FC Barcelona v UEFA (CAS 2024/A/10310)
Intro
The CAS Decision concerns FC Barcelona's (“FCB”) classification of audiovisual rights revenue under
UEFA's Club Licensing and Financial Fair Play Regulations (CL&FFP). The dispute centered on FCB's
June 2022 sale of 10% of its LaLiga television rights for €267,089,000, followed by an additional 15%
sale in July 2022 for €400,400,000, both deals spanning 25 years.
The critical regulatory question involved FCB's classification of the initial sale proceeds as "other
operating income" in its break-even calculations, rather than as "profit on disposal of intangible assets."
This distinction is materially significant because operating income counts toward UEFA's break-even
requirement, while profit from intangible asset disposal does not.
Following a compliance audit, UEFA's Club Financial Control Body determined that FCB had incorrectly
classified the revenue, resulting in a €500,000 fine. The audit concluded that FCB's break-even result
was overstated by €267 million, as the classification conflicted with both FCB's own financial statements
and the fundamental nature of the transaction.
The case illuminates the complex interplay between club financial management strategies and UEFA's
regulatory framework. FCB's appeal sought a (i) finding of no breach or (b) a reduction in sanction. The
matter raised important questions about the interpretation of financial sustainability regulations in
European football, particularly regarding the characterisation of novel revenue arrangements and
discrepancies between national and UEFA’s financial regulations.
CFCB First Chamber and Appeals Chamber proceedings
The CFCB First Chamber proceedings imposed a €500,000 fine on FCB for breaching Articles 58(1)
and (2) of the CL&FFP, specifically finding that FCB's break-even result was overstated by €267 million.
FCB appealed to the CFCB Appeals Chamber which rejected FCB's appeal confirming the First
Chamber's decision and imposing €2,000 in procedural costs on FCB.
The CAS proceedings
The CAS proceedings commenced in January 2024. The arbitral tribunal was Mr Manfred Nan
(President), alongside arbitrators Mr Jeffrey G. Benz and Ms. Raphaëlle Favre Schnyder. An in-person
hearing was held on 5 June 2024, featuring expert testimony on behalf of FCB from Professors Oriol
Amat and Andrei Boar regarding financial reporting and accounting.
FCB's Appeal Arguments:
- FCB contended that its classification of the sale of the rights as "other operating income" was correct,
considering:
- Its unique legal structure as a sports club (asociación civil comprised of 140,000 individual member
owners) and its limited capital injection options;
- The assessment by its auditors and experts;
- Its alignment with LaLiga's FFP rules and Spanish/EU law;
- The rights sale's positive impact on FCB’s long-term financial sustainability; and
- That if the violation was upheld, the €500,000 fine was disproportionate compared to the initial
€100,000 recommendation.
UEFA's Response:
- UEFA characterised the case as "straightforward," focusing on FCB's allegedly non-compliant breakeven information.
- Maintaining that FCB:
- Made a manifest misclassification of the sale profits;
- Deliberately deviated from their own financial statements;
- Overstated their break-even result by €267 million;
- Failed to provide valid justification for the classification;
- The sanction was proportionate and in fact "very lenient"; and
- Emphasising CAS’ jurisprudence requiring uniform application of FFP rules across all clubs, rejecting
individual "privileges" or "exceptions" for the benefit of FCB.
The jurisdictional basis and applicable law were undisputed, with both parties accepting CAS’
jurisdiction under Article 62.1 of UEFA Statutes and the primacy of UEFA Regulations.
UEFA and FCB held two competing interpretations of UEFA's CL&FFP, specifically regarding the
classification of FCB's €267 million rights sale under Article D(b) of Annex X, CL&FFP.
FCB's Position:
- Classified the sale proceeds as "other operating income" under Article B(f) of Annex X CL&FFP;
- Argued that the classification was validated by external auditors in their 2021/22 Consolidated Annual
Accounts and was consistent with LaLiga's FFP Regulations; and
- That the rights sale led to a reporting surplus and had a positive impact on its long-term financial
sustainability.
UEFA's Position:
- The sale proceeds must be classified as "profit from disposal of intangible assets" under Article D(b);
- FCB's Financial Report initially classified the transaction as "profit from intangible assets";
- Article D(b) explicitly excludes such profits from break-even calculations;
- The misclassification resulted in a €267 million overstatement of the break-even result; and
- FCB’s conduct constituted violations of Articles 58(1), 58(2) CL&FFP and 77.01(e) CL&FS.
The relevant regulatory framework the Panel had to assess:
- Article 57(1) CL&FFP - mandates monitoring requirements for UEFA club competition participants;
- Article 58(1) - defines relevant income and expenses in Annex X;
- Article 58(2) - requires reconciliation with audited annual financial statements; and
- Article D(b) specifically excludes profit/loss on disposal of intangible assets from break-even
calculations.
The disputed classification materially affected FCB's compliance with UEFA's financial monitoring
requirements, though UEFA accepted that even with a negative adjustment, FCB would still have
complied with the budget provisions for the 2022/23 monitoring period albeit its budget position would
have been negatively impacted as the assessment period spans three years.
The Panel agreed with UEFA focusing on three key conclusions:
1. The revenue was incorrectly classified under Article B(f) rather than Article D(b) of Annex X CL&FFP
because:
- The income clearly fits the definition of "profit from disposal of intangible assets";
- The specific definition in Article D(b) takes precedence over the general "other operating income"
category (lex specialis principle (which provides that where two laws apply to the same scenario, the
law that applies to a specific subject matter takes precedence over the law that applies in general);
and
- Annex X must be interpreted as a whole, not in isolated sections.
2. The Panel rejected FCB's arguments that:
- FCB could choose between two valid classifications;
- FCB’s interpretation aligned with a "true and fair view" and of accounting principles;
- FCB followed the spirit if not the letter of the law; and
- LaLiga's different classification system was relevant.
3. The Panel found three specific violations:
- Article 58(1): Incorrect classification overstated break-even result by €267 million;
- Article 58(2): The classification conflicted with FCB’s own financial report; and
- Article 77.01(e): FCB confirmed inaccurate information as complete and compliant.
The Panel concluded that FCB prioritised short-term gains over long-term sustainability, contradicting
UEFA's regulatory objectives of encouraging responsible spending and protecting long-term viability.
The Panel also had to decide whether FCB's legal structure should affect how regulations are applied
to the club.
FCB's position:
- As a non-profit private association owned by over 140,000 members, it argued that its structure is
unique and puts it at a competitive disadvantage;
- Unlike most clubs, FCB cannot sell shares, bring in new investors, or raise capital through traditional
means;
- FCB argued that this limitation should be considered when evaluating their compliance with UEFA’s
regulations, particularly regarding their sale of audiovisual rights; and
- That the current rules favour profit-making structures and create inequality.
UEFA's Position:
- Contested FCB's claim of uniqueness, stating that 41% of European clubs (303 clubs) are organised
as associations or foundations;
- Argued that FFP rules apply equally to all clubs regardless of legal structure;
- Stated that FCB's legal form is irrelevant to their classification of the sale in question;
- Maintained that the Regulations are not tailored for corporate models and that no club should receive
special treatment.
The Panel decided:
1. The Panel acknowledged that different legal structures affect how football clubs can raise capital.
FCB, as an association, cannot raise share capital through equity contributions without changing its
legal form.
2. While UEFA could have created different rules for different types of club structures, it chose to apply
uniform regulations to all clubs. The Panel determined this was a policy decision that shouldn't be
challenged in the proceedings.
3. FCB never challenged the introduction of the UEFA Regulations when they were first implemented.
Since the rules were properly implemented and consulted with the European Club Association (which
includes FCB), they couldn’t be challenged in an individual violation case.
4. The Panel noted that UEFA's discouragement of selling intangible assets is logical because such a
practice:
- Reduces a club's long-term earning capacity;
- Liquidates future earnings for short-term gains; and
- Goes against the CL&FFP objectives of encouraging responsible spending and protecting long-term
sustainability.
5. While FCB argued it had limited options to recover from a precarious financial position due to its legal
structure, the Panel found that:
- This indicated that FCB had been "living beyond its means";
- The club’s legal structure isn't unique (as highlighted by UEFA); and
- The rules apply equally to all clubs regardless of structure.
6. The Panel ultimately concluded that FCB's legal structure didn't warrant special treatment and
confirmed that it violated the relevant CL&FFP and CL&FS articles.
FCB provided the following reasons for selling its future audiovisual rights:
FCB's financial situation and considered solutions:
- The new Board of Directors aimed to achieve economic stability and improve equity;
- They considered three main options:
1. Extraordinary payments from members (rejected due to members' socioeconomic status and
COVID-19);
2. Selling players (rejected as it would require selling too many players and harm
competitiveness); and
3. Selling non-sport assets such as the rights (chosen as the most viable option).
FCB's justifications:
- It argued that the sale of non-sport assets was practically its only option to recover financially;
- The approach allowed them to avoid impacting members while maintaining competitiveness;
- It claimed other European clubs had used similar strategies; and
- That the sale helped improve its financial position in line with UEFA Regulations' objectives.
UEFA's counter-arguments:
- FCB's debt problems didn't justify special treatment;
- The case was specifically about how the sale revenue was classified in break-even calculations;
- Financial difficulties didn't justify violating applicable rules; and
- Better expense management which was the responsibility of FCB could have prevented the situation.
The Panel's findings:
- The reasons behind the sale didn't impact whether FCB breached UEFA Regulations;
- While the sale itself was permitted and possibly a rational business decision, it didn't justify classifying
the revenue differently than required;
- The sale can still benefit FCB's short-term financial health, but the revenue may not count as "Relevant
Income" for break-even purposes;
- The Panel emphasised that FCB is responsible for both current and past financial decisions;
- Ultimately, FCB's reasoning didn't change the Panel's conclusion that it had violated the Regulations.
The Panel had to consider whether the €500,000 fine was appropriate:
FCB Argued:
The fine was disproportionate because:
- The decision turned on what was merely a technical accounting disagreement;
- It still met break-even requirements even without the disputed income;
- It was a first-time offence;
- Similar cases received much smaller fines; and
- The CFCB Reporting Member had recommended only a €100,000 fine.
FCB maintained that:
- Its classification of the sale revenue was made in good faith;
- There had been no intention to deceive;
- Defending its position shouldn't be considered an aggravating factor; and
- It had cooperated adequately with the audit process;
UEFA's counter-arguments:
It wasn't simply an accounting disagreement because:
- The misclassification impacted break-even results by a huge amount, €267 million;
- FCB acted deliberately and consciously in violating the rules; and
- The size of the misreported amount matters when determining sanctions.
UEFA defended the fine arguing:
- The sanction needed to serve as a deterrent;
- The fine was actually lenient (0.2% of misreported amount);
- FCB delayed the compliance audit by initially heavily redacting documents; and
- The fine aligned with precedent cases when considering proportionality.
3. UEFA rejected FCB's claims that:
- The fine was connected to FCB's Super League involvement;
- The CFCB Reporting Member's lower recommended fine was binding; and
- FCB’s financial hardship should reduce the fine.
The Panel found:
•
FCB's violation was intentional, as it classified the revenue differently in their break-even
submission versus its own financial report;
•
The misclassification had major implications for FCB's break-even results for multiple seasons;
•
FCB was given an opportunity to correct the classification for a smaller fine of €80,000 but
•
It appeared to be FCB's first violation, but wasn’t considered a mitigating factor;
•
Given FCB's overall revenues and the scale of the misclassification (€267 million), the €500,000
declined to do so;
fine was considered "relatively mild";
4. The Panel ultimately dismissed FCB's appeal and confirmed the original €500,000 fine, finding
it justified and proportionate given the intentional nature of the violation and its significant
impact; and
5. The Panel rejected FCB's argument that the infringement had no material impact, as well as
their reliance on external experts' opinions, noting that none of FCB’s experts had
contemporaneously advised them to report the revenue in the way they did.
Note on the Decision:
The Panel’s ruling whilst significant is not surprising. FCB’s position on the classification of the
audiovisual rights was inconsistent. The club had opted for the definition which best suited its interests
on submission to UEFA and had subsequently failed to revise the classification when advised of the
error. Any argument for special treatment due to the nature of FCB’s legal structure was bound to fail
without compelling evidence to show that the structure was distinctive and placed FCB at an unfair
disadvantage vis-à-vis other European clubs. Interestingly, the First Chamber noted that similar
breaches by FCB for subsequent reporting periods would be treated as recidivist and would attract
harsher penalties. There have been recent reports that FCB are looking to sell off future corporate
hospitality rights to help finance the registration of Dani Olmo for LaLiga (this was before the
government intervened and came to FCB’s rescue). Whilst not directly relevant to the present case,
FCB will need to be sure such sales are properly reported when it comes to its accounting to UEFA for
the 2024/25 season and beyond because government intervention will not be of any assistance to the
club if it finds itself on the end of further sanction from UEFA.