Ph.D. A.I. Ponkina
Dr.Hab., Professor I.V. Ponkin
Kutafin Moscow State Law University (MGYuA), Moscow

Keywords: professional sport, sport, public administration in the field of sport, sports law, sports regulation, financing of professional sport.

Introduction

Over the past 20-25 years there has been a massive worldwide transformation of the infrastructure, used in professional sport, with the direct financial participation of the state.

Nowadays, however, most of European professional sports clubs have already moved away from the previously existed since the 1970s financing structure "Spectator, Subvention, Sponsor, Local resident". In particular, for example, the level of subventions received from the government has been significantly reduced or the government funding of professional sports was banned altogether [1].

Funding of professional sports activity can often be reduced to two main areas. Firstly, it is the funding of the construction of the necessary sports infrastructure and in this case financial participation of the government (which, by realizing it, can pursue other purposes) is the most preferable option. Secondly - it is the direct financing of the sports clubs’ activities. Methods of financing of professional sport have changed in the modern era, and more often there can be seen a shift from the traditional model of funding, which was based on the income received from the spectators of sports events, government subventions and sponsorship funds to a new financial model, where television, entrepreneurs, merchandising, as well as the sale of services via the Internet, public offering of shares are new major sources of income. While the role of public funding remains unchanged or decreases steadily [2, p. 9–10].

The issue of the extent of obligation of the state funding of professional sports and the limits of such financial participation of the state is one of the most difficult in the science of sports law. The international experience on the considered range of issues appears to be of a significant interest.

Sports legislation of a number of foreign countries has particular guarantees of funding of professional sports. Below we will discuss the main approaches to the financial participation of the state in professional sports activities defined at the legislative level.

Guaranties, conditions and limitations of public financing of professional sport

Analysis of foreign legislation on sport reveals the following approaches to securing guarantees, conditions and restrictions (subjective and objective) of the public funding of professional sport:

1). The absence of direct prohibition on funding of professional sport. The most common examples of the establishment of the legal capabilities and conditions for financial support of professional sport by the state are quite abstract norms that involve the need to support all sports in general without establishing specific restrictions on funding of professional sport. Here are the examples: Article 5 of the Federal Law of Canada dated 19.03.2003 (as amended on 17.10.2011) "On sports activity and sport", paragraph VI articles 3 and 32 of the General Law of Mexico on 05.06.2013 (as amended on 09.05.2014) "On physical culture and sport", art. 29 p. 1 of the Law of Poland dated 25.06.2010 (recently amended) "On sport", p. 1 art. 7 of the Law of Portugal № 5/2007 dated 16.01.2007 (as amended on 06.09.2013) "On the basics of sports activity and sport", §§ 1, 7-9 the Law of Finland № 1054 dated 18.12.1998 (as amended on 13.12.2013) "On the legal regulation of sport", art. 5, 12, 13, 40J, 40K and 43 of the Law of Chile from 30.01.2001 (as amended on 25.03.2014) "On Sport".

2). Rules directly providing the possibility or necessity of public financial support of professional sport. The legislation of a number of states can provide guarantees securing the financial support of professional sport by the state. However, it should be noted that such guarantees are often a mere mentioning of professional sport among the possible areas that require funding from the state budget. It is reasonable to mention paragraph 1, § 1 of the Federal Law of Austria "On promoting sport by the federal government" 2013, paragraph. 2, article 1 of the Law of Spain № 10/1990 dated 15.10.1990 (as amended on 09.17.2014) "On sport" paragraph «m» art. 8, 15^th additional provision and part 1 of the third transitional provision of the Law of Spain № 10/1990 dated 15.10.1990 (as amended on 09.17.2014) "On Sport", art. 86 and 84 of the General Law of Mexico dated 05.06.2013 (as amended on 05.09.2014) "On physical culture and sport".

3). Restrictions on public financing of professional sports activity that does not correspond to certain principles. As an example there is paragraph 1, § 21 from the Austrian Federal Law 2013 "On promoting sport by the federal government".

4). Restrictions on public financing of professional sports activity applied by its specific direction and its specific objectives. As a rule, the purposes for which the public funding for professional sports is provided, are related to the achievement of any significant national interests (parts 1 and 2, § 20 and § 46 of the Federal Law of Austria 2013 "On promotion of sport by the federal government", art. 28 and p. 7, art. 29 of the Law of Poland dated 25.06.2010 (recently amended) "On Sport" p. 1 and 2, Art. 46, p. 5 and 6 of art. 8 of the Law of Portugal № 5/2007 dated 16.01.2007 (as amended on 06.09.2013) “On the basics of sports activity and sport”, art. 43 of the Law of Chile on 30.01.2001 (as amended on 25.03.2014) "On Sports", art. 3 and 4, p. 2, art. 5, p. 1, art. 6, p. 1 and 2 art. 16, Art. 11, p. 3 of art. 26, p. 1, art. 28, p. 1 and 2 of art. 32 of the Union Law of Switzerland from 17.06.2011 "On promoting sports and physical activity",

5). Restriction of the possibilities of public financing of professional sports activity with a view to preventing abuse. As examples there are paragraphs 1 and 2 art. 36 of the Law of Spain № 10/1990 dated 15.10.1990 (as amended on 17.09.2014) "On Sport", p. 4 art. 8 of the Law of Portugal № 5/2007 dated 16.01.2007 (as amended on 06.09.2013) "On the basics of sports activity and sport”.

Conclusion

As the final conclusions we present an overview of some arguments against the public financial support of professional sport as well as arguments in favor of providing specific financial support for professional sport.

Arguments against the public financial support of professional sport. Speaking of the existing approaches to the issue of the necessity and possibility of financial support by the state of professional sport, first of all, we should refer to the point of view according to which the state should not fund professional sport at all or exercise it in a very limited fashion. This follows from the imperative that any major line of investments of public funds cannot violate the principle of neutrality of the state. And this neutrality would be violated if the state took steps, using its enforcement authority and providing all sorts of privileges in order to promote one lifestyle or activity at the expense of the other. There are other social benefits (education, medicine, etc.), the financing of which is much more reasonable [4, p. 25–26].

The nature of professional sport is aimed primarily at ensuring the earning of the subjects of professional sport and often exploits an entertainment aspect of sports, rather than aims directly at promoting implementation of socially significant interests [4, p. 28]. In determining to what extent it is appropriate for the state to fund professional sports activities, we should pay attention to the economic aspect. Typically, the construction of sports stadiums and the creation of professional sports teams represent the level of economic development of the state, and not the means of its increasing [3, p. 4], that is, such measures may be taken by the state only when other expenditure items are secured.

The US experience on this issue demonstrates that the public authorities, investing in corresponding infrastructure projects, would get fairly minor income from such investments [5]. Moreover, investment in the development of professional sport by local public authorities could lead to negative consequences in some cases. For example, analysis of the economic situation in 37 US cities with their own baseball, football and basketball teams has revealed that sports events had no positive effect on their local economy, Moreover, the net economic impact of professional sport in Washington DC and in 36 other cities, in which professional sports teams had existed for more than 30 years, resulted in the reduction of the real per capita income across the urban agglomeration [4, p. 29].

Doubts about the appropriateness of financing of professional sport may be caused by some other factors, such as, for example, possible abuse by professional sports clubs, as well as the dynamics of the development of activities in its framework and its features caused by the specifics of such sports. There are representative examples of the US and Canada, where once there were serious doubts about the feasibility of public financing of professional sport. First of all, these doubts were intensified by the increase in the number of sports teams in professional sports leagues, in particular, in an attempt to increase their own revenue, or to increase "marketability" of the respective sports. For example, in 1995 the US National Football League (NFL) increased the number of its football teams from 28 to 32, while a greater number of sports teams means more sports facilities to be build or reconstructed, including by leveraging public funds. In addition, difficulties in obtaining by the public authorities (mainly local public authorities) benefits of some kind from financing of professional sport have also been associated with frequent moves of professional sports teams from one locality to another [4, p. 23].

Arguments in favor of providing certain public financial support to professional sport. Legal and factual capabilities of providing certain financial support of professional sport also finds arguments arising from the need to understand the development of professional sport as a core of sport industry, that brings taxes in budgets of all levels, creates a lot of jobs, etc., arguments resulting from the understanding of the positive impact of the propaganda of professional sport to attract children and youth into mass sports, as well as from the understanding of the value of the level of development of professional sport to the international image of the state, and many other arguments. But this is a topic of another article.

References

1. Andreff, W. The Evolving European Model of Professional Sports Finance // <http://www.playthegame.org/news/news-articles/2002/the-evolving-european....
2. Avgerinou, V. The Economics of Professional Team Sports: content, trends and future developments // Statistical Modelling: An International Journal. – 2007. – Vol. 3. – № 1. – P. 5–18.
3. Baade, R.A., Matheson, V.A. Financing Professional Sports Facilities / North American Association of Sports Economists // <http://college.holycross.edu/RePEc/spe/MathesonBaade_FinancingSports.pdf>. – 33 P.
4. Murray, D. Reflections on Public Funding for Professional Sports Facilities // Journal of the Philosophy of Sport. – 2009. – № 36. – P. 22–39.
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