Rich do as they please – Riga municipality each year assigns significant amounts of public money to different sporting events, large part of that has been given to the Basketball Club VEF Riga, in clear breach of municipality’s own regulations.
Key Criteria
Riga municipality considers several criteria when assessing the public money, among them:
the achievements of the applicant in the recent years
tax debts at the moment of application and moment of concluding the support contract
VEF Riga qualifies for the public money based on the sporting merit: it was the Latvian basketball champion in 2023/2024.
However, the tax matter is a whole different story. As of 13.09.2024, according to the state revenue service VEF Riga owes the state significant money in tax debts.
Serving the formality
When reading the regulation grammatically, one has to consider only two dates:
1. when the application was submitted, and
2. when the contract was signed.
On 10.06.2024 VEF Riga did not have a tax debt above EUR 150. This is the day when application to Riga municipality was submitted.
However, just a few days early (on 04 June) the debt was EUR 62’269.88. Coincidence or not, the debt again jumped up to EUR 19’241.57 by end of June. and the club has been in the red for most of the time ever since.
It could be assumed that the club signed the contract before 23 July, because this is the last day when VEF Riga did not have a tax debt (at the time of this writing on 13.09.2024).
Was it a well planned strategy or just a coincidence?
Is it a good governance for the municipality to completely ignore that the tax money is handed out to a private entity with regular tax debts, except for 2 periods* in the year?
The Latvian – Estonian basketball league project’s 4th season has ended with the victory of “Prometey”. For the first time in 4 years a game was declared “technical loss” to a team not appearing in a scheduled game, and the Final was played without any Latvian club. Unless you consider Prometey to represent Latvia, since their home games take place in Riga.
The exceptional Champions
The league regulations state that the tournament is for clubs of both Baltic states, with one exception for one team only. And this year it turned out not to be the single exception.
According to Wikipedia, Prometey Slobozhanske, is a Ukrainian basketball club based in Slobozhanske, previously based in Kamianske. It played in the Ukrainian Basketball SuperLeague, the highest tier of basketball in Ukraine, from 2019 to 2022.
So what are they special with?
Special League Regulations for Prometey
Prometey enjoys special treatment by the Latvian-Estonian league, and rightfully so, having such club on board offers something new for the fans on regular basis. It is believed that Prometey might be the richest club in this year’s tournament, and likely the richest club ever to be based in Riga (many rich clubs have played in Riga, but that is another story).
Tournament – Joint league containing Estonian and Latvian Clubs that has its own entity and budget. As a exception on 2023/2024 basketball season containing also BC Prometey team from Ukraine.
Definition of the “Tournament” in the regulations
Infamous no-show on 9 march 2024 in Tartu
Apart from the Riga-based club taking away the spot in finals for one of the Latvian clubs, it made most noise also during the regular season. Prometey made the history books by becoming first club in the league to be disciplined for not coming to an away match in Estonia.
Club team that does not show up for a scheduled game without announcing and without a justified cause will lose the game by forfeit and the score will be 0:20. In addition there shall be a fine of 5000 EUR.
..
The team that receives a second forfeit during the season shall be disqualified from the Tournament competition. All the game results of the respective team are annulled. In addition, there shall be a fine of 20400 or 40800 EUR (Article 7.6.).
..
The Boards of National Federations can decide the additional punishments (e.g. starting the next season from the lower league).
League regulations Section 11.3. Forfeit
It was reported in media that the team had injury problems. Although Prometey had objective reasons to ask for the match to be re-scheduled, the Tartu team did not accepy any of the proposals. Prometey claims that they approached the Latvian Basketball federation (“LBS”) with their issue.
Representatives of other clubs claimed for removal of the Ukrainian club from the competition at all, some called them names, etc.
Obviously, some club managers cited the financial power of Prometey to dismiss the injury list as a real problem.
According to the public information, Prometey had approached LBS and Tartu club to ask for game date change, and their doctor would allow only 6 players to participate in that match.
So why the forfeit still?
Whom to ask?
How to properly document?
What is striking from the public information – the club tried to speak with LBS and Tartu club. However, as much as the officers of LBS might believe in their authority to decide all basketball related matters, LBS does not have any decision powers in these situations for this joint League. Directly approaching Tartu club remains at Prometey’s own risk, as it turned out that Tartu was not at all motivated to agree on a date change.
Correct Answer to question 1: Tournament Regulations govern the Latvian-Estonian Basketball League 2023/2024, along with any other rules, regulations, manuals, circulars and decisions referenced to herein or adopted by the Management Board of the Latvian-Estonian Basketball League (EST-LAT BL OÜ); matters which are not regulated with the regulations or other regulations and principles which are approved by Management Board of Organizer shall be conducted according to Official FIBA Rules.
Why? Definitions of the regulations stipulate the following:
Management Board – Executive body of the Company and of the Tournament.
Company – The legal entity EST-LAT BL OÜ established jointly by Latvian and Estonian Basketball Association
Organizer – Management Board, Tournament directors and administration workers
There is an obvious error in definitions, evidently, however it cannot lead to think that LBS might have rights to adopt or approve the game date change.
Although the club’s doctor had likely made certain recommendation, there is no mention of the fact being properly documented with sick leaves, etc. If an employer is short-handed on staff, usually any absence can be justified only with doctor’s prescription. Employers may excuse their players without demanding sick leave at all times, however, in relation to third parties this might have been a crucial proof of an objective situation.
Correct Answer to question 2: hard to tell… it depends if the arguments were true at all. Meaning that simple arguments of difficult situation is not a proof, unless it has some documentation under the claims.
Other legal highlights
From legal standpoint, interesting topics as to the sponsors and nationalities of players can be highlighted.
Prohibited or limited advertising
The Latvian law on gambling prohibits advertising the gambling product outside of gaming places. The title sponsor of the league has traditionally been a sports betting company. Per Law, betting is a sub-type of gambling. Therefore, such questionable practice, although tolerated by the Law enforcement officers, remains beyond the Law.
There are also regulations as to the advertising of credits and loans in the Consumers’ protection Law. One of the banners shown among the league’s sponsors is exactly operating in this business field, however, it remains a matter of law enforcement officers accepting that such practice can be tolerated, being favourable towards the sports industry.
Nationality related limitations
In Case C‑680/21 the European Court of Justice analysed the rule of minimum/maximum number of players based on their nationality in national leagues. Since the Latvian – Estonian league is hardly a professional league, this rule might not be against the EU Law. However, it is more likely than not that this tradition which has started in the 90s before Latvia and Estonia joined the EU, is actually illegal.
Latvian sport is governed in a multi-level structure:
a) the level of sports federations – all sports
b) the olympic movement – only sports recognised by IOC qualify
Two “towers” for the Latvian sports
In Latvia both of the levels (a&b) belong to a different organisaion: a – to the Latvian Sports federations council (called “LSFP”), and b – to the Latvian Olympic Committee (called “LOK”).
Section 10. Sports Organisations
(1) Sports organisations are sports clubs, sports federations and other institutions referred to in this Law.
..
(6) The activities of the sports federations recognised in Latvia shall be coordinated, their shared interests represented and implemented by the sports organisation – the association Latvian Sports Federations Council.
(7) The activities of the sports federations recognised in Latvia in respect of the Olympic sports approved by the International Olympic Committee shall be coordinated, their shared interests represented and implemented by the sports organisation – the association Latvian Olympic Committee.
Latvian Sports Law section 10 on LSFP and LOK
The LSFP and LOK merger
On 27 March 2024 both organisations are carrying out general meetings to approve their merger. Such initiative is based on their respective statues and the Associations and Foundations Law.
Delegation arising from the Sports Law
Although the merger is mainly based on the two legal sources cited (respective Statues and Law governing Associations & Foundations), the draft merger agreement and the draft decision does not clarfiy the role of the Latvian Sports Law.
Article 10 of the Sports Law delegates to the associations their respective powers. I.e., the rights to certify sports federations and represent the Republic of Latvia – those do not arise from the text, whatever it might be, in the Statutes or the Articles of Association of each respective organisation here.
Such rights both LSFP and LOK have, because the parliament has given them such authorisation.
Therefore, although a decision to approve the merger might create political pressure on the Latvian parliament, might not be legally enforceable and the legal preparations of such decisions might very likely be rejected by the Company register.
The meeting of members simply does not have the power to decide on such matters, where the higher hierarchy law has not authorised them to such.
Can this defect be cured? Hypothetically, if the merger agreement referred to a “condition precedent” that the parliament approves this merger, would it validate the voting as such? Most likely, still no, since the Law would have to be amended. The lawmaking process has its requirements before a Law can be passed, and it hardly could be considered a valid decision in itself, without a consequential additional meeting after the LAw manemdments hav ebeen passed.
Statutes as a supreme source of rights?
In the daily work life of an organisation, its statutes likely play the major and most important role. So it is easy to forget that the Statues and the initial delegation to an organisation actually might arise from a more supreme source of Law.
The provisions in the Sports Law, assigning LSFP its share of competencies, and LOK its share of the other competencies – is a politicla decisino, which cannot be changed by simple decision of the organisations themselves, in whatever forum they meet.
Who will fill the separate roles per Sports Law?
In addition to the two mentined organisations, there also exists a “Latvian National Sports Council” with separate function of each president of the above organisations.
The Latvian National Sports Council is a public consultative institution which participates in the development of the State sports policy, facilitates sports development and cooperation in the field of sport, and also in the making of decisions regarding matters related to sport. The Cabinet shall approve the by-law of the Latvian National Sports Council.
Latvian Sports Law section 9
Among many constituents of the Latvian National Sports Council are several ministers of the government, as well as (a) the president of the association Latvian Olympic Committee, and (b) the president of the association Latvian Sports Federations Council, and several others.
The roles of LOK and LSFP presdicents are separate in this forum. Looking further in the Law, we can find roles for each of the officials from each organisation separately in the anti-doping matters, too.
