Yesterday in Belgium, FIFPro, the world football (soccer) players’ union, filed a competition law complaint with the Directorate General Competition of the European Commission against FIFA in an attempt to challenge the movement of players.[i] FIFPro is denouncing the Regulations on the Status and Transfer of Players (RSTP) as anti-competitive and illegal, preventing smaller clubs from competing, limiting player rights, and failing the future growth and success of the sport. Should the challenge be successful, the global transfer system would look drastically different from its current state, and transfer fees might become a thing of the past. The arguments that FIFPro will make are outlined below, along with their analysis of each issue (whether valid, dubious, or otherwise).
How did FIFPro reach this point?
The global transfer system began evolving in England in the late 1800s when registration requirements were put on teams and players in order to solidify competition and ensure that a player only played for one club. Transfer fees were paid, even at the end of contracts, and in the event a prospective buyer did not offer enough, the player would have to remain with the original team.[ii] While this system lasted for decades, one of the biggest developments in transfer history was the landmark Bosman ruling, in which the European Court of Justice found that this reserve clause situation was illegal, and transfer fees could not be imposed on out-of-contract players. This case essentially created free agency in football in 1995, and increased labor movement in the industry.
Enter the RSTP in 2001, where FIFA enacted some standards regarding player transfers, including maximum contract lengths, protecting youth players, breach of contract penalties, and more. After seeing the implementation of these rules, and the recent results, FIFPro has concluded that these measures are either no longer being respected or just patently unfair to the rights of players. With the RSTP in place for 14 years now, FIFPro is claiming that that harm outweighs the benefit, and those profiting from the current state of affairs are the opposite of those that the rules were enacted to protect and support. The RSTP has failed to achieve its stated goals, including contractual stability, competitive balance, sporting integrity, financial solidarity, and the training of young players.
FIFPro’s Major Concerns
While many of the rules introduced with RSTP were put in place in an attempt to stabilize financial aspects of the global transfer system, one of these clauses is the Solidarity Mechanism. This article was designed to reward clubs for training a player in his formative years, between ages 12 and 23. While the idea in theory is good, FIFPro General Secretary Theo van Seggelen stated that under 2% of overall transfer fees end up being true solidarity payments to any clubs outside of the top five leagues. As one of the principle ideas behind these regulations to begin with, the original goal would have been to have a much more significant figure being trickled back down to clubs all across Europe, and the world.
Related to the solidarity mechanism, FIFPro has alleged that these youth players have also been irrevocably harmed. The trafficking of minors has continued, if not worsened, since the introduction of RSTP. Stockpiling these “assets” is at an all-time high, which further minimizes solidarity payments to smaller clubs, and potentially a less stable development for youth players. Once these players get to a large club, they are still more or less at the mercy of that club until their 23rd birthday, as the Bosman ruling does not apply to players under 23. While an amateur can always turn down the professional contract,[iii] once he has signed he is subject to the heightened control of the club until he reaches Bosman age. These players get caught up in the top teams’ arms races to their detriment as possible (likely) lack of first-team play stagnates growth.
The primary beneficiaries from the RSTP have been the major clubs (and to a slightly lesser extent the big five European leagues) and agents. Per van Seggelen, the major clubs and leagues retain 68% of transfer fees, and agents receive 28%.[iv] The setup additionally allows for abuse, as seen with recent issues involving third-party ownership and players being treated more as commodities than employees or laborers. The combination of Bosman and RSTP create situations that clubs exploit, pushing players to re-sign their contract with multiple years remaining so they never lose them on free transfers. FIFPro argues that this is another example of the imbalance in negotiations between player and club, giving the club the advantage.
The minor benefit to the player is overshadowed by the additional bargaining power of the team to demand a higher transfer fee. If a player doesn’t extend the contract, the club has the leverage to freeze the player out, while the player has little other option during the negotiating process. Even worse, adverse cases for players have continued to lessen player’s efficacy when dealing with teams in contractual matters. The Matuzalem case set a precedent causing a player to owe a former team more than he made in most if not all of his career, due to the application of the RSTP. The de Sanctis case helped show the inconsistent application of Article 17 of the RSTP, and how monetary penalties frequently seem arbitrary, and not applied constantly with regard to other similar cases.[v]
The higher transfer fees are exacerbated by the richest of the rich, who are more than willing to spend lavishly to buy up the players they desire. The top ten transfers on or before 2001 were a combined 285 million pounds. With (inflation and) the implementation of RSTP, since 2009 alone the top ten transfers have cost 658 million pounds. Transfer costs are rising, and the beneficiaries are the clubs that can afford it, which at the top is a relatively unchanging (and short) list. With the additional introduction of Financial Fair Play, clubs are further stratified into financial castes. Top teams continue buying top talent all while spreading money (transfer fees) amongst other top teams and leagues while others are left behind, unable to bridge the financial gap.[vi] FIFPro believes that these top clubs can effectively keep up a high barrier to enter the pinnacle of competition by keeping transfer fees high.
The need for additional money, in addition to small clubs’ reticence to cover transfer costs led to third-party ownership. Players with potential become assets for third parties, who are only looking out for their own economic interests, and further divide and complicate employee-employer relationships in the system. The undue influence that these third parties have, as well as potential financial instability that they can leave clubs with, are significant reasons why FIFA recently banned the practice. While FIFPro does not need to worry as much about the already banned practice of third-party ownership, they still worry about the fact that the atmosphere brought about by RSTP created the possibility for such influences to arise.
What will happen now?
No, FIFA’s current transfer system arising from the RSTP is not going away tomorrow. This process will likely continue into the next few years. FIFPro is asserting that the last attempt (RSTP), while not broken, is significantly flawed, and fails to address the desired goals and objectives that were sought in 2001. At the same time, no concrete alternative has yet been provided as a better option, and it remains to be seen whether such an option will factor into any decision that the European Commission makes. Overall, this complaint has the opportunity to be Bosman revisited[vii] in terms of overall affect on the global transfer of players, and could change the landscape of labor movement within football.
[i] The full FIFPro press conference can be found here: https://t.co/TLhX0O6pyT.
[ii] This situation is essentially the same as baseball’s reserve clause, which was struck down by Marvin Miller in 1975.
[iii] Such as Paul Pogba leaving Manchester United for greener pastures.
[iv] With agents receiving 28% and small clubs only receiving a fraction of that, the players’ union sees a sizeable portion that can be reallocated to further the interests and future of the sport.
[v] Consequences of terminating a contract without just cause.
[vi] The principle tenet of Financial Fair Play is the breakeven requirement, which basically says you can’t spend more than you make. While designed to prevent teams from building up massive debts and losses, it also hinders clubs from making competitive leaps with spikes of increased expenditure.
[vii] If the Bosman decision was on steroids. While Bosman affects approximately 10% of players at any one time, this change would change every completed transfer.
Pingback: Sports Law Links | The Sports Esquires