““General Overview of Brazilian Sports General Overview of Brazilian Sports LawLaw””

lcastro@ibdd.com.brlcastro@ibdd.com.br

Luiz Roberto Martins CastroLuiz Roberto Martins Castro

IntroductionIntroduction

Law 9.615/98 - known as “Lei Pelé”

Regulates all aspects of sports in Brazil. Embraces general rules about

Brazilian Sports Law.

Two major alterations as of its publication. (Law 9.981/00 and Bill

of amendment 2.141/01).

““Lei Pelé’s” major aspects Lei Pelé’s” major aspects

Brazilian internal sports organizationBrazilian internal sports organization

Establishment of leaguesEstablishment of leagues

Establishment of for profit sports enterprise organizationsEstablishment of for profit sports enterprise organizations

Labor contract rules Labor contract rules

Assignments of labor contracts and trading athletesAssignments of labor contracts and trading athletes

Arena rightsArena rights

Insurance policies for athletesInsurance policies for athletes

Disciplinary codesDisciplinary codes

Sports courts composeSports courts compose

Will be discussedWill be discussed

Will not be discussedWill not be discussed

Establishment of Leagues Establishment of Leagues

Article 20 and its 5 subsectionsArticle 20 and its 5 subsections

Allows all clubs that take part in any national or Allows all clubs that take part in any national or regional competition and are members of the Brazilian regional competition and are members of the Brazilian National Sports System to found leagues.National Sports System to found leagues.

The leagues are private legal entities, and may, among The leagues are private legal entities, and may, among other issues, negotiate on behalf of their members other issues, negotiate on behalf of their members sponsorship agreements, advertising and broadcasting sponsorship agreements, advertising and broadcasting contracts.contracts.

Establishment of Leagues Establishment of Leagues

Article 20 and its 5 subsectionsArticle 20 and its 5 subsections

The establishment of leagues must be notified to the The establishment of leagues must be notified to the national sports administration entities - NSAE (i.e. national sports administration entities - NSAE (i.e. Federations and Confederations). Such leagues are Federations and Confederations). Such leagues are totally independent from the NSAE. totally independent from the NSAE.

Affiliation with a league does not imply in disaffiliation Affiliation with a league does not imply in disaffiliation of the NSAE. The club may participate in competitions of the NSAE. The club may participate in competitions organized by both entities, without legal restriction. organized by both entities, without legal restriction.

Establishment of for profit Sports Establishment of for profit Sports Enterprise Organization Enterprise Organization

Article 27 its 2 subsections, 27A and its 5 Article 27 its 2 subsections, 27A and its 5 subsectionssubsections

All entities that take part in professional athletes All entities that take part in professional athletes competitions are allowed to establish themselves as for-competitions are allowed to establish themselves as for-profit enterprises.profit enterprises.

The entity that establishes itself as for-profit enterprise The entity that establishes itself as for-profit enterprise is not allowed, except if approved by the general is not allowed, except if approved by the general meeting of the entity, to use its assets to meeting of the entity, to use its assets to

subscribe its capitalsubscribe its capital

offer as warranty offer as warranty

Establishment of for profit Sports Establishment of for profit Sports Enterprise Organization Enterprise Organization

Article 27 its 2 subsections, 27A and its 5 Article 27 its 2 subsections, 27A and its 5 subsectionssubsections

Neither natural person or legal entity is allowed to Neither natural person or legal entity is allowed to own stocks or quotas of more than one club that own stocks or quotas of more than one club that disputes the same professional competition. Exception disputes the same professional competition. Exception for this prohibition are:for this prohibition are:

sponsorshipsponsorship

stadiums administrationstadiums administration

licensinglicensing

broadcastingbroadcasting

The infringement of this prohibition implies the The infringement of this prohibition implies the suspension of the clubssuspension of the clubs.

Establishment of for profit Sports Establishment of for profit Sports Enterprise Organization Enterprise Organization

Article 27 its 2 subsections, 27A and its Article 27 its 2 subsections, 27A and its 5 subsections5 subsections

All enterprises that detain concession, All enterprises that detain concession, permission or authorization to explore TV or permission or authorization to explore TV or radio broadcasting, are prohibited to sponsor radio broadcasting, are prohibited to sponsor any team.any team.

Labor Contract Rules Labor Contract Rules

Article 28 and its 5 subsectionsArticle 28 and its 5 subsections

This article stipulates the most relevant This article stipulates the most relevant aspects of the Professional Athlete’s Labor aspects of the Professional Athlete’s Labor Contract (“PALC”), that are:Contract (“PALC”), that are:

all PALCs must be written and co-signed by all PALCs must be written and co-signed by athlete and a club, or a club enterprise;athlete and a club, or a club enterprise;

payment for the service must be clearly stated in payment for the service must be clearly stated in the contract; the contract;

penalty clause in cases of defaulting, breaching of penalty clause in cases of defaulting, breaching of contract and unilateral rescission of the contract.contract and unilateral rescission of the contract.

Assignments of labor contracts and Assignments of labor contracts and trading athletestrading athletes

Subsection 2 of article 28Subsection 2 of article 28

This subsection has abolished the named “Passe”.This subsection has abolished the named “Passe”.

“ “Passe” was a legal determination that an athlete Passe” was a legal determination that an athlete would remain “tied” to the club even after the would remain “tied” to the club even after the termination of his/her labor contract. Therefore a tie-termination of his/her labor contract. Therefore a tie-release amount was due to the club by another club release amount was due to the club by another club if the latter whishes to offer the Athlete a new labor if the latter whishes to offer the Athlete a new labor contract even if this offer happens after the contract even if this offer happens after the termination of the labor contract.termination of the labor contract.

Assignments of labor contracts and Assignments of labor contracts and trading athletestrading athletes

Article 28 and its 5 subsectionsArticle 28 and its 5 subsections Penalty clause amount:Penalty clause amount:

Will be freely stipulated by the parties, but limited to the Will be freely stipulated by the parties, but limited to the amount of 100 times the annual wage and benefits of the amount of 100 times the annual wage and benefits of the athleteathlete

yearly automatic reduction:yearly automatic reduction:

10% as of the first year10% as of the first year

20% as of the second year20% as of the second year

40% as of the third year40% as of the third year

80% as of the fourth year80% as of the fourth year

In the event of international transfer, the penalty In the event of international transfer, the penalty clause may not be subjected to any limitation or yearly clause may not be subjected to any limitation or yearly reductionreduction

Assignments of labor contracts and Assignments of labor contracts and trading athletestrading athletes

Article 29 Article 29 The club that has “discovered and formed” the player The club that has “discovered and formed” the player is allowed to executes with him, his first agreement, is allowed to executes with him, his first agreement, which can not last more than 5 (five) years.which can not last more than 5 (five) years.

The limit of the penalty clause in this special situation The limit of the penalty clause in this special situation is 200 (two hundred) times player’s wage and benefitsis 200 (two hundred) times player’s wage and benefits

By the time of termination of the first agreement By the time of termination of the first agreement executed between club and player, if the club continue executed between club and player, if the club continue to pay his wage for a period of 6 (six) months after its to pay his wage for a period of 6 (six) months after its termination, in the event of transfer for an other club, the termination, in the event of transfer for an other club, the limit of the penalty clause is 150 (hundred and fifty) limit of the penalty clause is 150 (hundred and fifty) times player’s wage and benefits.times player’s wage and benefits.

Assignments of labor contracts and Assignments of labor contracts and trading athletestrading athletes

Article 30Article 30 An athlete’s labor contract may not last for a period An athlete’s labor contract may not last for a period shorter than 3 (three) months and longer than 5 (five) shorter than 3 (three) months and longer than 5 (five) years.years.

Article 31Article 31In the event of non-payment of 3 (three) consecutive In the event of non-payment of 3 (three) consecutive months of wages, the athlete is allowed to unilaterally months of wages, the athlete is allowed to unilaterally terminate the agreement without becoming liable to pay terminate the agreement without becoming liable to pay any fine.any fine.

Article 38Article 38Every assignment of rights of a PALC or a transfer of Every assignment of rights of a PALC or a transfer of an athlete to another club must have his/her written prior an athlete to another club must have his/her written prior approvalapproval

Arena rightsArena rights

Article 42 and its first subsectionArticle 42 and its first subsection Arena is a personal right that an athlete has due to the Arena is a personal right that an athlete has due to the use of his image by the club. The club has the right to use of his image by the club. The club has the right to negotiate the broadcasting of its matches and negotiate the broadcasting of its matches and participation on championships. However, pursuant to participation on championships. However, pursuant to subsection 1, 20% (twenty percent) of the income related subsection 1, 20% (twenty percent) of the income related to the broadcasting of the matches must be equally to the broadcasting of the matches must be equally distributed to all athletes of the team.distributed to all athletes of the team.

The amount of the Arena right can be altered by Union The amount of the Arena right can be altered by Union convention.convention.

Insurance Policies for Athletes Insurance Policies for Athletes

Article 45Article 45 The insurance policies must cover personal and The insurance policies must cover personal and occupational accidents.occupational accidents.

The indemnity must correspond to the negotiated year-The indemnity must correspond to the negotiated year-wages of the Athlete.wages of the Athlete.

Problem, in Brazil nowadays there is no insurance Problem, in Brazil nowadays there is no insurance company that has the modality of Athlete’s insurance. company that has the modality of Athlete’s insurance.

Instituto Brasileiro de Direito DesportivoInstituto Brasileiro de Direito Desportivo

Brazilian Sports Law InstituteBrazilian Sports Law Institute

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