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Common-Ownership: UEFA Reach Decision on Participation by RB Leipzig and FC Red Bull Salzburg in UEFA Champions League 2017/2018

On 8 June 2017, we considered the issue of whether RB Leipzig and FC Red Bull Salzburg would both be permitted to participate in the UEFA Champions League 2017/2018 season. Both clubs qualified from their respective leagues on merit but, given that both clubs are in one way or another funded by Red Bull, questions had arisen as to whether UEFA’s rule against common-ownership would mean that both clubs would be prevented from competing in the UEFA Champions League at the same time.

It has now been reported that, following a month-long investigation by UEFA and changes made by both clubs, UEFA is satisfied that both clubs can compete in next year’s competition.

A UEFA statement confirmed that the Adjudicatory Chamber of the UEFA Club Financial Control Body (the “CFCB”) “has decided to accept the admission of both FC Salzburg and RB Leipzig to the UEFA Champions League 2017/2018, having found that Article 5 (Integrity of the competition) of the competition regulations is not breached.”

The statement goes on to confirm that:

“Following a thorough investigation, and further to several important governance and structural changes made by the clubs (regarding corporate matters, financing, personnel, sponsorship arrangement, etc.), the CFCB deemed that no individual or legal entity had anymore a decisive influence over more than one club participating in a UEFA club competition.”

UEFA has confirmed that the decision of the CFCB may be appealed to the Court of Arbitration for Sport within 10 days. While a challenge by Leipzig and Salzburg would appear highly unlikely, there would appear to be more cause for complaint on the part of the other German clubs that will be affected by the decision.  Article 5 of the Regulations of the UEFA Champions League 2015 – 2018 Cycle states that, where two clubs that are commonly owned qualify for the same UEFA competition, the one with the lower UEFA co-efficient ranking will not be allowed to compete in the relevant competition. In the case of Salzburg and Leipzig, the club with the lower co-efficient would be Leipzig.  If Leipzig had been removed from the competition, the automatic group stage place in the UEFA Champions League would have gone to 1899 Hoffenheim, whose UEFA Champions League play-off round place would have gone to FC Koln.

However, it has been reported that neither team will be appealing the decision.  A Hoffenheim spokesman has been quoted as saying that:

“We are absolutely fine with the decision. After our best season in Bundesliga history we are looking forward to the Champions League play-offs in August.”

An FC Koln spokesman is reported to have said:

“We won’t appeal this case, it is not our business. We are very happy having qualified for the Europa League for the first time in 25 years.”

The story therefore appears to have reached a happy ending for all involved.

Yet a cautionary note must still be sounded.  It is clear from the CFCB’s decision that both clubs were forced to make “several important governance and structural changes” in respect of “corporate matters, financing, personnel, sponsorship arrangements”. UEFA clearly takes the common-ownership rule very seriously and it has been reported that, in order to comply with this rule, individuals at both clubs were required to step down in order to focus on one or the other club, rather than both.

For owners that have interests in more than one club, this decision will be a clear sign that UEFA has not given up on its rule against common-ownership and that the principles espoused in ENIC are still alive and well.  If multiple clubs with common ownership do qualify for UEFA competitions in the same season, the owners must be willing to make significant concessions in terms of business structures and personnel. Given that the ultimate beneficial owners may well have a financial interest in the success of both teams, such changes may be unappealing.

© Copyright 2017 Squire Patton Boggs (US) LLP

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About this Author

Thomas Lloyd, Squire Patton Boggs Law Firm, Sports and Litigation Attorney
Associate

Lloyd Thomas is an associate in the Litigation department and is part of the Sports Law team based in our London office.

Lloyd provides a range of contentious and regulatory advice to a number of leading sports clubs, individuals and national governing bodies on a variety of issues. As part of such advice, Lloyd regularly assists in proceedings brought before the FIFA Dispute Resolution Chamber and the Court of Arbitration for Sport.

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