Will NBA Europe’s format and salary cap comply with EU law?
It wasn’t quite the papal white smoke, but the NBA made the clearest statement yet this week that it intends to launch a new league in Europe.
In a joint appearance with the head of Fiba, basketball’s international governing body, NBA commissioner Adam Silver spoke of the “enthusiastic support” within both organisations to push ahead with the plans.
“The response we’ve gotten from the marketplace is very positive,” Silver said. “Whether it’s from media partners, fan research that we’ve done, discussions directly with Fiba, advertising agencies and other clubs in Europe, several of them who have also been enthusiastic about the potential opportunity to better serve basketball fans in Europe.”
Should it progress as planned, NBA Europe will feature 16 teams in a semi-open format, with 12 permanent members and four places available for qualifiers.
The teams are likely to be a mixture of existing European giants, such as Barcelona and Real Madrid, and new ones, some linked to football clubs such as Paris Saint-Germain and, reportedly, Manchester City.
New franchises will mean new investors, many of whom may have links to the NBA or the US more widely. So it was perhaps no surprise that Silver said that NBA Europe would operate a salary cap, in keeping with major sports in North America. These details, however, are by no means certain to be deemed compatible with EU law.
The aborted European Super League project initially planned a similar semi-open format but was forced to change that and comply with the European sports model of open competition.
Attempts to impose a hard salary cap in football have also failed while even plans for a soft cap face the threat of legal action from player unions.
“NBA Europe is an interesting concept. US owners and investors will look to make a profit so they will definitely want to ensure cost control measures are in place,” Darren Bailey, a sports regulation expert and consultant at Charles Russell Speechlys, tells City PM.
“Frankly, competition law is being deployed to attack all forms of regulatory frameworks at present so there may be a vulnerability, but a key issue is who are the likely complainants.
“Much depends on the structure and access of teams. If it looks like it will be a success and the process for admission is not meticulously fair, then excluded teams may look to challenge.
“In addition, players and agents may be encouraged to have a crack if they believe the market is being distorted and salaries/fees being unreasonably suppressed.”
Why European courts could give NBA leeway
NBA Europe could be given some extra latitude legally if viewed as a startup backed by big money, as some new sports leagues have when agreeing long broadcast deals, says Bailey, although the tendency for European judges to promote free markets in sport since the landmark Bosman ruling calls that into question.
Competition law has been successfully used to scupper Fifa’s planned cap on the fees taken by football agents and opened the door for new competitions, such as a European Super League, to be set up provided that they abide by certain key principles. But removing all protections for sport could end up damaging it, says Bailey.
“What will be fascinating is how they structure the inevitable collective bargaining agreement and player representation. My sense is they will adopt the US model and look to defend it if attacked based on various sporting and economic grounds such as uncertainty of outcome, wider talent distribution, fair allocation of revenue to players (circa 70 per cent) etc.
“Who knows, the Americanisation of regulatory frameworks may repel some of the arguments we have seen play out recently in the European courts.
“In my view if the courts don’t back off attacking sports regulations designed to protect key sporting imperatives, then national governments and the EU will need to grant exemptions from elements of competition law otherwise investors will disappear.”