Sports and Entertainment company Largadere has made and unusual step of directly communicating with members of the FIFA Council, after the Confederation of African Football (CAF) declined their request to address the Executive Committee (ExCo) scheduled to meet on 21st November 2019 in Cairo, Egypt.
In an unprecedented move, Largadere Sports and Entertainment (LSE) through their CEO Ugo Valensi and their head of Africa Idriss Akki, have protested CAF’s refusal to give them an audience, citing a telephone call with Secretary General Mouad Hajji.
“Following today’s telephone conversation with CAF Secretary General Mr. Mouad Hajji, we (LSE) take note of your refusal to allow our representatives to be heard by the CAF Executive Committee at its next meeting of 21st November 2019, as kindly as kindly requested in our letter of 15th November, to which you have not seen fit to respond to,” the letter reads in part.
“We very much regret this decision”, it adds.
On the 15th of November 2019, LSE had written a letter addressed to CAF President Ahmad Ahmad, protesting at the unilateral termination of the commercial and broadcasting contract between Largadere and CAF.
“It is therefore with sadness and frustration that we have experienced in recent weeks, with CAF unilaterally challenging our agreement, it being reminded that its detailed version was signed by the two parties just over three years ago,” the letter to Ahmad read.
CAF had in their decision to unilaterally terminate their contract with Largardere, cited a ruling by the Egyptian Competitions Authority (ECA) and the Common Market for East and Southern Africa (COMESA) recommendations, which had identified the process of acquisition of the contract as being anti-competitive, discriminatory and infringing on domestic laws.
On their part, Lagardere had extended an olive branch towards the new CAF dispensation, who rode into office on the promise of overhauling the entire contract, as captured in Ahmad’s electoral manifesto. Beginning in October 2017, an ad-hoc delegation comprising of 1st Vice President Constant Omari, 2nd Vice President Fouzi Lekjaa and member of the FIFA Council Hany Abourida had met with LSE officials, to negotiate contentious issues and balance out concessions.
LSE CEO Ugo Valensi, on whose watch they have lost the CAF contract.
Indeed progress was made with Lagardere conceding the terrestrial Free-to-Air rights for Sub Sahara Africa, which became effective in January 2019, which allowed CAF to directly exploit these rights via the African Union of Broadcasting (AUB), a move which was in part meant to help CAF recover outstanding amounts from collapsed media outfit LC2 to the tune of $20 million.
There was also a proposal to adjust the duration of contract which was due to expire in 2028 and reduce it by four (4) years to 2024, a proposal which hadn’t been finalised following delays on the part of CAF.
It is worth noting that Supersport, a pan African satellite broadcaster based in South Africa, has since challenged this state of affairs, and pulled the plug as regards to broadcasting CAF competitions, thereby locking millions of viewers out, which has in-turn undermined CAF competitions and sponsors who get mileage from such exposure.
Supersport have recently pulled out of several African markets citing financial constraints, following the upward review of the English Premier League (EPL) rights fees in the last bidding cycle. Ghana, Nigeria and Kenya were the first casualties of this development and it is widely speculated that they want to use this current impasse as a technicality to completely exit from broadcasting CAF competitions.
Supersport CEO Gideon Khobane. They want to exploit the current impasse between LSE and CAF to exit the African market and concentrate on their core-business which is promoting European sports in the continent.
Supersport’s departure would come as a big blow to African football, as they have been at the forefront in building domestic capacity for production and content generation, whose spin-offs have seen an overall improvement of quality and standards around the continent.
Attached are the minutes of meetings between CAF and Lagardere.
Record of Understandings reached during the CAF / Lagardère Sports (LS) meeting of 01/11/2018 in Rabat and the technical and additional meetings that followed on 02/11/2018 and 15-16 / 11/2018
Recital: As indicated by the representatives of LS in these meetings in particular, the points on which the representatives of LS agreed, particularly at the said meetings and mentioned in this Record of Understandings, have value, at this stage, of draft arrangements that LS is prepared to consider at the request of CAF, which should not be taken into account individually, but only in the context of a of an overall and final contractual arrangement; the latter remaining further conditioned, firstly, by its prior approval by the Egyptian Competition Authority and the COMESA Competition Commission in the light of the points raised by them concerning the CAF/LS contract of 28/09/2016, then by the approval of our group in compliance with the applicable procedures, and, finally, by the finalization and conclusion of the corresponding contractual amendment.
For their part, the CAF representatives indicated that they are able to reach an agreement with the Egyptian Competition Authority to respond to the points raised regarding the CAF/LS contract of 28/09/2016, if an acceptable compromise is found on the various topics discussed between CAF and LS, and do not believe it should therefore be necessary to condition an overall contractual arrangement to a prior approval by the Egyptian Competition Authority and the COMESA Competition Commission.
1/ Meeting CAF / LS of 01/11/2018 Attendees:
o For CAF :
Mr. Omari Constant Selemani, 2nd Vice-President of CAF
Mr.Hani AboRida, member of the CAF COMEX
Mr. Abdel Bah, CAF Marketing & TV Director
Ms. Achta Mahamat Saleh, CAF Head of Legal
o For LS:
Mr. Andrew Georgiou
Mr. Idriss Akki
Mr. Paul O’Dowd
Mr. Charles Questiaux Mr.Max Lebessou
Mr. Philippe Antoine
Excused: Mr. Amr Fahmy, Secretary General of CAF
NB: The order followed below and the related titles are those of the agenda proposed by CAF in its letter of 05/10/2018.
Reduction of the contract duration
o CAF and LS agreed on the principle of reducing the duration of the CAF/LS contract to
31/12/2024 under the following terms and conditions
- Since it would be found, following a debate allowing conflicting views, that LS has not met certain pre-defined objective criteria vis-à-vis CAF in the context of the execution of the CAF/LS contract, CAF may decide in the 7th year (2023) not to renew the contract beyond 31/12/2024;
- Otherwise, the contract will automatically continue beyond 31/12/2024, until its end in 2028;
- The assessment of whether the pre-defined objective criteria may or not may have been met should be made in the 7th year (2023);
- In the event of non-renewal, the “MINIMUM GUARANTEE OF REVENUES RECEIVED” would automatically be reduced by a sum of USD$400 million; while the methods of calculation and payment of LS’s commission for the sales contracts continuing beyond 31/12/2024 remain to be defined between CAF and LS, and CAF recognized and agreed that LS should continue to receive commission on such contracts.o The”technical”delegationsofCAFandLSareaskedtoexchangeandproposeobjectivecriteria that could be used as the basis for determining whether the contract is automatically renewed. Take-back by CAF of the terrestrial TV rights for the Sub-Saharan area
o CAF and LS agreed on the principle of the take-back by CAF of the right to commercialize the free terrestrial TV rights for the sub-Saharan zone as of the 2019 Super Cup (played in December 2018), with compensations for LS concerning such take-back and for the disengagement of LS from the outstanding amounts still owed to CAF and LS in the zone (LC2 and national TVs).
o The “technical” delegations of CAF and LS are asked to exchange and propose the financial terms corresponding to the aforementioned compensations.
Increase of the minimum guarantee because of the new format of the AFCON
CAF and LS again agreed (following the postponements requested by CAF) on the organization of tripartite working meetings between CAF, LS and each of the three main TV broadcast clients on the continent (beIN Media Group, Supersport and Canal + Afrique), to discuss with them a possible increase in contractual license fees due to the increase in the number of matches in the competition. CAF will let LS know as soon as possible the availability of its delegation for the practical organization of these meetings.
Exploitation of the digital matters
CAF and LS again agreed that it is necessary to take more account of digital aspects and to promote to the CAF COMEX the actions already taken by CAF and LS in this area. It is thus agreed that LS will organize in Accra at the next CAF COMEX meeting on 30/11/2018 a presentation of these actions (subject to confirmation by CAF).
New CAF website
CAF confirmed that the digital department of LS is tasked by CAF with a consulting mission for the invitation to tender and selection for the provider to be appointed for the purpose of creating and implementing a new CAF Website. In consideration for this specific advisory mission, CAF will pay LS a net fee of EUR €30 K in accordance with the quotation
- Bank guarantee from Lagardère SportsAs a bank guarantee is neither conceivable by its cost, nor justified because of the contractual advance payments system and the existing corporate guarantee already given by Lagardère Sports and Entertainment in the contract CAF/LS of 28/09/2016, CAF and LS agreed to reaffirm in the contractual amendment to be finalized the existence of such corporate guarantee by Lagardère Sports and Entertainment.
- Commission of Lagardère SportsLS confirmed that, if CAF so wishes, LS may propose to CAF an alternative commissioning model, based on a simple commission of business provider and the payment of fee packages corresponding to the additional services provided by LS to CAF, but without any minimum guarantee of revenues.
- Terrestrial TV rights for the North African areaBearing in mind that these rights (subject to the host country) are part of the contract with beIN Media Group, CAF and LS agreed that this topic should also be addressed during the tripartite working meeting between CAF, LS and beIN Media Group.
- Proposal for amending certain articles of the contractNothing has been communicated, but CAF indicated that these would only be points of minor detail. In the absence of clarification on this subject, LS indicated that it could not comment on this request, but reaffirmed that the proposed reduction in term was not an opportunity to redraft the remainder of the contract.
- Update on ongoing cases regarding the ECA and COMESA
o CAF stated that it had met and been in contact with the new ECA chairperson, with a view to having the ECA, if necessary, endorse the draft of contractual arrangement that CAF and LS may agree on.
o LS reiterated that the conclusion and validity of any draft of contractual arrangement will remain conditioned by its prior approval by the ECA and the COMESA Competition Commission in the light of the points raised by them regarding the CAF/LS contract of 28/09/2016.
2/ Technical and additional meetings CAF/LS of 02/11/2018 and 15-16/11/2018
a) 1st Technical meeting CAF/LS of 02/11/2018 regarding the objective criteria to be determined in relation to the topic “Reduction of the contract duration”
Attendees:
o For CAF:
Mr. Abdel Bah, CAF Marketing & TVDirector
Ms. Achta Mahamat Saleh, CAF Head of Legal
o For LS:
Mr. Paul O’Dowd
Mr. Charles Questiau
Mr. Philippe Antoine
It was agreed to distinguish two sets of objective criteria:
o A first set of objective criteria that should be considered essential and likely to give, each individually, after assessment and debate between CAF and LS, the option for CAF not to renew the CAF/LS contract for additional 4 years; and
o A second set of objective criteria that should be considered as non-essential, not individually, but taken collectively. If all of the criteria have not been met by LS during a specified time period, the parities will meet to discuss and assess whether such collective failure is sufficient for CAF to exercise its option of not renewing the CAF/LS contract for another 4 years.
Such assessments above will include whether CAF has met all of its own obligations under the contract and any over-delivery by LS.
CAF will send to LS its proposals for objective criteria as soon as possible, presented in the form of two separate sets as referred to above.
b) 2nd Technical meeting CAF/LS of 02/11/2018 regarding the financial terms to be determined in relation to the topic “Take-back of the terrestrial TV rights for the Sub-Saharan area”
Attendees:
o For CAF:
Mr. Abdel Bah, CAF Marketing & TV Director
Ms. Achta Mahamat Saleh, CAF Head of Legal
o For LS:
Mr. Charles Questiaux
Mr. Philippe Antoine
Both technical delegations explained and detailed the contents of their respective proposals on the compensations for LS in case of take-back by CAF of the terrestrial TV rights for the Sub-Saharan area and for the disengagement of LS from the outstanding amounts still owed to CAF and LS in the zone (LC2 and national TVs). It was agreed to pursue exchanges on this topic, which has finally led to additional meetings of 15-16/11/2018 in Boulogne-Billancourt (see point d) below).
c) 3rd Technical meeting CAF/LS of 02/11/2018 regarding the topic “Exploitation of the digital matters”
Attendees:
o For CAF:
Mr. Abdel Bah, CAF Marketing & TVDirector
Ms. Achta Mahamat Saleh, CAF Head of Legal
o For LS:
Mr.Max Lebessou
Mr.Philippe Antoine
As requested by CAF at the Strategic Committee meeting of 25/07/2018, the technical delegation of LS drew up and presented a comparative study of the different practices regarding the broadcasting of match clips on the digital platforms of rights holders.
On the basis of this study and as part of its general mission of advising CAF, LS recommended that CAF ensures compliance with its contractual commitments to its broadcasting partners, being reminded that the contractual possibility for CAF to broadcast match clips is limited to the only CAF digital platforms with regard to beIN Sports. Thus and in particular, it was expressly recommended to CAF to limit as much as possible the possibility for third parties to broadcast on their own digital platforms match clips that are broadcasted by CAF on its digital platforms, by systematically activating all restrictions of sharing offered by each platform, including in particular the restriction preventing the embedding.
Given the uncertainties surrounding in particular the technical developments of the digital platforms, it was agreed to periodically re-evaluate the situation and, in any event, that CAF will immediately suspend any broadcast that would be the subject of well-grounded objections addressed by broadcasting partners.
d) Additional meetings CAF/LS of 15-16/11/2018 in Boulogne-Billancourt, regarding the financial terms to be determined in relation to the topic “Take-back of the terrestrial TV rights for the Sub-Saharan area”
Attendees:
o For CAF:
Mr. Abdel Bah,CAF Marketing & TV Director
o For LS:
Mr. Idriss Akki
Mr. Charles Questiaux Mr.Philippe Antoine
After many exchanges of views between the delegations of CAF and LS, it was agreed to simplify the financial mechanism and initially limit the take-back by CAF of the rights for the only competitions organized until 2024 (with the possibility of discussing a possible takeover by CAF of the rights beyond 2024, at the time of the assessment made in 2023 with regard to the objective criteria defined for the renewal of the contract after 2024).
It would henceforth be considered, with regard to the rights taken back for each of the three cycles of two years (2019-20, 2021-22 and 2023-24), a compensatory turnover coming automatically, on the one hand, to be added to the revenues actually collected by LS during each of these cycles with regard to both the assessment of the achievement of the MG and the calculation of the commissions paid to LS and, secondly, to be deducted from the amounts of advance payments on revenues such as provided in the contract. This compensatory turnover to be added to the actual revenues and to be deducted from the amounts of advance payments on revenues, would be divided for each of the competitions in proportion to the respective amounts of “THRESHOLDS” as set out in appendix 4 of the contract CAF/LS of 28/09/2016
On the basis of the mechanism above, CAF’s delegation proposed the compensatory turnover figures below for the three cycles concerned of two years (subject to confirmation by the CAF representatives):
- – Cycle 2019-20: USD $19,000,000 as compensatory turnover with regard to all competitions scheduled in 2019 and 2020 (excluding Qualifiers AFCON2019, but including Qualifiers AFCON2021);
- – Cycle 2021-22: USD $21,500,000 as compensatory turnover with regard to all competitions scheduled in 2021 and 2022 (excluding Qualifiers AFCON2021, but including Qualifiers AFCON2023)
- – Cycle 2023-24: USD $21,900,000 as compensatory turnover with regard to all competitions scheduled in 2023 and 2024 (excluding Qualifiers AFCON2023, but including Qualifiers AFCON2025).These financial terms would complement those already agreed regarding the treatment of the main receivables held by CAF and LS in the area concerned by the planned take-back, namely:
- – A lump sum of USD $6,706,250 to be paid by CAF to LS (by offsetting against any amounts due by LS to CAF), half in 2019 and the balance in 2020, with regard to the disengagement of LS from the outstanding amounts still owed by LC2 group to CAF and LS (principal sums of USD $18,806,858 and EUR €447,327 to date); and
- – The clearance by the national televisions of Sub-Saharan Africa of the outstanding amounts still owed by them to CAF and LS (principal sums of EUR €2,930,736 and USD $924,197 to date (i)) as a precondition for licensing in these countries.The delegation of LS, for its part, indicated that it agreed to make the additional effort necessary for the acceptance of this proposal (subject to the reservations referred to in the recital of this Record of Understandings).
