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Niels Verborgh has won the prestigious Flemish ‘Thesis Award’. He received the award for his thesis on the European agreements, legal provisions, associations and organizations that govern the football world. In his thesis, Verborgh exposes the numerous legal problems of the system in an impressive way. Niels Verborgh compressed his award-winning thesis in a short article on wtnsch.be, a website dedicated to the promotion of science to children and young adults. Since it contains the gist of his research, we translated it into English.
222 million euros. That is what the French PSG recently paid to FC Barcelona to secure the services of the Brazilian ball virtuoso Neymar. Football transfers seem to know no limits, but is this correct? More and more scientific studies are emerging that conclude that the transfer system is illegal in its current context. Excess transfer fees seem to be in conflict with the free movement of employees and the transfer system also entails other legal problems. Yet a solution seems to be long in coming.
High transfer fees in conflict with free movement of employees
In itself, a transfer fee is not illegal because it actually acts as a compensation for breaking an employment contract. The problem, however, is that transfer fees have skyrocketed in recent years. This is partly due to to the high player salaries and the long contract duration. But there is also a lack of proportionality - so much so that the transfer fees are at odds with the European law provisions on the free movement of workers.
The towering transfer fees are problematic because they can prevent a footballer from switching to another team. Having been put a too high transfer fee on his head by his club, a player’s search for another club becomes restricted. Not every potential new employer can pay the high transfer fee. That is why, a few years ago, the European Commission has warned against “artificially inflated transfer fees in football”. A transfer fee should not go beyond what is necessary to ensure fair competition and contract stability.
Studies show that the transfer fees compromise the fairness of a competition. It is easy to see why: only the richest teams are still able to put the high transfer fees on the table. It would be more logical if the footballer - who is an employee like someone else - only has to pay a severance payment that complies with the legal regulation of employment law.
Transfer system at odds with the European competion law
The transfer system is also at odds with the European competition law. This is partly due to the competition between football clubs, partly due to the transfer system. But it is also because FIFA is unilaterally able to dictate a large part of the rights that professional footballers may receive through its regulatory power.
The transfer rules are missing their goal as well. FIFA wanted a transfer system providing a financial and competitive balance. But in practice it falls short on this goal. The richest clubs dominate the transfer market and only the most elite clubs are still able to lure the best (read: most expensive) players. The system therefore creates a competitive imbalance: clubs that can spend the most will usually win more often. One only has to look at the sporting dominance of a select circle of high-capital teams, to see this is a true danger.
The transfer rules also prevent free competition between clubs because it curtails the usual system of supply and demand. Sports economist Késenne states that the transfer market promotes a closed system of top clubs: smaller clubs might pull off paying the wages of a top football player, but the high transfer fees make their recruitment impossible.
The financial strength of clubs is increasingly linked to their sporting results. Recruiting top talent has become almost the sole privilege of top clubs. This phenomenon takes place at both national and European level. One only has to look at the champion’s list in different countries, or to the Chapions League: it are almost always the same clubs that come out on top.
Dubious regulations in transfer law code
Some provisions of the transfer regulations seem to be in conflict with higher legal norms as well. National judges have already judged several provisions as being contrary to the free movement of employees. In spite of this, FIFA adhere to its rules.
The ban on Third Party Ownership (TP, ) issued by FIFA, is also questionable in the light of European law.
Closer to home, illegal practices are being effectuated with regard to the training allowance and transfers of (youth) players. Moreover, some clubs do not shy away from morally reprehensible and illegal acts in their recruitment of minors.
Reorganization takes courage
Reconsidering the actual policies would benefit football. A regulation that gives players more freedom in choosing their football club would no doubt result in a better distribution of the player talent.
In this respect, America provides a good example. It used to have a system that was similar to the European transfer system, in which clubs had far-reaching property rights on players. This system was abolished, and almost all studies show this t have ben beneficial for the American professional sport.
The abolition of the FIFA transfer system would most likely have similar effects. UEFA chairman Ceferin recently even made a plea for a new transfer system. But his proposal will almost certainly be rejected. The salary ceiling he suggested will most probably suffer the same fate. Yet, they are worthy things to consider for anybody wanting to tackle the excesses of the current transfer system.