23 March 2016 by

Challenging times for football’s current transfer system

FIFPro, the worldwide representative body for professional footballers, is challenging FIFA’s Regulations on the Status and Transfer of Players (“RSTP”). FIFPro states that the current transfer system, prevents small clubs from competing to acquire sporting talent, causing harm to players, small and medium sized professional club and their supporters. FIFPro has lodged a complaint with the European Commission, claiming that RSTP is anti-competitive, unjustified and illegal.

At the heart of FIFPro’s challenge to the RSTP is that it claims the current system invites commercial abuse by third party ownership and agents and fails to protect players against abuses of their labour contracts via systematic non-payment. The arguments raised by FIFPro, seek to show that the various opt-outs from European Law agreed between the European Commission and FIFA/UEFA in 2001, have not been adhered to.

FIFA’s current RSTP state that if a contract is unilaterally broken during a season, without just cause or just sporting cause, compensation must be paid by the party seeking to breach the contract. Such compensation is to be calculated with due consideration for the law of the country concerned, the specificity of sport and any other objective criteria.

FIFPro wants FIFA to change its position on player’s rights. The case of Matuzalem Francelino da Silva (“the player”) highlights one of the current issues with FIFA’s transfer system. In 2004, the player signed a 5 year contract with Ukranian side, Shakhtar Donetsk (“Shakhtar”). In 2007, 3 years into the 5 year contract, the player unilaterally terminated his contract and signed a contract with Spanish side, Real Zaragoza (“the club”). Shakhtar commenced proceedings and FIFA ordered that the player and the club pay compensation of €6.8 million plus interest at 5% from July 2007. The decision was appealed to the Court of Arbitration for Sport (“CAS”). CAS ordered the player and the club to pay an increased sum of €11.8 million plus interest at 5% from July 2007. It is important to note that the sum ordered to be paid was 10 times the player’s annual salary. Likely to prove very difficult to pay.

The player and the club could not afford to pay the order of CAS and the order was appealed to the Swiss Federal Supreme Court. The appeal was unsuccessful.

As neither the player nor the club had paid the CAS order, Shakhtar commenced disciplinary proceedings via FIFA against the player and the club. On 31 August 2010, the player was banned from all football activities. The FIFA decision was appealed by both the player and the club to CAS. The appeal was rejected by CAS.

Finally, the player alone appealed the second CAS decision to the Swiss Federal Supreme Court. After a long run of legal defeats, the player eventually had a legal victory, when the Supreme Court confirmed that the decision of a sporting organisation must be line with the fundamental values of Switzerland. One of the fundamental values is known as the “excessive commitment”. Breaching such principle is described as a violation of substantive public policy if the personality rights are obviously and seriously violated. The worldwide ban of a professional footballer for an unlimited period of time because of an inability to pay sum of money that was 10 times the footballer’s annual wage was in breach of substantive public policy. The Supreme Court, therefore set aside the second CAS decision.

Under the current system, it is acknowledged that football clubs invest substantial sums of money in footballers, via the payment of transfer fees and salaries. If a professional footballer is able to unilaterally terminate their contract without the club receiving any compensation, then the return on the investment through the transfer fee is severely reduced.

However, one of FIFPro’s aims from their complaint to the European Commission, is to have transfer fees abolished. One must take the view that if Shakhtar had not paid a transfer fee for the player (they paid EUR 8 million in 2004), then the 5 years of legal proceedings could have been simplified greatly.

It is likely that a decision on FIFPro’s complaint will not be made until sometime later this year, however, everyone with an interest in football, should wait with anticipation for what could be the biggest change to movement of footballers since the Bosman decision in 1995.

It is acknowledged that FIFPro’s complaint to the EU Commission relates not only to the issue dealt with in this article, but also a number of other issues regarding the RSTP. The other issues are not within the scope of this article and will be dealt with in future articles.

Should you wish to discuss any issue regarding this article or have any other sporting issue, please contact us on 0207 288 4700.

11 March 2016 by

Listed Building Consent – What it is and why it is important?

A listed building is a building, object or structure that has been judged to be of national importance, in terms […]

18 March 2016 by

The truth and nothing but the truth – Commercial Property Standard Enquiries

It is best practice for potential buyers of commercial properties, or prospective tenants of commercial premises, to raise standard enquiries […]

Signup To Our Weekly e-News

"*" indicates required fields

We’ll never share your details with any third party in line with our privacy policy.