FIFPr s EU cmpetitin law cmplaint executive summary 18 September 2015 I. What are the bjectives f this cmplaint? - Challenge unnecessary restraints n labur; - Refrm ftball s labur market s as t ensure players are n lnger cnsidered as tradable assets; - Make sure that what has been infrmally agreed in 2001 between the EC, UEFA and FIFA is prperly checked, and cnclude whether the assumptins/gals f that infrmal agreement are valid; - Prtect players fundamental rights under cntract and labur law, including the timely payment f salaries; - Achieve reciprcity f rights and prtectins fr the unilateral breach f cntracts fr clubs and players; - Develp better plicies t ensure that legitimate interests such as the training f yung players and financial slidarity amngst clubs are better served than under current regulatins. II. What is the bject f the cmplaint? What is challenged? The cmplaint has a furfld bject: 1. The pst-bsman transfer system; 2. Article 17 (1) f FIFA s RSTP; 3. Article 17 (3), last sentence, f the RSTP; 4. Article 18 (3) f the RSTP. In general terms, it can be said that the cmplaint challenges the legality f the pst-bsman transfer market system, that is the system that allws clubs t trade (i.e. buying and selling ) players under cntract with ther clubs. Players are traded as assets. The regulatry fundatin fr the transfer market system can be fund in FIFA s Regulatins n the Status and Transfer f Players (RSTP). The RSTP cntains a chapter IV n maintenance f cntractual stability between prfessinals and clubs (Articles 13-18). Of particular imprtance are the fllwing prvisins: 1
III. Article 17 (1) RSTP. Cnsequences f unilateral terminatin withut just cause (): a financial cmpensatin must be paid. 1 On the basis f this prvisin, a player is liable t cmpensate his/her wn market value when he/she terminates the agreement with the club. The due cmpensatin reflects the market value. Article 17 (3) last sentence f the RSTP. Prtected perid. If breach f cntract during prtected perid: sprting sanctins can be impsed. A player can be banned fr 4 mnths (6 mnths in case f aggravating circumstances). Re-intrductin f the prtected perid: The prtected perid starts again when, while renewing the cntract, the duratin f the previus cntract is extended. Article 18 (3) RSTP: A club intending t cnclude a cntract with a prfessinal must infrm the player s current club in writing befre entering int negtiatins with him. A prfessinal shall nly be free t cnclude a cntract with anther club if his cntract with his present club has expired r is due t expire within six mnths. Any breach f this prvisin shall be subject t apprpriate sanctins. Histrical perspective 1995: Bsman judgment f the Curt f Justice. N transfer fees fr players ut f cntract. Cmpare with the current transfer system: transfer fees fr players under cntract. 2001: infrmal agreement between Eurpean Cmmissin, FIFA and UEFA It is recgnized that cntractual stability is f paramunt imprtance in ftball, frm the perspective f clubs, players, and the public. Cntractual relatins between players and clubs must be gverned by a regulatry system which respnds t the specific needs f ftball and which strikes the balance between the respective interests f players and clubs and preserves the regularity and prper functining f sprting cmpetitin. 2001: amended FIFA Regulatins n the Status and Transfer f Players (RSTP). Intrductin f the rules n cntractual stability. Questins after almst 15 years: (i) is there any cntractual stability? Or cntractual instability? (ii) what abut the balance f interest between players and clubs? (iii) has the system attained the legitimate bjectives pursued? 2007: Webster decisin f the Curt f Arbitratin fr Sprt (CAS). because f the ptentially high amunts f cmpensatin invlved, giving clubs a regulatry right t the market value f players and allwing lst prfits t be claimed in such manner wuld in effect bring the system partially back t the pre-bsman days when players freedm f mvement was unduly hindered by transfer fees and their careers and well-being culd be seriusly affected by them becming pawns in the hands f their clubs and a vectr thrugh which clubs culd reap cnsiderable 1 In additin, the RSTP prvides that a cntract can unilaterally be terminated (i) fr just cause and (ii) fr sprting just cause. 2
benefits withut sharing the prfit r taking crrespnding risks. In view f the text and the histry f article 17 par. 1 f the FIFA Status Regulatins, allwing any frm f cmpensatin that culd have such an effect wuld clearly be anachrnistic and legally unsund. 2008: Matuzalem decisin f the CAS. Matuzalem has unilaterally terminated his agreement with Shaktar Dnetsk t jin Real Zaragza. CAS has rdered the player t pay a cmpensatin f EUR 11,858,934 (plus interest rate) t Shaktar Dnetsk. This cmpensatin amunted t almst ten yearly salaries. Prblem 1 = applicatin f a s-called principle f psitive interest (als principle f expectatin interest ) in rder t calculate the due cmpensatin fr unilateral terminatin withut just cause. [CAS] will aim at determining an amunt which shall basically put the injured party in the psitin that the same party wuld have had if the cntract was perfrmed prperly, withut such cntractual vilatin t ccur. This principle is nt entirely equal, but is similar t the praetrian cncept f in integrum restituti, knwn in ther law systems and that aims at setting the injured party t the riginal state it wuld have if n breach had ccurred. Prblem 2 = market value becmes cmpensable damage. In the event f a breach by a player, a panel has therefre t analyze the amunt necessary t acquire and keep the wrking frce f the player. In ding s, the Panel nly acknwledges ecnmic reality in the wrld f ftball, i.e. that services prvided by a player are traded and sught after n the market, are attributed an ecnmic value and are accrding t art. 17 FIFA Regulatins wrth legal prtectin. The Panel is eager t pint ut that the sle bject f this apprach are the services prvided by a player and nt the human being as such. Prblem 3 = re-intrductin f a pst-bsman transfer system. Art. 17 f the FIFA Regulatins is part f chapter IV f the FIFA Regulatins, i.e. f that part that deals with and try t fster the maintenance f cntractual stability between prfessinals and clubs. Within the framewrk f the "recnstructin" f the FIFA and UEFA rules fllwing the well-knwn Bsman decisin, the cncept f cntractual stability was intrduced t mve frward and replace the frmer transfer fee system: accrdingly, the pre-bsman transfer fees due after the expiry f a cntract have been replaced by cmpensatins due fr the breach r undue terminatin f an existing agreement. 2 IV. The transfer system (main bject f the cmplaint) 1. What is a transfer? What are transfer fees? Transfer fees can be regarded as the cmpensatin fr the waiver f any cntractual and/r federative right f the club ver the player: 2 CAS, Matuzalem, pint 79 (emphasis added). 3
- Cntractual perspective: SZYMANSKI explains that, [i]n ecnmic terms, the transfer fee might be thught f as cmpensatin fr breach f cntract. 3 - Federative perspective: GERRARD describes the transfer fee as the financial payment r the acquisitin cst if the player s registratin (that is, the exclusive right t field the player in games) has been acquired frm ther teams. 4 The transfer f a player under cntract requires the cnsent f the three parties invlved, i.e. the tw clubs and the ftballer. 2. Restrictin f cmpetitin between clubs In a well-functining labr market, emplyers cmpete t attract the mst valuable talent fr their needs. Transfer system affects and reduces the ability f clubs t cmpete fr ftball players. The transfer system restrains cmpetitin amngst clubs t what is mst valuable t them playing talent. Transfer fees are a barrier and disincentive t recruitment. 3. That restrictin als affects the psitin f players The transfer system affects the player s emplyment pprtunities and the terms under which emplyment is ffered. Fundamental rights perspective. Players are traded as assets. Their labur becmes a cmmdity, which is bught and sld t make prfit. The EU Charter f Fundamental Rights grants the right t every wrker t wrking cnditins which respects his r her [ ] dignity. Such a trade f labur infringes that right t dignity. See als the pressing prblem f Third Party Ownership: investment funds buy stakes in players. 4. The restrictin f cmpetitin des nt pursue a legitimate bjective, and is unnecessary and disprprtinal The usual argument is that the transfer system is an incme re-distributin mechanism in ftball, prviding smaller clubs, leagues and assciatin with much needed finance. Hwever, transfer rules is nt an adequate means f maintaining financial and cmpetitive balance in the wrld f ftball. In additin, recent data shw that the redistributive pwer f the transfer market is limited. There is, in reality, a transfer fees spender pyramid. Only a limited number f clubs and cuntries benefit f the transfer system. 5. On cntractual stability - Stability : is this mre abut preserving the existing situatin/status qu? That wuld be anti-cmpetitive; - Matuzalem: cntractual stability was needed t intrduce a pst-bsman transfer market; - 14 years after the amendment f the RSTP: ftball industry seems t be characterized mre by cntractual instability see the number f transfers and the rising transfer fees. 3 STEFAN SZYMANSKI, Mney and Sccer. A sccernmics Guide, New Yrk, Natin Bks, 2015, p. 269. 4 B. GERRARD, Achieving transactinal efficiency in prfessinal team sprts: the thery and practice f player valuatin in F. GODDARD and P. SLOANE (eds.), Handbk n the Ecnmics f Prfessinal Ftball, Edward Elgar, 2014, p. 189. 4
V. Why shuld this cmplaint be a pririty fr the Eurpean Cmmissin? - The Cmmissin is the guardian f the Treaties. If EU cmpetitin law r the freedm f mvement f wrkers is infringed, the Cmmissin shuld act. - 2001 infrmal agreement. After almst 15 years, and 20 years after Bsman, the mment is there t verify whether the infrmal agreement with FIFA and UEFA has been based n accurate assumptins. Is cntractual stability a legitimate bjective? Has FIFA been successful in its endeavrs t establish cntractual stability? Was cntractual stability abut cntractual stability r abut smething else? - The transfer system interferes with labur mbility and the cnditins under which new emplyment pprtunities are ffered. Accrding t president Juncker, free mvement f wrkers and labur mbility are plitical pririties f the Eurpean Cmmissin. See Mr. Juncker s pening statement in the Eurpean Parliament s plenary sessin n 15 July 2014 - A New Start fr Eurpe: My Agenda fr Jbs, Grwth, Fairness and Demcratic Change : Free mvement f wrkers has always been ne f the key pillars f the internal market, which I will defend, while accepting the right f natinal authrities t fight abuse r fraudulent claims. I believe that we shuld see free mvement as an ecnmic pprtunity, and nt as a threat. We shuld therefre prmte labur mbility, especially in fields with persistent vacancies and skills mismatches. See als Mr. Juncker s plitical pririties, available n his website: Free mvement is an pprtunity, nt a threat. *** 5