of its board members represent governments.

Doping has been on the EU agenda on a number of occasions, which is reflected in numerous documents from all EU institutions. The 1992 Olympics in Barcelona and Albertville saw actions on the spot as well as a code of conduct. The 1998 Tour de France led to a Community Support Plan[23] which promoted pilot projects in the field of the fight against doping, co-financed by the EU, for two years. Important development work in the field of laboratory analysis was funded from the research budget under the now discontinued HARDOP and CAFDIS programmes.[24] Political cooperation has included various meetings inside and outside of the EU, as well as regular contacts with the Council of Europe and UNESCO. Finally, the ECJ ruling in the Meca-Medina case was also connected with the question of doping in sport.[25]

Doping practices involving illegal substances pose a serious threat to social order, including criminal justice issues, and to the integrity of the sporting community. They rely on a generalised and systematic breach of law practised by persons acting within networks. Many substances used for doping are covered by national legislation on illicit drugs and/or international drug conventions. While the possession of these substances may be illegal, they are often easily available. In this respect, a remarkable enforcement deficit can be observed. For the criminal community, the trade in doping substances can offer an attractive mixture of low risk and high return on investments. Trade in doping substances is often not subject to severe punishment.

The EU would benefit from a more coordinated approach in the fight against doping, in particular by defining common positions in relation to WADA, UNESCO and the Council of Europe, and through the exchange of information and good practice between Governments, national anti-doping organisations and laboratories.

Partnerships could also be developed between Member State law enforcement agencies (border guards, national and local police, customs etc.), laboratories accredited by the World Anti-Doping Agency (WADA) and INTERPOL to exchange information about new doping substances and practices in a timely manner and in a secure environment.

The negative health effects of doping should be taken into account in public health and drugs policies. Sport organisations should develop rules of good practice to ensure that young sportsmen and sportswomen are better informed and educated of doping substances, prescription medicines which may contain them, and their health implications.

2.3. The role of sport in education and training

The European Year of Education through Sport (EYES 2004) was launched to promote education through sport in formal and non-formal education and as a vehicle for social inclusion, in order to develop knowledge and skills by encouraging cooperation between educational institutions and sport organisations. 167 projects (out of 1643 applications) were co-financed through EYES’ €12.3m budget. In its subsequent Communication to the European institutions, the Commission acknowledged the need to build on the European Year's achievements.

The Council, in its Resolution of 17 December 1999 on the non-formal education dimension of sporting activities in the EU Youth programme[26], called upon the Commission, in cooperation with the Member States, to devise a coherent approach in order to exploit the educational potential of sport, considering that sporting activities can have a pedagogical value which contributes to strengthening civil society. The non-formal education dimension has been backed by the European Parliament, which has underlined the educational and social value of sport as well as its role in combating racism and xenophobia.

The important role played by schools and the need for health education and physical education are also outlined as priority themes in the White Paper "A Strategy for Europe on Nutrition, Overweight and Obesity related health issues".

Sport and physical education

Many stakeholders are concerned about the situation of sport and physical activity in schools in view of declining physical activity trends among young people and the corresponding rise in sedentary behaviour and obesity. Concrete physical and mental health problems can be addressed in part by ensuring a sufficient timeframe for sport and physical activity in schools, either inside or outside the school curriculum. Curriculum time allocation for physical education is a concern in some countries. Since 2002, there has been an overall reduction in average time allocation for physical education in both primary (from 121 minutes to 109 minutes per week) and secondary school curricula (from 117 to 101 minutes per week) across the EU.[27] This is particularly worrying since it is estimated that up to 80% of school-age children only practice physical activity at school, while it is recommended that they have at least one hour of light physical activity every day.[28]

For the purpose of strengthening physical activity in schools outside the school curriculum, innovative solutions should be explored, such as cooperation agreements between schools and sport clubs.

University sport also plays an important role in promoting health and physical activity as well as intercultural dialogue, as demonstrated by the summer and winter Universiades organised by the International University Sport Organisation (FISU).

Formal education could take better advantage of the values conveyed through sport to develop knowledge, motivation, skills, readiness for personal effort and also social abilities such as teamwork, solidarity, tolerance, fair play and the ability to lose. Time spent in sport activities, be it during school time or extra-curricular activities, can produce health and education benefits which need to be enhanced. The establishment of links between sport and formal and non-formal education to make better use of the educational potential of sport is also a key issue in view of the new integrated life-long learning strategy.

Sport and physical activity can be encouraged through various policy initiatives in the field of education and training, including the development of social and civic competences in accordance with the 2006 Recommendation on Key Competences for Lifelong Learning. This Recommendation mentions in particular that "personal and social well-being requires an understanding of how individuals can ensure optimum physical and mental health, including as a resource for oneself and one's family, and knowledge of how a healthy lifestyle can contribute to this". The development of social and civic competences could therefore be supported through the exchange of best practices in this context.

The training of young sportspeople

A Commission study on the training of young sportsmen and sportswomen in Europe is ongoing.[29] This study will identify training centres’ common quality criteria as regards education, training and/or vocational reintegration, evaluation, protection of minors, and ages of transfers. The initiative is linked to the need to ensure the possibility of so-called dual careers for top-level sportspeople, given that the lifespan of their sport career tends to be limited.

In 2005, UEFA introduced rules concerning players in the club competitions it organises (European Champions' League and UEFA Cup). The rules gradually require clubs in UEFA competitions to have locally trained players on the teams they present for UEFA matches. "Locally trained" means that the player must have spent at least 3 years between the ages of 15 and 21 in his club or in another club of the same country. There is no nationality condition. The idea is to promote training of young players and to encourage clubs to invest in training of young people and not only in transfers of players.

The Commission is completing its analysis of the compatibility with Community law of rules requiring that teams include a certain quota of locally trained players. The results of the mentioned study on the training of young sportsmen and sportswomen in Europe will contribute to this analysis.

Vocational education and training

Vocational education and training in the sport sector in Europe involves multiple stakeholders (Member States, local authorities, sport employers, sport employees, sport organisations, VET providers) and tends to be fragmented. However, the potential for growth is important, and sport could play its part in fulfilling the objectives of the Lisbon Strategy for growth and employment, all the more so since most sport-based economic activities tend to be labour-intensive and the jobs are often locally based.

The VOCASPORT study[30] commissioned by the European Commission in 2004 estimated that the sport sector employed around 800,000 professionals in the then 25 Member States of the EU. The rate of employment growth was considerable in the last decade, with an estimated growth of 57% in the period 1990-1998. Moreover, millions of volunteers are involved in the sport sector in the EU. The growth of the sector is correlated to the growing demand for sport and physical activities. At the same time, the demand for a more professionalized approach to sport activities has created a need for a more highly trained workforce.

Worker mobility tends to be high in the sport sector, including mobility between Member States, which can lead to problems concerning the recognition of qualifications of foreign workers. These characteristics of the sport sector need to be seen in the context of new Europe-wide initiatives in the field of Vocational Education and Training (VET). However, it should be noted that VET systems in sport tend to be specific and largely autonomous from global VET systems in most Member States, with the involvement of ministries responsible for sport and/or of sport federations in the definition of qualifications in the sport sector.

The European Parliament and the Council adopted on 7 September 2005 a Directive on the Recognition of Professional Qualifications[31] to promote the free movement of professionals, while ensuring an adequate level of qualifications and of protection of the health and security of consumers. The Commission will continue to ensure, in accordance with the mentioned Directive, that the freedom of movement of workers is not hampered by undue restrictions on the recognition of qualifications in the sport sector. Under this Directive, professional associations also have the possibility to work at common platforms[32] as well as professional cards[33].

2.4. Volunteering, non-profit sport organisations and active citizenship

2.4.1. Volunteering

Voluntary activity forms the basis for the organisation, administration and implementation of sport activities in all EU Member States. Voluntary sport organisations provide the backbone of the entire sport structure. Figures suggest that there are around 10 million volunteers active in about 700,000 sport clubs throughout the EU. In some Member States, more than 10% of adults voluntarily engage in the sport sector, and in most countries sport constitutes one of the key areas of voluntary work. Moreover, volunteering in sport must be considered as one of the cornerstones of the characteristics of sport in Europe. These facts make it an important theme for discussion at EU level, beyond the general discussion on ‘volunteering in Europe’.

The Member States have expressed support for promoting voluntary sport structures in an EU context. In its Nice Declaration (2000), the European Council called on Member States to encourage voluntary services in sport by means of measures providing appropriate protection for and acknowledging the economic and social role of volunteers, with the support, where necessary, of the Community. Two years later, EU Sport Ministers recognised in the “Aarhus Declaration on Voluntary Work in Sport”[34] the significant contribution of voluntary work to sport and its economic value.

In 2004, EU Sport Ministers decided to put volunteering in sport among the key issues of the then adopted EU Rolling Agenda for Sport. At their meeting in Liverpool, EU Sport Ministers called upon future Presidencies “to follow up their discussion of volunteering in sport, by developing proposals for promoting and sustaining the voluntary sector in sport, which they acknowledge to be vital to the sustainability of amateur sport in particular”. The Finnish Presidency made volunteering in sport one of its priority themes, with a particular interest in the role and status of voluntary non-profit sport organisations. The Ministerial Conference in Brussels in November 2006 agreed on the establishment of a Working Group "Non-profit Sport Organisations" to address, inter alia, the specificities of the voluntary sport sector. Specific inter-ministerial working groups already exist in some EU Member States, e.g. Sweden and Finland.

The EU is putting increasing emphasis on objectives and policies which create solidarity within the EU and secure opportunities for all citizens. The Commission has defined its overall strategic objectives accordingly. Voluntary activities in the sport sector strengthen social cohesion and inclusion and promote local democracy and active citizenship. Voluntary activities in sport also have a socio-economic value in terms of GDP and if converted in e.g. full-time employment. There is also an implicit economic value: without volunteers sport activities would come at a much higher cost and many of the social activities related to sport would disappear.

2.4.2. Non-profit sport organisations

Organised sport in almost all EU Member States is built on specific non-profit making governing structures at grassroots level. These are self-governing independent structures, heavily reliant on the commitment of volunteers, with specific forms of legal personality or status that provide the precondition for a range of financial and fiscal advantages.

Although not exclusively altruistic, activities of non-profit (sport) organisations are usually undertaken without any profit-making intention or dimension. However, due to the decrease in the amount of donations and government funds and in order to survive, the majority of non-profit sport organisations need to raise revenues from some kind of commercial activity. This enables them to effectively fulfil their social goals, i.e. to reinvest in the social cause, without being subject to investors' accountability and control. However, despite the focus on the attainment of socially beneficial goals, they thus pursue economic activities, which are subject to EU law.

The EU legal framework does not specifically address non-profit (sport) organisations. Under EU law it is not the nature of the organisation, but the nature of the activity that it pursues, which is usually considered to determine whether competition and Internal Market provisions apply. Regarding, for instance, the application of EU competition law, non-profit organisations are subject to it if they operate as undertakings because they engage in economic activities by offering goods and services in the common market. An intention to generate profits is not a prerequisite for economic activity within the meaning of EU competition law. However, an infringement of EU competition law requires that the conduct in question may affect trade between Member States. This may often be excluded for non-profit sport organisations in view of their local character.

2.4.3. Active citizenship

Sport can be a useful tool in terms of active citizenship. Approximately 70 million Europeans, many of them young people, are members of sport clubs. Sport can have an educational role through its values. Participation in a team, principles such as fair-play, compliance with the rules of the game and respect for others, solidarity and discipline as well as the organisation of amateur sport based on clubs and volunteering reinforce active citizenship. Sport also provides attractive possibilities for young people's engagement and involvement in social life.

The potential of sport in the fields of youth and citizenship is challenged by new trends in sport participation, particularly among young people. There is a growing tendency to practise sport individually, rather than collectively and in an organised structure, and a declining volunteer base for amateur sport clubs as well as a shorter average period for a volunteer's involvement in a given club. Nevertheless, the importance of organised sport in promoting active citizenship must be duly taken into account.

2.5. Social inclusion and equal opportunities

2.5.1. Social inclusion and integration

Sport can be an effective tool for social inclusion. Among its objectives in the fight against poverty and exclusion, the Council adopted the objective "to develop, for the benefit of people at risk of exclusion, services and accompanying measures which will allow them effective access to education, justice and other public and private services, such as culture, sport and leisure."[35]

The Nice Declaration underlines that "sporting activity should be accessible to every man and woman, with due regard for individual aspirations and possibilities". It also recognises that "for the physically or mentally disabled, the practice of physical and sporting activities provides a particularly favourable opening for the development of individual talent, rehabilitation, social integration and solidarity and, as such, should be encouraged."

In March 2006, the European Council adopted a new framework for the social protection and social inclusion process. Based on the Nice objectives, sport can be included in the new objective "access for all to the resources, rights and services needed for participation in society, preventing and addressing exclusion, and fighting all forms of discrimination leading to exclusion".[36]

In the framework of the European Year for Education through Sport (EYES) 2004, a study on education, sport and multiculturalism and more than 25 operational projects were directly oriented at integrating socially disadvantaged groups. The evaluation of EYES 2004[37] and the follow up ensured by the European Commission has shown the importance of implementing the Amsterdam and Nice declarations, especially concerning the social function of sport.

The accessibility of sport activity needs to be ensured for all citizens. For this purpose, the specific needs and situation of under-represented groups must be addressed, and the special role that sport can play for disabled persons and gender equality must be taken into account.

At the same time there is a need to better use the potential of sport as an instrument for social inclusion in the policies, actions and programmes of the European Union and Member States. This includes the potential of sport as an employment creation factor, particularly in disadvantaged areas. Also in this light, sport activities contributing to social cohesion and to social inclusion of vulnerable groups can be considered as social services of general interest.

The social inclusion strand of the 2006-2008 National Reports on Strategies for Social Protection and Social Inclusion highlights the importance of participating in sport activities as a means to prevent and tackle social exclusion of children on the one hand, and on the other hand as a tool for promoting the integration of immigrants and social inclusion of ethnic minorities.

In the September 2005 communication “A Common Agenda for Integration - Framework for the Integration of Third-Country Nationals in the European Union”[38] it is underlined that frequent interaction between immigrants and Member State citizens is a fundamental mechanism for integration. Measures which help to promote a shared sense of belonging and participation may be instrumental in promoting integration. In this context, it is important to make available spaces for sport and support sport-related activities in order to allow immigrants and the host society to interact together in a positive way.

2.5.2. People with disabilities

Citizens with disabilities represent around 10% of the population of the EU. They are confronted with specific difficulties concerning access to sport.

The European Commission established an EU Disability Action Plan (DAP)[39] for 2004-2010 to ensure coherent policy follow-up to the European Year of People with Disabilities 2003[40] in the enlarged Union. Three operational objectives are central to the DAP: (1) full implementation of the Employment Equality Directive[41]; (2) successful mainstreaming of disability issues in relevant Community policies; and (3) improving accessibility for all. The Commission also adopted a European Action Plan 2006-2007[42] as the second step of its disability strategy.

The Declaration on the specific characteristics of sport and its social function in Europe, adopted in Nice in December 2000, underlines that "sporting activity should be accessible to every man and woman, with due regard for individual aspirations and possibilities". It also recognises that "for the physically or mentally disabled, the practice of physical and sporting activities provides a particularly favourable opening for the development of individual talent, rehabilitation, social integration and solidarity and, as such, should be encouraged."

A number of Commission activities for disabled persons have involved sport. The European Year of People with Disabilities 2003[43] financed sports events, and as part of the European Year of Education through Sport 2004[44], several projects on the integration of people with disabilities through sports were funded. The Commission organised an experts’ meeting on equal opportunities in sport[45] in 2005 to identify key needs, trends, and fields of action. The Youth programme has supported sport activities for young people with disabilities.

The concept of equal opportunities in sports for people with disabilities is based on three fundamental pillars: (a) access to sports premises as sportspeople, (b) access to sports premises as spectators, and (c) support for people with disabilities who wish to practice sport (e.g. the cost of equipment, training of staff and adapting facilities). It seeks to demonstrate that the educational and social values of sport also matter to people with disabilities. In this light, sport (both competitive and recreational) is a cross-cutting tool for integration, job creation and equality for people with disabilities.

Founded as the International Paralympic Committee's European Committee in 1991, the European Paralympic Committee (EPC) adopted its current name in 1999. The EPC awards, controls and supervises European championships and cup events in 12 sports for four disability groups (visually impaired, athletes with cerebral palsy, athletes with intellectual disability and athletes with a physical disability).

Special Olympics Europe/Eurasia (SOEE) provides opportunities in sport for 425,000 individuals with intellectual disabilities and coordinates the participation of European athletes in the quadrennial Special Olympics World Games.

The Commission ensures that EPC and SOEE are involved in all its consultation activities directed towards sport stakeholders.

Access to sport remains a problematic issue facing disabled people, both with regard to their access to sport activities as sportspeople, and their access to sport premises as sportspeople and/or spectators. In particular, boys and girls with disabilities do not enjoy the same opportunities to practise sport as their able-bodied peers, particularly in physical education classes in school with their classmates. Consequently, they do not pick up the habit to practise sport at an early age.

2.5.3. The gender dimension

The gender dimension of equal opportunities is mainstreamed into all EU policies. The Commission adopted its Roadmap for equality between women and men 2006-2010 [46] in March 2006. Although figures differ and are not available in all Member States, there is a general impression of under-representation, to varying degrees, of women in sport, in terms of participation in sport, the organisation and management of sport activities, leadership positions in sport, and media coverage of competitions involving sportswomen.

2.6. The prevention of and fight against racism and violence

European cooperation in the fight against violence in sport was strengthened after the Heysel stadium tragedy in 1985. The European Commission has actively promoted the development of improved violence prevention for international sporting events, focusing on two key objectives:

- Establishing common standards on safety and public order through the exchange of experience and best practice between the Member States;

- Enhancing operational cooperation related to the exchange of information on football supporters at risk, or likely to be violent, in accordance with data protection rules.

In this respect, Council Decision 2002/348/JHA of 25/4/2002[47] introduced binding obligations on the establishment of national football information points. These information points are intended to improve cooperation and information exchange between police forces and other competent authorities combatting football-related violence. The Evaluation Report on the implementation of this decision concluded that the Member States should set up the relevant structures, which have since played an effective role in the exchange of important data among relevant services.

To facilitate and bring uniformity to this cooperation, a handbook was adopted by a Council Resolution[48], with recommendations on useful measures to prevent and control violence and disturbances in connection with football matches with an international dimension.

Moreover, based on the experience of some Member States, the Council adopted another Resolution inviting the Member States to, inter alia, examine the possibility of introducing stadium bans and to supplement the bans with penalties for non-compliance.

The preparations for the 2006 World Cup in Germany were discussed at regular meetings of football experts in the framework of the Police Cooperation Working Group (PCWG). The issues discussed related to the quality control of exchanged information, regular disorder assesments and modalities of transferred information.

Council Presidencies organised other regular expert meetings to efficiently tackle hooliganism. Working contacts with UEFA have also been established.

The role of the Council of Europe in the field of prevention of violence in sport is significant. In August 1985 was adopted the European Convention on Spectator Violence and Misbehaviour at Sports Events and in Particular at Football Matches.[49] Under the Convention, Parties undertake to co-operate and encourage similar co-operation between public authorities and independent sports organisations to prevent violence and control the problem of violence and misbehaviour by spectators at sport events. To this end, the Convention sets out a number of measures, such as in particular close co-operation between police forces involved; prosecution of offenders and application of appropriate penalties; strict control of ticket sales; restrictions on the sale of alcoholic drinks; appropriate design and physical fabric of stadiums to prevent violence and allow effective crowd control and crowd safety. A Standing Committee established by the Convention is empowered to make recommendations to the Parties concerning measures which should be taken. The Convention has been signed by all EU Member States and ratified by all but two.

Future EU policy development on violence in sport should be based on two complementary pillars: law enforcement and prevention. A multidisciplinary approach is needed to efficiently and effectively tackle the problem, in association with all the stakeholders, including clubs and supporters' associations.

One of the main sources of violence and anti-social behaviour (e.g. insults, unfavourable treatment etc.) is discrimination based on race , religion or ethnic groups. It manifests itself in different forms but the core issues remain consistent.

The Commission has repeatedly rejected and condemned all manifestations of racism, xenophobia and anti-Semitism, as these phenomena are incompatible with the values on which the EU is founded. The Hague Programme, adopted in November 2004, recalls the firm commitment of the EU to oppose any form of racism.

On the basis of a Commission proposal, Member States reached, at the JHA Council held in April 2007, political agreement on the Framework Decision on Combating Racism and Xenophobia. The purpose of the Framework Decision is to approximate Member States' legislation and to ensure that racism and xenophobia are punishable in all Member States by effective, proportionate and dissuasive criminal penalties. The Framework Decision criminalises intentional conduct such as incitement to violence or hatred towards a group of people, or a person belonging to a group, defined on the basis of race, colour, descent, religion or belief, national or ethnic origin, as well as the public condoning, denial or gross trivialisation of crimes against humanity and war crimes. Incitement to violence or hatred will also be punishable if committed by public dissemination or distribution of tracts, pictures or other material. The conduct is criminalised insofar as it is threatening, abusive, insulting or carried out in a manner likely to disturb public order. Racist and xenophobic motivation is regarded as an aggravating circumstance in the determination of the penalty applicable to any type of criminal offence. The Framework Decision also provides for liability of legal persons.

A European Monitoring Centre on Racism and Xenophobia (EUMC) was established to tackle racial discrimination effectively. It was replaced on 1 March 2007 by the Fundamental Rights Agency (FRA) which will continue to work on racism, xenophobia and related intolerance.

The first European anti-racist football network, "Football Against Racism in Europe - FARE"[50], was founded at a seminar sponsored by the European Commission, "Networking against Racism in European Football", in Vienna in February 1999. More than 40 different organisations including anti-racist sport projects, fan clubs, players' unions, football associations and ethnic minority groups from 13 European countries affirmed their commitment to fight all forms of discrimination in football. The European Programme against Discrimination sponsored the FARE work programme 2002-2004.

Media coverage of mass sports such as football or basketball has enabled racist chants, signs, flags, and slogans to spread widely. Most of the initiatives taken by different stakeholders have focused on football. The European Parliament adopted a declaration on tackling racism in football in March 2006 and recognised in its recent resolution on the future of professional football that many incidents of racism and violence continue to take place in and around football stadiums.

All stakeholders must engage in dialogue to raise awareness of the damaging effect of racist and violent behaviour in sport and to promote exchanges of best practice, based on existing initiatives.

2.7. Sport in the EU's external relations

Sport can play a role regarding two different aspects of the EU's external relations:

- It can play a role in easing relations with partner countries and be an element of the dialogue with them as part of the EU's public diplomacy;

- If agreed with the beneficiary countries, it can be an element of the EU's external assistance programmes.

Regarding the first aspect, cooperation in the field of sport has the potential to contribute to better international relations in other, unrelated areas. At the same time, sport has acquired a global dimension and deserves to be included in a policy dialogue on such issues as international players' transfers, trafficking in underage players and players from developing countries, doping, money-laundering through sport, and security during major international sport events. Finally, there is a potential for cooperation in the field of sport research (possibly including the fight against doping), outside the scope of assistance programmes, with other countries that have reached a high level of knowledge in this field.

Regarding the second aspect, sport could be included in external assistance programmes as a means to promote education, health, socio-economic development, and peace and ethnic reconciliation. While projects are financed in the framework of the EU's enlargement and European neighbourhood policies, sport-related projects are particularly useful in the pursuit of the UN Millenium Development Goals.[51] The European Parliament's Resolution of 1 December 2005 on development and sport highlights the link between physical education, sport and the Millennium Goals.

The Commission and FIFA have recently signed a Memorandum of Understanding (MoU)[52] to make football a tool for development in African, Caribbean and Pacific countries (ACP). The MoU covers a wide range of areas, from the promotion of children's rights, anti-discrimination and social integration, to health and post-conflict reconstruction.

There are examples of concrete projects in this area that have been financed through the various financial instruments of the EU's external action. The financial contribution from the EU budget to sport-related initiatives in ACP countries is estimated to have been approximately €34 million over the past 10 years.

The potential of sport for peace and development has been recognised by the United Nations through the General Assembly's resolutions 58/5, 58/6 and 60/9 on sport as a means to promote education, health, development and peace. These resolutions proclaimed 2005 the International Year of Physical Education and Sport and paved the way for the creation of the office of the Special Adviser to the Secretary-General on Sport for Development and Peace and of the United Nation's inter-agency Working Group on Sport for Development and Peace.[53]

Some Member States are also engaged in multilateral structures combining political dialogue and external assistance for sport issues such as the Conference of French-speaking Ministers for Youth and Sport (CONFEJES)[54], the Commonwealth Sports Ministers Meetings[55], and the Consejo Iberamericano del Deporte[56].

Major international sport organisations have also developed their own assistance programmes, such as Olympic Solidarity[57] of the International Olympic Committee, FIFA's Goal Project[58], and the Meridian Project[59] between the Union Européenne de Football Association (UEFA) and the Confédération Africaine de Football (CAF). Non-governmental organisations have also been created in the specific field of solidarity through sport, such as, for example, "Right to Play"[60], which focuses on ethnic reconciliation in the Balkans and the Caucasus, or "Sports Sans Frontières"[61].

The potential of sport as a means to promote education, health, development and peace, although recognised in many policy documents and studies, needs to be properly addressed through concrete actions in the EU's external relations. Synergies should be achieved with existing programmes of the United Nations, Member States, local authorities and private bodies.

2.8. The environmental dimension of sport

The practice of sport activities can affect the environment. For example, sport events can have significant impacts on the use of natural resources, generation of waste and loss of biodiversity. On the other hand, the environment can also affect the practice of sport as environmental conditions can compromise sport activities and performance. For example, warmer climate conditions in Europe in 2007 have affected the practice of winter sports. An unhealthy environment may affect not only professional athletes but may also hinder the motivation of individuals to pursue sport in the first place. Water pollution, air pollution, stratospheric ozone deterioration, habitat loss, toxic waste, pesticide residues, noise, traffic emissions, climate change and indoor air quality are among the threats to the safe and enjoyable practice of sport.

Sport practice, facilities and events have a significant impact on the environment. The “greening” of sport can best be achieved through environmentally sound management, capable of addressing inter alia green procurement, greenhouse gas emissions, waste disposal and the treatment of soil and water. Responsible organisations could also expect specific benefits by improving their credibility on environmental matters while bidding to host sport events, as well as economic benefits related to a more rationalised use of natural resources.

Major sport events can act as promoters of sport as well as of social and environmental values. Thanks to the passion it generates, the world of sport is capable of spreading these positive values. Major sport events should therefore be regarded by European society not just as an economic opportunity but also as an opportunity for disseminating cultural, social and environmental values with a view to generating growth and sustainable development.

It is important that public administrations, sport organisations and the sporting goods industry acknowledge the need for environmental sustainability as a way to develop their policies and businesses. In particular, European sport organisations and event organisers should adopt ambitious environmental objectives in order to make their activities environmentally sustainable. The EU has adopted the following tools for this purpose, thus enabling public and private organisations to upgrade their environmental credentials.

In 2001, the EU adopted a regulation[62] allowing both public and private organisations to implement the Eco-Management and Audit Scheme (EMAS). EMAS is a voluntary instrument which gives acknowledgement to organisations that improve their environmental performance on a continuous basis. More than twenty organisations have registered in the framework of EMAS for their sporting activities. Examples relate to the 2006 Winter Olympic and Paralympic Games which published a guidance document for applying EMAS to sport events[63], the Nürburgring Formula 1 circuit in Germany, and the FIFA World Football Championship 2006, where two of the stadiums obtained EMAS registration.

Participation in EMAS can notably provide the following benefits to sport organisations:

- Enhanced legal certainty through a compliance check with environmental legislation;

- Resource savings on environmental costs;

- Added credibility and confidence vis-à-vis local authorities, local communities and other stakeholders;

- Added credibility when submitting their candidacy for the organisation of sport events.

In 2000, the EU adopted a regulation on a revised Community Eco-Label Award Scheme.[64] This is a voluntary scheme designed to encourage businesses to market products and services that are friendly to the environment and to allow European consumers - including public and private purchasers - to easily identify them.

The Commission has also adopted a non-binding handbook on environmental public procurement (“Buying green!”).[65] This document is particularly pertinent for local authorities that are planning to award contracts for the construction or renovation of sport facilities.

Where plans or projects are necessary, e.g. urban development projects such as the construction of infrastructure for the organisation of sport events, competent authorities and concerned parties need to implement the Environmental Impact Assessment Directive[66] and the Strategic Environmental Assessment Directive[67].

3. THE ECONOMIC DIMENSION OF SPORT

Sport is a dynamic and fast-growing sector with an underestimated macro-economic impact. Although sound and comparable data are generally lacking, this is confirmed by different studies and analyses of national accounts (impact on value-added and purchasing power; impact on employment), the economics of large-scale sporting events, physical inactivity costs, including for the ageing population (health care cost reduction, health promotion), and by sector specific analysis (e.g. sport and tourism as economic drivers). The further globalisation, commercialisation and professionalisation of sport go hand in hand with increased sport sponsoring, sale of broadcasting rights and ticket sales. Sport structures and leisure facilities, especially at local level, will require innovative investment and reconfiguration to meet the evolving sport and physical activity needs of the 21st century.

Sport has been identified as a growth area offering job potential. According to a European study commissioned in 2004[68], the sports sector (NACE group 92.6) accounted for some 800,000 jobs[69] in the EU-25. The UK alone accounted for more than 30% of aggregate employment in the field of sport, followed by Germany with 13% and France with 12.5%.

Since 1980, the total number of jobs classified under sporting activities (NACE group 92.6) has tripled. The main reasons for this trend are:

- The reallocation of income to health and leisure activities;

- The development of sporting activities which affect a wider part of the population (young people, elderly, people with disabilities) and meet a variety of needs (leisure, entertainment, health, education);

- Changes in the supply of sport.

It is difficult to estimate the aggregate employment growth of the sector because of different national methods used to classify statistical information. However, in the past ten years the aggregate volume of sport-related employment is estimated to have grown by about 60%.[70]

There are large disparities within the EU. Main professional occupation in the sector as a percentage of the active population varies between 0.11% in Poland and 0.94% in the UK. Moreover, volunteers are not visible in official labour statistics related to sport.

3.1. Statistics

The sport sector is making a positive contribution to the attainment of the goals of the Lisbon Strategy.[71] However, this contribution has so far not been made explicit. The potential of sport should therefore be made visible in EU policy-making.

Mechanisms and methods need to be identified to ensure that sport is taken into account in the framework of the implementation of the Lisbon Strategy. In general, this should be feasible without creating additional structures or mechanisms.

The launch of policy actions and enhanced cooperation on sport at EU level needs to be underpinned by a sound knowledge base. Governmental and non-governmental stakeholders have identified the need for a European statistical definition of sport and to coordinate efforts to produce sport and sport-related statistics on that basis. They have particularly stressed the need to coordinate efforts to improve the quality and comparability of data in order to allow better strategic planning and policy making for sport.

Trustworthy statistical information on sport and sport-related matters is a necessary pre-condition for developing well-founded policies and for giving sport a higher profile in other policy areas. Statistics provide the factual means to assess the need for and progress of political initiatives.

At EU level, comprehensive and comparable statistics on sport are almost inexistent. Sport is statistically defined through NACE (classification of economic activities in the European Communities) code 92.6. This code only covers the “operation of sports facilities” and “other sports services”, i.e. the core business of sport. The statistical definition does not comprise sectors directly affected by sports activities (e.g. sporting goods manufacturers and retailers, sport media, sports education) nor other sports-related activities in sectors such as health or tourism. No specific data is collected in other fields, such as sports participation, types of sport or the profile of practitioners.

The persistent underestimation of the macro-economic impact of sport is mainly due to the fact that sport is statistically defined in a very narrow way. There is a discrepancy between the statistically covered economic sector "sport" and the common understanding of sport. One underlying and recurrent problem for experts is the lack of a definition of “sport” in an economic and statistical sense.

The Commission gathered some statistical information on sport by carrying out Eurobarometer surveys in 1997, 1998, and in 2003 and 2004 (in the run up and in parallel with EYES 2004) in order to learn about European citizens' interest and participation in sport. Some research and publications have also been produced by academic institutions and by the European Observatory on Sport Employment (EOSE) and COMPASS[72]. The big professional sport federations finance their own statistics, as do the business sectors of sport, sports goods industries and sport service providers.

In 1999 and 2004 the Commission financed studies that relate to employment aspects of sport, with the “Vocasport” study being a comprehensive information source.

At their meeting in Vienna in March 2006, EU Sport Directors proposed to give the economic importance of sport a central place in discussions on sport among the Member States. A Working Group on "Sport and Economics" was set up in September 2006 with the aim of developing a common statistical definition of sport as well as a method for illustrating the economic impact of sport within the EU, most likely on the basis of national sport satellite accounts.

A satellite account is a specific data system which is based on the national accounts of a country, but does not form part of these national accounts. Hence, a satellite account is an appropriate tool for measuring an economic sector which does not correspond with specific economic activities according to statistical classification systems such as NACE, the European Community's statistical nomenclature of economic activities. Examples of other sectors where satellite accounts have proven useful are tourism and health.

At their meeting in Stuttgart in March 2007, EU Sport Ministers endorsed the activities of the Working Group on "Sport and Economics" and agreed that work on a sport satellite account should be taken forward at Member State and EU level.

3.2. The financing of sport

Sport organisations have many sources of income, including club fees and ticket sales, advertising and sponsorship, TV and media rights, re-distribution of income within the sport federations, merchandising, public support etc. However, some sport organisations have considerably better access to resources from business operators than others. In amateur and mass sports, equal opportunities and open access to sporting activities can only be guaranteed through strong public involvement. Public financial support is often vital for sport but must be provided within the limits imposed by Community law.

This section starts with an overview of the public financing of sport. It discusses the application of EU State aid rules to public aid provided to the sport sector, as well as the taxation of sport activities.

It then considers some aspects of the private financing of sport. In this connection, it considers sport-related aspects of sponsorship and the protection of intellectual property rights.

3.2.1. Public support for sport

Public support for sport can take many different forms, such as:

- Direct subsidies from public budgets,

- Subsidies from fully or partly State-owned gambling operators, or direct revenues resulting from a licence to provide gambling services,

- Special tax rates,

- Loans with lower interest rates,

- Guarantees with lower commissions,

- Public financing of sport facilities,

- Acquisition of a public municipal facilities by a private club or institution at a low price,

- Renting of sports facilities by public entities at a low price,

- Payment for the construction or renovation of sport facilities by the local council,

- Public works in private sport facilities,

- Public acquisition of advertising spaces in sport facilities,

- Land sales or donations or an exchange of land for sport facilities.

Sport is crucial to the well-being of European society. The vast majority of sporting activities takes place in non-profit-making structures, many of which depend on public support to provide access to sporting activities to all citizens in a discrimination-free environment. The main issue faced by a number of Member States is how to achieve a more sustainable financing model for giving public support to sport organisations.

In May 2006, the Commission organised an expert meeting with representatives of the Member States to examine the importance of public support for non-profit sport organisations, the functioning of which depends to a large extent on voluntary activity. The exercise showed that the nature of public support varies considerably between Member States, and from one sport discipline to another.

3.2.2. State aid control

The objective of State aid control is to ensure that government interventions do not distort competition and intra-Community trade. In this respect, State aid is defined as an advantage in any form whatsoever conferred on a selective basis to undertakings by national public authorities. Therefore, subsidies granted to individuals or general measures open to all enterprises are not covered by Article 87 of the EC Treaty and do not constitute State aid.

The EC Treaty contains a general prohibition of State aid. In certain circumstances, however, government interventions are necessary for a well-functioning and equitable economy. The Treaty therefore leaves room for a number of policy objectives with which State aid can be considered compatible.

State aid control in the field of sport

There are very few decisions so far where the Commission has applied Article 87 of the EC Treaty to sports. Public support measures in sports generally finance either infrastructure or activities or individual sports clubs.

Public financing related to the construction of sport infrastructure can be considered not to constitute State aid, provided that certain conditions are fulfilled.[73]

Public subsidies to professional clubs, however, may raise problems of compatibility with EU State aid rules since professional clubs are engaged in economic activities and are therefore considered to be undertakings under the EU competition rules.

The Independent European Sport Review makes a number of recommendations to the EU in the State aid area. In particular, it asks the Commission to exempt certain categories of State aid to sport from the general application of State aid rules. A general exemption from State aid rules would be contrary to the Treaty itself, under which all economic undertakings fall under the application of Article 87(1) EC. A block exemption regulation, which would exempt State aid measures from the obligation of notification to the Commission when certain conditions are respected, is not possible at this stage. The Commission has not been habilitated by the Council to adopt such a block exemption regulation in the area of sport. Furthermore, a block exemption regulation is possible only in an area where the Commission and Member States have acquired a good experience through an established practice and case law. This is not the case at this stage in the area of sport. For this reason, the Commission considers also that the adoption of guidelines on State aid and sport would at this stage be premature.

The granting of State aid to undertakings is in principle prohibited, but the State aid rules foresee a number of exceptions. These imply that several types of support measures granted by Member States to their sport sectors are State aid within the meaning of EC rules, but they can be considered to be compatible under certain conditions. This is notably the case if they fall within the scope of the existing block exemptions that apply to all economic sectors, such as:

- "De minimis" aid: aid of up to 200,000 EUR distributed over 3 fiscal years to a single undertaking.

- Rescue and restructuring aid: aid to clubs facing financial difficulties, provided that such aid is limited in time, followed by a restructuring plan, and reimbursed in the 12 months after payment.

- Aid to SMEs: under certain conditions, aid for investments by small and medium-sized enterprises can be considered compatible.

- Training aid: state support accorded to the training of young athletes is generally compatible with EU law if it fulfils the conditions laid down in the block exemption regulation on training aid. Alternatively, it is not covered by the State aid rules if it falls within the competence of the State in the area of education.

Amateur sport clubs

In the area of sport, there is a tradition in most European countries that public aid is given to local sport clubs at the local level (mostly by municipalities). The sporting, social, cultural and recreational dimensions of amateur sport clubs are important for the public authorities of most Member States, which realise that sport plays an important role in promoting integration and health. Many small clubs may need to obtain public financing to run efficiently. Given the fact that amateur clubs are generally not considered as undertakings within the meaning of Article 87(1) EC, to the extent that they do not pursue economic activities, subsidies granted to these entities are generally not covered by the State aid rules.

Professional sport clubs

Since professional sport clubs are engaged in economic activities, there is no compelling argument why they should be exempted from the State aid rules.

The need to ensure competitive equality between players, clubs and competitions as well as the necessity to ensure uncertainty of results can in fact be guaranteed most effectively by the application of State aid rules, which are meant to establish a level playing field and ensure that States or municipalities that are most willing or able to grant subsidies to their clubs will not disrupt fair competition.

3.2.3. Taxation of sport activities

In the field of indirect taxation, Article 93 of the EC Treaty provides for the adoption of provisions for the harmonisation of Member States' rules and a large amount of secondary legislation has been agreed in this area. The current Community VAT rules are laid down in Council Directive 2006/112/EC[74] (hereafter referred to as "VAT Directive"). On 1 January 2007 the Sixth VAT Directive[75] was replaced by this new Directive, which codifies the text without changing existing legislation. These rules aim at ensuring that the application of Member State legislation on VAT does not distort competition or hinder the free movement of goods and services. The common system should, even if rates and exemptions are not fully harmonised, result in neutrality in competition so that within the territory of each Member State similar goods and services bear the same tax burden.

The following provisions are important for sport:

- According to Art. 132 of the VAT Directive, VAT exemptions are possible for certain activities of public interest. This category includes:

- (m) the supply of certain services closely linked to sport or physical education supplied by non-profit-making organizations to persons taking part in sport or physical education[76];

- (o) the supply of services and goods by organizations whose activities are exempt under the provisions of (m) in connection with fund-raising events organized exclusively for their own benefit provided, inter alia, that the exemption is not likely to cause distortion of competition to the disadvantage of commercial enterprises subject to VAT. For the purpose of point (o), Member States may introduce any restrictions necessary, in particular as regards the number of events or the amount of receipts which give entitlement to exemption.

- Member States may regard activities which are exempt under Art. 132 and engaged in by bodies governed by public law, as activities in which those bodies engage as public authorities. In such circumstances those activities will be regarded as "outside the scope of VAT" activities, meaning that they will also be non-taxable for VAT purposes.

- According to Art. 98 Member States may apply either one or two reduced rates of not less than 5% to supplies of goods or services in the categories set out in Annex III of the VAT Directive. While the standard rate of VAT must be at least 15% in each Member State, Annex III provides for reduced VAT rates concerning the "admission to sporting events" and the "use of sporting facilities".

The application by Member States of the reduced VAT rate in the field of sport is not always in compliance with Community rules because of different interpretations of the "scope" of the reduced rate. With regards to the different VAT rates applied to "admission fees to sporting events" within Member States, the question of allowing a Member State to avoid a VAT bill for a given sporting event (e.g. World Cup, Olympic Games) is a recurrent issue.[77]

The Commission is currently looking into the VAT rules governing public bodies and exemptions for certain activities in the public interest, with a view to modernising those rules in order to achieve a more consistent approach across the EU, avoid market distortions and meet current needs.

The rationalisation of the rules and derogations regarding the application of reduced VAT rates to certain sectors set out in Directive 2006/112/EC is also being considered. This process may have an impact on the special rates Member States are allowed to apply in the areas of "admission to sporting events" and "use of sporting facilities".

In the absence of harmonisation, direct taxation remains a competence of the Member States. As a result, different national tax rules affect sports with regard to the taxation of clubs and of players. Different national tax rules can result in divergences e.g. in labour costs for sports clubs with the effect of imbalances between clubs in different Member States.

The income of sportspersons performing their activities in a State other than their residence State is taxed in the State of activity (Art. 17 of the OECD Model Tax Convention on Income and Capital). The applied withholding tax procedure may create some practical difficulties to get overpaid taxes reimbursed, in particular if the sportsman performed activities in several States.[78] In its "Gerritse" ruling[79] about the applicability of different rates of taxation in relation to the income of non-residents and of residents, the European Court of Justice (ECJ) stated that higher taxation of non-resident artists and sportsmen was not compatible with Articles 49 and 50 EC.

3.2.4. Sponsorship

The vast majority of sponsorship deals in Europe are found in the field of sport. In 2005, 91% of sponsorship investment went into sport, which corresponded with a figure of around $7–8 billion, compared to only 1% into culture.[80] Sport sponsorship is an inexpensive form of advertising which can easily reach favoured market segments[81], including through TV coverage.

From a sport point of view, sponsorship makes a significant contribution to many sport activities and is an important source of revenue for sport right holders (federations, clubs, teams or individual sportspersons).[82] It therefore plays a major role in the development of sport. Event sponsoring is also important. Events such as the FIFA World Cup 2006, the European Championship 2008 or the 2012 Olympic Games offer multiple opportunities for lucrative sponsorship deals to market brands and develop business.

Commercial sport sponsorship deals are especially significant in professional sport, but sponsoring is also important in the grassroots sector through its supportive role for the development of local or amateur sport structures. It can be especially interesting for the local business sector.

In its follow-up to the Green Paper on Commercial Communications in the Internal Market[83], the Commission identified 'sponsorship' as one of the priority areas for an Expert Group set up to examine problems arising from cross-border commercial communications and the objectives, levels and means of protection of public interest objectives of differing national regulations pertaining to them. As regards sponsorship, the Commission and the Expert Group, which consisted of two representatives appointed by each Member State, looked at the following problems: differing national regulations on sponsorship services related to particular products, differing definitions in national regulations of sponsorship and patronage which restrict the development of cross-border services in this area, and differing national regulations on TV sponsorship insofar as they concern aspects which are not covered by Directive 89/552 EEC as amended by Directive 97/36/EC or the work of its contact committee. The Commission and the Expert Group concluded that there was no need for harmonisation in this field.

From an "ethical" or societal point of view, sport sponsorship must be seen in connection with policies aimed at protecting the public or the consumer. In the field of public health, Member States have different laws and policies in place that set e.g. tobacco, alcohol or fast food apart from other goods traded within their territories, and relate also to advertising and sponsorship. Some of these areas have been regulated or are currently being addressed at EU level.

In view of the fact that the vast majority of sponsorship investment goes into sport, the economic interests of sport need to be taken into account when new policies with an impact on sponsoring are designed. However, these interests need to be balanced against considerations of public health as well as societal and ethical considerations.

As different national rules on tobacco advertising and sponsorship were becoming a barrier to the free movement between Member States of the products and services carrying them, the EU introduced a ban on tobacco advertising and sponsorship in 2003[84] that Member States had to implement by 31 July 2005, with a prolongation until 1 January 2007 for the ending of tobacco sponsorship at international sporting events.[85] The directive bans advertising in the print media, on radio and over the internet and it also prohibits tobacco sponsorship of cross-border events or other activities.[86] The WHO's Framework Convention on Tobacco Control, for which the EU completed its ratification, has as one of its objectives a world-wide ban on tobacco advertising, promotion and sponsorship.

In the autumn of 2006, the Commission adopted a Communication setting out an EU strategy to support Member States in reducing harm related to alcohol consumption.[87] The Communication identifies areas where the EU can support the actions of Member States to reduce alcohol-related harm[88], among which the field of "responsible commercial communication and sales". Here the main aim is to support EU and national/local government actions to prevent irresponsible marketing of alcoholic beverages . The intention is to improve enforcement of current regulations, codes and standards.

For both sponsors and right-holders the issue of ambushing of sponsored properties is of increasing concern. Although in most countries the notion of "ambush marketing" is undefined, in its broadest sense it can encompass any kind of marketing activity undertaken around a property by an entity that is not a sponsor, where the entity seeks commercial benefit from associating itself with the property. There is little legislation in the area of ambush marketing. Where protection is offered, it has been developed through case law as an extension of the applicability of rules on intellectual property, unfair competition and, to a lesser extent, advertising and consumer protection. As a general rule, protection against ambush marketing tactics used within the stadium where a sport event occurs is most efficiently obtained through a well-drafted contract between the sponsor and the event organiser. However, protection against such tactics used outside the physical location under the control of the event organiser is much more difficult to obtain.

There is growing pressure from event organisers, who wish to protect their events and contractual agreements with their sponsors, on governments to introduce specific anti-ambush laws.[89] For example, prior to the European football championship in 2004 Portugal made it a criminal offence to gain promotional advantage for a brand by association with certain designated events. Any Internal Market problem relating to sponsorship should be addressed in the context of the Commission's policy on Commercial Communications.

3.2.5. Protection of sport-related intellectual property rights

The protection of sport-related intellectual property rights has been shaped by case law of the European Court of Justice.

Trade marks may consist of any signs capable of being represented graphically, such as a word, logo or colour scheme applied to goods and services. The signs must be capable of distinguishing the goods and services of one undertaking from those of other undertakings. A trademarked product informs the purchaser of the origin of the product, thus marking it as distinct from other products. At EU level, trade mark law is governed by two instruments: Directive 89/104/EEC on the approximation of trade mark laws in the EU[90], which aims at harmonising the conditions for registration of a national trade mark in respect of goods or services, and Council Regulation 40/94 on the Community trademark. In the sport context, trade marks are used extensively in the sport industry to protect sporting brands, but also by other sporting actors. The Court has given its interpretation of the trade mark directive in cases involving clubs or sporting goods manufacturers.[91] In the case "Arsenal Football Club v Reed" [92] on the scope of the proprietor's exclusive right to a trademark, the Court held that the non-authorised use of the sign “Arsenal” on scarves is such as to create the impression that there is a material link in the course of trade between the goods concerned and the trade mark proprietor. The use of a sign which is identical to the trade mark at issue is liable to jeopardise the guarantee of origin. It is consequently a use which the trade mark proprietor may prevent in accordance with Directive 89/104/EEC. The ECJ's findings are important for sport in that it supports trade mark owners and adds clarity to the question of whether a sign is being used as a trade mark or a badge of support. Moreover, in the field of trade marks, the role played by big sport federations and the IOC in setting guidelines for trade mark identification processes and designs of sports products can be an issue of concern for sporting goods manufacturers.[93]

In the field of copyright and related rights, it is mainly the 1996 Database Directive[94] that is of relevance for sport as it relates to sports information, such as fixture lists (lists of matches and dates) owned by leagues and used by sport betting companies. This Directive has been interpreted by the ECJ in four judgments of 9 November 2004 in cases concerning the sports database owners FM and BHB. Regarding the exploitation of databases (fixture lists and horse-racing data) by bookmaking services, the Court held in these cases that the right-holders cannot claim protection under the Database Directive.

Sport-related counterfeiting and piracy[95] have become an international phenomenon with considerable economic and social repercussions. Counterfeiting activities during major sporting events are a real challenge and can have economic impacts for sport right-holders. The sporting goods industries are particularly concerned by the growing purchase of counterfeit goods over the internet.

The protection and enforcement of intellectual property rights is an important issue for sport right-holders, although the sport sector hardly differs from other business sectors in this respect and faces similar challenges.

Existing cooperation networks with the Commission for the fight against counterfeiting during major sporting events (e.g. issuing of information for customs officials to help them to differentiate between genuine and counterfeit items during the European football championship in 2004) could be further developed.

3.3. Sport as a tool for regional development

Although its potential varies according to local specificities, sport can be a tool for local and regional development, urban regeneration or, in some cases, rural development (nature sports). Synergies can be identified between sport and tourism and sport can stimulate the upgrading of collective infrastructure (e.g. transport networks) and the emergence of new mechanisms for their financing (e.g. public-private partnerships).

Sport is not referred to in the regulatory framework and guidelines for the EU's cohesion policy for the period 2007-2013. However, sport-related projects have been previously co-financed by the Structural Funds[96], based on other objectives such as tourism promotion, urban regeneration, economic competitiveness or interregional cooperation.

Regional policy instruments can also play a role in preparing and ensuring the sustainability of certain major sporting events. For example, they were used to co-finance investment in transport infrastructure linked to the Olympic Games in Athens in 2004[97], although they were not aimed at financing sport facilities, but rather at improving accessibility generally, with specific benefits linked to the events.

3.4. Anti-trust

The economic importance of sport has grown dramatically in recent years and continues to grow. As a result, the Commission has had to deal with an increasing number of cases in the area of antitrust related to the sport sector and has resolved these cases either formally through decisions or informally.

The material provisions of the EC Treaty are

- Article 81 which forbids agreements between undertakings and decisions by associations of undertakings that prevent, restrict or distort competition in the common market, subject to some narrowly defined exceptions; and

- Article 82 which prohibits the abuse by one or more undertakings of a dominant position within the common market.

It has long been established by the case-law of the Community Courts and the decisional practice of the Commission that economic activities in the context of sport fall within the scope of EC law, including EC competition rules and internal market freedoms. This has recently been confirmed specifically with regard to the anti-trust rules, Articles 81 and 82 of the EC Treaty, by the Meca Medina ruling of the European Court of Justice (ECJ).[98] This judgment is of paramount importance for the application of EC competition law to the sport sector since this is the first time the ECJ has ever pronounced on the application of Articles 81 and 82 to organisational sporting rules.[99] In prior judgments the cases were decided solely on the basis of other provisions of the EC Treaty, most notably those on the freedom of movement for workers and the freedom to provide services. The very existence of an authoritative interpretation of the anti-trust provisions of the Treaty in the context of organisational sporting rules by the ECJ represents a significant contribution to legal certainty in this area.

a) The applicability of EC anti-trust law to organisational sporting rules and the specificity of sport

The Community Courts and the Commission have consistently taken into consideration the particular characteristics of sport setting it apart from other economic activities that are frequently referred to as the "specificity of sport". Although no such legal concept has been developed or formally recognized by the Community Courts, it has become apparent that the following distinctive features may be of relevance when assessing the compliance of organisational sporting rules with Community law:

- Sport events are a product of the contest between a number of clubs/teams or at least two athletes. This interdependence between competing adversaries is a feature specific to sport and one which distinguishes it from other industry or service sectors.

- If sport events are to be of interest to the spectator, they must involve uncertainty as to the result . There must therefore be a certain degree of equality in competitions. This sets the sport sector apart from other industry or service sectors, where competition between firms serves the purpose of eliminating inefficient firms from the market. Sport teams, clubs and athletes have a direct interest not only in there being other teams, clubs and athletes, but also in their economic viability as competitors.

- The organisational level of sport in Europe is characterised by a monopolistic pyramid structure . Traditionally, there is a single national sport association per sport and Member State, which operates under the umbrella of a single European association and a single worldwide association. The pyramid structure results from the fact that the organisation of national championships and the selection of national athletes and national teams for international competitions often require the existence of one umbrella federation. The Community Courts and the Commission have both recognized the importance of the freedom of internal organization of sport associations.

- Sport fulfils important educational, public health, social, cultural and recreational functions . The preservation of some of these essential social and cultural benefits of sport which contribute to stimulating production and economic development is supported through arrangements which provide for a redistribution of financial resources from professional to amateur levels of sport (principle of solidarity).

Controversial discussions in the past have never called into question the recognition of these unique characteristics of sport. Rather, they centered on the question of the precise impact of the specificity of sport on the application of EC competition law. It was argued by some that so-called "purely sporting rules" automatically fall outside the scope of EC anti-trust rules and cannot, by definition, be in breach of those provisions.

The ECJ has unequivocally rejected this approach in Meca Medina and held that the qualification of a rule as “purely sporting” is not sufficient to remove the athlete or the sport association adopting the rule in question from the scope of EC competition rules. The Court insisted, on the contrary, that whenever the sporting activity in question constitutes an economic activity and thus falls within the scope of the EC Treaty, the conditions for engaging in it then are subject to obligations resulting from the various provisions of the Treaty including the competition rules. The Court spelled out the need to determine, on a case-by-case basis and irrespective of the nature of the rule, whether the specific requirements of Articles 81 EC or 82 EC are met. It further clarified that the anti-doping rules at issue were capable of producing adverse effects on competition because of a potentially unwarranted exclusion of athletes from sporting events.

In the light of Meca-Medina , it appears that a considerable number of organisational sporting rules, namely all those that determine the conditions for professional athletes, teams or clubs to engage in sporting activity as an economic activity, are subject to scrutiny under the anti-trust provisions of the Treaty.

The landmark Meca Medina ruling has therefore substantially enhanced legal certainty by clearly pronouncing that there exists no such thing as a category of "purely sporting rules" that would be excluded straightaway from the scope of EC competition law.

This is not to say, however, that the ECJ has decided not to take into account the specific features of sport referred to above when assessing the compatibility of organisational sporting rules with EC competition law. Rather, it has ruled that this cannot be done by way of declaring certain categories of rules a priori exempt from the application of the competition rules of the Treaty. In other words, the recognition of the specificity of sport cannot entail the categorical inapplicability of the EC competition provisions to organisational sporting rules but it has to be included as an element of legal significance within the context of analyzing the conformity of such rules with EC competition law.

b) The methodology of applying EC anti-trust law to organisational sporting rules

The second aspect of the Meca Medina ruling contributing to increased legal certainty, apart from clarifying under which conditions EC competition law is applicable to sporting rules, is the establishment of a methodological framework for the examination of the compatibility of sporting rules with Articles 81 EC and 82 EC.

The ECJ spelled out that not every sporting rule that is based on an agreement of undertakings or on a decision of an association of undertakings which implies a restriction of the freedom of action is prohibited by Article 81(1).[100] In assessing the compatibility with this provision account must be taken of

- the overall context in which the rule was adopted or the decision was taken or produces its effects, and more specifically, of its objectives; and

- whether the restrictive effects are inherent in the pursuit of the objectives; and

- are proportionate to them.

In applying those principles to the case at hand, the ECJ found that the objective of the challenged anti-doping rules was to ensure fair sport competitions with equal chances for all athletes as well as the protection of athletes’ health, the integrity and objectivity of competitive sport and ethical values in sport. The restrictions caused by the anti-doping rules, in particular as a result of the penalties, were considered by the ECJ to be “ inherent in the organisation and proper conduct of competitive sport ”. The ECJ also carried out a proportionality test examining, with a positive result, whether the rules were limited to what is necessary as regards (i) the threshold for the banned substance in question and (ii) the severity of the penalties.

This demonstrates that the instruments of EC competition law provide sufficient flexibility in order to duly take into account the specificity of sport and illustrates how the distinctive features of sport play an essential role in analyzing the admissibility of organisational sporting rules under EC competition law. Where these features form the basis of a legitimate sporting objective, a rule pursuing that objective is not in breach of EC competition law provided that restrictions contained in the rule are inherent in the pursuit of that objective and are proportionate to it.

The methodology of applying EC anti-trust law, i.e. Articles 81 EC and 82 EC, to rules adopted by sport associations as set up by the ECJ in the Meca Medina ruling including criteria relating to the specificity of sport can be summarized as follows:

Step 1. Is the sports association that adopted the rule to be considered an “undertaking” or an “association of undertakings”? a. The sports association is an “undertaking” to the extent it carries out an “economic activity” itself (e.g., the selling of broadcasting rights). b. The sports association is an “association of undertakings” if its members carry out an economic activity. In this respect, the question will become relevant to what extent the sport in which the members (usually clubs/teams or athletes) are active can be considered an economic activity and to what extent the members exercise economic activity. In the absence of “economic activity”, Articles 81 and 82 EC do not apply. Step 2. Does the rule in question restrict competition within the meaning of Article 81(1) EC or constitute an abuse of a dominant position under Article 82 EC? This will depend, in application of the principles established in the Wouters judgment, on the following factors: a. the overall context in which the rule was adopted or produces its effects, and its objectives; b. whether the restrictions caused by the rule are inherent in the pursuit of the objectives; and c. whether the rule is proportionate in light of the objective pursued. Step 3. Is trade between Member States affected? Step 4. Does the rule fulfil the conditions of Article 81(3) EC? |

The significance of the individual steps of this analysis are developed and explained in more detail in the Annex on Sport and EU Competition Rules.

It needs to be underscored that the Meca Medina ruling excludes the possibility of a pre-determined list of sporting rules that are in compliance with or in breach of EC competition law. Apart from the refusal by the ECJ to recognise purely sporting rules as automatically falling outside the scope of the Treaty competition rules or automatically compliant with them it is the requirement of a proportionality test that prevents any general categorisation. That test implies the need to take account of the individual features of each case. Even for the same kind of rule (e.g. licensing rules for sport clubs) conditions may and do vary greatly from sport to sport and from Member State to Member State (e.g. depending on the national legal obligations relating to financial management and transparency there may or may not be a need to include licensing requirements of a particular type in the statutes of a sport association). In many if not most cases there are many conceivable shapes and forms of any particular type of rule. This, as well as the interrelation with other rules, the assessment of which is often indispensable to judge the proportionality of a certain regulation as a whole, renders it virtually impossible to comment on the compatibility of certain types of rules with EC competition law in general terms.

Nevertheless, the body of existing case law of Community Courts, relating to the application of Treaty provisions other than the competition rules, as well as the de