Why Does Luxembourg Still Not Have A Professional Football League?

The piece was written for and first published by LawInSport, and is available here.

While the entire football world is looking at the Super League dispute and how it could eventually shape the future organization of football in Europe, Luxembourg football clubs still haven’t decided on having a professional football league.

Even with a very high number of football club licensees per capita1, and recognizable sporting achievements over the past few years, the stakeholders do not seem to be ready (yet) to have a fully professional league and make profits from a commercial exploitation.

In fact, many talented players end up leaving the country at a very young age in order to have a shot at a successful career abroad. Such decision is most likely driven by the dream of eventually joining famous foreign clubs and play at an international level, but it is also the result of a non-existing professional league providing for an appropriate compensation which would potentially convince these players to stay. As a consequence, Luxembourg’s highest football league, the ‘BGL-League2 composed of 16 teams is left to amateurism, despite its pool of talented young players and the various financial and social advantages the country has to offer to them (and their families).

What exactly is holding the Luxembourg Football Federation (FLF) back from establishing a professional football league? This article examines the issues, looking at

  • The existing legal framework of Luxembourg football
  • The need for institutional transformation and commercial processes
  • Developing marketing strategies and raising political interest
  • Capitalising on sporting momentum

The Existing Legal Framework Of Luxembourg Football

Luxembourg’s BGL-League is far from being a fully professional league, meaning one in which all players are paid a salary that they can live on and do not need additional sources of income.

Luxembourg football clubs are all non-profit associations which are predominantly run by volunteers, without which the whole system would most likely collapse.

The football federation’s regulations (FLF Regulations) expressly prohibit the football clubs to be incorporated as commercial companies3.

In that way clubs affiliated to the FLF are also not allowed to generate any economical profit with the revenues received through football activities4. The revenues (or “financial transactions” as referred to in the FLF Regulations) are only intended to cover the incurred costs of a club.

Accordingly, most of these financial transactions are strictly regulated by FLF Regulations such as the revenues originating from ticketing or the notorious transfer fee to be allocated to a club in case of a national transfer of a player. The transfer fee is for example based on a specific formula which takes into account the age of the transferred player, the number of games he played for his club and/or the national team, and the timeframe during which the transfer occurred.

The Player’s compensation remains unregulated however, and can be freely negotiated between the player and the club.

Despite the non-profit oriented FLF Regulations, a total of approximately 50 players5 still managed to sign a professional employment contract with a Luxembourg football club during the 2021-2022 season, thanks to very generous sponsorship agreements.

Under these circumstances, there is also no urge to further regulate football activities other than with the FLF Regulations and Article L-1216 of the Luxembourg Labor Code setting the conditions for a sportsman to be eligible for an employment contract (professional status) under Luxembourg Law. Those without a professional status are considered to be service providers, with the uncertainties associated with this status such as the lawful early termination of the contractual relationship.

The few players who have an employment agreement are usually of foreign nationality7, generally raising the level of the BGL League with the experience they have acquired abroad. As a result, the football clubs with the most generous sponsors attract the best players, making it easier for them to dominate the national competitions and participate in European qualifiers for the Europa League or Champions League.

However, the imbalance of sponsorship agreements inevitably creates a discrepancy between Luxembourg football clubs, who then have divergent ambitions. While the “not-so rich” clubs focus on the development of their young talents, the wealthier clubs (who are dominating the national competitions and have easier access to the European qualifiers and of course the related participation money) are much more tempted by the idea of turning Luxembourgish Football into a profitable business.

The first attempt to do so in 2003 resulted in an investigation by the European Commission8 into the compatibility of the FLF’s Regulations on the licensing of players which originally provided for a player quota based on nationality and which prevented the wealthier clubs to field more high-quality foreign players. The investigation was launched on the basis of a complaint submitted by the Luxembourg football club, F91 Dudelange, and mainly concerned the compatibility of the FLF Regulations with EU rules on the free movement of workers and services (for more information, see here)9. As a result of this “indirect” investigation, the FLF decided to remove the quota on the basis of nationality.  However, the FLF left in place an obligation which did not discriminate on the basis of nationality but required clubs to field at least seven players who obtained their first player license with a Luxembourg football club (equivalent to the UEFA “home-grown player”- rule)10.

Whereas in other parts of Europe, the purpose of the home-grown player rule is to support the promotion and protection of quality training for young footballers in Europe and increase the competitive balance between clubs, the Luxembourg player quota based on nationality was in fact introduced to promote Luxembourgish players who would eventually form the national football team11.

If the player quotas based on nationality was abandoned, Luxembourg’s football federation still faces controversy by certain football clubs with regard to the player quota based on first license players12, as being too restrictive and ineffective considering that the footballers trained in Luxembourg (first license players) are either good enough to join foreign leagues or not good enough to play in the BGL-League.

It has to be observed that the European Commission did not take a formal position on the actual legality of the FLF’s (new) regulations under competition law, so that questions on its legality may still be raised.

The system has recently been revised via a national referendum in order to reduce the first license quota from 7 to 5. It is expected that with the reduction of the quota, applicable as from 1 July 2022, the football level will increase (as more foreign and qualitative players are allowed to be fielded) which is of course a fundamental element towards professionalization.

However, the reduction of the quota will only have a limited impact, if the clubs can only rely on the traditional and limited funding sources (i.e. sponsors).

The Need For Institutional Transformation And Commercial Processes

It is no secret that money is always flowing for the most profitable football clubs in the world, such as Real Madrid or Chelsea F.C. who have high profile backing and attract an incredible number of fans to their stadiums and TV sets, especially during tournaments like the Champions League.

If clubs are making huge profits, it is because they are incorporated as commercial companies with a profit-oriented business model. Thanks to the large sums invested in stadiums, player contracts, staff etc. it is possible for them to develop and sell football and its derivative products.

If permitted in Luxembourg, a trading company could in fact, via adapted agreements, allow the football clubs to exploit the entire economic aspects of their operations, particularly with regard to the marketing and management of audiovisual exploitation rights (media rights).

The commercial business model could take different forms, with corporate set-ups allowing private or public investors to acquire shares in the company. The funding base could also be limited in different ways to avoid an external takeover, by for example providing that a club may not hold less than a certain percentage of the capital and voting rights of the commercial company that was established to that effect (as is the case in Germany13).

Given that in Luxembourg the government makes contributions to the development of sports in essentially a subsidiary and complementary manner, the sports federations enjoy a large degree of autonomy when it comes to promoting their sport14. Accordingly, the decision to commercialize football in Luxembourg will have to be taken at the level of the FLF and its member clubs in cooperation however with the national Olympic committee, who represents the interests of sports to official, public and private authorities and institutions15.

The reconfiguration from a non-profit model to a revenue-generating entity will be a huge challenge, but the denial to commercialize football in Luxembourg is in the author’s view no longer justified when today FLF counts more than 45,000 registered members (more or less 7% of the population).

This number unfortunately does not coincide with the number of spectators attending BGL League match days. The record number of spectators for the 2021-2022 season was for the game between FC Differdange 03 and FC Progrès Niederkorn, with just 1877 spectators16. Also, the Luxembourg Cup Final, held in the newly built stadium (“Stade de Luxembourg”), between the 2022 championship winner, F91 Dudelange, and Racing Football Club Union Luxembourg attracted not more than 3531 paying supporters17.

It quickly becomes clear that while there is a market for Luxembourg football, there is currently no active marketing strategy behind the ambition to increase the value of the product.

Developing Marketing Strategies And Raising Political Interest

Since Luxembourgish football clubs are not profit-oriented entities, marketing concepts have been essentially non-existent.

The correlation between lack of attractiveness and visibility also explains the current difficulty of the championship to guarantee its broadcast on television. With such poor results in terms of attendance at matches, the reluctance of RTL (the Luxembourg-based international media conglomerate) to pay a certain price to obtain rights can be easily understood.18

Today, Luxembourg football clubs do not generate any revenues from broadcasting at all.

While it is expected that the level of football will rise with the reduction of the quota based on first license players, it is at the same time feared that the number of fans will drop as less domestic and familiar players are fielded. This would then negatively affect fan identification and fan engagement, a second fundamental element of a successfully working professional football league.

Fan identification with a club is generally led by tradition and culture developed by the club over a long period of time. This includes the preference for young talented players over high-profile stars and foreign players. With a very underdeveloped football culture the Luxembourgish football clubs would have to take new initiatives to boost fan engagement and lead to new income streams (such as merchandising, branding etc.) if they ever want to make profits through football.

Not everything, however, is controlled by the FLF. This includes the stadiums in which the clubs play, which are owned by Luxembourgish communes (i.e. administrative areas19). In 2018, the major sponsor of F91 Dudelange wanted the commune of Dudelange to make concrete proposals to build a new football stadium for its team. As the commune’s proposals of renovating the stadium instead of constructing a new one were not satisfactory to meet the ambitions of the sponsor, the latter withdrew from the club. In reality, due to the low attendance of spectators on games, combined with the non-profit oriented FLF Regulations, there is no real interest for the communes to invest in the infrastructure.

It will therefore be necessary to involve the communal politicians in the negotiations leading to the professionalization of football in Luxembourg.

Capitalising On Sporting Momentum

Overall, it can be observed that Luxembourg football is improving in quality, for example with the first-time qualification of the Luxembourg U-17 national team to the European U-17 championship in Israel, or the qualification of the Luxembourg championship winner F91 Dudelange, for the 2018–19 UEFA Europa League (becoming the first Luxembourg club to reach the group stage of a European competition). F91 Dudelange also made the 2019–20 UEFA Europa League group stage where they became the first team from Luxembourg to win a game in the group stage after an amazing 4–3 victory over APOEL of Cyprus

Also, after UEFA added the “Conference League” as the third-tier European competition, with the ambition of giving clubs from lower-ranked UEFA member countries a chance of progressing beyond their customary elimination from the Champions League and Europa League, a new level playing field has been created. This is suitable for Luxembourg football clubs to compete in as they are often eliminated early from the qualifying rounds of Europa League or Champions League.

When agreeing on commercializing football in Luxembourg, the stakeholders will also have to decide whether or not a professional league is going to be profitable with 16 teams, or if a league with a reduced number of teams would not be the better option.

Whatever the solution may be, football is an international event and currency that can entertain athletes, customers, suppliers and business partners, and Luxembourg and its communes have a highly interesting market population, be it a bank or a 7-year-old kid.

Therefore, it is in the author’s view just a matter of time before Luxembourg has its own professional football league.

For further information, please contact our author :

Me Danira Mustafic – Avocat à la Cour

danira.mustafic@brucherlaw.lu

2022-06-20T16:41:37+02:00 June 20th, 2022|