La Revue Squire

French club sports and stock markets


Rédigé par Shannon Yavorsky le 31 Mai 2006


France has been asked by the European Commission to amend legislation preventing football and other club sports from being listed on stock markets. The Commission took the view that this is an unjustified barrier to the free movement of capital and therefore in breach of Article 56 of the EC Treaty. The request took the form of a “reasoned opinion”, the second stage of the infringement procedure under Article 226 of the EC Treaty. If a Member State that has received a reasoned opinion fails to give a satisfactory reply within the deadline, typically two months, the Commission may refer the matter to the European Court of Justice.

The infringing French legislation is found in Act No 84-610 of 16 July 1984 on the organisation and promotion of physical and sports activities. Article 13 of that Act states that limited companies in the sports sector shall not raise capital from the public. Professional sports clubs and notably football clubs are thereby prevented from being listed on the stock market. The initial complaint about the Act was lodged with the European Commission in 2002 by eight professional French football clubs.

Admission to stock exchanges and the issue of securities on capital markets are considered movements of capital for the purposes of Article 56 of the EC Treaty. To appreciate the scope of Article 56 one can consult Directive 88/361/EEC (OJ No L178, 8.7.1988, p.5.), which, adopted before the introduction of Article 56, is a useful source for interpretation. Annex I of the Directive contains a list of transactions that are to be considered as capital movements. Rulings of the ECJ have consistently held that restrictions on the movement of capital must:

- be applied in a non-discriminatory manner;
- be required for overriding reasons of general interest;
- be such as to guarantee the achievement of the objective pursued; and
- not go beyond what is necessary to achieve that objective.

According to Le Monde, the French minister for sport, Jean-Francois Lamour (a former Olympic fencing champion and the same minister who said that London didn’t have the sporting “know-how” to host the 2012 Olympics) reacted by saying that discussions would be taking place to find a solution in line with both EU law and the “specificity of French sport”. Mr Lamour is of the view that allowing French clubs to raise capital from the public is not a miracle solution that will secure the economic development of the clubs.

Lamour proposes instead that clubs focus on building and exploiting their stadiums such that their balance sheets do not solely reflect income from media rights. This is of particular relevance in view of the fact that two major channels, Canal + and TPS, are due to merge and thus reduce possible income streams from television rights. It may be that Lamour’s stadium proposition will be amenable to the “specificity of French sport” and the Commission. However, in view of the ECJ’s decisions on provisions that restrict the movement of capital, it may be that the French Act doesn’t have a sporting chance.





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