Court Rules Professional Football Leagues to Become Public Benefit Company

Israel's Central District Court has rejected an appeal by the Professional Football Leagues Directorate, ruling that the organization must be registered as a "Chavrat Le'to'elet HaTzibur" (CH"TZ), or Public Benefit Company. The court, presided over by Judge David Ziler, determined that the Directorate's primary purpose is the advancement of football in Israel, a public objective, despite its extensive commercial activities.

The Directorate, established in 2014 as a private company managing the top two professional football leagues, had argued that its mission to maximize revenue for football clubs and its annual transfer of tens of millions of shekels to them were incompatible with public benefit status. It also claimed that transitioning to CH"TZ status would hinder its operational flexibility due to restrictions on executive salaries, related-party transactions, and regulatory oversight, potentially impacting its ability to manage broadcasting rights, sponsorships, and other economic activities.

However, the court found that revenue generation serves as a means to promote professional football. It clarified that funds transferred to clubs are based on their active participation in the leagues, not on shareholding, and that the Directorate's statutes already prohibit dividend distribution. The Registrar of Endowments also indicated that CH"TZ registration would not prevent the continued transfer of funds to clubs under the existing model.

The court emphasized the need for increased oversight, citing that many football clubs are themselves non-profits reliant on public support and noting past attempts to amend the Directorate's bylaws to allow profit distribution or private investment as further justification for ensuring public benefit.

The ruling mandates the Directorate to operate under the CH"TZ framework starting January 1, 2027, and orders it to pay 15,000 shekels in legal costs. The court dismissed all of the Directorate's claims regarding the expected regulatory burden, stating these are standard requirements for all public benefit companies.