Amendments to the Law on sports broadcast rights: the consequences will be felt this year


Yevhenii Promskyi, a member of the Council of the UBA’s Committee on Sport Law, an assistant attorney at ARES Law Firm, has predicted the consequences of the adoption of Law No. 2563-IX, which fundamentally changes the approach to the realization of sports broadcast rights in Ukraine.

News about amendments to the Law of Ukraine "On Physical Culture and Sports" regarding the recognition of sports clubs as organizers of sports competitions appeared in the media without much fanfare (the Law of Ukraine "On Amendments to the Law of Ukraine "On Physical Culture and Sports" on the Demarcation of Sports events and competitions" No. 2563-IX).

It would seem that this amendment is pure technical and cannot have significant consequences. In fact, this law is system-changing regarding the realization of the rights to broadcast sports competitions and destroys the rules of the game developed over the years.

Before the adoption of Law No. 2563-IX, the initiator of sports competitions was recognized as the organizer of sports competitions. In this case, it was the Ukrainian Premier League. The Ukrainian Premier League owned the rights to broadcast all matches and had the right to dispose of them, including signing contracts with TV broadcasters to show matches. It is also important that in this case one can set specific requirements for the quality of broadcasts and other details.

According to the results of the tender, the Ukrainian Premier League signed a contract for the broadcast of matches with the television company Setanta Sports. The majority of UPL participants voted for the corresponding decision — this is enough to recognize the decision as adopted according to its charter. However, the clubs that voted "no" still did not allow Setanta Sports staff into the stadiums during their home matches, broadcasting independently at their discretion.

This version of the exercise of media rights (not taking into account the actions of the clubs that refused to comply with the decision made by the majority) corresponded to the best international practices. For example, the English Premier League is one of the most commercially profitable competitions. When it was created, all participants transferred their rights to broadcast home matches to the Premier League that sells them to television companies centrally. Such a product is commercially attractive. Of course, in the short term, it is more profitable for rich clubs to sell the rights to show their home matches on their own. However, in the long run, it has more negative consequences even for them, as the smaller clubs become poorer, which reduces the overall competitiveness of the tournament and therefore the interest in it and profitability in general.

The adoption of Law No. 2563-IX turned everything upside down. From now on, a sports club that holds a sports event within the framework of sports competitions and provides organizational, financial and other support for its preparation and holding is considered the organizer of the sports event. This means that each participant in a sporting event (e.g., a football club) has the right to dispose of its media rights, including the right to broadcast a sport event (e.g., football match), at its own discretion. The specified changes do not apply to international competitions held under the auspices of international sports organizations.

It should be noted that the amendments were adopted in an unprecedentedly short time. On September 6, 2022, at 1:10 p.m., the deputies vote to define it as urgent (314 votes), at 1:11 p.m. — accept it as a basis (314 votes), immediately at 1:11 p.m. — as a whole (317 votes).

Immediately after its adoption, a petition was registered on the website of the President of Ukraine with a demand to veto Law No. 2563-IX. However, the petition did not receive the necessary 25,000 votes, and the President of Ukraine signed this law.

Why was this Law adopted at all, given the listed shortcomings? Perhaps it has not been adequately studied in relation to a large number of much more important issues.

The adoption of this Law was the result of a conflict between a part of the football clubs of the Ukrainian Premier League and the Ukrainian Premier League itself with other football clubs regarding the implementation of media rights, including the broadcasting of football matches. The owners of football clubs who lobbied for the adoption of Law No. 2563-IX are among the richest people in Ukraine, some of them are considered oligarchs. For them, the right to independently choose the broadcaster of their clubs' matches is not a matter of making a profit (since the matches are broadcast on their own television channels), but a matter of image, preservation of the platform for the dissemination of narratives beneficial to them on sports and other issues.

It should be noted separately that Law No. 2563-IX applies not only to football, but to all sports competitions in general.

If the participants of a sports competition have transferred their rights to broadcast home matches for their centralized sale, then there are no problems. However, if at least one of such participants changes their mind and decides to exercise their rights to broadcast sports events independently, it will lead to the destruction of the centralized system of sale of rights, devaluation of the value of goods. An ordinary spectator will be forced to look for the broadcast of each club's match separately instead of watching all the matches in one place. As correctly stated in the petition on the website of the President of Ukraine, there will not be a single official broadcaster, but there will be thousands of separate "event organizers", each of whom will broadcast their matches where they want and how they want (paid or free).

The law entered into force on October 1, 2022, at a time when most competitions had already begun. Usually, contracts for the broadcast of matches are concluded in the summer, when the seasons have not yet started. It is then that we will be able to see the results of the adoption of Law No. 2563-IX. But already now it is possible to determine the negative consequences that are inevitable:

1. Broadcasts of sports competitions organized in Ukraine will not be commercially attractive for the foreign market, since the product will not contain matches of all participants in the competition (or at any moment one of the participants may decide to broadcast their home matches independently that will violate the integrity of the media product).

2. Small clubs will not be able to realize their media rights for an acceptable price independently, which will make them poorer and less competitive.

3. The competitiveness of the sports competition will decrease.

4. General interest in sports competitions among the population and sponsors will decrease.

5. The incomes of all participants in sports competitions will decrease (which are already meager compared to European clubs).

Instead of conclusions, we note that once again the image and political motives of individuals turned out to be more important than common sense, the general development of Ukrainian sports, international sports legislation, and the statutes of international federations (associations), of which Ukraine is also a member. We hope that the war will end as soon as possible with the victory of Ukraine, and the people's deputies will pay attention to this seemingly technical, but such an important amendment.