Will a recently issued Dutch FIFA class action benefit footballers – or be an expensive own goal?

Football’s international regulator, FIFA, faces litigation based on a challenge to the existing system of transfer regulations, following a compensation claim being launched by a Dutch foundation representing current and former professional footballers over transfer rules.

I have represented many clubs, agents and probably more than 100 professional footballers during my career as a regulatory lawyer and litigator specialising in the sports sector. In my view, this lawsuit is a significant mistake for football and especially for players. No transfer can take place without a player’s consent.

Effectively, the transfer fee system provides compensation from a player’s new club to the player’s current club for the early termination of the player’s fixed-term employment contract.

Any transfer is based on the financial loss to the existing employer, balanced against the new unconditional wages and term (number of years) of contract offered by the new employer. Together, this equates to a player’s “enterprise value”.

If the player wishes to leave his contract with one club early (likely with more than two years remaining), then the chances are that the transfer fee (compensation) will be high, but the player will also demand and receive a very substantial increase in salary over the term of his new contract in any event.

The real concern of the interference proposed is the impact on the financial dynamics of the system. Currently, players are securing lower transfer fees (except for a small number of exceptions) but higher wages. In the English Premier League, it is common for more than 60% of the clubs’ revenue to be paid out in player wages by the constituent clubs.

If the clubs lose or experience reduced transfer fees, then the likelihood is that player wages will go down and not up. Very few clubs at the top end of the game are making a profit, and the dismantling of the transfer system would, in my opinion, destabilise the system and be generally damaging.

This would especially be the case for the vast majority of clubs, being those not owned or indulged by sovereign wealth funds, private equity firms or multi-billionaires.  

At the heart of this is the contract that the players and clubs enter into. If the player doesn’t like the commitment on offer, he shouldn’t sign the contract. Freedom of movement in the EU should not be used as an excuse for replacing the investment and expectation arising from an enforceable agreement between two appropriately represented parties.

In short, I believe this is a wholly inappropriate and potentially damaging enterprise for the ECJ to have become involved in.

Setting aside my cynicism about how these claims could achieve historical damages, I have nevertheless outlined why I believe these particular claims – and the attempts to dismantle the football transfer system –are misplaced.

Graham Shear is a partner and EMEA regional leader of litigation and investigations at BCLP. He also co-leads the firm’s sports, media and entertainment sector. He has more than 35 years’ experience as a commercial litigator both in the UK and internationally.