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Changes to the transfer system
By Adam Isaacs
One of the few perks of working in the European Parliament is that I can attend meetings of interest without the hassle of pre-registration, authorisation and the rest. One such meeting was on Tuesday 7 November - an Open Forum to on the Future of the Transfer System, chaired by Arlene McCarthy (one of the Labour MEPs for the North-West). The level of cross-party interest could be seen the presence of staff from all three UK parties.

Strange as it was to enter a parliamentary committee room bedecked in Oldham Athletic pendants, Rochdale team photos and with an array of replica kits from Wigan to Stockport, it was a useful opportunity to find out the latest developments with the proposed changes to the transfer system. However, it might be useful to review how we got where we are today, before considering the possible implications for clubs like Watford.

The Background

EU involvement in international football began with the Bosman ruling of the European Court of Justice (C-415/93) in 1995. The Bosman case is centred round the question of the Freedom of Movement for workers and discrimination on the grounds of nationality.

Jean-Marc Bosman claimed that the Belgian Football Federation and UEFA-FIFA Transfer rules had prevented his transfer to a French club. Bosman sought a declaration from the European Court of Justice that the transfer rules and nationality clauses were not applicable to him on the grounds that they were incompatible with both the Treaty of Rome rules on competition and the free movement of workers. The court consequently ruled that both Transfer rules and nationality quotas are contrary to the Treaty and therefore not permissible.

Two of the most obvious negative consequences of the ruling have been less investment in player development at local level, since there is no longer as much incentive for clubs to pour resources into training programmes when they can acquire players from a cheaper or better supplier in a foreign country, and an increasing tendency for players to break contract at will, often undesirable in the sporting context, and contributing to inflation of players' salaries.

European Commission involvement
The European Commission does not have the power to reverse Bosman nor does it desire to do so. On several occasions it has indicated that it firmly intends to use its powers to ensure the principles of the Courts judgement are respected.

An infringement procedure was launched on 19 January 1996 against UEFA/FIFA, based on Article 85(1) of the EC Treaty and Article 53(1) of the Agreement on the European Economic Area, with the outcome that the football authorities informed the Commission that the international transfer system would no longer apply to players who changed clubs at the end of their contracts.

The Transfer Fees issue was by no means resolved by this concession. In 1997, three small clubs made complaints to the Commission which prompted a further investigation into the present system.

Following a hearing with UEFA/FIFA in 1998, the Commission gave the sporting authorities the task of proposing a system for Transfer Fees within a player's contract (not covered by Bosman) that would be compatible with the Treaty. Informal consultations have continued since, but no formal proposals formulated. Recent press reports and Commission statements have indicated that the Commission intends to get tough with the sports bodies if they fail to produce the goods in the very near future, the worst-case scenario being an outright ban of Transfer Fees, which would be disastrous for small clubs and grass-roots football. Mario Monti, the European Commissioner for Competition Policy is reported to be considering a scheme whereby clubs whose players leave in mid-contract receive a fixed sum in compensation. This would equal what the player was due to be paid until the end of his contract.

31 August 2000 - FIFA holds crisis talks in Zurich and produces following draft proposals which would effectively spell the end of the current transfer system:

  • Minimum age limit of 18 years for international transfers in order to protect young players.
  • Clubs that train young players are to be compensated for their work, with compensation being due for players until 24 years of age and calculated on a model yet to be approved.
  • Minimum duration for contracts of one year. National associations to permit transfers only once a year and requested to create a framework of provisions to discourage premature termination of contracts.

7 September 2000 - European Commission statement:

  • The Commission wishes to see a transfer system that respects both the principles of Community law and the specificity of sport. The current transfer system does neither.
  • It restricts competition between clubs as well as the free movement of players.
  • In accordance with national employment law, some form of compensation will usually be justified should a player break his contract with a club in order to join a new club.
  • The Commission would be prepared to accept rules which require transfers to take place during specified periods only.
  • The effort of training young people must be encouraged, so that compensation reflecting costs incurred by a club in training young people can be accepted unless this creates a situation of undue dependency between players and clubs.

UEFA/FIFA Delegation met with Commissioner Reding (responsible for education and culture) and Commission officials following this statement and an extended deadline (31 October) was given for the Football Authorities to come up with suitable proposals.

A football task force was formed, including Per Omdal, Vice-President of FIFA, Michel Zen-Ruffinen, FIFA General Secretary, Gerhard Aigner, CEO of UEFA, Pedro Tomas, General Secretary of the Spanish League, Gerhard Mayer Vorfelder, Vice-President of the German FA, Gordon Taylor, FIFPro President.

Proposals to be devised on following issues:

  • Protection of young players - international transfers not to be permitted under the age of 18.
  • Compensation for clubs who train young players and then lose them.
  • Incentives for clubs to do youth work.
  • Time limits for transfers. National associations would have to permit transfers only during 2 periods per year but only one transfer per player and per year permitted.

Recent Developments

31 October 2000 - FIFA/UEFA submit transfer proposals to European Commission

A detailed economic study was prepared which has been prepared which proves that the present system functions as a redistribution mechanism in football, providing smaller clubs, leagues and associations with much needed finance.

In any new system, it is essential to keep the positive aspects of the current regime, in particular the maintenance of contractual stability, the reward of investment in the training of players, the redistribution of income.

Main elements of proposed system as follows:

Prohibition on the international transfer of minors/players under 18

Training compensation for young players
The football bodies have designed a "training and education package", intended to reward clubs investing in the training of young players. Training compensation would be paid when a player under 23 moves at the end of his contract.

Respect for contracts
As a matter of sporting regulation, any contract lasting for a period of up to three years must be respected. Proposal to introduce player contracts with a maximum duration of five years.

Transfer periods
Two unified transfer periods and a limit of one transfer per player per season.

Arbitration system in case of breach of contract
This would be based on respect for national law and respect for the specificity of sport. Regarding the former, the system would apply objective criteria to calculate compensation. Regarding the latter, the system would have power to apply sports disciplinary sanctions.

Transitional arrangements
Appropriate transitional measures are essential which, at a minimum, protect existing contractual arrangements between clubs and players.

The full text can be found at (look under negotiation document). It should be noted that the player's union, FIFPro, boycotted the final session of transfer talks, accusing FIFA of trying to retain too much of the present system.

Commission response so far
The Commission is happy with the proposals as a basis for negotiations, but disagreement over ban on international transfers for under-18s, and uncertainty that a compensation fee would be acceptable in many Member States. Sports Ministers, at a recent meeting in Paris, have urged the Commission to take the Proposals seriously and to find as rapid a conclusion as possible. The Commission hopes to be is a position to adopt a proposal by the end of the year.

How do we stand now?

One point stressed by the Commission representative at the Open Forum was that the proposals related to international transfers only, and that "it is for football to regulate football". As such in strict legal terms, a lot of the dire warnings relating to the impact of the changes on clubs like Watford may be overblown and premature. That said, such changes to the transfer system as will take place will merely accentuate the trend towards increased player power and the whole game dancing to the tune of big clubs and media interest. The golden age of the little club, which almost certainly never existed, will definitely not return.