Top tips for football clubs on navigating complex employment negotiations

Published 07 January 2019 By: Nick Hawkins, Naomi Latham

Football players on field with ball

Not content with 8 Olympic gold medals, world domination and stardom, Usain Bolt wanted to become a professional footballer. With the aim of one day playing for Manchester United, a club he famously supports, and following a couple of trial periods in Germany (Borussia Dortmund) and Norway (Strømsgodset), he joined the Australian Central Coast Mariners for an indefinite training period1 in August this year.

Approximately 10,000 people attended Bolt’s pre-season debut, with his first goal for Mariners attracting around 6.24 million views on Twitter2. Bolt undoubtedly attracted widespread international media attention for the club, and his potential commercial value to the club would have been obvious to both parties.

The specific circumstances relating to Bolt’s case were very unusual in many ways. On the one hand, he is an Olympic sprint champion and a world-renowned star who would undoubtedly make a pronounced impact on the short-term revenues of the Mariners. On the other hand, he is a 32-year-old trying to kick-start his career as a professional footballer, with no previous experience at a reputable level. Indeed, it was reported3 that from a playing point of view, he was not likely to strengthen the Mariners’ team in any significant way – not least because the physique needed for football is considered to be completely different to that required as an Olympic sprinter.

Bolt’s commercial value was such that the Mariners were keen to engineer some sort of a deal. However, no such deal could in the end be agreed4. Bolt’s management were apparently looking for a deal worth $3million, whereas the club were not prepared to offer more than $150,000,5 without the benefit of a third-party contributor. Efforts to secure a "commercial solution" apparently collapsed after the club were unable to secure that third-party contribution.

The particularly interesting aspect to Bolt’s case is the interplay between the footballing and commercial value of Bolt. Although both parties have said that the decision to end discussions was amicable, these specific circumstances provide an opportunity to examine:

  • why contract negotiations break down;

  • what rights both employees and employers have in situations such as these; and,

  • what steps employers in the sports industry should take to best manage these scenarios.

In doing so, we will draw analogies with employment negotiations between companies and senior executives to pick up relevant learning points. Please also note that while most examples relate to football, the lessons are equally applicable to other sports.

Why do contract negotiations break down?

Before commencing negotiations, the Mariners had to consider what the wider implications of this deal might be. For example, how might the other, more experienced and skilled footballers in the squad feel about having someone join who would most probably be the highest earning player? What long-terms benefits would Bolt bring to the club, and would this justify the size of the investment? How might securing a deal with Bolt affect the Mariners’ ability to negotiate with their current or future staff?

These sorts of issues are not exclusively the preserve of football clubs and footballers. In the world of employment law, we often see companies faced with similar questions and dilemmas when negotiating with senior executives, when the balance of negotiating power is perhaps slightly more even than between your average “player” and a club. It is often the case that senior executives are headhunted and so are the ones being approached, not the other way around (in much the same way that footballers are often approached by clubs). This in itself provides the individual with a degree of leverage, as they have the benefit of knowing they are wanted. This dynamic may give the employee greater scope to negotiate the terms put to them. It is therefore practical for an employer to begin negotiations on the assumption that the executive will want to negotiate terms to some extent. For the purposes of this piece, the author has tried to avoid dealing with perhaps the most obvious reason negotiations break down, and that is because the money isn’t right.

The terms – money aside

Inevitably, deals will often collapse because the money isn’t right. But there can be occasions where the money does not appear to be the primary concern, necessarily. Recently capped England international Jadon Sancho reportedly rejected a deal in 2017 from his club Manchester City of £30,000 a week, the biggest deal ever offered to a 17-year-old player.6 Instead, Sancho opted to go abroad and accept a deal from Borussia Dortmund. The reported reason for Sancho’s rejection of the City deal was that he felt he would have more first-team opportunities at Dortmund7, and would therefore develop faster, whereas at Manchester City he could not be assured of playing time. That being said, his salary at Dortmund is unknown, but given Manchester City’s financial clout one can speculate that it was not the finances that were the issue.

Across businesses there are always a number of issues – money aside – that can be significant, particularly in respect of senior individuals negotiating their contracts. For example, the proposed responsibilities of a senior executive may not be as wide-ranging as expected (a footballing equivalent might be that the manager does not have responsibilities for player purchases); the executive may want to bring team members with them (or “backroom staff”) which the company are unwilling to accommodate; there may be issues around relocation costs if the executive needs to move for the new role; and there may also be concerns on the part of the executive about the restrictive covenants proposed (be that there are too many, the restricted periods are too long, and will often seek to negotiate the restrictive covenants put to them).

These sorts of issues may not always be relevant to football players (in large part, because there is a standard form of contract for players in the UK) however they do become relevant issues for managers. Of course, typically one would only expect to hear about contractual matters where there is a dispute and there are several high-profile examples of when UK employment law is very relevant in the footballing context, including when Steve Bruce "walked out" of Crystal Palace8, when Chelsea were in dispute with former club doctor Eva Carneiro9, or more recently when Antonio Conte was dismissed by Chelsea10.

Rigidity

Where employers take a more rigid approach to negotiations, it may lead to a breakdown at an early stage and possibly the loss of an individual’s interest altogether. Rigidity can earn you a reputation, although this might of course be something to one’s advantage; indeed, there are some famous examples in the world of football of people regarded as “tough” negotiators, and the same can be said of certain big businesses.

However, there is a balance to be struck, and there may need to be occasions where a degree of flexibility should be exercised, assuming that the individual is of sufficient value to the business. Being flexible can make the individual feel valued and can assist in negotiations, however employers should be cautious of being too flexible as it may set a precedent for future negotiations, and potentially expose the employer to future disputes about pay parity.

Poor communication and a lack of rapport

Issues which can often lead to a breakdown in negotiations include other things such as lack of rapport and poor communication. Building rapport is vitally important to ensure a prospective employee feels valued. Turning back to the comparisons with football, Gabriel Jesus admitted that he joined Manchester City instead of one of a host of other top clubs because Pep Guardiola was the only manager who gave him a phone call prior to a deal being struck which conveyed to him the club were genuinely interested11.

In the same way, it is critical for an employer to establish some common ground in the early stages of negotiations in order to lay the foundations for a solid relationship to be built upon. If an individual does not feel valued, then what is their incentive to move? Failure to establish a relationship can mean that a degree of understanding and flexibility between the parties cannot be cultivated. Additionally, poor communication and lack of information can influence this and can block negotiations entirely.

Failure to agree what was promised

Employers making promises which can’t then be delivered can often lead to tension in negotiations, or indeed a total collapse, particularly where the people making the offers don’t have authority to sign off on the deal. This may well be the case in circumstances where terms are verbally agreed in principle but then, for one reason or other, the offer terms change as soon as the agreement is documented. Whilst this was apparently the case in respect of the transfer from Lyon to Tottenham of goalkeeper Hugo Lloris, on that occasion it was not fatal to the negotiations although it was reported12 that this approach was not appreciated by Lyon.13 A sense of friction between the parties may potentially prevent any future negotiations, short or long term, being successful. In the case of Lyon and Tottenham, it is notable that the Lyon Chairman blocked the transfer of striker Lisandro Lopez to Tottenham a year after the Lloris transfer (although it is not actually clear why the transfer was blocked, one can speculate that the Lloris incident may have been relevant) 14.

What rights do employers and employees have in these situations?

Employees and potential employees ultimately have the right to accept or reject any offer which is presented to them – in the same way that any contract can be accepted or rejected. It is obviously best practice to ensure that any agreement is documented in writing – there can be (and often are) costly breach of contract battles fought in circumstances where two parties have a dispute over something that was purportedly agreed verbally. The overriding benefit to having an agreement set out in writing is that it gives the parties the opportunity to confirm and solidify their expectations, entitlements and risks. However, there are no set rights available to employees or employers in the UK when negotiating contracts and indeed it is well known the verbal agreement can be contractually binding.

In 2008 in the case of Tullett Prebon Group Ltd v Ghaleb El-Hajjali15, an employer successfully enforced a clause in a contract which required the prospective employee to pay a specified amount if he did not start work – what is sometimes referred to as a "no show" clause. Such clauses are unusual, however, and in reality the risks of a no-show are relatively low. To the extent that a contract is agreed, and then one party does not then abide by the terms of that contract, then the "damaged" party may have cause to pursue claims for breach of contract.

In the UK, it should be noted that once an employment contract has been finalised, there are implied terms that apply to all employment contracts. Those implied terms include the mutual obligation of trust and confidence. The employer must not, without reasonable and proper cause, conduct itself in a manner which is likely to destroy or seriously damage the relationship of trust and confidence between that of the employer and employee. Should a promise be made by the employer to the executive, such as that of a bonus or promotion, failure to fulfil that offer may constitute a breach of the implied term, trust and confidence, and may also give rise to implications such as constructive dismissal and destroy the relationship between the parties altogether. This is obviously a significant factor to consider during all stages of negotiation – making promises which are not then kept can lead to legal battles, although there are often difficulties that arise regarding evidencing the terms of oral agreements.

What can employers in the sports industry do to best manage scenarios such as this?

Employment contracts are personal and negotiations can be influenced by subtle nuances. From the outset, employers need to remember that when negotiating with senior executives and other employees, to avoid hidden restrictions or preconditions and consider whether the company is willing to share any risk (for example, will they agree to indemnify an individual to the extent they are subjected to legal proceedings as a result of their departure from their former place of work?). Employers should not always assume that they have superior bargaining power, whilst they may be offering the position and the privilege of working for the company this can sour negotiations very early on and jeopardise any existing trust and confidence between the parties.

Companies that understand executives’ vulnerabilities will be able to adjust their strategy and tactics to eliminate or at least neutralise these. Several factors can reduce the risk of negotiations breaking down. Football clubs and other employers in the sports industry should consider some of the following practical points in order to best approach the negotiations, and these points would usually be relevant whether dealing with contracts of players and managers, or whether dealing with the more familiar world of business:

  • A key consideration for any employer is identifying at the outset what it is you are trying to achieve and be clear on your limits and authority.

  • Consider a reasonable timeframe in which to agree a deal. It will often not be helpful to set yourselves (or the individual) a narrow timeframe in which to conclude matters and an individual may well not appreciate unnecessary pressure.

  • Be flexible, but not too much – it does not assist for employers to be absolutely rigid in their negotiations, especially if they are keen to get a particular individual on board. For example, employers should give thought to what else they may be willing to offer to get a deal over the line. However, there is of course a danger that being too flexible may cause issues within the business, for example, where a new employee is remunerated significantly better than another of a similar level of seniority (this being an issue in the football industry is not uncommon16).

  • Take time to find out what is important to the individual but be careful not to promise anything which you do not have authority to agree. Remember that moving jobs is often a very significant event for any individual, regardless of their seniority. It may be that benefits such as relocation costs, life assurance and health insurance can be very important and valuable to the individual, particularly when such policies can be extended to family members.

  • Avoid having large teams of people trying to negotiate a deal. It is easier for one or two people to develop a relationship with a prospective employee and that can assist with negotiations. However, having large teams where different people are involved can have the effect of confusing matters and putting off an individual.

It is always worth keeping in mind, however, that you will not always get what you want. In Bolt’s case, obviously no agreement could be struck: for Bolt, there may well be a tinge of disappointment that he was unable to secure a professional contract with the Mariners but his desire to play professional football with them may not have overridden the package that could be offered to him. Similarly, there may well be disappointment on the part of the club that the deal fell through and all the potential benefits that may have brought. But those possible benefits did not override all the other factors the Mariners had to keep in mind, not least the financial considerations.

For the time being, he may just have to make do with 8 gold medals…

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Author

Nick Hawkins

Nick Hawkins

Nick Hawkins is an Associate at CM Murray LLP and specialises in partnership and employment law. He provides contentious and non-contentious employment law advice to clients, and has particular expertise in advising senior executives in professional services. Nick has experience dealing with employment exits, settlement, and cases involving breach of restrictive covenants, whistleblowing and discrimination. Nick has also advised employer clients, and has worked on high profile High Court litigation matters. He has provided commentary to print and online media, and writes articles for legal and HR publications. He is an enthusiastic sports fan with an interest in the employment law aspects of the sporting world . CM Murray LLP are leading specialist employment & partnership law advisors to Multi-National Companies, Professional Partnerships, Senior Executives and Partners.

+44 (0) 20 7933 9122

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Naomi Latham

Naomi Latham

Naomi Latham is a Trainee Solicitor at CM Murray LLP, and provides support to lawyers specialising in both employment and partnership law.

+44 (0) 20 7933 9137

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