In this article, Richard Berry explains the current types and contractual status of footballers’ bonuses in light of the recent dispute at Cardiff City, and goes on to explore where remuneration in English Football may be heading in the future.
Much has already been written about the third party ownership of footballers ("TPO"), both positive and negative. Its prevalence has been a cause for concern in Europe, highlighted in the European Commission report on 'The Economic and Legal Aspects of the Transfers of Players'.
On Friday 16th November, in a London hotel, I was lucky enough to have the opportunity to meet two stars of Major League Baseball (MLB), Rick Vandenhurk, a pitcher for the Pittsburgh Pirates & Chris Dickerson, an outfielders for the New York Yankees. Both where in London as part of the European Big League Tour (EBLT), an organisation founded by Vadenhurk, a Dutch national, who wanted to organise free clinics with All-Stars from the MLB for kids in his home country The Netherlands and the rest of Europe.
The FIFA World Cup is one of the biggest sporting events on the planet. In 2014, Brazil will host the tournament again 64 years after the Brazilian national team was crowned runner-up in the Maracanã stadium, Brazil. Many benefits arise from mega events, ranging from tourism and employment to improvements in social welfare and infrastructure.
The 2014 World Cup will be the first to establish ecological and social parameters to be met by governments and private companies that participate in its organization. FIFA calls this the "Green Goal" created to mark the concern for the environment and sustainability of mega events.
At the start of the 2010/11 Barclays Premier League season, a significant rule was introduced that could have important legal consequences within English football. The Premier League Handbook 2010/11 (Section L) introduced a rule which stated that each Premier League club must submit a Squad List of 25 players. Any players deemed surplus to requirements and who were omitted from the Squad List would not be able to play any Premier League games until at least the next transfer window. Some 18 months on, this article examines the effect of the rule and the legal consequences which may arise in the future.
In particular, this article discusses the possibility that, if omitted from a Squad List, a player could claim constructive dismissal, could seek unilateral termination and/or could argue contractual frustration. Further, specific causes of action contained within the FIFA Regulations on the Status and Transfer of Players are considered, such as the terminating a contract either for ‘just cause’ or ‘sporting just cause’. If successful in any claim, a player could be free to join another club without the payment of any transfer fee. While this article focuses on the legal causes of action that a player may take should he be omitted from a Squad List, there are important compensatory factors that must be considered. For instance, notwithstanding that a player may be free to join another club, in certain instances, he could have grounds to claim compensation from his previous club for the value of his contract. Accordingly, this article will be followed by another which will look more closely at the various compensatory factors and other considerations that should be taken into account by all parties.
As the January transfer window comes to a close, this article contains important legal considerations which players, agents, football clubs and their legal advisors should all be aware of. This article is predicated on the basis that there is no term within an individual player’s contract which provides that a club need not include him in their Squad List. Indeed, any representative of a player who negotiated that contract should be questioned if there was such a clause present. However, notwithstanding the presence of such a clause, it is certainly arguable that under English law, a Court could deem that clause to be invalid, so as to protect that player’s employment rights. As such, the causes of action contained within this article would still be relevant.
Section L of the Premier League Handbook
Rule L1 works as follows:
Immediately following each transfer window, all Premier League teams must submit a Squad List of up to 25 players to the Premier League. Each Squad List may include, at most, 17 non-Home Grown players. A Home Grown player is defined as “one who, irrespective of his nationality or age, has been registered with any club affiliated to the Football Association or the Welsh Football Association for a period, continuous or not, of three entire seasons or 36 months prior to his 21st birthday (or the end of the season during which he turns 21)”. As a result of these rules, Chelsea FC’s Daniel Sturridge would be deemed to be a Home Grown player, though Juan Mata would not. Clubs are not permitted to change their Squad List until the next transfer window. At the end of a transfer window, those players that find themselves surplus to requirements are left staring into an abyss.
Few players have found themselves in the situation outlined about without good cause since Rule L1 was introduced. During the 2010/11 season, Jonathan Woodgate (Tottenham Hotspur FC), Michael Kightly (Wolverhampton Wanderers FC) and Mamady Sidebe (Stoke City FC) were all not included in their respective squads, but all had long term injury problems. This season, Michael Essien was omitted from the Chelsea FC squad for the same reason, and played his first game of the season against Sunderland AFC in January 2012, once he had been included within Chelsea FC's Squad List. However, this season, Hogan Ephraim (Queens Park Rangers FC) and Danny Collins (Stoke City FC) were both omitted from their squads for ‘football’ reasons, eventually moving to Charlton Athletic FC and Ipswich Town FC, respectively, on loan.
In many cases, clubs will be able to find a temporary home for an unwanted player. However, it stands to reason that a time will come when a club will be forced to sign additional players in an attempt to achieve success, but will be unable to transfer a player, either permanently or loan. In Ephraim’s case, he was not subsequently loaned to Charlton Athletic FC until October 2011, and while Ephraim took this 'on the chin', with different personalities involved, certain legal problems could arise.
It is worth mentioning at this point that Rule L1 does not appear to contravene European Community law. The rule does not discriminate on the grounds of nationality; a footballer of any nationality can qualify as a Home Grown player (for instance, Giovani dos Santos is classified as a Home Grown player within Tottenham Hotspur FC’s Squad List). However, Rule L1 has not been challenged as a matter of European law, even though it could be argued that it is indirectly discriminatory on the grounds of nationality. Footballers from elsewhere within Europe are, without doubt, less likely than British players to be Home Grown and hence included within a Squad List, as they are less likely than their British counterparts to be registered with the FA or the WFA for 36 months before their 21st birthday.
It should also be noted that the Football League Rules contain similar provisions on squad sizes, so all of the causes of action outlined within this article are of equal relevance to clubs within the Football League.
A footballer is an employee of a football club, and a contract between a football club and a player still constitutes a contract of employment under English law despite, in many cases, being wildly different from an 'ordinary' employment contract. As such, players have the same ‘employment rights’ that are afforded to all 'employees' under English law.
Constructive dismissal occurs when an employee resigns in a situation in which he or she is entitled to terminate their employment contract as a result of their employer’s conduct (s.95(1)(c) of the Employment Rights Act 1996).
There are two elements to any claim of constructive dismissal.
- There must be a ‘repudiatory’ breach on the part of the employer which must be sufficiently serious to justify the employee’s resignation; and
- The employee must accept the breach and resign.
In order for the Court to find that there has been a ‘repudiatory’ breach, an employee must be able to:
- Identify the contract term (express or implied) which has been broken;
- Provide evidence to assert that the term has been broken; and
- Satisfy the court that, in law, that the breach has been sufficiently serious, so as to constitute a ‘repudiatory’ breach.
While most contracts have ‘express’ terms, such as contractual hours and pay, the Court has accepted that there can also be ‘implied’ terms within contracts, which either give ‘business efficacy’ to the contract (The Moorcock  14 PD 64) or should obviously be included in the contract (Shirlaw v Southern Foundries (1926) Ltd  2 KB 206).
The following breaches of implied terms have, in the past, formed the basis of successful claims of constructive dismissal:
- Demotion or other change in status (Coleman v S and W Baldwin  IRLR 342)
- A change of job content not envisaged under the contract (Luke v Stoke-on-Trent City Council  EWCA Civ 761).
Could a term which requires a football club to, at least, consider fielding a football player in its employ in all competitive matches be implied into a contract, providing ‘business efficacy’ or otherwise being obvious to the intentions of the contract? It is certainly possible. One would imagine that the main reason why a club would sign a player is to use him in its competitive matches. By not including a player in a Squad List, the club could be seen to be demoting or otherwise changing the job content of the player, as he would not longer be able to compete, in the most part, in their first team’s competitive matches. In any event, the list of implied terms above by no constitutes an exhaustive list of situations in which an employee could be deemed to have been constructively dismissed, and thus other implied terms could be claimed. For instance, it would be open for a player to argue that there is an implied term in a contract that he will be included within a Squad List. While there could be an implied term within a contract which provides that a certain player must be in a Squad List, there is certainly no equivalent obligation on the part of a player to agree to move clubs. While it is beyond the scope of this article, in other jurisdictions, such as the United States of America, as far as Major League Baseball is concerned, players can be traded without their consent in certain circumstances. Given the relatively favourable treatment that employees are afforded under English law, football clubs must be weary of omitting players from their Squad List.
A constructive dismissal claim may not be applicable to younger players who clubs aim to develop. However, for other established players who have failed to be included in a Squad List, a constructive dismissal claim is a real possibility.
Constructive dismissal is a form of unilateral termination (at least on the part of the employer), but it is clear from recent cases, such as Heart of Midlothian v Webster & Ors (CAS 2008/A/1298-300), Essam El-Hadary v FIFA & Al-Ahly Sporting Club (CAS 2009/A 1881), Fenerbahçe Spor Kulübü v Stephen Appiah (CAS 2009/A/1856/1857) and Shakhtar Donetsk v Matuzalem & Ors (CAS 2008/A/1519-20), that players are, albeit unlawfully in some cases, able to terminate their contracts unilaterally.
In the El-Hadary and Appiah cases, the Court of Arbitration for Sport (‘CAS’) accepted that transfers had taken place, but concentrated more on compensation. In both Appiah and El-Hadary, compensation due to their respective previous clubs was a controversial point (and in El-Hadary's case, owed by the player), as they were both extremely experienced footballers and prime assets to their respective clubs. However, in instances where a player has been omitted from a Squad List, the situation could be seen as entirely distinct as such a player is, by definition, unwanted. It is suggested that, based on the method in which the CAS calculated compensation due in these cases, no money would be payable to a club who had lost a player. Accordingly, terminating one’s contract unilaterally may be that much more of an attractive prospect for a player who has been omitted from a Squad List.
Any contract, including an employment contract, may be frustrated where without fault of either party certain obligations can no longer be performed.
It could be argued that if a player has been omitted from a Squad List, the contract as between the player and the club cannot now be performed. As above, if a term could be implied that a club would consider the player for all competitive games, should that player be omitted from a Squad List, then this is clearly no longer possible.
While courts have in the past been reluctant to find that a contract has been frustrated where one party was at fault, it has since been held that only the party seeking to rely on the frustration (i.e. the player) must not be at fault (FC Shepherd & Co Ltd v Jerrom  QB 301 at 319,  3 All ER 589). In a related note, if it was the club that wished to force the player out, then frustration could not be relied upon as it would have been the club that had frustrated the contract.
Further, while employment tribunals have in the past been reluctant to find that a contract has been frustrated because it adversely affects employment rights, in situations where a player has been omitted from a Squad List, contractual frustration would be used by a player to assert his employment rights.
If frustration was found, the player could treat the contract as terminated and walk away from the club.
The FIFA Regulations on the Status and Transfer of Players (the "FIFA Regulations")
Notwithstanding the causes of action outlined above, even if, as a matter of English law, a player is entitled to terminate his contract, by joining another club, the player could be deemed to be in breach of the FIFA Regulations.
Under Article 17 of the FIFA Regulations, where a player terminates his contract without just cause, liability can be imposed both upon him and the club which he joins. Therefore, alongside the causes of action above, players and their advisers must be aware that there could be a secondary hurdle to overcome.
There are two possible avenues offered under the FIFA Regulations.
Article 14 of the FIFA Regulations : Terminating a Contract for Just Cause
Article 14 of the FIFA Regulations states that “A contract may be terminated by either party without consequences of any kind (either payment of compensation or imposition of sporting sanctions) where there is just cause”.
On the face of Article 14, all of the causes of action above, if founded, would constitute a "just cause" to terminate a contract. The commentary which accompanies the FIFA Regulations indicates that claims under Article 14 will be decided on a case-by-case basis, however it is stated that the more persistent the breach, the more likely just cause will be found. The commentary cites an example in which a player has not been paid by his club.
However, without a real-life claim by a player on one of the grounds above, it is unclear whether a successful claim under English law will constitute just cause under Article 14 of the FIFA Regulations. Notwithstanding this, it could be argued that if the contract has been found to have been terminated under English law, then even before FIFA this would be 'res judicata' ('a matter [already] judged') and 'just cause' under the FIFA Regulations would be found, permitting the player to freely leave the club under the FIFA Regulations.
Article 15 of the FIFA Regulations : Terminating a Contract for Sporting Just Clause
Article 15 of the FIFA Regulations, otherwise known as the 'Sporting Just Clause', permits an 'established' player to terminate his contract if he has been used in less than 10% of the official matches of his employing club over the course of a season.
Hypothetically, any player who is omitted from a Squad List could potentially terminate his contract under the Sporting Just Clause, however two factors stand in his way. Firstly, just because a player is omitted from a Squad List does not mean that he is ineligible to play in FA Cup, League Cup or European matches. As such, the 10% threshold could still be surpassed, notwithstanding that the player has been omitted from the Squad List. Secondly, and importantly, under the Sporting Just Clause, a player will only be able to terminate his contract once the season has ended. As such, unlike the other causes of action outlined above, the player would have to wait to make a claim. This would not be the case if a contract was terminated for 'just cause' under Article 14 of the FIFA Regulations.
It is clear that, as a result of Rule L1 and similar Football League provisions, if clubs fail to include players in their Squad Lists, they could be open to claims from players that their contract has been, or should be terminated. While English football clubs have, in the past, been accused of collecting players, and in many cases not actually using them, clubs must now ensure that they strictly adhere to the new rules. As clubs in England become more accustomed to squad size rules and entirely fill their Squad Lists, there will inevitably be players who are left on the sidelines due to the demands upon clubs to compete. If clubs fail to move these players on, these players may be able to simply walk away themselves.
The landmark ruling handed down by Mr Justice Tugendhat in March 2011 in the Rugby Football Union –v- Viagogo case, was a triumph for rights holders who require a means by which they can discover the identity of the anonymous wrongdoer who advertises and/or sells tickets via a ticket exchange. Despite attempts to set aside the ruling in the Court of Appeal and the Supreme Court, the appeals have been unanimously dismissed. An important precedent has now been set by the Supreme Court which for the first time gives the rights holder the ability to obtain Norwich Pharmacal relief, to implement and enforce its ticketing policy and potentially take action against the wrongdoer.
For the first time in history, an award of the Court of Arbitration for Sport (CAS) was annulled by the Swiss Federal Tribunal because it violated fundamental principles of law, the so called substantive public policy. This marks the first time that a CAS award has been overruled based on substantive law and not procedural law.
In March 2011 the so called Pele Statute Federal Statute (n. 9.615/98 Art 29-A) established a legal means to calculate and claim solidarity contributions in Brazil. This was largely influenced by the FIFA Regulations on the Status and Transfer of Players (“RSTP”).1 The new rules aim to improve the system of compensation for training and education within Brazil. This article examines the construction of training compensation and solidarity contributions under the amended Pete Statute.