Transfer market fever

Recent manoeuvrings over footballers contracts have left the transfer system in a state of flux.

one thing is certain lawyers will have to sort out...Recent manoeuvrings over footballers contracts have left the transfer system in a state of flux.

one thing is certain lawyers will have to sort out the mess, as Stephen Ward reportsJust as Manchesters top club, United, seems to dominate English soccer, so that citys lawyers seem to be key players in the new European transfer system for players negotiated in Brussels.A Manchester United director and legal adviser, Maurice Watkins, partner in Manchester firm James Chapman and Co, is one of the English Premier Leagues solicitors, and one of two English members of the Association of European Union Professional Leagues, as well as chairman of a juridical committee of a task force set up by the European football authority Uefa to co-ordinate discussions between the various bodies involved.And on the other side of the fence, the English players union, the Professional Footballers Association, is advised by John Hewison and Mark Hovell, partners at another Manchester firm, George Davies & Co.That connection gives them a strong link into the European-wide negotiations, because Englands is one of the most powerful leagues and its players among the highest paid.

Gordon Taylor, the associations chairman, also chairs the federation of European players unions, Fifpro.This month the European Commission, Uefa, and the world governing body for football, Fifa, finally agreed a new regime for transfers between clubs in Europe, a deal which followed the ruling by the European Court six years ago on the case of a Belgian footballer, Jean-Marc Bosman.Until that case, clubs owned the registration of footballers, who could only move to another team by agreement with the club, and payment of a transfer fee.Bosman was blocked by his Belgian club from moving to another in France, because it was not receiving a transfer fee, even though he was not offered a further contract in Belgium.The European Court ruled that in so far as football constituted an economic activity, EU law applied to it, and that a professional footballer is a worker like any other.

As such he benefits from the right to freedom of movement.That judgment left the players free to move for no transfer fee whenever they were out of contract.

But some wanted to go further, and to have the same freedom of movement as any other worker, to move to another club without a fee at any time during their contracts.The issue came to a head when EU plans to make footballs transfer system comply with the Treaty of Rome brought a horrified reaction from football clubs, which pointed out that some of their biggest assets the players would be rendered worthless by such a move.And the sums at stake are huge.

Arsenal made a cool 22.5 million profit on an initial 500,000 investment by selling Nicolas Anelka to Real Madrid; the London club would not have received a penny if Anelka, who was determined to leave, had gone under the proposed system.Worldwide, the stakes are even higher; Real Madrid was reported to have increased its debt to 100 million when it paid 37 million to make the Portuguese international Luis Figo the worlds most expensive player last year.

In the slightly saner home market, Alan Shearer is the most expensive Englishman at 15 million.Smaller clubs feared that the end of the transfer system would rule out the sell-on clauses which pay them for producing players who are later sold for huge fees.Alasdair Bell, partner and head of competition at US law firm White & Cases London office, and the solicitor representing Uefa, says: With the amount of business interest in sport these days, certainly in Europe, and football being obviously the number one sport, people see governing bodies as monopolistic structures.In the last two or three years they have realised that they can use EU law, especially competition law, to attack sports regulatory structures they dont like.He says that although the transfer arrangements were dressed up as an argument for free competition, it was really a complaint against Fifa whose regulations governed the international transfer of players.The agreement reached between the European Commission and the football governing bodies followed months of negotiations, involving up to 11 lawyers.

Fifa and Uefa had abandoned their joint negotiating position after disagreeing on the response to the EU plan; Uefa wanted to protect young players by banning the transfer of players aged under 18, but Fifa did not agree.This months agreement restored some semblance of unity, with Fifa president Sepp Blatter saying: It will be for the protection of the young players, for the protection of the training clubs, and it will be for the protection of the fans.According to Mr Bell, although the issue is about employment, lawyers around the table were not employment specialists.

Employment law is different in 15 different countries of the EU.

We were trying to introduce a system which brought in some degree of level playing field for international transfers, but the international regime we have set up is subject to national law.

The regulatory regime in Spain is very different from the one in Belgium, or in England.

What we hope to get is a broadly acceptable regime which is not manifestly offensive to any national employment law regime.The backgrounds of the lawyers involved show how much football has become a business, and players valuable properties.

Mr Watkins is a sports law expert, but a business and commercial property lawyer by background.

Mr Bell is an expert in EU law who worked in Brussels for nine years, and relocated to London three years ago.

Fifa uses a team led by Marco Bronckers another EU lawyer, in the Brussels office of the international firm Stibbe Simont Monahan Duhot.

Mr Hewisons background is commercial, within sport and particularly soccer.He says: I know enough about EU competition law to know the problems.

Its the nuances of how this affects football you have to understand.

The knowledge you need is football niche knowledge.The deal hammered out on eight pages with five more of annexes still covers only on the principles, the heads of agreement.

It shows that European Union law on freedom of movement for workers is not as straightforward as the Bosman ruling suggested.If there is an inherent need in the organisation of a sport for restrictions on the movement of players, then an exception can be sanctioned.

That inherent need is for a degree of stability in contracts, so that clubs can be run without players disappearing overnight abroad or to a rival, the commission decided.To preserve that stability, the European Commission agreed that players can be tied for three-year contracts up to the age of 28, and two years if they are older than 28.

If they break those contracts without just cause or sporting cause, their associations will be able to fine or suspend them.Any player breaking the contract in the first two years of a three-year protected period can be banned from playing for his new club for four months in the next season and for six months if he repeats the offence.

Sanctions can also be applied to agents.Behind the legal argument, the clubs were anxious to protect the value of their multi-million pound assets, while top players know their increased mobility makes them more valuable.Jonathan Ebsworth, head of the sports and media law unit at London firm Reid Minty, who has represented several top players in contract disputes, says complete freedom would have benefited only the very top players who are at their peak.

Longer contracts give more security, he says.The players unions did not approve of the final deal.

They left the table, unable to agree the draft, shortly before it was signed off.

Taylor believes it gives clubs too much power to terminate players contracts at short notice, and says three test cases are in the pipeline.

He said this month: The document is ambiguous, and the only certainty is that players rights are worse than they were before.

From now on they have to try to negotiate better terms in the detail of the agreement, or consider a challenge in the European Court to the deal.But Mr Bell says their scope is likely to be limited: All we can say is that we assume the commission will not have signed off on a deal that is incompatible with EU law.Lawyers on all sides agree that the issue was as much a political as a legal one.

Mr Bell says: The commissioners were faced witha difficult case from a legal and political point of view.

There were interventions at a pretty high political level.One thing seems likely the further complications introduced into the transfer market are good news for lawyers throughout Europe.

Mr Ebsworth points out that in the US, sportsmens agents are usually lawyers, and he sees a growth in the trend in Europe.Players who break contracts can still be sued for damages by clubs under domestic contract laws, and there will be arguments about whether players breaking contracts had just cause.According to Mr Ebsworth: In effect what the EU is really saying to players is that it is so complex now, that you cant think about transferring without a lawyer by your side.

With all due respect to agents they cant make sure the contract is legally enforceable without lawyers help.