The law and the recruitment and transfer of players
After the buying club and the selling club complete negotiations and agree on the terms of the transfer, lawyers are often brought in to draft key contracts that would bind all parties to the deal.
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The most important contracts are the Transfer Agreement between the buying club and the selling club and the Player's Employment Contract with the buying club. Other relevant contracts include the Intermediary/Agent Contract, and if the transfer involves a high profile player then a potentially separate Image Rights Agreement would be signed between the buying club and the player.
This article examines some of the key provisions and clauses found in a typical transfer agreement which basically captures the transfer fee to be paid and the conditions precedent for its payment.
A typical transfer fee could be made of up a basic transfer fee, payable in full immediately or by installment, and other payments in respects of potential add-ons and a sell-on fee i.e. a percentage of the profit made from a future sale of the player. The first key clause should indicate why the transfer fee is being paid. In legal parlance it is known as the ‘consideration’ for the payment of the transfer fee which is obviously the permanent transfer of the player. Consideration in contract law is the exchange of one thing of value for another. It is one of the six elements that must be present for a contract to be enforceable. However the most crucial clause of a typical transfer agreement is the Transfer Fee clause. This clause normally has a number of sub-clauses which constitute the condition precedent for the payment of the transfer fee. The transfer fee clause would normally indicate the transfer fee to be paid under the agreement and the period within which it has to be paid which can sometimes be a few days.
As indicated above the payment of the transfer fee is normally made subject to the fulfillment of certain key conditions including the following:
• Players International Transfer Certificate
The agreement should indicate that Player’s International Transfer Certificate (“the ITC”) would be requested for and received by the buying club’s association from the selling club’s association. This sub-clause would be included if it is an international transfer. This is captured under Article 9 (1) of the FIFA Regulations on the Status and Transfer of Players. It must however be noted that International transfers of Players are only permitted if the player is over the age of 18. This is captured under Article (19) of FIFA’s Regulations on the Status and Transfer of Players as Protection of Minors. This clause and other specifics FIFA Clauses such as
Article 7 (Player Passport), Article 20 (Payment of Training Compensation for young Players) are mandatory provisions which are binding on all National Associations and who are to include these provisions in their regulations without any modifications. Consequently the GFA has included the provision on the Protection of Minors in International Transfer under Article 18 of its Regulations for the Status and Domestic Transfer of Players. The GFA has also included the Payment of Training Compensation for Young Players under Article 19 of its regulations.
• Authorization of Transfer by FIFA’s Transfer Matching System
The transfer fee shall be paid subject to the transfer being matched and authorized by the FIFA Transfer Matching System (“TMS”). The system is an online system introduced by FIFA in October 2010 for registering both domestic and international transfer of players, and which replaced the old procedure based on agreements signed on paper. The system which is designed to regulate the transfer of players worldwide has two variants; the Domestic Transfer Matching System (DTMS) for player transfers between clubs affiliated to the same association and International Transfer Matching System (ITMS) for player transfers between two different football associations. In order for a transfer to be validated the two clubs involved must enter the relevant information on the deal which must include the names of the clubs, the member associations, player personal details,, type of transfer (permanent, loan etc), the total transfer fee, details of any training compensation, transfer fee payment deadlines, the transfer fee payment schedule (including dates, amounts paid and recipients) etc. This provision can be found under Articles 6 FIFA Regulation.
The DTMS is fully functional in Ghana football and is captured under Article 6 of the GFA regulations.
• Work Permit
If the player requires a work permit to allow him to be lawfully employed as a professional football player in the country of the buying club, payment of the transfer fee would be subject to the player obtaining the work permit and this provision has been included in the transfer agreement.
• Medical Test
The payment of the transfer fee is subject to the Player passing a medical test. If a player fails a medical test, then the whole transfer might be cancelled unless the buying club is prepared to go ahead with the deal.
• Player Registration
The payment of transfer fee is also subject to the Player being registered with, and granted eligibility to play for buying club by its association.
Other important clauses
There are other clauses and provisions in a transfer agreement which are equally important but which are not condition precedent for the payment of the transfer fee.
Add-on Clause
Add-on are contingency payments made by the buying club to the selling club. Typical Add-on terms include the following:
• Specific payment by the buying club if the Player makes a certain number of appearances in the first teams competitive matches. For example if the player makes 25 appearances for the First team a certain amount of fee would be paid and if he makes 50 appearances another amount of fee would be paid by the buying club
• Another example is the buying club would pay a specific fee if the player scores a certain number of goals for the first team. For example a specific fee would be paid if the player scores 25 goal or 50 goals while playing for the buying club
• Payment of a specific fee if the player wins an award such as Player of Year or Player of the month award on a specific number of occasions in a season is another example of an add-on clause
• Payment of a specific fee if the buying club finishes in a certain position on the league table. For example if the buying club finishes in the top four.
Sell-on Clause
This clause normally indicates that should the Player be permanently transferred in the future by the buying club, and the transfer fee is in excess of the entire amount received by the selling club under the agreement , the buying club shall pay a percentage of such excess amount to the selling club. Let’s use the Charles
Taylor’s transfer from Hearts to Kotoko as an example. Assuming Kotoko subsequently transferred Charles Taylor to another club for a fee of GH¢60,000, and if there was a sell-on clause in the contract, Kotoko would have had to pay Hearts a certain percentage of the excess amount (GH¢20,000) because Hearts received GH¢40,000 as transfer fee.
Buy back Clause
Buy-back clauses in transfer agreements are used primarily to give a selling club the security of being able to repurchase a young promising player at a set fee should the player excel in the future. Some high profile examples include Álvaro Morata (Juve back to Madrid) and Gerard Deulofeu (Everton back to Barcelona). The Contract for Nathan Ake’s £20 million move from Chelsea to Bournemouth is reported to include a buy back clause so Chelsea can re-sign the player at a later date if they so wish
Right of First Refusal Clause
It is a generic provision in a contract that gives a specific party the right to be the first to be allowed to purchase a particular item if it’s offered for sale. The holder has the right to refuse to buy the item. A right of first refusal clause in a transfer agreement gives the club who has the benefit of the clause the opportunity to be informed of the selling club’s intention o sell a player it earlier bought from the holder of the right. This is different from a buy-back clause because usually with a first refusal clause, the selling club retains the power to decide whether to sell the player or not. Typically, a buy-back clause automatically triggers the transfer of the player should specific contractual conditions be met. Cesc Fabregas revealed that although there was a Right of First Refusal clause in the transfer agreement between Barcelona and Arsenal when he joined Barcelona, Arsene Wenger was not interested in activating the clause when Barcelona wanted to sell him although he Fabregas was ready to rejoin Arsenal.
The Writer is a Legal Practitioner and a Sports Analyst
