Court Rules Professional Football Leagues Must Register as Public Benefit Company

An Israeli court has ruled that the administrative body for professional football leagues must register as a public benefit company (חל"צ - 'cheletz'). The Central District Court rejected an appeal by the leagues' management against a decision by the Registrar of Endowments, determining that the organization's primary purpose is to advance Israeli football.

The management argued that its activities, aimed at maximizing revenue for football clubs and distributing tens of millions of shekels annually, were incompatible with public benefit status. They also claimed that transitioning to a public benefit company would hinder their operational flexibility due to restrictions on executive salaries, related-party transactions, and regulatory oversight, potentially impacting their ability to manage broadcasting rights, sponsorships, and other commercial activities.

Presiding Judge David Ziler dismissed these claims, emphasizing that the leagues' management operates under authority delegated by the Israel Football Association, a public entity governed by sports law. The court stated that extensive commercial activities, including selling broadcasting rights and sponsorships, do not negate the organization's public benefit goals, as revenue maximization serves to promote professional football.

The court also addressed the distribution of funds to clubs, ruling it was not an impermissible distribution of assets for a public benefit company. It clarified that clubs receive funds as active participants in the leagues, not as shareholders, and that the management's bylaws already prohibit dividend distribution. The Registrar confirmed that public benefit registration would not prevent the continued transfer of funds to clubs under the existing model.

Concerns about increased oversight were also rejected, with the court finding the regulatory requirements standard for public benefit companies. The ruling upheld the need for enhanced supervision, citing the non-profit status of many football clubs and past attempts to amend the bylaws to allow profit distribution, which reinforced the necessity of ensuring resources serve public objectives.

The leagues' management was ordered to transition to public benefit company regulations by January 1, 2027, and was also required to pay 15,000 shekels in legal costs.