Matt Scott: Broken windows? How the transfer system is under threat

“What one can see out in the sunlight is always less interesting than what goes on behind a windowpane. In that black or luminous square life lives, life dreams, life suffers.” Charles Baudelaire

There is something visceral, something deeply emotional, about the transfer window. For fans of clubs who are apt to sell their best players, it stirs deep pangs of jealousy at the threat of a love lost to a more potent rival. But then by turns it also speaks of promise, of hope renewed.

The transfer system, which has existed for more than 120 years, is central to the commerce of the modern game. As the proliferation of transfer stories in the newspapers and on television sports-news channels at this time of year demonstrates, it is one of football’s most marketable facets for consumers. Outside of live football involving their team, nothing excites a fan as much as the tantalising prospect of a new signing, nothing occupies him more than the fear of the enforced sale of a star player.

For buying clubs more prosaically it is a means of improving their rosters. For selling clubs it is a means of liquidating unwanted assets, and of receiving compensation for effective player development. For some, transfer income is their lifeblood.

But although clubs have been buying and selling players and thus exciting various emotions in their followers for more than a century, the transfer system as it stands has been around only since 2001. That was when the European Court of Justice made its famous Bosman ruling, forcing the football authorities to negotiate a new framework for transfers since the old rules could no longer apply under European law.

Although the most hawkish reading of articles on freedom of movement would permit players to move between clubs at the end of a short notice period, there was recognition that the season cycle of football competition required longer-term contractual stability. The introduction of transfer windows ensured better planning for clubs as there was no risk of players upping sticks from one day to the next.

But the system as it stands does not satisfy every one of football’s stakeholders. The world players’ union, FIFPro, feels the interests of its members are ill served by the status quo. Last week it announced through the French players’ union’s website that it will soon take its arguments to the European Commission and to the European Court of Justice, making its complaint to each of them on September 17 this year.

“What we don’t agree with are the consequences of the installation of the current system,” FIFPro’s legal counsel, Alexandra Gómez Bruinewoud told me. “Lots of clubs are not paying their players the amounts due to them in their contracts.

“Transfer fees are very high in many cases. Clubs acquire players very expensively and then they can’t pay the salaries they have promised them. Players don’t get what they should and it leads to bigger clubs with great players and small clubs with not so good players. Every time it becomes more extreme. These are serious issues affecting the rights of the players.”

Ahead of the formal complaint to the EC and the courts Gómez understandably refused to go into details of exactly how FIFPro feels the system offends European law. However, it is known that FIFPro’s objections surround the areas of freedom of movement of labour and competitions legislation. What she was more expansive on was how FIFPro believes FIFA’s current Regulations on the Status and Transfer of Players demand too much of the players they regulate.

Every time a player is transferred or renews a contract, a new “protected period” of three years (if the player is under 28 years old) or two years (if older) comes into force. During that period the player may not obtain a transfer from his club without the club’s consent. Under Article 17 of the Regulations, even after that time, if a player moves clubs he must pay compensation to the club he is leaving, according to a formula taking into account the following inputs:

· Pay and benefits due to the player

· Time remaining on his contract up to five years

· Whether or not it takes place during a protected period

· Transfer fees and expenses paid by the former club (amortised according to the time served on his contract)

The first three of these principles were supported by the so-called Webster ruling, which came about when the Heart of Midlothian defender Andy Webster sought to leave for Wigan Athletic in 2006. It was viewed as a landmark ruling perhaps on the scale of Bosman, permitting players genuine freedom of movement as they entered the final two years of a five-year contract.

However a subsequent decision in the case of the Brazilian midfielder Matuzalem, who was trying to use the Webster provisions to engineer a move from Shakhtar Donetsk to Real Zaragoza, reversed the momentum back in favour of clubs. Introducing the fourth principle of transfer fees and expenses paid by the club into the compensation calculation, the Court of Arbitration for Sport ordered Matuzalem to pay €12 million (then £11 million). This ensured that players exercising their Webster mobility risked paying a prohibitive amount in compensation to the clubs they would leave. (I covered this in the daily Digger column I was writing at the Guardian at the time: http://bit.ly/1K5yBDc)

Matuzalem appealed to the Swiss Federal court but it was initially rejected on the grounds that compensation should be payable to clubs who lose players before the end of their contracts. Even so, the player and Zaragoza did not pay up and Shakhtar appealed to FIFA for sanctions to apply. Matuzalem was banned from all football activity until he had settled the compensation with the Ukrainian club. He again appealed the matter to the Swiss Federal court on the ground that it was an excessive limitation on personal freedom: if he could not play he could not earn and if he could not earn he could not pay. This time, the courts upheld his appeal.

For FIFPro this was a pyrrhic victory as it still leaves Article 17’s compensation provisions in place, as supported by the initial decision of the Swiss courts on the matter in Matuzalem. But there are perhaps strong arguments that this restricts freedom of movement under European laws. After all, the transfer fees clubs pay for players are not determined by the players themselves, but if their ability to switch clubs is subsequently impacted by the sums involved then it should be open to specific legal examination.

“What we negotiated as FIFPro in 2001 wasn’t enforced,” added Gómez. “Lots of what we agreed was changed. For example, the protected period. We didn’t say that the protected period could be reinstalled with every contract extension. We also disagree with Article 17 because it led to decisions like Matuzalem, which we consider absurd.

“Some things are OK on paper but they have not been applied as they should. We have said that in practice [when a player wants to leave a club outside of the protected period] the situation should be coherent: a player should have to pay the rest of the value of his contract. It is not OK with him having to pay that plus [the unamortised] part of his transfer fee or extra compensations. That’s too extreme. In Matuzalem he had to pay millions to the club.

“The problem is there’s no line of legal precedent. You have Webster, you have Matuzalem, you have [others]. But there is no clear line in CAS on how each case will be decided.

“As a player you don’t know what happens with a breach-of-contract case. You have the right to know what are the consequences. When a club breaches a contract it will know what to pay the player. When the player does the same he doesn’t know.”

FIFA said it had no comment to make on FIFPro’s challenge, while UEFA said the matter is “regularly debated in the UEFA Professional Football Strategy Council, where all stakeholders are represented, including FIFPro.” It refused to divulge any details of these discussions, however.

The European Clubs Association, which has most to lose in this case, said: “FIFPro’s threat of challenging the transfer system is not new. In our view, the system overall functions, and plays an important role in the redistribution of resources from top to bottom. It also ensures a fair balance between contractual stability and free movement of players, which was the objective of the 2001 agreement with the EU.

“It is more a matter of addressing the possible abuses of the system (such is the case for example with agents, third-party ownership and overdue payables). ECA always remains committed to an open and fair dialogue with the relevant stakeholders within the appropriate institutional framework.”

Neither side is prepared to envisage what might emerge if the current transfer system is overturned but there is clearly very much at stake here for football.

The risk for clubs, as the producer element of football’s economy, is that unfettered freedom of movement of players would destroy an important part of their asset base. As FIFPro recognises, player values are now a many-multibillion-euro element of what clubs are collectively worth. Without long-term contractual stability this asset value could be decimated. That value has been set by the market. Whether or not the market is egregiously distorted by current employment practices is a matter that the courts’ intervention must take into account.

It was the sociologists James Wilson and George Kelling who coined the phrase broken windows in 1982, demonstrating that a building with broken windows is exponentially more vulnerable to vandalism than one intact. So central is the transfer market to the commerce of football, it seems clear to me that any decision breaking up the system that introduced transfer windows risks tearing the whole edifice of its business model down.

Journalist and broadcaster Matt Scott wrote the Digger column for The Guardian newspaper for five years and is now a columnist for Insideworldfootball. Contact him at moc.l1635169061labto1635169061ofdlr1635169061owedi1635169061sni@t1635169061tocs.1635169061ttam1635169061.