When does a buy-out clause trigger a “transfer” under FIFA Regulations?

Published 03 November 2016 By: Alfonso León Lleó

When does a buy-out clause trigger a “transfer” under FIFA Regulations?

This article reviews the interpretation of what constitutes a "transfer" under the Fédération Internationale de Football Association’ (FIFA) Regulations on the Status and Transfer of Players (FIFA RSTP) and its implications with regards to the triggering of FIFA’s solidarity contribution mechanism (see this article1 for a detailed analysis of solidarity contributions in football).

 

Introduction

Football player transfers are not only of interest, or of benefit, to larger football clubs but also smaller clubs that are also indirectly affected by international player transfers through the solidarity and compensation mechanisms implemented by the RSPT.

This article focuses exclusively on the payment of the solidarity contribution mechanism, and specifically the event triggering the right to payment, namely when the international transfer of a player actually takes place.

 

International Transfers

Article 21 of the FIFA RSTP provides as it follows:

If a professional is transferred before the expiry of his contract, any club that has contributed to his education and training shall receive a proportion of the compensation paid to his former club (solidarity contribution). The provisions concerning solidarity contributions are set out in Annexe 5 of these regulations.

The same applies in case of an international loan, in accordance with Article 10, paragraph 1 FIFA RSTP:

A professional may be loaned to another club on the basis of a written agreement between him and the clubs concerned. Any such loan is subject to the same rules as apply to the transfer of players, including the provisions on training compensation and the solidarity mechanism.

 

The definition of a "transfer"

Much has been written on the solidarity contribution deriving from the international player transfer mechanism implemented by the FIFA RSTP2. Whilst this is uncontroversial, one aspect that is worthy of further analysis is the definition of what is “transfer” for the purposes of the FIFA RSTP?

There is no explicit definition provided by the FIFA RSTP as to what is considered to be a “transfer”. Therefore sports lawyers must resort to complementary legal sources such as Swiss legislation3 and the jurisprudence rendered by the Court of arbitration for Sport (CAS).

The notion of “transfer” does not exclusively encompass a “sale” as expressed by the CAS Panel constituted in the arbitration proceedings CAS 2010/A/2098 (commonly known as the “Keita case”), which pointed out “a transfer of a player can also take place outside the scheme of a (“sale”) contract […]”. In accordance with Article 184 of the Swiss Code of Obligations4> a “sale” is a:

[…] contract whereby the seller obligates himself to deliver to the buyer the object of the purchase and to transfer title thereto to the buyer, and the buyer obligates himself to pay the purchase price to the seller

Therefore, in accordance with Swiss law, the consent of the seller, i.e. the former club, is crucial, at least when it comes to an assessment of whether a “sale” took place. This criteria is also applicable to transfers under the FIFA RSTP, as ruled by the CAS, and detailed below.

 

CAS precedents relating to the "transfer" of a player

Two CAS Panels in the Keita and Zárate cases, as described below, have addressed the question of whether a “transfer” has or has not taken place from different perspectives.

The Keita case

The Keita case involved the transfer of the player Seydou Keita from the French club, RC Lens, to the Spanish club Sevilla Club de Fútbol S.A.D. (hereinafter, “Sevilla”). Both clubs had agreed that in case of a “resale5 of Keita to a third club from Sevilla, RC Lens would be entitled to a percentage out of it. The Player relied on Articles 13 and 16.1 of the Spanish Real Decreto 1006/19856 (“Real Decreto”) - a specific piece of legislation applicable in the sports sphere in Spain, providing in favour of sportspersons the right to unilaterally and prematurely terminate their employment contracts - and unilaterally terminated his employment contract with Sevilla, after satisfying the amount of compensation stipulated in the Real Decreto by means of a cheque issued by FC Barcelona. The dispute was over whether the Player's actions were tantamount to a sale. The Player believed his actions could have constituted a "sale" as in their view all three parties involved to it had agreed to the "sale".

The Zárate case7

In the Zárate case, the transaction that took place could be considered a “transfer” in the terms referenced by the FIFA RSTP. Both the Player, Mauro Matías Zárate, and his former club, Qatari team, Al Saad, had agreed, in the player's contract, to an amount that would allow the Player to unilaterally and prematurely terminate his employment contract8. This is commonly known as a “buy-out clause”. The Italian club, Lazio S.p.A, disbursed the said amount in favour of Al Saad, resulting in the player’s release from his previous employment contract and subsequent transfer to the Italian side. The main issue in the proceedings was whether the activation of the players “buy-out clause” amounted to a “transfer” for the purposes of the FIFA RSTP and therefore entailed the obligation to pay solidarity contribution.

In both cases, the professional football players involved had gone through a specific type of transaction that in the end allowed them to terminate their previous employment contract and subsequently enter into a new employment contract with a new club. However, it is unclear whether the transactions could be considered as "transfers" in the sense of Article 21 of the FIFA RSTP, thus triggering the right to solidarity contribution (which would increase the overall price of the purchase of the services of the player, as described below).

 

Solidarity contribution following unilateral termination

 

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Author

Alfonso León Lleó

Alfonso León Lleó

Associate at Ruiz-Huerta & Crespo SPORTS LAWYERS. Specialist in Sports Law. LL.M. inInternational Sports Law (ISDE). Member of the AEDD. Graduated in Law andBusiness Administration. Member of the Board of Directors at Club de TenisValencia.

Aleon@ruizcrespo
+ 34-650031353