FIS – The Head of an Unmolested Multibillion-Dollar Sports Cartel

Professional skiers around the globe are obliged under the athlete agreement to comply with the rules of their international federation FIS in order to obtain a competition licence and to pursue their profession. In this respect, it is a normal procedure, which is necessary for the orderly conduct of sporting competitions. However, the content of these rules gives cause to reflect once (again) on their appropriateness and compliance with the law.

The governing rules of the FIS are set out in the International Ski Competition Rules (IWO). In addition to the general competition rules, these contain, inter alia, the requirements that must be met by athletes in order to participate in international and national competitions. Under the athlete agreement, the sportsperson is bound by these rules vis-à-vis his national federation. It states, inter alia, as follows (Art. 204.1):

"A National Ski Association shall not support or recognise a competitor within its structure, nor issue him a licence to participate in FIS or national races, if he [...] has permitted the individual exploitation of his name, title or personal image for advertising purposes, unless the relevant National Ski Association – or its pool – has concluded a contract for promotion, equipment or advertising for this purpose."

Furthermore (item 206.8 / 206.9):

"A National Ski Association or its pool may conclude contracts with a commercial company or organisation regarding promotion, equipment and advertising, if the relevant company or organisation is recognised by the National Ski Association as an official supplier or promoter. [...] Any compensation pursuant to such contracts shall be paid exclusively to the National Ski Association or its pool, which shall receive and manage such compensation in accordance with the respective provisions of the National Ski Association. No competitor may directly receive a share of this compensation, except for that listed in Art. 205.6. The FIS may at any time request a copy of such a contract."

And finally (Art. 205.6):

"A competitor, who is registered by his National Ski Association with the FIS for participation in FIS races, may receive: full compensation for travel to training and competition sites, full remuneration for maintenance during training and competition, pocket money, compensation for loss of earnings in accordance with the resolutions of his National Ski Association, social security including insurance for training and competition, scholarships."

Whoever reads and understands this is rightly puzzled as to whether this is well-intentioned and, above all, compliant with the law. In summary, it states that the individual athlete cannot conclude his own (sponsorship) contracts and may only receive compensation payments from the contracts concluded by the national ski federation for him. In doing so, one must bear in mind that most athletes are treated by their national federation as independent (!) entrepreneurs, i.e. no social security contributions are paid whatsoever. An entrepreneur who cannot conclude contracts relating to his own business?

Precisely. The foregoing regulations ultimately mean that in professional skiing, individual sponsorship is not possible – worldwide and regardless of whether it involves the marketing of the athlete or the person. Such marketing can and may, according to the FIS's conception, only be carried out by the national federation, and only this federation is permitted to receive remuneration for it. The athlete, on the other hand, is essentially only entitled to receive compensation from such contracts concerning him or his person and whatever he absolutely needs to live. There is no mention of income or profit. An entrepreneur without the possibility of making a profit? That too. More than that: if these rules are not complied with, the athlete may not receive a licence and may not participate in official competitions. Any existing licences must be revoked. This amounts to a ban on the pursuit of the profession, which applies whenever the sportsperson attempts to act as an entrepreneur in his business capacity.

That this set of rules cannot be permissible in this form is – at least for lawyers – obvious. The problem lies in the massive restrictions on competition associated with it, which find no justification in sporting objectives. For what sporting reason should an athlete not be able to market his own person? The power of rulemaking resulting from federation autonomy is thus far exceeded, especially since it is also difficult with all legal efforts to find a statutory interpretation of these rules. The wording is too clear.

The regulations of the FIS ultimately mean that the individual sportsperson is merely a tool of the (national) federation, because according to the conception of the IWO he no longer has any possibility to offer his so important marketing rights on the market – he must transfer these to the federation and can no longer conclude contracts himself. As a result, competition between the athletes belonging to the federation – worldwide! – comes to a complete standstill, even though their marketing services (advertising space / personality) are subject to strong and especially performance and personality-related demand. The only remaining "competitor" is thus the national federation, which has a de facto monopoly.

Since the individual federation controls a large number of athletes in this way using the same contractual structure, a so-called hub contract exists, which serves to control the competitive behaviour of the entire downstream market level (athletes). And the demand market (sponsors) is subsequently dominated by the federation. On the one hand, only the (paying) cooperation partners of the federation have any chance of being able to use the marketing rights of the sought-after athletes, because these are not freely available on the market. This would be different in a functioning competition. On the other hand, the demand side is left with only one contact partner for the services in question: the federation. In this way, the federation secures itself, with the help of FIS rules, an absolute monopoly in its sport and thus a dominant market position, which is regularly also abused to take unfair advantage of individual athletes and sponsors through arbitrary contract terms. However, the real problem is that the federation, which is per se dominant in the market due to the single-place principle prevailing in federation law, demands and receives contract terms from both market sides that would scarcely be possible in effective competition.

Finally, the foregoing restrictions on competition cannot be exempted either, because they all lack a sport-specific objective. On the contrary: the federations follow purely economic considerations and thereby harm both the athletes and consumers (= sponsors) equally.

Of course, there are massive differences in the practical implementation of the FIS rules by the national ski federations. While in Germany the DSV endeavours to find and practise a liberal interpretation in the true interest of the athletes, other federations make full use of the already unlawful situation in their favour, in order to enforce their interests on the backs of the athletes. Often it is about power, money, nepotism, personal preferences and everything else, just not about sport and certainly not about the athletes. "Fair play" certainly looks different.

As a result, it must be noted that the FIS rules in the aforementioned point of individual marketing, which is extremely important for the athletes, at least in Europe violate applicable antitrust law and are thus void. Only the de facto monopoly of the FIS and the national federations and the associated threat potential have so far prevented the issue from being dealt with from a legal perspective. This could change in the future, if a critical mass of athletes or industrial companies come together to challenge the FIS regulations. In Europe, for example, this could look like the cartel consisting of the FIS, the federations of the 28 member states and also the respective federation sponsors being officially reported to the European Commission. In doing so, all parties concerned would be well advised to participate in the front row due to the leniency programme (immunity from punishment for the whistleblower). This applies equally to the athletes. Strictly speaking, they are – albeit involuntarily – members of the cartel.

In this sense: Athletes – fight for your rights!