WRITTEN QUESTION P-2997/01

by Toine Manders (ELDR) to the Commission

(22 October 2001)

Subject: Football: undesirable effects of the new transfer system

The former transfer system for professional footballers was, as is well known, abolished following the ruling in the Bosman case on the grounds that it contravened the right to freedom of movement within the internal market. It has since proved difficult to find an acceptable alternative solution to the matter of financial compensation for the high costs of training players.

As from September 2001, FIFA, in agreement with the Commission, has introduced new conditions for the transfer of players, which are already giving rise to unintended and undesirable effects.

In many cases players may now, when their contract expires, change employer without their club receiving any financial compensation apart from a small reimbursement for training. For clubs investing in training to develop young talent, that means they run the risk that the player, once trained, may move to another club and that they will receive very little financial compensation. Investment in training players and improving their skills in order to increase their market value has become essential to the financial survival of clubs. Particularly for clubs in small countries which, under UEFA rules, are required to play in their national leagues, revenues from the media are much lower disproportionately so than in big countries, and they can therefore no longer compete with other European clubs for financial reasons.

The new transfer system has already led to abuses in a number of countries. In the Netherlands, for example, it led to football club Ajax suspending Arveladze a year before his contract was due to expire in order to in order to put pressure on the player to extend his contract. During the term of a contract the financial compensation required to be paid to a club is significantly higher. From Ajax' point of view, this measure is quite understandable as the player in question would be in a position to leave without compensation being paid upon expiry of his contract, meaning that Ajax would receive no compensation for the investment it had made.

Both in human terms and from the point of view of labour law, however, this is a very undesirable development. To my mind, this cannot have been the intention of the new rules, which were created precisely in order to protect players and clubs?

Is the Commission aware of this case?

Is it prepared to examine as soon as possible whether improvements can be made to the new transfer system and, if so, to implement them?

Would it be an appropriate starting point to take a European ranking of clubs as a basis for the level of compensation paid by clubs for players joining them?

Answer given by Mr Monti on behalf of the Commission

(22 November 2001)

On 5 March 2001, the International Federation of Football Association (FIFA), in agreement with the Union of European Football Associations (UEFA), undertook to amend its 1997 rules governing the status and transfer of players based on a set up principles worked out with the Commission and made public.

On 5 July 2001, the FIFA executive committee, meeting in Buenos Aires, adopted the new rules on international transfers of players. On 31 August 2001, a joint press release by FIFA and the International Federation of Professional Footballer Associations (FIFPro) confirmed the latter's participation in the establishment of new rules as well as in the FIFA dispute settlement bodies and the Arbitration Tribunal for Football.

The Bosman ruling had not put an end to the transfer system as a whole. It had criticised the payment of allowances at the end of contracts for international transfers within the European Economic Area (EEA). The practice of signing longer and longer contracts together with the FIFA ban on transfers in the event of the unilateral termination of contracts by players made it possible to avoid end-of-contract transfers and thus circumvent the Bosman ruling.

The principles on which FIFA based its new rules, in force since 1 September 2001, put an end to that situation. In the Commission's opinion, they strike an even balance between the guarantee to encourage training, especially in small clubs, and compliance with Community law. Contracts now run for a maximum of five years. Training compensation can still be paid provided it is proportionate to the actual training costs incurred even in the case if end-of-contract transfers. Small clubs, including amateur clubs, should be the main beneficiaries of the new system whereby part of the compensation is passed on (cascade system). Unilateral termination of contracts is now possible at the end of season. It can give rise to objective financial compensation and during protected periods, short-term sanctions proportionate to the objectives of ensuring the stability of teams and the regularity of competitions. Termination of a contract for a just cause or just sporting reasons is always possible. Arbitration is voluntary and dispute settlement bodies have joint membership.

The Commission believes that, if properly applied, these principles should be enough to end the type of practice referred to by the Honourable Member, which appears to have been frequent before FIFA adopted new rules.

The Commission feels that sporting organisations are in the best position to establish a ranking of clubs in accordance with objective criteria designed to ensure strict compliance with the principles evolved at the meeting on 5 march 2001.

The Commission is of the opinion that by amending the rules on international transfers of players on the basis of principles agreed beforehand has safeguarded general interest as well as individual freedom while having due regard for the specific features of the sport. Individual cases of abuse or circumvention of the new system can be referred to the ordinary courts.