FIFA (Fédération Internationale de Football Association), since the election of Mr. Gianni Infantino as its new president, has intended to draft a new Regulation on the Status and Transfer of Footballers. The aim is to try to agree with all and every stakeholder in the football family: players, clubs, leagues, confederations and associations. But when you look at all the (different) interests, sometimes you see that it is more a compromise than a real change. In this article, we will try to dig unto this evolution or revolution.
First of all, we will have a look onto past developments within the field of regulations and contracts, with the transfer of players from one club to another being one of the most important issues – thoroughly controlled by FIFA. All of the most relevant changes and adaptations that have been made by FIFA over the past few years in regards to contracting and transferring players are highlighted (for example, in relation to the length of the contract, contractual stability, transfers of minors, international transfers, third party involvement, etc), giving some real-life examples regarding cases in which they were of importance. For the future, some further changes within the FIFA´s regulations are expected (for instance, in relation to the “stocking” of players), which are being pointed out and discussed in an outlook at the end of the article.
Football, more than just a sport, has become an important industry. FIFA as the highest international governing body of football is controlling the rules and regulations of the sport. The FIFA Statutes and regulations have been edited various times during the cause of its history – regarding issues like contractual stability and length of contracts and international transfers, amongst others – and more adaptations are expected to be made in the near future.
Towards a new regulation frame on the transfer of footballers: Evolution or revolution?
I have been involved in football since 1981 and as Bob Dylan sang, “times are a’ changing”, which is more than true in our sport, but most of the regulations for the market are still the same, at least the basic ones. However, changes do have occurred recently, mostly during the last two decades, and a new world seems to appear now, with 2020 as the balcony where we all must look out. This article will try to outline the changes that are in FIFA’s mind and if they are, in our humble opinion, good for football or not, and last but not least, if this is a mere evolution of times or a real revolution.
Football has been “the” sport in the last decades and born as a “game” or a “sport” it has become a real industry. Just as an example, football is 1.4% of the Growth Domestic Product in Spain and, in words of Spanish politicians, “it has helped Spain to overcome the crisis”. So it is not just a mere sporting activity, but has become an important business.
This must show us the need to understand the football market and how important it is, in terms of employment, direct or indirect, as well as in leisure, tourism, infrastructures and so on. Of course, transfer of players is not the least to name in such a GDP…
You should remember the latest transfers of Neymar, with 222 million Euro, from Barcelona to PSG, or the one of Kepa, from Athletic Bilbao to Chelsea, the highest of a goalkeeper, for 80 million euro, as well as Fabián, from Betis to Naples for 30 million, or Bakambu from Villarreal to Guoan Beijing for 38 million, or Ronaldo from Real Madrid to Juventus for 100 million. All of them were transferred from Spain to strong leagues or wishing to be strong (China).
One of the most important issues in the year 2015 was the absolute prohibition of having any third party involved in any contract, for players or clubs
This is only a small demonstration of transfers, and you can add a lot more to understand how important the football market is in Spain, but of course the rest of the world is there too, with its 7,000 USD used in transfers in 2018, with 16,533 international moves of players from 175 nationalities. The market, however, is mostly the one of Europe, as 78.2% of the money was used within the UEFA confederation members.
So, as a first step, we can understand how important the transfer market is and how crucial it is to regulate it, which is why the new FIFA regulations have to be scrutinized and explored.
II.- Why is FIFA controlling the transfers?:
FIFA was incorporated in 1904 in Paris, with six federations and a club, Madrid C.F, representing Spain, and from that date it has intended to be the international body which controls football worldwide. The FIFA Statutes and the cooperation with the International Board, which is the body that takes care of the Rules of Football, were its legal grounds, but it was only in April 1991 when the first “Transfer Regulations” were drafted.
Those basic ones were changed in 1994 into the renamed “Regulations on the Status and Transfer of Players”, with several interesting points that were the basis for a judicial struggle some years afterwards. It contained the rule that a player could only move from one club to another if his contract has expired o was going to expire in the next six months, so it was not possible for a footballer to rescind his contract. Only with an agreement between the three parties, player, old club and new club “The Transfer” could be done, otherwise the footballer had to wait to be free until the end of his contract.
Another key point was the calculation of an indemnification to be paid by the new club even after the natural end of the labor contract, so the player was not really “free” to leave even after his contract was terminated.
A crucial factor emerged when an unknown Belgian player, called Jean-Marc Bosman, sued FIFA and challenged its unique position as the lawmaker of football regulations, which was above all and every legislation, whether national or international.
The player must give notice to the club with at least 15 days of his intention and thus the club can avoid the rescission with just cause by paying the debt. If no payment occurs, then the contract will be considered as terminated
We are not going to discuss Bosman here, as it has its own and long discussed doctrine , but we would like to mention that it was a landmark case, and that FIFA had to change its regulations after that. The Court of Justice of the European Union (CJEU) decided against the FIFA regulations in a decision dated 15th of December 1995, and, after that, the European Commission forced FIFA to amend its 1994 Regulations. Concretely, this implied amending those articles that were against the EU and national law, which were mostly those about the absolute freedom after the natural termination of a contract, among others about the EU nationals becoming “nationals” in the very same terms of a “citizen” of a nation. Thus, there were no more “foreigners” in football when you were an EU citizen. This was a real revolution.
After such a mess, FIFA tried to compose itself and decided to launch a new regulation in 1997; taking into account those principles that the CJEU had said that were against the EU and the national laws of Europe.
But FIFPro (the International Federation of Professional Footballers) was not in the mood to accept such “new” regulations and brought a claim against those before the European Commission and, after a back and forth of reunions, meetings and agreements, all the parties finally settled with the 2001 FIFA Regulations with five accepted principles:
- The contractual stability of players’ contracts (however with certain possibilities to terminate those relationship ante tempus).
- The regulation of international transfers of minors, with a prohibition to those players under 18 with three exceptions.
- A maximum and minimum length for the contracts (1 and 5), but with acknowledgement of the national law if stating differently.
- The introduction of two transfer windows: beginning and middle of the season.
- The introduction of a system to compensate the training clubs: a 5% of so-called “solidarity mechanism” on all and every payment made when a player is transferring from one club to another, internationally, and the training and promotion of a player, another indemnification to be paid to previous clubs upon certain parameters.
The idea of FIFA was thus to control the international transfers, but it didn’t cross its mind that legal and regulatory issues had to be fulfilled as well as agreements had to be taken with the stakeholders (at that time quite uniquely FIFPro).
The 2001 FIFA Regulations for the Status and Transfer of Players became the “constitution” for international transfers and suffered slight changes in 2005 (after the Mexès case, with a new definition on sanctions for the players and the clubs that terminate their contract without just cause). Then, in 2008, when article 18bis appeared and was the starting point against Third Parties Ownership or Influence (“No club shall enter into a contract which enables another party to that contract or any third party to acquire the ability to influence employment and transfer related matters, its independence, its policies or the performance of its teams”).
This prohibition came after the well-known Tévez and Mascherano cases, which were crucial issues in the English Premier League, as the contracts between the previous clubs (Cruzeiro of Brazil and River Plate of Argentina respectively) and the buying club West Ham of England had a real peculiarity with the inclusion of a third party (a company) which had the right to terminate the labor contract (even not being a party there) or to force West Ham to transfer the player upon its request.
You can see that FIFA tries to objectivize the indemnification on one hand and on the other hand it is still keeping the “old criteria”. This is causing confusion
Such influence was viewed by FIFA as interfering in the employment agreement as well as in the policy of the clubs and thus they decided to ban it.
The next step was in 2009, just a year after the previous change. A real novelty came into the field, as minors were going from thereon to be controlled by a sub-committee, which was due to give its approval to any international transfer of minors and to any first registration of any minor foreigner. This was a move towards the absolute control of any international movement of a minor, which was a key factor for FIFA in order to protect the youth from being taken from their countries to another for strict reasons only linked to football.
In 2010, the now famous TMS (Transfer Match System) appeared, being the starting point of the future “clearing house”, one of the new regulations that are in the verge to be approved. But coming back to the year of 2010, when the TMS served the purpose of avoiding any misunderstanding in international transfers. Before the implementation of the TMS, transfers were made by fax, sending contracts throughout the world and with - let’s say it with accuracy - the least of the controls… Contracts were thrown to windows of federations, faxes had their time changed in order to reach the end of the transfer window on time… in short, a lot of strange behaviours that could be ended thanks to the TMS. It was and is an electronic control of the agreements between clubs, with the duty to upload to a general system controlled by FIFA all and every document related to an international transfer. Each club must have a TMS person and if not, the national federation must take care of it. This was another huge revolution in how transfers were made from then - if not legal, at least behavioural.
The 2012 edition was a bit less important, with small regulatory details that changed, like the reduction of the provisional registration days after requesting an ITC (International Transfer Certificate), from 30 to 15 days, in order to hurry up some issues.
In 2014, some more adjustments were made, particularly regarding the release of professional players to their national teams.
In 2015 we could see a stronger change in the third parties prohibition. Also, after the case against FC Barcelona on the minors’ registration, the age for the request of an ITC was reduced from 12 to 10 years old. A new and very interesting procedural article came into force, the 12bis, for overdue payables, which permit a quick proceeding in cases where no termination was intended by a player, but only a sanction to his club and a fast payment was searched. As for the overdue payables among clubs, the intention was the same: a quick decision and a sanction that drives to a payment. We can say that this has worked remarkably well and it has been one of the changes for good.
One of the most important issues in the year 2015 was the absolute prohibition of having any third party involved in any contract, for players or clubs, which in my opinion was a mistake, as instead of controlling the TPO/TPI, FIFA opened the “hen to the foxes” if you pardon me, and created or helped to create direct investments in clubs which are now in the hands of those who FIFA wanted to avoid being in football…
Also in 2015, the agents were expulsed from the FIFA Heaven and thus were no longer part of the “football family”, letting the national association deal with the issue, providing them with some “FIFA regulations on intermediaries” that the associations ought to follow. So FIFA was throwing away the agents but trying to control them anyway, at least indirectly. This, in the opinion of most of the stakeholders as well as in my opinion, was a complete mistake and error and we can see now that FIFA is on the verge (2020, 2021?) to have them back home.
In 2016, some amendments were made on the protection of minors and on the release of players for national teams.
As for 2018, a key issue came into force, as new article 14bis was implemented. This article stated, for the first time, what could be understood as a breach of contract due to unpaid salary. The previous jurisprudence was more or less the same but from June 2018 two outstanding salaries were enough for a player to ask for a just termination of his contract.
The player must give notice to the club with at least 15 days of his intention and thus the club can avoid the rescission with just cause by paying the debt. If no payment occurs, then the contract will be considered as terminated.
However, any outstanding sum amounting to two salaries will also be considered as just cause to end the contract unilaterally by the player, with the same notice.
Still, it comes to my mind that if you want to have a strict 2 months debt to consider it as a just cause to terminate the contract, how does it come that you draft a notice period of “at least” 15 days? It is evident that the notice could be of more than 15 days in this case, and what if the contract stipulates that the player must give a notice of 45 days? Then, you can have a club with 2 months overdue salaries and the player’s notice will allow the club to owe him more than 3 months. And this is not something unreal, as the two parties might have agreed this in favour of the club in exchange of other compensations for the player. The drafting, in my opinion, is wrong.
The new article makes it clear how much an outstanding debt should be in order to have just cause to finish the employment contract. As well, any collective bargaining agreement that differs from the article will prevail, but not the private contractual agreements that will never prevail over the 14bis.
But this was not the only one, as article 14 included a new paragraph 2, in which it is stated that “any abusive conduct” from a party (club or player of course) that intend its counterparty to rescind a contract or try to modify its contents will be considered as a just cause to terminate the relationship. This was already part of the jurisprudence but FIFA decided to affirm it clearly.
Another adding was the second paragraph on article 17.1. That article was the key point of the contractual stability and the most important agreement between FIFPro and FIFA during the process of the making of the 2001 Regulations.
That article 17 (22 in the 2001) was crucial because it determined the consequences of the termination of a contract without just cause. This was a demand made by FIFPro for years and when it was drafted it was so broad that the FIFA decisions, and posteriorly, the CAS awards, were so different that it was evidently let down by players and clubs which did not use it after 2010. So now FIFA tried to make the indemnification for a termination without just cause as objective as possible.
The new article 17.1 second paragraph tried to give an exact amount of compensation by stating that, in general, it will always be that remaining part of the contract that has been prematurely ended, with the deduction (if any) of any new contract which overlapped the previous one and a possible three to six months salaries that could be added.
This seems clear enough but then why FIFA has i) maintained paragraph one of the 17.1 in which the criteria are not so objective but had to include remuneration of the old and new contract, remaining time of the rescinded contract, non-amortized fees of a previous transfer, the specificity of sport and “other objective criteria” and ii) the new paragraph states that “bearing in mind the aforementioned”, which are those of my point i).
So, you can see that FIFA tries to objectivize the indemnification on one hand and on the other hand it is still keeping the “old criteria”. This is causing confusion (confusio in terminis) and will surely drive all of us to a lot of legal issues. Let’s see how this continues.
And in 2019, small procedural changes had been implemented but those are not worth a legal comment.
III.- What next?
Finally, it is expected that in 2020 and moreover some news are coming as FIFA has in mind several changes that have been, if not approved yet, at least beard in mind of the decisive bodies and were on the verge to be accepted.
In that sense, a great concern of FIFA is the control by some clubs of a huge number of players under contract in order to have as much footballers as possible under their control and as not to lose any talent that has been spotted by their scouts.
So, once you have detected a talent and you can sign him as he is over 16 years old (age as from a player can sign a professional contract), he becomes part of the “team” even though he might not play a single match with the A-team in his whole life.
In commercial law, you could talk about a “stock” of players, as hard as the word could be, but it is the strict truth, the footballers are “stocked” waiting to be of use for the A-team. Meanwhile, those players are going to be loaned to other clubs – normally in other countries as to avoid being in competition against their own club – or to lower categories of the same association.
FIFA has decided to take two steps towards the control of such “stocking” of players. The first one will be the reduction of the loans from and for clubs, as to avoid having too much footballers under contract.
This will be implemented as from the season 2020-2021 and will take into account players over 21 and players under 21 when being non-trained by the club. That first season a maximum of loans will be 8 in and 8 out, and on the following seasons 2021-2022 and 2022-2023, it will be a maximum of 7 and 6 loans in and out respectively.
Those restrictions will not apply to under 21 players whom are club-trained, but we do not know yet who will be considered as “trained” or not by a club. An in order not to load friendly clubs with own players, FIFA will forbid more than 3 loans to the same club.
The members association will have three years as from 2020-2021 to implement domestically those rules on loans.
The second step to control the clubs squads will be to draw a line on the number of players registered with a team. This could have been made on the same timeline of the reduction and control of loans but FIFA has not yet proposed a deadline as when it will become mandatory. Of course we do not know yet even how much players FIFA would like to accept in its squad-control, so I guess that this is something that has not been agreed by FIFPro and ECA yet, as both bodies would like to have as much players as possible under contract for the sake of their members (FIFPro) to work and be paid and to be able to use (ECA). Thus, this will probably take some more time…
And finally, even though it seems to be a side on the Transfers of Footballers, it meant a lot, both to FIFA and its stakeholders: the control of agents.
As we have already stated, FIFA is willing to have the agents/intermediaries back to the home of football and mostly to control them as if they are not under their umbrella, it seems that they could do anything and for the worst as FIFA is thinking.
The figures that FIFA is using are those in which the agents (I’d rather prefer that word) are getting far more than clubs for solidarity mechanism and training compensation. This is surely true, but why is FIFA not measuring the incomes with the transfers’ fees? It is well known that the use of language (or figures in this case) is easy to misinterpret when showing it to be public.
But, FIFA is only using that comparison and the difference is huge, so they have decided to mandatorily impose the percentage of commissions that agents are going to be allowed to take from their clients, i.e. players and clubs.
The crucial element is that commissions have to be paid; and the rest of the regulations have much less importance. FIFA is willing to have a maximum of 3 % of commission for the players’ agent when paid by their client, as well a 3% when they are agents of the new (or buying club), all two calculated on the gross salary of the players throughout his contract with his new club. And, surprisingly, not only for me but for most of the lawyers involved in football, a 10% for the agent of the selling club (when a transfer fee is involved).
So, the field is as follows:
a.- If there is no transfer, the player and the new club shall pay a 3% each to their own agent,
b.- If there is a transfer, the same for the player and new club agents but a 10% for the agent of the selling club.
c.- An agent can be the same for the player and the new club and thus have a maximum of 6% commission but all different situations are not allowed (player and selling club or two clubs).
Just as an example, if a transfer fee is a (now) normal one of 30 million euro, the selling club agent will be entitled to 3 million euro commission and with a salary of 3 million gross, the player’s agent and the new club will get (let’s say for a four seasons contract), 360,000 euro each. This is not only disproportionate but also likely to be seen as something incredibly inaccurate for the work that a player’s agent normally does, which is much more than the one for any of the two clubs involved.
This is something that should have been taken into consideration by FIFA and I sense a lot of claims in one side and, may be, some agreements between agents in order to circumvent the regulations.
FIFA is intending, with those Agents’ Regulations, to regulate what they understand as people “outside” the football family and even if they want them to come back to home, it seems more likely to be “the prodigal son” parable but without the wish of the redemption by the father (FIFA) to his prodigal son (Agents).
The regulations that have been implemented by FIFA on the Status and Transfer of Players in 2019 and those that we are expecting (loans next year, squad control after, etc.) in such Regulations and on those of Agents (a crucial part of the transfer system) are a natural evolution and not a revolution.
FIFA regulations tend to follow either the legal claims or decisions (Bosman, Mexès, Bueno-Rodríguez, etc.) by the CJEU, the CAS or the Swiss Federal Tribunal and that is why some changes have been just a natural and direct consequence of such decisions but sometimes the very same football market needs to be controlled (minors, TMS, clearing house, agents, clubs…) and FIFA is trying to make it work, and for the first time intending to have all the stakeholders with them.
However, in my opinion, FIFA should have sought for other insiders like football lawyers, whom are at the core of all and every claim, change and have the knowledge of the regular practice with all those stakeholders that are also their clients. I guess that this would help a lot, so I hope that FIFA will take the offered hand and talk to all of us…
And, as I said in my comments on the various editions of the Regulations, FIFA should be more careful in drafting as sometimes there are contradictions and the RSTP need a real “codification” in which all and every article is drafted properly, in connection with the whole rules and thus deliver a final clean publication, without bis, ter et al…
Still, we have to bear in mind that FIFA is needed as the worldwide controlling body, in order to avoid the dispersion of rules all over its members’ States, so long life to FIFA RSTP, but always keeping an eye on them for the good of the football law.