“General Overview of Brazilian Sports Law ”

“General Overview of Brazilian Sports Law” Luiz Roberto Martins Castro lcastro@ibdd.com.br

Introduction 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 • Brazilian internal sports organization • Establishment of leagues • Establishment of for profit sports enterprise organizations • Labor contract rules • Assignments of labor contracts and trading athletes • Arena rights • Insurance policies for athletes • Disciplinary codes • Sports courts compose • Will be discussed • Will not be discussed

Establishment of Leagues • Article 20 and its 5 subsections • Allows all clubs that take part in any national or regional competition and are members of the Brazilian National Sports System to found leagues. • The leagues are private legal entities, and may, among other issues, negotiate on behalf of their members sponsorship agreements, advertising and broadcasting contracts.

Establishment of Leagues • Article 20 and its 5 subsections • The establishment of leagues must be notified to the national sports administration entities - NSAE (i.e. Federations and Confederations). Such leagues are totally independent from the NSAE. • Affiliation with a league does not imply in disaffiliation of the NSAE. The club may participate in competitions organized by both entities, without legal restriction.

Establishment of for profit Sports Enterprise Organization • Article 27 its 2 subsections, 27A and its 5 subsections • All entities that take part in professional athletes competitions are allowed to establish themselves as for-profit enterprises. • The entity that establishes itself as for-profit enterprise is not allowed, except if approved by the general meeting of the entity, to use its assets to • subscribe its capital • offer as warranty

Establishment of for profit Sports Enterprise Organization • Article 27 its 2 subsections, 27A and its 5 subsections • Neither natural person or legal entity is allowed to own stocks or quotas of more than one club that disputes the same professional competition. Exception for this prohibition are: • sponsorship • stadiums administration • licensing • broadcasting • The infringement of this prohibition implies the suspension of the clubs.

Establishment of for profit Sports Enterprise Organization • Article 27 its 2 subsections, 27A and its 5 subsections • All enterprises that detain concession, permission or authorization to explore TV or radio broadcasting, are prohibited to sponsor any team.

Labor Contract Rules • Article 28 and its 5 subsections • This article stipulates the most relevant aspects of the Professional Athlete’s Labor Contract (“PALC”), that are: • all PALCs must be written and co-signed by athlete and a club, or a club enterprise; • payment for the service must be clearly stated in the contract; • penalty clause in cases of defaulting, breaching of contract and unilateral rescission of the contract.

Assignments of labor contracts and trading athletes • Subsection 2 of article 28 • This subsection has abolished the named “Passe”. • “Passe” was a legal determination that an athlete would remain “tied” to the club even after the termination of his/her labor contract. Therefore a tie-release amount was due to the club by another club if the latter whishes to offer the Athlete a new labor contract even if this offer happens after the termination of the labor contract.

Assignments of labor contracts and trading athletes • Article 28 and its 5 subsections • Penalty clause amount: • Will be freely stipulated by the parties, but limited to the amount of 100 times the annual wage and benefits of the athlete • yearly automatic reduction: • 10% as of the first year • 20% as of the second year • 40% as of the third year • 80% as of the fourth year • In the event of international transfer, the penalty clause may not be subjected to any limitation or yearly reduction

Assignments of labor contracts and trading athletes • Article 29 • The club that has “discovered and formed” the player is allowed to executes with him, his first agreement, which can not last more than 5 (five) years. • The limit of the penalty clause in this special situation is 200 (two hundred) times player’s wage and benefits • By the time of termination of the first agreement executed between club and player, if the club continue to pay his wage for a period of 6 (six) months after its termination, in the event of transfer for an other club, the limit of the penalty clause is 150 (hundred and fifty) times player’s wage and benefits.

Assignments of labor contracts and trading athletes • Article 30 • An athlete’s labor contract may not last for a period shorter than 3 (three) months and longer than 5 (five) years. • Article 31 • In the event of non-payment of 3 (three) consecutive months of wages, the athlete is allowed to unilaterally terminate the agreement without becoming liable to pay any fine. • Article 38 • Every assignment of rights of a PALC or a transfer of an athlete to another club must have his/her written prior approval

Arena rights • Article 42 and its first subsection • 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 negotiate the broadcasting of its matches and participation on championships. However, pursuant to subsection 1, 20% (twenty percent) of the income related to the broadcasting of the matches must be equally distributed to all athletes of the team. • The amount of the Arena right can be altered by Union convention.

Insurance Policies for Athletes • Article 45 • The insurance policies must cover personal and occupational accidents. • The indemnity must correspond to the negotiated year-wages of the Athlete. • Problem, in Brazil nowadays there is no insurance company that has the modality of Athlete’s insurance.

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“General Overview of Brazilian Sports Law ”