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RETAINING FOOTBALLING TALENT – SELF HELP, LITIGATION, AND MARKET FORCES

This article was first written for and published by LawInSport.Click here to view the original.


By Andrew Clarke QC published on 29 July 2015.

The Raheem Sterling transfer saga again raises the issue of the balance of power between footballers and their clubs. How can a club seek to protect its most valuable assets at the start of the relationship and when it appears likely to break down? What can be negotiated when the player joins? Can the courts help when the player insists on leaving? Might a free for all actually provide a better solution?

This article will explore what clubs can do to help themselves. It will then explore the value for clubs in using the courts to help prevent their prized employees from moving to a rival, before proposing an alternate solution to the courts for the transfer of players.

 

Protecting talent: negotiating the best contract

Some clubs and players have sought to address the problem in the contracts they negotiate with the player. One possibility is a sporting variant of the pre-nuptial agreement; a term agreed at the start of the relationship, whilst relations are good, in which it is stated that the player can leave the club if an offer of more than a certain sum is made. It should provide a degree of certainty to both sides. A quick glance at the sports pages shows that Liverpool may have secured Christian Benteke by offering the amount specified in his buy-out clause1 and that Man Utd target Pedro had negotiated a significant reduction in his (to £22m2) when agreeing a new contract.

Protection can also be achieved by a lengthy employment contract, which does, of course, offer protection to the player as well. Again, this appears to offer a measure of certainty. Some clubs use this in combination with a buy-out clause.

The problem is that no term in a contract can force a player to play. Furthermore, unhappy players often perform below their potential. So, terms in contracts are useful, but they will not provide complete protection.


Protecting talent: the value of court injunctions

Nurturing talent and then protecting that talent from the clutches of rival businesses raises problems that have been confronted in the wider commercial world for some time. Successful bankers, scientists and salesmen often attract the interest of rivals. The courts are willing to become involved only in very limited ways.

Should clubs look to the courts for assistance? Contracts for personal services cannot be the subject of court orders that directly, or indirectly, compel an individual to work. Indirect compulsion is usually that which would stem from a court order that leaves the individual with the choice to perform the contract or to starve. So, in Warren v. Mendy,3 the Court of Appeal refused to grant an injunction to prevent boxer Nigel Benn using Mr Mendy as his manager when that would have forced him to perform his contract with Mr Warren when relations between the two of them had broken down.

The Courts have been willing to uphold terms of contracts which impose post-employment restrictive covenants which keep those who leave one employer to go to a rival out of the market place for limited periods. So contracts can provide that a manager cannot go to work for a rival for a few months after leaving his current club. The periods of restraint which courts will sanction are short and there are difficulties in the way of using such terms in contracts for managers and, most particularly, players, which are mentioned below.

Enforcing such covenants pre-supposes that the contract is at an end. What of those who just walk away? Those who chose to break their contracts by attempting to go to a rival can be kept out of the market, by the courts, on ‘garden leave’ for a period. Such periods will again always be limited. As in the case of enforcing restrictive covenants, the need for an injunction will be assessed by reference to the impact on the business of having an employee going to work for a rival, viewed in terms of damage to customer connection (the customers might move with him), workforce stability (other staff might follow) and confidential information (he might make use of it for the benefit of the new employer). These are matters that can be difficult to substantiate in the case of a manager, never mind a player.

Some years ago, a garden leave injunction was granted against Steve Bruce4 to prevent his going off to manage a rival team in the same league as his current employers, Crystal Palace. The case illustrates the difficulties of obtaining such injunctions in a sporting context. As already noted, the sorts of factors mentioned above are difficult to apply in a sporting context. That would be especially so in the case of a player. In that case there was a real risk that Bruce going to a rival could be to the commercial disadvantage of his employers for reasons other than that they valued his services and didn’t want a rival to have the benefit of them. Mere protection from competition is never enough to justify such an injunction.

It is difficult to see these sorts of injunction being granted in relation to a move by a player (or manager) to a foreign club. The possibility of fixtures in a trans-national tournament is unlikely to be enough and there would be obvious enforcement difficulties. Of course, there may be difficulties in the way of registering a player who is already contracted to another club. There is obvious scope for disputes as to whether the behaviour of the previous club was such as to repudiate the contract, leaving the player free to choose to walk away.

It will be apparent that the prospect of seeking injunctions from the courts in this context is fraught with legal difficulties. Furthermore, whilst threats of litigation may improve a negotiating position, resorting to court is likely to kill the prospect of any reconciliation and of the player (or manager) staying put.

Some American commentators have argued that the time has come for the courts to take a different approach to player contracts than to service contracts generally.5 They suggest that specific performance can be justified in relation to such a contract because, in particular, no court supervision will be necessary because no player (especially one looking to leave) would render sub-standard performance. Reasons why other traditional objections to such orders should not apply in the case of player contracts are also suggested. The arguments are interesting, but I cannot see that they are likely to succeed. The traditional rule is too well entrenched and courts would be reluctant to re-caste it. Anyway, short of legislation, this is probably impossible.

 

An alternate solution

It seems inevitable to recognise that litigation is rarely going to be a course worth pursuing in the context of a player, or manager wanting to leave. Even if it was an available option, it would carry the risk of players and managers revealing what they would characterise as their version of the events causing breakdowns in relationships which would entitle them to claim that the other party was in breach of contract so that they could lawfully walk away. Clubs dislike such matters entering the public arena.

Are we then stuck with the current situation? An alternative way forward would be to allow players freely to move clubs during transfer windows, provided that suitable compensation could be agreed or fixed. A tribunal could adjudicate where clubs were unable to agree, with the ‘new’ club being jointly liable, with the individual player, for any fee decided upon. Such a tribunal exists (the Professional Football Compensation Committee) to deal with those instances where a young out of contract player is to move and clubs cannot agree (for a recent example, see Danny Ings6). Who would establish the tribunal would be a matter for debate, but it could be made the responsibility of the relevant associations in the countries involved to nominate one or more members, with the members to appoint a president. There could be an appeal to the Court of Arbitration for Sport. The author notes that FIFPro, the World Players Union, announced challenges to the current transfer system in 2013, citing how unfair the current system is to the union’s members.7 What this author proposes could provide a more acceptable solution, especially to clubs, than some dismantling of the current system, which they claim is based on the economic interests of the clubs and not the players.

This would not prevent clubs from attempting to ensure the retention of their talent by using long contracts and generous salaries (or bonus packages). It need not prevent the use of buy-out clause, as they would provide a degree of certainty for both parties. It would have to be accepted that neither would be binding on the tribunal, but would be factors to be taken into considering in fixing the fee.

Of course, operating such a system on an international basis would pose difficulties and clubs might consider that the system would act so as to depress transfer fees. Nevertheless, they might be persuaded that such a system could offer a welcome degree of transparency and certainty. Perhaps the biggest losers would be journalists, but it would give them something new to write about.


References
  1. Simon Jones, ‘Christian Benteke wants Liverpool move but may have to demand exit from Aston Villa’, DailyMail.co.uk, 15 July 2015, last viewed 28 July 2015, http://www.dailymail.co.uk/sport/football/article-3162406/Christian-Benteke-wants-Liverpool-demand-exit-Aston-Villa.html
  2. Mark Ogden, ‘Man Utd transfer news: Barcelona admit they are powerless to stop Pedro from leaving’, telegraph.com, 22 July 2015, last viewed 28 July 2015, http://www.telegraph.co.uk/sport/football/teams/manchester-united/transfers/11756965/Man-Utd-transfer-news-Barcelona-admit-they-are-powerless-to-stop-Pedro-from-leaving.html
  3. [1989] IRLR 2010
  4. Crystal Palace FC (2000) Ltd v Stephen Bruce 22 November 2001, Burton J
  5. See, eg, Affirmative Injunctions in Athletic Employment Contracts: Rethinking the Place of the Lumley Rule in American Sports Law by G C Rapp in the Marquette Sports Law Review Spring 2006 at p.261. , http://scholarship.law.marquette.edu/cgi/viewcontent.cgi?article=1350&context=sportslaw
  6. For example see – David Hughes, ‘Danny Ings to Liverpool: Reds may have to pay record £8m tribunal fee to secure free agent’, independent.co.uk, 29 May 2015, last viewed 28 July 2015, http://www.independent.co.uk/sport/football/transfers/danny-ings-to-liverpool-reds-may-have-to-pay-record-8m-tribunal-fee-to-secure-free-agent-10284244.html
  7. ‘FIFPro announces legal challenge to transfer system’, fifpro.org, 17 December 2013, last viewed 28 July 2015, http://www.fifpro.org/en/news/fifpro-announces-legal-challenge-to-transfer-system

Posted: 09.12.2015 at 16:08
Tags:  Sports Law  On Sport  Articles
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