With the economic value of sports increasing, a more transparent and mature legal structure is called for in China to better regulate sports as an industry. 

In October 2014, the state council released a guideline to boost China’s sports industry, titled Opinions on Accelerating the Development of Sports Industry and Promoting Sports Consumption (or Guofa [2014] No. 46.) 

One main target specified in the document is to increase the overall size of the sports industry to more than 5 trillion yuan ($750 billion) by 2025 and for it to become a driving force to promote sustainable social and economic development in China. 

“This is regarded as a milestone in sports development in China, as the government is encouraging individuals and companies to exploit the business side of sports. While tapping the value in sports, we will see more disputes over various kinds of contracts; hence, we see the need for a more sophisticated regulatory environment here,” says Dong Shuangquan, a partner at Great Wall Law Firm and the founder of the Chinese Sports & Law Research Centre. 

One of Dong’s current routine tasks involves dealing with contract compliance among players and coaches as legal awareness is rising. 

“Before, we saw contracts with vague terms a lot and those contracts were usually drafted without a sports lawyer involved,” says Dong. “More international football players now come to China and some join our local clubs and they usually come with their personal legal teams. This actually largely helps increase legal awareness in the mind of not only individual players but also related companies or clubs in China.” 

LONG ROAD AHEAD 

Despite such progress, there is still a long way ahead for China to create a mature legal structure in sports, and one critical step is to update related regulations that are antiquated. 

For the time being, the Law of the People’s Republic of China on Physical Culture and Sports, which was adopted in 1995 and updated only once in 2009, is the basic legal framework in the country. However, along with economic development and an open capital market, new issues that are not covered by the 56 clauses of the existing law have emerged. 

“Legal experts have been calling for an updated version to cope with China’s current sports development,” said Dong. “At the same time, we would like to see detailed guidelines focusing on those segments which have seen more disputes and negative influence being issued and implemented.” 

Examples of how this plays out in real life have made their way to the headlines, particularly during and after the Olympic Games in Rio de Janeiro in August. 

Chinese world champion swimmer Ning Zetao made a splash as rumors spread that he was disqualified from the Rio Olympics over commercial disputes with the national sports authorities. Ning was reportedly involved in a dispute with the National Swimming Administrative Center after signing with a dairy brand (Ning-Yili Group) as his personal sponsor, which is the rival brand of the national team’s dairy sponsor (China Mengniu Dairy Company). 

“We do not really have a clear scheme for managing players’ commercial activities. There is a measure document about it, but it was issued a decade ago and is too old for these new problems,” says Dong. 

Ning’s case is hardly the only one, although it is unusual in the level of attention it received. Chinese players usually choose to give up their personal commercial activities if there is a conflict of interest with those of their teams. In China, whether a player can participate in a competition largely depends on the team and related authority. 

“We’ve seen very detailed clauses about balancing sponsorship between individual players and their teams or clubs in countries like the U.K., Norway, and the Netherlands. Some even clearly state how many personal sponsors one player can sign apart from his team’s main sponsor. However, we have not seen such rules in China. Also, when such disputes happen, we do not have a sports arbitration body that could quickly settle these cases and protect the rights of our athletes,” said Dong. 

FOOTBALL EVOLVING 

One key focal point of this ongoing evolution of sports law is football. Although the national team’s performance on the football pitch has long been derided by locals, football is still the most popular sport in China, as in many other countries around the world. 

A comparison could give a picture of Chinese football fans’ enthusiasm. Chinese Super League (CSL) footballers’ average salaries are amongst the highest in Asia. Worldwide, they are ranked 15th highest. In the January 2016 transfer window, clubs in the CSL paid significantly more for players than any other league did, spending 331 million euro ($365 million). 

“Football is the most commercialized sports in the country. This leading position can also be seen from the government’s ambitious reform plan on it,” says Dong. 

On March 16, 2015, the Chinese government released a reform plan for sports in China, with a particular focus on football. 

Under the Football Reform Plan, the first basic principle is “to integrate the international experiences with specific Chinese circumstances; to learn from the experiences of those football advanced countries based on the specific situations of China.” 

“Successful football sector reform in China will not only set a great example for other sports in China to follow in their respective reforms but also encourage more private and international investment in the Chinese sports market,” says Liu Chi, a Chinese sports and entertainment lawyer who is a partner at Jun Ze Jun Law Offices. 

“Improving governance structures among China Football Association, China Super League, and professional football clubs will be one of the priorities for the football reform. A good legal framework that combines international best practices and Chinese characteristics will be one of the key benchmarks of Chinese football development.” 

Another focus is on media rights in broadcasting competitions. Media organizations usually use large amounts of money to bid for exclusive broadcasting rights, but their contributions cannot be safeguarded under a specific law. 

Last October, China Sports Media Ltd. bought the media rights for CSL for the next five years for 8 billion yuan, and then in February distributed the exclusive online broadcasting rights to LeSports for two years, from 2016 to 2017, for 2.7 billion yuan. 

In 2015, a district court in Beijing issued an important judgment on the protection of intellectual property in sports broadcasting rights. Sina. com brought claims against ifeng.com for infringing Sina.com’s exclusive broadcasting rights in CSL games. Ultimately, the court sided with Sina.com. 

“For the time being, the legal basis for such cases is still copyright law, which does not have a clear definition for sports competition broadcasting rights. The best solution is to add audiovisual work in the copyright law,” says Dong.