History of FIFA transfer regulations

Preamble

In January 2019, FIFA released a transfer market report that revealed, inter alia, that the total spending on international transfers in 2018 reached a new high of USD 7.03 billion, 10.3% more than in 2017. A new record was set with 16,533 international transfers, 5.6 % more than in 2017, involving 14,186 players of 175 different nationalities. The highest transfer fee paid was the transfer of Neymar from FC Barcelona to PSG, priced at USD 263 million.

If comparing these figures with football transfers historically, the level of transfer fees being paid for players has been exploding in recent years. In 1995, in comparison, only USD 403 million were spent on 5700 international transfers. The amount spent on all international transfers in 1995 is USD 73 million lower than PSG spent on the two transfers of Neymar and Mbappé in 2018, USD 263 million and USD 213 million respectively.

This explosion in transfers and transfer fees in the past 20 -25 years, makes it all the more necessary for clubs, players and national associations to understand how these transfers are regulated. In order to understand the FIFA transfer regulations, it is necessary to understand why FIFA decided to create these transfer regulations, and to understand the process of the making of the regulations.

Pre Bosman

Before 1995, few rules applied to transfers of players. Both FIFA and UEFA had transfer regulations, but these regulations to a large degree encouraged the involved clubs to come to agreements. Domestic transfers were handled according to the transfer regulations of the national associations, which varied from association to association. According to UEFA’s transfer regulations at the time, which had similar provisions to FIFA’s transfer regulations, a player under contract could only transfer to a new club if allowed to do so by his former club[1], which is the same provisions as the FIFA RSTP has today. Moreover, the club had the opportunity to offer the player a new contract before its expiry. The player was free to accept or refuse that offer, but if the player refused the offer, the club could still claim a transfer fee if the player found a new club[2].

Bosman

The Belgian football player Jean-Marc Bosman was never a football star but had for several years earned a living as a professional football player. In 1988, when Bosman was 24 years old, he signed a contract with Belgian first division club RC Liege. In 1990 his contract with the club expired, but before its expiry, RC Liege used the possibility in the transfer regulations to secure a future transfer fee by offering Bosman a new contract. In its offer of a new contract, RC Liege cut Bosman’s wages from 120.000 BFR to 30.000 BFR a month[3]. It was quite obvious that the club offered a new contract because they wanted to receive a transfer fee for the player, even though the they showed little interest in keeping the player.

Since Bosman was not willing to accept the cut of his wage he was actively looking out for a new club. He even found a club that showed interest in him, the USL Dunkirque, a club of the second French division that wanted to sign him. The two clubs even agreed on a transfer feee, but RC Liège had doubts as to USL Dunkerque's solvency, and consequently did not ask the Belgian FA to send the transfer certificate to the French FA. As a result, the transfer collapsed, and Bosman was left without the possibility to continue his professional football career.

Both Belgium and France were, and are, members of the European Union. One of the main principles in the EU is the freedom of movement of workers within the EU area. This principle was at the time stated in art. 39  of the Treaty establishing the European Community (now article 45 of the Treaty on the Functioning of the European Union) which read as follows:

`1. Freedom of movement for workers shall be secured within the Community.

2. Such freedom of movement shall entail the abolition of any discrimination based on nationality between workers of the Member States as regards employment, remuneration and other conditions of work and employment.'

Bosman claimed that RC Liège’s refusal to release him was a breach of the principle of free movement of workers and took the case to The European Court of Justice (ECJ). In short, ECJ agreed with him and concluded that professional football constitute an economic activity and is subject to EU law. With regards to the relationship between transfer regulations and the principle of free movement for workers, the ECJ stated:

“Since they provide that a professional footballer may not pursue his activity with a new club established in another Member State unless it has paid his former club a transfer fee agreed upon between the two clubs or determined in accordance with the regulations of the sporting associations, the said rules constitute an obstacle to freedom of movement for workers.”[4]

With regards to a claim that transfer rules are justified by the need to maintain a financial and competitive balance between clubs and to support the search for talent and the training of young players, the ECJ stated:

 “In view of the considerable social importance of sporting activities and in particular football in the Community, the aims of maintaining a balance between clubs by preserving a certain degree of equality and uncertainty as to results and of encouraging the recruitment and training of young players must be accepted as legitimate”.[5]

It is worth noting that with these considerations, the ECJ acknowledged the importance of encouraging the recruitment and training of young players.

Nevertheless, the ECJ concluded that the football associations are obliged to comply with EU law, including the principle of free movement for workers. The right for a club to claim transfer compensation for a player whose contract is expired did indeed constitute a breach of the principle of free movement of workers.

Post-Bosman, 1995 – 2001

The most visible immediate effect of the Bosman ruling was that clubs lost their power over players whose contracts had expired, leaving these players free to conclude new contracts with other clubs. The clubs obviously wanted to prevent their players leaving for free, and many clubs tried to compensate for this loss of power by trying to tie players to longer contracts and implement clauses in the contracts giving the club the right to unilaterally extend contracts[6]. Further, the clubs claimed that the Bosman ruling was a large threat to the development of football, as there were no longer any incentives to train and develop players, as it would be cheaper to sign trained and developed football players than it would be to train and develop football players themselves.  The clubs and club associations issued this problem to FIFA and UEFA, urging them to establish transfer regulations that were compliant with EU law, but at the same time secured the clubs’ right to be reimbursed when players transferred to other clubs. FIFA started working on a new edition of their transfer regulations, Regulations on the Status and Transfer of Players (RSTP), and in 1997 FIFA sent the new edition of RSTP to the European Commission. The European Commission did not agree that the regulations complied with EU law but invited FIFA to a dialogue to discuss how the transfer regulations could be in compliance with EU law, whilst taking into consideration the specific relationship between the employer and the employee in the world of professional football. After years of discussions between EU, UEFA and FIFA, an agreement was reached in March 2001[7], where the parties agreed on central principles of transfer regulations. These principles were then implemented in the RSTP released in July the same year. These are some of the main principles the parties agreed upon[8]:

·        in the case of players aged under 23, a system of training compensation should be in place to encourage and reward the training effort of clubs, in particular small clubs;

·        creation of solidarity mechanisms that would redistribute a significant proportion of income to clubs involved in the training and education of a player, including amateur clubs;

·        international transfer of players aged under 18 to be allowed subject to agreed conditions; the football authorities will establish and enforce a code of conduct to guarantee the sporting, training and academic education to be provided:

·        creation of one transfer period per season, and a further limited mid-season window, with a limit of one transfer per player per season;

·        minimum and maximum duration of contracts of respectively 1 and 5 years;

·        contracts to be protected for a period of 3 years up to 28; 2 years thereafter;

·        the system of sanctions to be introduced should preserve the regularity and proper functioning of sporting competition so that unilateral breaches of contract are only possible at the end of a season;

·        financial compensation can be paid if a contract is breached unilaterally whether by the player or the club;

·        proportionate sporting sanctions to be applied to players, clubs or agents in the case of unilateral breaches of contract without just cause, in the protected period;

·        creation of an effective, quick and objective arbitration body with members chosen in equal numbers by players and clubs and with an independent chairman;

·        arbitration is voluntary and does not prevent recourse to national courts.

It is worth noting that although the RSTP has been amended on a number of occasions, most of the principles agreed upon by the EU Commission and FIFA remain untouched.

FIFAs RSTP, duties for national associations

The extent to which each national football association is obliged to comply with FIFA's provisions in its own legislation is regulated in FIFA’s RSTP art. 1-3 b):

b) Each association shall include in its regulations appropriate means to protect contractual stability, paying due respect to mandatory national law and collective bargaining agreements. In particular, the following principles must be considered:

– article 13: the principle that contracts must be respected;

– article 14: the principle that contracts may be terminated by either party without consequences where there is just cause;

– article 15: the principle that contracts may be terminated by professionals with sporting just cause;

In other words, the national football association is obliged to implement rules that ensure contractual stability. This obligation must be seen in light of how FIFA defines contractual stability. Furthermore, the national football association is obliged to consider having in the regulation that the principle that the contract can only be terminated by some of the parties where there is just cause. There is no obligation to include FIFA's wording or model in its own regulations. As long as the national football association has included in the regulations rules that ensure stability of the contractual relationship, there is thus a certain degree of freedom of choice with regard to how this is implemented.

[1] Frans de Weger, ‘The Jurisprudence of the FIFA Dispute Resolution Chamber’ 2008 p. 3.

[2] http://curia.europa.eu/juris/showPdf.jsf?text=&docid=99445&doclang=EN

[3] http://curia.europa.eu/juris/showPdf.jsf?text=&docid=99445&doclang=EN

[4] http://curia.europa.eu/juris/showPdf.jsf?text=&docid=99445&doclang=EN para. 100

[5] http://curia.europa.eu/juris/showPdf.jsf?text=&docid=99445&doclang=EN para. 106

[6] Frans de Weger, ‘The jurisprudence of the FIFA Dispute Resolution Chamber’ (2008) p. 5.

[7] https://europa.eu/rapid/press-release_IP-01-314_en.htm

[8] Ibid.