The EC state aid investigation of the “Salva Calcio” law: Is there a real distortion of trade or does Brussels just want to run the show?

The EC Commission’s decision to open an investigation into whether the Italian “Salva Calcio” measures, whereby Serie A clubs have the option to write off players’ values over a ten year period, amounts to illegal state aid is unlikely to prove very popular in Italy. If the Italian law (which the Commission also alleges is in breach of EC accounting directives) is rescinded, a number of clubs are likely to follow the path of Fiorentina into administration and the lower divisions (at least for a while anyway).

Although its own TV selling arrangements are not without serious practical difficulty, at least the Italian league does not sell its TV rights collectively. If it did, it would probably be subject to the same sort of enquiry that is being currently endured by the Premier League. Here, if the Commission forces the English Premier League to re-tender its broadcast rights packages and Mr Murdoch gets a big rebate (just how big being dependent on what rights he retains second time round) a number of clubs will have to go into administration – as Murdoch himself was not slow to point out in his recent TV interview. In such an event, it is doubtful if the UK government would be as generous as their Italian counterparts.

So what is in it for the Commission? It is clearly not going to become popular by intervening in ways that may lead to clubs going bust (or making them cheaper for Russian oligarchs to purchase).

EC Commission interventions rarely happen in isolation and often are addressed to a number of audiences. At the moment, the member states are resisting the Commission’s attempts to have a specific competence in the sporting field in the new Treaty on the grounds of “subsidiarity”. Is the Salva Calcio enquiry much more than a bit of political muscle flexing of the “give us a real role or we will make your life a misery” garden variety?

Whereas the Premier League rights investigation is clearly born of the belief (whether justified or not and whether legally sustainable or not) that pay-TV markets should be made more competitive by parcelling out key sports rights, the Salva Calcio investigation looks more like a bit of “look at me” profile raising than an economically sound intervention based on the state aid rules.

Suppose for a moment that the Italian measures do amount to the concession of an advantage, are competition and trade between member states affected as a result? The Commission’s press release does nothing to clarify this vital issue. At one point it says that the distortion which allows clubs “at least in the short term to pay inflated prices and wages for players even when their true financial position should not allow them to do so, thus gaining an advantage on the field” is not directly covered by EU law. Later in the same press release and in apparent contradiction, the Commission justifies its view that the measure distorts competition and has an effect on trade between member states by pointing out that the acquisition of players and the sale of broadcasting rights for European competitions like the Champions League take place on international markets.

If the effect of Salva Calcio on UEFA’s collective selling of the broadcast rights for Champions League is difficult to discern, the distortion of the European market for the acquisition of players arising from this optional accounting measure, whose effect is “short term” at most (as the Commission concedes), is not clearly apparent either.

In the light of this it will be very interesting to see whether the state aid as opposed to the accounting part of the enquiry goes much further. Whatever happens, the EC Commission clearly wants to be involved and is likely to remain active in sport at least unless it gets given a specific sporting competence.

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