Sports rights for players in security transactions: legal aspects and economic prospects

Ahunzyanov Danis Fanisovich Postgraduate student; Faculty of Law; Saint Petersburg State University Leading Lawyer; Gazpromneft - Expert Solutions LLC 199034, Russia, St. Petersburg, line 8, 77, sq. 402 d.akhunzyanov@yandex.ru Other publications by this author

Today, the activities of professional sports clubs are entrepreneurial in nature and are aimed not only at achieving high sporting results, but also at systematically making a profit. It is natural to assume that in connection with the conduct of specific activities by professional participants in the sports market in such a market, special ways of ensuring the fulfillment of obligations may arise and be used, just as, for example, securitization, covenants, syndicated lending, performing a security function, have found their place in the financial market, taking into account the specifics of the relevant business ^[1].

Sports rights for players are usually understood as the totality of the club's powers in relation to a player, providing the opportunity to include them in their team; participation of players in competitions decided by the club; assigning roles and positions to players in the team, including the formation of the starting line-up; moving players within the club structure (to the reserve or to the farm club); providing players on loan to other teams; termination of the contract with the player in case of his exclusion from the main squad; transfer of the player to another club on a permanent basis; use of the player's first name, last name, voice and signature in the club's promotions ^[2].

In the current practice of sports clubs, the transfer of sports rights from one club to another is carried out through the conclusion of a transfer contract. It seems that sports rights to players can be not only the object of such a transaction as a transfer contract, which is by its nature an exchange transaction, but also act as the object of a security transaction. There are no legislative restrictions that would prevent such contractual arrangements. Confidence in the possibility of use is reinforced by the provisions of paragraph 1 of Article 329 and paragraph 2 of Article 421 of the Civil Code of the Russian Federation, according to which an open list of ways of securing obligations is established and the conclusion of contracts not provided for by law or other legal acts is permitted.

Modern legal science demonstrates a significant interest in studying the private law aspects of sports relations, which is confirmed by the presence of a number of scientific papers devoted to this issue. Within the framework of existing research, special attention is paid to contractual relations in the sports industry, which is reflected in the works of such scientists as A.Ya. Akhmedov ^{[3, 4]}, V.P. Vaskevich ^[5], S.V. Alekseev, M.O. Buyanova and A.V. Chebotarev ^[2]. An analysis of their work allows us to state that the main focus of the authors is on studying the legal nature of transfer contracts, while some other aspects of the use of sports rights remain without due attention.

In particular, there is practically no research on the application of sports rights in security transactions, which indicates that there is a significant gap in the scientific literature. This lack of scientific understanding underscores the relevance of this research, which, in the author's opinion, is able to attract the attention of specialists in the field of civil, business and sports law, as well as contribute to the development of theoretical and practical foundations for the regulation of sports relations.

At the same time, in the field of sports management, it is relevant to resolve the complex issue of evaluating and effectively using sports rights to players as economic assets of sports clubs. Despite their key economic role, the real liquidity and objective assessment of such assets can entail significant risks for the club. The variability of their value, the impact of external and internal factors, as well as difficulties in valuing assets raise questions about their rational use, and also cast doubt on the possibility of using sports rights to players as objects of security transactions.

However, modern research and international practice demonstrate a desire to improve methods for estimating the value of sports rights, including the introduction of machine learning algorithms to predict the success of transfers, which increases the attractiveness of their use not only in transfer transactions, but also in security transactions.

These trends make the chosen scientific field especially relevant and promising for study. The methodological basis of the study was the comparative legal method. In addition, general scientific methods such as the logical method, the system analysis method, and the modeling method were used in the article. The purpose of this article is to assess the potential for the use of sports rights to players as economic assets and the risks that may arise from such use, to study and demonstrate innovative and traditional methods for assessing the transfer and market value of sports rights to players. It seems that the use of sports rights in security transactions may become an economically attractive and justified solution for sports clubs seeking to improve their financial stability and reduce dependence on government funding.

Sports rights to players are classified as intangible assets on the balance sheets of sports clubs and represent a unique category directly related to human capital ^[6]. Unlike standard intangible assets such as utility models or trademarks, the value of sports rights to players depends on a number of variables, including athletic performance, age, physical health, and marketing attractiveness of the athlete, which gives the evaluation process a high degree of complexity and variability. At the same time, fluctuations in value caused by changes in physical (sports) fitness, regulatory regulation of leagues and federations, or global economic events require sports clubs and their management structures to have a deep understanding of both the sports and financial components of the market.

The author of this study adheres to the position that, in a broader economic context, sports rights can be used not only as part of transfers between clubs, but also as the basis for security transactions ^{[7, 8]}. Such use opens up new financial opportunities for clubs, helps to establish the financial stability of clubs and reduce dependence on government funding, since one of the key problems for domestic clubs is their unsatisfactory financial condition (for example, high dependence on budget funds and funds from state corporations in football) ^[9]. It is also noted in foreign literature that estimating the value of players can demonstrate a reliable indicator of the creditworthiness of a sports club, which opens up additional sources of financing for the latter ^[10].

Of course, it is necessary to take into account the risks associated with a potential decrease in playing characteristics or injuries to players, which somewhat weakens the attractiveness of providing sports rights as security. However, the improvement of methods for estimating the value of sports rights for players and the introduction of new technologies and machine learning contribute to increasing transparency and simplifying transactional processes, allowing, among other things, a more accurate and timely assessment of the value of sports rights. These innovations remind us of the strategic importance of sports rights as intangible assets that require careful and professional management in the financial planning of sports organizations.

Analyzing the economic significance of sports rights, it should be emphasized that their commercial attractiveness is not limited only to the receipt by the former club of a counter grant in the form of a transfer payment for the transfer of an athlete to a new sports club. Owning sports rights to a player provides clubs not only the right to "use" the professional skills of players, but also opens up opportunities to enhance team results, which, in turn, can significantly increase club revenues through increased ticket sales, sports paraphernalia, and television broadcast rights ^[11].

It is important to note that advertising contracts also serve as a significant source of financial income for clubs, and athletes acting as brand representatives effectively increase their marketing value and contribute to the growth of club revenues and reputation through agreements with sponsors and advertisers. At the same time, the international experience of the players and their achievements outside of domestic sports play an important role in increasing their transfer value, strengthening the team with their own playing qualities and expanding the global recognition of the club, which, as a result, stimulates the growth of both the national and international fan base, increasing, for example, sales of club paraphernalia outside national markets. ^[12].

It should be noted that such a multifaceted economic value of sports rights for players turns the latter into a unique asset capable of generating several revenue streams for sports clubs, thereby minimizing the risks associated with difficulties in their objective assessment. All this will require sports clubs not only to be legally aware, but also to integrate deep strategic approaches in marketing and management ^[13]. This multidimensional approach highlights the complexity and importance of sports rights in the context of a dynamically developing sports industry that requires a comprehensive scientific analysis and elaboration of legal regulations.

Before turning to the issue of methods for assessing the pricing of sports rights, let us note that there is a distinction between the market and transfer value of sports rights. Market value is usually defined as the approximate (estimated) amount at which a player could be sold on the open market based on his current athletic achievements, physical condition, and other professional characteristics. This cost is formed under the influence of publicly available information and analysis conducted by experts and analytical agencies such as Transfermarkt ^[14].

The transfer price, on the contrary, is determined in the course of specific negotiations between the interested clubs and may differ significantly from the market value. The transfer price is formed on the basis of a variety of factors, including not only the professional qualities and current condition of the player, but also the negotiating power of the clubs, the economic situation in the clubs, supply and demand in the market at a particular moment, as well as the strategic needs and financial capabilities of the club acquiring sports rights ^[15].

Despite these differences, we can agree with the position that the market value of sports rights and the potential transfer payment for the transfer of a player from one team to another category are comparable ^[16]. Thus, an analogy can be drawn between the market and transfer value of sports rights for a player on the one hand, and the cadastral and market value of real estate on the other. In both cases, one can distinguish between an assessment based on objective criteria/procedures (cadastral for real estate and market for sports rights) and an assessment based on market conditions, negotiating capabilities of the parties and other subjective factors such as the geography of the sale, liquidity assessment (market for real estate and transfer for sports rights).

In order to avoid terminological confusion and taking into account the fact that both the transfer value of sports rights and their market value are associated with an approximate estimate for a potential buyer, the article uses the category "value" without the prefix "market" as a universal term.

Turning to the issue of pricing sports rights for players, we note that one of the key problems in assessing their value is their objective assessment and profitability, while researchers are trying to identify appropriate objective pricing methods ^{[13, 17]}.

Methods of estimating the value of sports rights are also given special attention in foreign literature. In this regard, it is necessary to cite one of the modern and systematic studies devoted to the review of methods for estimating the value of football players, which covers various methodologies for estimating the value of football players. We are talking about the work of the "Determinant's of football players' valuation: a systematic review": the authors analyzed 29 scientific studies that used econometric models to estimate the value of players, as a result of which key variables influencing the valuation were identified, in particular, the age of players, the terms of their contracts and professional achievements. At the same time, foreign colleagues point out the need for further development of empirical research in this area in order to improve understanding of the mechanisms of market value formation in professional football ^[18].

In addition, attempts are being made in the scientific literature to evaluate other factors rather than focusing solely on the professional qualities and performance of an athlete, which may also affect the pricing of sports rights. Research in this area covers a wide range of variables, ranging from professional achievements and physical characteristics, to less obvious aspects, such as the appearance of an athlete, the negotiating positions of clubs ^{[19, 20]}.

Concerns about the unpredictability and volatility of the value of sports rights for a player can be overcome by improving quantitative analysis and machine learning techniques that provide more accurate and reliable estimates. As analytical methods improve and access to large amounts of up-to-date data increases, the accuracy of estimates of the value of sports rights improves significantly, which, in turn, expands the possibilities for using sports rights in security transactions.

Increasingly, we are talking about the development and improvement of analytics tools, the introduction of machine learning and artificial intelligence in the assessment and management processes, including sports assets. In this regard, it is impossible not to mention the article by foreign authors "Who Will Score? A Machine Learning Approach to Supporting Football Team Building and Transfers", which highlights the key role of learning and testing models based on data from open sources, which allows us to reliably assess the effectiveness of algorithms in the context of real-world scenarios. The results obtained demonstrate a high degree of forecast accuracy (about 84%), which illustrates the significant potential of machine learning to improve player recruitment and transfer processes ^[21].

The above-mentioned circumstances regarding the improvement of methods for estimating the value of sports rights for players can significantly strengthen the confidence of creditors and investors in such financial schemes (security transactions), improving financing conditions for sports clubs and increasing overall transparency and stability in the sports transfer market. Thus, the prospects for the use of sports rights in security transactions are particularly encouraging, which is supported by continuous improvement of valuation methods and in-depth study of market interaction mechanisms.

It is important to note that the methods of estimating the value of sports rights analyzed in this work can be applied not only to players whose sports rights have already been the subject of transfer transactions, but also to young players who have yet to enter the transfer market.

In summary, we note that the scientific literature pays special attention to the issue of pricing sports rights for players in the context of concluding transfer contracts. In the framework of this work, it was possible to emphasize the unique nature of such pricing, resulting from the complex interrelation of various variables, such as the age of athletes, their athletic achievements, physical condition and other factors. This versatility complicates the process of evaluating these rights and requires sports clubs to have a comprehensive understanding of the sporting and financial aspects of their activities.

We believe that the use of sports rights in security transactions will open up new opportunities to improve the financial stability of clubs and reduce their dependence on government funding. Of course, it is impossible to avoid the risks associated with changes in athletes' playing performance or possible injuries to players, which may reduce the security appeal of these rights. However, thanks to the development of assessment methods and the use of innovative technologies, it is possible to significantly increase transparency and simplify the process of assessing the value of sports rights. These innovations enhance the strategic importance of sports rights as intangible assets of clubs that require careful and professional management in the context of financial planning of sports organizations, which, in turn, may require support from the legal community in developing contractual structures that allow the use of sports rights to players as objects of security transactions.