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This article is written by Soham Devlekar, pursuing Diploma in US Contract Drafting and Paralegal Studies from LawSikho.

Introduction

The first evidence of football dates back to the 12th century, its shape changing over the course of time and reaching its origin in Britain during the 18th century. Before medieval times, in villages and towns, this game had been played as “folk football.” The industrial and urbanized landscapes took their lead to enhance the game’s status into a professional sport. Every sport has some boundaries that should not be crossed which will negatively affect the status of the game, the participants, and the viewers, therefore, it will not be widely accepted and will become inaccessible. Keeping this in mind, as this game evolved, there came laws and rules that dictated the dos and don’ts. 

The laws and rules included the number of players a team should have, the parameters of the game, the length of the game, the size of the field and ball, the type and nature of fouls that referees may penalise (for e.g., now shoulder push is not considered as a foul), the offside rule, red card, and yellow card concept, and many other laws that define the sport. These codified rules of football sodality were called Laws of the Game (LOTG). In addition to laws, regulatory bodies and contracts between players and clubs were introduced. 

‘Fédération Internationale de Football Association’(FIFA) is a non-profit organization that delineates itself as an international governing body of football, which is well known in over 200 countries for its football association. The main factors which are involved in the domain of FIFA are contracts and their termination. Interestingly, termination plays a key role in this game because there is an abundance of fortune put up by the stakeholders.

Throughout this article, we will explore the contractual obligations between players and clubs, as well as football contracts and how they are terminated.

What are football contracts?

Let us first perceive the relationship between the football club and a football player, both will come into a contract wherein normally the club has to pay a transfer fee to consummate a transfer of a football player who is under contract with another club. After signing the contract, there is an obligation or importantly a commitment between the player and the club for a specific period whilst deciding at the time of transacting the terms of the contract per se. Unlike other ordinary contractual relationships where the employee can terminate the contract without being held liable for the financial consequences which are discussed.

Definition of football contracts

A football contract inherently means that the club is in control of the players. The contracts for football players are governed by associations of football, including both amateur and professional spheres. These contracts overlap substantially with the contract, tort, and labour law. Furthermore, football contracts also address other issues such as emolument issues, privacy rights, and intellectual property.

How are football contracts drafted?

The football contracts are drafted as per the negotiation inaugurated with the club and the player, where the player’s agent negotiates with the club about all the terms and conditions that are going to be included in the agreement. Generally, a lawyer drafts a football contract.

Importance of football contracts

In order to ensure disciplinary protocols, there needs to be a contract that both players and clubs abide by, and that should act as a guide for any issues between players and clubs. It also assists in reaching the masses, without which, viewership will be diminished. Therefore, there is an importance of contracts in football.

Parties to a football contract

  • Player,
  • Buying club,
  • Selling club, and
  • Player’s agent.

Clauses in football contracts

There are various obligations between a player and a club and a variety of duties imposed on each other which must be followed by both parties till the end of the contract. Football agreements protect the player by assuring that the player gets paid on time and the club is benefited as they can keep a player they do not want to sell or demand a large transfer fee. All these contractual obligations can be agreed upon if there are relevant and precise clauses inserted in the agreement.

There are relatively few sectors where companies will pay huge transfer fees to release an employee from a contract. Colloquially, this does not ensue where an employee is released for a higher fee after his contract ends. Even lawyers are not able to have another law firm or company bid for them in millions of dollars or pounds for the services that they will provide. From this standpoint, one can derive why football players have been given so much importance and sold for millions of dollars. Hence, there should be decisive clauses used in a football agreement to stay away from any repercussions.

Professional football player contracts mostly include common clauses and a standard employment contract format is used. Sample clauses are given below:

  • The effective term of contract 

This clause will contain the exact term of the employment contract when it will start and end date of the contract, also providing the regulation which the contract will comply with.

Example of effective term of contract clause;

  1. The player commences work on: (exact date). 
  2. The contract has been concluded for a specified term and shall expire on: (exact date). 
  3. The player and the club have equal right to enter negotiations for extending the contract by notifying the other party of this in writing at least one (1) month before the date of expiry of the contract in advance.
  • Description of work

It will include all the work the player will do related to the field of football and basically, all the tasks allotted are mentioned in this clause. The description of work could include: 

  1. The player is employed as a professional football player in the terms and conditions provided in the contract.
  2. The main tasks of the player are participating in the club´s training process and participating in matches on behalf of the club.  
  3. Work tasks are provided by and their performance is supervised by the (head) coach.
  • The clause on player’s salary and amounts to be paid by the club

Example of salary, wages and amounts clause;

  1. The monthly gross wages of the player are one and a half (1.5) minimum wage valid in the Country of Spain OR €X (X euros).
  2. Wages are paid once (1) a month on the Xth day of the month following the month of work to the bank account which the player has informed the club about. 
  • Obligations of the player

Which can include coming to training on time, following the instructions of the club, attending all the matches, etc. obligation should also include not to abuse or badmouth the representative club by posting something on social media.

  1. Obligations of the club can include sending the player for national team matches, paying wages and fees on time, taking all the costs for injuries suffered by the player, and keeping the records of the player, keeping the player’s information confidential, etc.
  2. Doping, Match-fixing, and gambling clause (maintaining disciplinary rules and not demeaning the club in anyway).

Example;

  • The player and the club obey current rules concerning doping.
  • Doping is the use of substances and methods which are in the prohibited list regulated by the disciplinary regulation. The parties are aware that the use of doping is forbidden.
  • The player and the club shall comply with all documents of other international football organisations concerning gambling and match-fixing.
  • Disciplinary clause 

Disciplinary clause and dispute procedures clause where the club will investigate and decide upon breaches of contract, or failures to observe the contract (if, for example, a player fails to turn up for training, fights with other teammates or refuses to play for the team).

  1. The club prepares internal disciplinary rules, describing the rules for players’ behaviour, procedures, and sanctions in the case of violations. The club must present the internal disciplinary rules to the player in an understandable manner against signature.
  2. If the player violates any contractual obligation, the club may establish sanctions or a selection of sanctions on the basis of the established disciplinary rules, taking into account the severity of the violation.
  • Termination of the contract 

Termination of the contract is used for e.g., clubs not paying players’ salaries. This clause could include;

  1. The contract expires upon the expiry of its term. The contract entered into for a specified term may only be cancelled extraordinary for just cause.
  2. The contract is terminated between parties prematurely on the basis established in the ________ Act in the Country of _____.
  • Advertising and Representation Rights Clause

Advertising and Representation Rights Clause or club marketing activities clause is used to represent the club and getting involved in club activities for various campaigns for brands and other initiatives presented by the club should be followed.

  1. The player must participate in marketing events established by the club which have the purpose of promoting and advertising the football club;
  2. The player must wear the outfit established by the club at advertising events.
  3. The player must not conclude an individual advertising contract or participate as a player in an advertising event without the mediation or written consent of the club.

Football contracts in FIFA jurisprudence and its importance

What is FIFA Jurisprudence?

FIFA Jurisprudence or FIFA legal system consists of the FIFA Dispute Resolution Chamber (DRC) which was created by FIFA in 2001 to resolve disputes regarding the international status and transfer of players. In the event that a decision made by the Dispute Resolution Chamber (DRC) is not satisfactory, it can be appealed to the Court of Arbitration for Sports (CAS), an international tribunal that arbitrates sports-related disputes.

FIFA and its regulations

Unilateral termination of a football player’s contract is mainly regulated in FIFA’s transfer regulations. Termination of contracts is not an incipient concept in this field of law especially in FIFA’s regulations and its entire jurisprudence. The Regulations on the Status and Transfer of Players (RSTP) is a regulatory framework in FIFA jurisprudence. It is a provisioning mechanism enacted by FIFA which ensures contractual stability and contractual linkage amidst players, clubs, and member associations. 

Moreover, these contracts are executed with the concept of ‘transfer window.’ This word is unofficial and usually used by a layman or the media houses. The Transfer window is the duration given to clubs and players to negotiate the terms. During the transfer process, players are transferred according to the club’s requirements and their performance. Such a transfer is completed by registering the player through FIFA’s regulatory framework. This is mentioned under Article 6 of RSTP as a registration period while Article 5 explains more about registration.

Importance of football contracts in FIFA jurisprudence

  • Stability of the game between players and clubs;
  • The fluidity of relations; 
  • Basic norms for players and clubs’ obligations;
  • Power dynamics playing a pivotal role – where clubs are superior and controllers of the game and players. Football contracts in this jurisprudence act as an equilibrium;
  • Contracts help in the transfer system of players to the clubs.
  • Maintaining safety for the players as well as for the viewers who are watching, as these football contracts have clauses particularly to follow the instructions to maintain the status of the game,
  • Any conflict or dispute impending FIFA jurisprudence can be dealt with prior while mentioning specific requirements in the football contracts;
  • In football, money plays a significant role, big checks, money transfer, clubs’ merchandise, stadiums cost, players demand, etc., hence contracts become an integral part of FIFA jurisprudence to ensure the smooth running of things where stakes are always high.

Termination of contract as per FIFA regulations

What is the termination of contracts?

Termination of contracts conventionally means when two parties to a contract break the obligation which was earlier set. In general, the effect of the termination of a contract is to discharge the parties from their unperformed obligations under the contract. 

In FIFA, termination of football contracts is a termination of the employment contract of a player. Termination plays a pivotal role in this game as it determines if the player and club will discontinue the contract and break the obligations and the repercussions, where the stakes are always high. For example; if it is high-priced and well-known players like Lionel Messi or Cristiano Ronaldo who wants to move to another club there should be a provision of termination or else parties to the contract will not be satisfied. 

Conditions under which contract can be terminated

Just cause

‘Just cause’ generally has no particular definition in the RSTP of FIFA, just cause is a legal term that describes that if an employee is terminated based on their own misconduct, then their employer shall not present them any notice. Hence, the employee has breached the contract of employment by their actions and so their employer has the right to instantly terminate the employee. But in FIFA’s regulations and considering earlier decisions, it refers to the exceptions or circumstances that may allow a club or player to terminate the employment contract between them, without any punishment or consequence. Any unilateral termination outside of “just cause” would attract monetary or sporting sanctions against the defaulting party.

A contract between a football player and a football club can only come to termination in the following situations:

  • The contract expires- when the player’s term is over at the club and the contract ends;
  • The contract is terminated by mutual accidents – when the player and club are mutually agreeing to terminate the contract due to some unfortunate event;
  • The player can terminate the contract with sporting just cause – In this type of termination, the club has failed to meet the contractual obligations which were promised earlier;
  • The club or the player can unilaterally terminate the contract with just cause- Both the parties have equal right to terminate the contract if either of them breaches the terms, conditions or obligations specified under that contract.

When the player terminates the contract?

Just cause in such a case only can be established if the club has breached its contractual obligations. The club’s most consequential contractual obligation towards the player is the payment of wages, and jurisprudence from DRC and CAS unsurprisingly shows that missing or truncated payments of wages plenarily or partly are claimed by football players as a justification for the termination of the player’s contract. If the contractual breach persists for a long time and the violation of obligations is quite clearly seen then the player is entitled to use just cause for terminating the contract unilaterally.

DRC and CAS usually assess the termination of contracts cases of FIFA authority wherein it includes late or reduced salary payments which constitute a just cause for a player to terminate the contract. However, FIFA inculcated a new provision of Article 14 in the RSTP framework. Article 14 states that if a club is unable to provide salary payments to the player and the club is two months late or more of such payments then the player using just cause can terminate the contract provided that the player gives the club 15 days’ notice for paying that outstanding amount. This is included in the first paragraph of Article 14bis of RSTP.

When the football club terminates the contract?

The football club can unilaterally terminate the player’s contract just like the players but it must establish just cause whereas normally players unilaterally terminate the contracts. Jurisprudence from FIFA, DRC, and CAS show that clubs can establish just cause if players breach the contract in an unethical manner for instance if a player does not report for training for a prolonged period or breach the contract by not following the principles or obligations given by the club. 

For instance, players like Adrian Mutu who was sacked from Chelsea FC after he breached the contract by testing positive for cocaine. The greatest of all time, Diego Maradona, is another player who was addicted and tested positive for cocaine while he was at the top. In the 1994 World Cup, he was banned for the stimulant ephedrine and ended the World Cup in disgrace. All these examples represent that a club can terminate the contract unilaterally.

Unilateral termination of the contract

If a player terminates his contract with just cause, due to the club’s unilateral decision to truncate or not pay salaries, the player will be in liberty to sign for another club and his former club will be liable to pay him emolument. In such a situation, the club is liable to pay emolument and will also be at the risk of sporting sanctions. 

However, if the player terminates his contract without just cause or the club terminates the contract with just cause, the player is liable to pay emolument to the club, and with risk sporting sanctions. There must be a protected period of two or three years (also depending upon the age of the player) for sporting sanctions to be imposed. In reality, the player can be suspended from the football matches whereas the club may be restricted from one or more transfer windows.

Sanctions and compensation on termination

1. Article 17 and Sporting Sanctions

We can visually examine that in football contracts customarily, the main criteria are player’s salaries because there are millions of dollars involved in players as well as all the things cognate to this huge spectrum of business. In any scenario, it is ordinarily about the players and their new club and how the transaction is going to be completed with the former player’s club. 

Article 17(3) to (4) describes that the party who has breached the contractual obligations shall be liable to the risk of sporting sanctions with compensation and within a protected period. For sporting sanctions, that can be imposed on a player or a club if either unilaterally terminates the contract without the just cause then the player shall have a restriction of four-month on his eligibility to play for official matches whereas in aggravating circumstances, the restriction will last for six months. In a situation where sporting sanctions are imposed on clubs, the clubs will suffer a ban from registering or buying any fresh players, nationally or internationally, for two entire and consecutive registration periods.

However, jurisprudence from CAS and DRC shows that sporting sanctions are rarely imposed in addition to liability for damages. The principle was first used in FC Pyunik Yerevan v. E., AFC Rapid Bucaresti and FIFA. CAS concluded that FIFA was not obliged to impose a sporting sanction, even if it follows from the wording. This decision by CAS has formed the basis for a practice where the main rule that a sporting sanction should be imposed has almost become an exception.

2. Calculation of compensation

Primarily, if a contract is terminated by the player or the club without just cause and if a player or club has terminated the contract by using just cause, the one who has breached the contract and violated the obligations will be liable for damages in accordance with Article 17

Matuzalem, De Sanctis and Andy Webster are the precedents where CAS, DRC and FIFA decided the compensation paid to the former club while the transfer was payable by the player and the new club. DRC and CAS have awarded compensation during a sizable number of cases that supported the principles of these cases which means that this acknowledged the injured party’s right to be placed within the position it might be if the contract had been properly consummated i.e., the principle of positive interest. A positive interest in lay terms means the time value of money where money today is more than the money tomorrow. Within the method of scheming the compensation, a good variety of things will need to be considered, lending the DRC and CAS panels a good margin of discretion.

When FIFA bestowed the mentioned amendment to RSTP Article 14 (2) and the new Article 14bis, they also introduced amendments to Article 17, which regulates how compensation should be calculated when the player is entitled to compensation. The new article states a transparent methodology of calculation. If the player has not signed with a brand-new club, he will be entitled to a quantity equal to his wages for the remainder of his contract. If the player has signed a contract with a brand-new club, these wages shall be subtracted from the compensation. 

The positive distinction between the worth of the previous contract and therefore the new consent the corresponding period is outlined as “mitigated compensation.” Additionally, to “mitigated compensation,” the player can mechanically be entitled to 3 months’ wages, outlined as “additional compensation”. If the player establishes flagrant circumstances, the extra compensation could also be accumulated from three months up to a maximum of six-monthly salaries, though the compensation might not exceed the remainder price of the untimely terminated contract.

The new formulation of Article 17 clearly offers less area for discretion with regards to the calculation of collectible compensation, compared to the previous formulation. The reasoning for FIFA’s call to alter the availability was that the previous formulation gave the DRC and CAS panels respectable discretion on a way to calculate compensation, which contributed to an outsized degree of uncertainty for the soccer clubs and soccer players concerned in such disputes. Though the new formulation may contribute to more certainty for the concerned parties once a player is entitled to compensation, the previous formulation still applies in cases wherever the club is entitled to compensation.

Paramount case law in the history of football contracts

Union Royale Belge des Sociétés de Football Association ASBL v. Jean-Marc Bosman

This is the most iconic and landmark case in the history of football. It changed the overall transfer market. This gave players i.e., employees and clubs i.e., employers to maintain stability in the contractual obligations put forward by both parties. There is a cardinal concept of unilateral termination of a football player’s contract, usually, the termination of any contract occurs mutually or if either party breaches any terms. This unilateral termination of a player’s contract is regulated in FIFA’s transfer regulations which are ‘Regulations on the Status and Transfer of Players’ (RSTP) in Part IV (Maintenance of Contractual Stability between Professionals and clubs)

In 2001, the agreement between FIFA, UEFA, and the European Union was established due to this ruling issued by the European Court of Justice in 1995. The Bosman Ruling eventuated because the football player Jean-Marc Bosman was denied a transfer to a French club after the expiry of his contract in the existing Belgian club. This ruling gave a right to the football players who wanted to switch to another club after the expiry and give flexibility to the players as well as the club. 

This was extremely impactful, as the player had to take permission or consent of the subsisting club to move to another. This gave rise to the transfer fee structure among players and the club now can charge a good amount of transfer fee if the player has immense potential. Later, FIFA, UEFA, and EU concluded to work together on a new transfer system from 1995 to 2001 and in 2001 there were new regulations amended by FIFA with RSTP which had some changes over the past but the main principles or crux of RSTP remained the same.

Conclusion

Due to the plethora of external factors affecting the football contractual relationships, it is not feasible for the sports to regulate without the provisions. Consequently, RSTP comes into the picture where the regulatory framework sanctions the players and clubs to work systematically. RSTP strikes the balance between the clubs and the players while giving them room for flexibility and acts in an equilibrium. Contracts in football are flexible now, as incipient provisions and advancements are added every year in FIFA’s Regulations while the Just cause concept remains undefined. Just cause is actively utilized in unilateral termination of football contracts but does not have a particular provision in RSTP.

It will be intriguing to optically discern with the advancements taking place in future for just clause provision to be recited in the RSTP provisions. Unilateral termination of contract can be utilized in other sports as well and can be adapted by other fields of practice. Just like the spectators of the game, one can only wait with jurisprudential developments in FIFA to inculcate more of such provisions which will eventually lead to better harmony with clubs and the players. This will eventually change the dynamics of other sports contracts and employment contracts per se as more development is anticipated in the future.

References


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