Introduction: FIFA’s TPO ban and its compatibility with EU competition law.
Day 1: FIFA must regulate TPO, not ban it.
Day 2: Third-party entitlement to shares of transfer fees: problems and solutions
Day 3: The Impact of the TPO Ban on South American Football.
Day 4: Third Party Investment from a UK Perspective. 

Editor’s note: Finally, the last blog of our TPO ban Symposium has arrived! Due to unforeseen circumstances, FIFA had to reconsider presenting its own views on the matter. However, FIFA advised us to contact Prof. Dr. Christian Duve to author the eagerly awaited blog on their behalf. Prof. Dr. Christian Duve is a lawyer and partner with Freshfields Bruckhaus Deringer LLP and an honorary professor at the University of Heidelberg. He has been a CAS arbitrator until 2014. Thus, as planned, we will conclude this symposium with a post defending the compatibility of the TPO ban with EU law. Many thanks to Prof. Dr. Duve for having accepted this last-minute challenge!

This blog article outlines FIFA’s reasons to introduce Art. 18ter FIFA Regulations on the Status and Transfer of Players (RSTP) which bans third-party ownership of players’ economic rights (TPO). In recent years, TPO was perceived as a threat to the integrity of football competitions within the international football community[i] and has become an area of concern for FIFA. Nevertheless Art. 18ter RSTP has been heavily criticized mainly by the proponents of TPO and a complaint has been filed with the European Commission by the Spanish and the Portuguese Leagues for an alleged violation of EU competition law. In the following it will be shown that such criticism does not sufficiently take into consideration the specific characteristics of the practice of TPO as well as football in general. It explains the rationale behind Art. 18ter RSTP which

-      fosters the integrity of competition which is a priority topic for FIFA,

-      promotes the independence of clubs by preventing third parties’ influence in sporting decisions,

-      leads to stable squads,

-      provides an opportunity for investors to invest in the clubs rather than in single players,

-      leads to financially healthier clubs.

Hence, with the introduction of Art. 18ter RSTP, FIFA pursues legitimate aims which justify the ban of the TPO practice.

1.              FIFA’s Way to Art. 18ter RSTP

TPO covers various situations in which a third party invests in the economic rights of a player in order to receive a compensation with regard to a future transfer. Whilst it is widely used in South America and in Southern Europe as an alternative funding possibility, especially to finance investments in sporting talent,[ii] TPO is explicitly prohibited in England, France and Colombia.[iii] The English ban on TPO was introduced in 2008 after the commotion caused by the Tévez case in 2006 where the contract between Tévez and West Ham United contained a provision giving a third party owner the right to decide on the transfer and the transfer fee of the player without any right to veto by the club.

FIFA has introduced a new rule Art. 18bis RSTP which prohibits clubs to enter into contracts that are liable to jeopardise the club’s independence, its policies or the performance of its teams and freedom of decision-making in employment and transfer-related matters and came into force on 1 January 2008.[iv] However, after having mandated two studies providing data and information on TPO in several countries in 2013 and 2014, it was felt that Art. 18bis RSTP was not sufficient and did not address this subject in an appropriate manner. Therefore FIFA decided to introduce a new Art. 18ter RSTP as from 1 May 2015.

The main provision of Art. 18ter RSTP reads:

1.      No club or player shall enter into an agreement with a third party whereby a third party is being entitled to participate, either in full or in part, in compensation payable in relation to the future transfer of a player from one club to another, or is being assigned any rights in relation to a future transfer or transfer compensation. […]

It has been criticized that Art. 18ter RSTP prevents and restricts competition in the market for capital investment in football in a way that is not proportionate for attaining its legitimate objective and that Art. 18ter RSTP is therefore incompatible with EU Competition law. However, such criticism does not sufficiently take into consideration the specific characteristics of football as will be shown in this blog.

2.              The Rationale of Art. 18ter RSTP

First and foremost, Art. 18ter RSTP protects the integrity of the game itself by allowing for the necessary freedom in the contractual relationship between a club and a player, to determine whether and when the player is fielded as well as to decide independently and for sporting reasons only whether and when they are transferred.

Second, with regard to financial aspects of the clubs, critics undervalue that Art. 18ter RSTP is limited to a prohibition of an investment in a club’s players and does not in any way limit an investment in the clubs themselves leading to financially healthier clubs.

2.1           Art. 18ter RSTP Fosters the Integrity of Football

Art. 18ter RSTP pursues several legitimate aims, inter alia, the integrity of competition (2.1.1.), the independence of clubs (2.1.2.) and the stability of squads (2.1.3.).

2.1.1      Integrity of Competition

The protection of the integrity of the game is not only one of FIFA’s main objectives according to Art. 2 e) of the FIFA Statutes, it was also recognized by the European Commission as a legitimate aim justifying limitations on competition.

With regard to the UEFA rule on the “Integrity of the UEFA Club competitions: Independence of clubs” establishing a ban on the ownership of several clubs participating in the same competition by the same person or company, the European Commission held that the ban was in any case a necessary rule to ensure its legitimate aim of protecting the integrity of sporting competitions by “protecting the uncertainty of the results and giving the public the right perception as to the integrity of the […] competitions with a view to ensure their proper functioning“.[v] Previously, a Court of Arbitration for Sport (CAS) decision has also confirmed the validity of this limitation and found that “when commonly controlled clubs participate in the same competition, the «public’s perception will be that there is a conflict of interest potentially affecting the authenticity of results»” and that “that ownership of multiple clubs competing in the same competition represents a justified concern for a sports regulator and organizer”.[vi]

The danger of such conflicts of interests is, however, not limited to club owners, it extends to investors, agents and coaches. Similar to the situations in which a third party has interests in several clubs participating in the same competition, conflicts of interests can also arise in cases where third parties own shares in economic rights of several players of different teams which are competing against each other.[vii] Especially if a player in which a third party has an economic interest competes against a club that is owned by the same investor, there is a significant potential for such conflicts. Even within the same team, the risk of having the same owner of a number of players presents a competitive integrity risk.[viii]

In any case and irrespective of an actual conflict, a conflict may at least be perceived by the public in connection with TPO. Such perception leads to a loss of confidence in the integrity of the competition and damages the image of the sport. In the light of the increasing threat of match manipulation, the involvement of third-party owners creates a danger to the reputation of the competition that could weaken the football world. The integrity of the game is therefore only guaranteed if players and clubs are not influenced by third parties owning the players’ economic rights with the aim to maximize their investment.[ix]

2.1.2      Independence of Clubs

To ensure the independence of its Members’ affiliated clubs is one of FIFA’s objectives pursuant to Art. 18 para. 2 of the FIFA Statutes. The second TPO study found that “the spread of TPO in the majority of the cases may be closely related to a partial takeover of the clubs’ control by actors seeking primarily short-term profit and speculating on the purchase and sale of economic rights, regardless of sporting concerns”[x]. TPO potentially has an impact on player selection on the field of play and creates complications for transfer negotiations as the clubs’ sporting interests (e.g. of holding a player despite a lucrative offer or of letting a player go without being offered a lucrative transfer fee) may conflict with investors seeking a profitable return on their investment.

Even though interests may coincide if the investor speculates for a rise in the player’s market value (e.g. Santos FC refusing Chelsea FC’s offer for Neymar), one prominent example of conflicting interests is the Tévez case in which West Ham United was deprived of any rights with regard to a future transfer of the player. More recently, contract renewal negotiations with Zambrano, a key player of Eintracht Frankfurt, are jeopardized by a third party whose entitlement to future transfer compensation for Zambrano is to be bought by Eintracht.[xi] 

Overall, the more clubs are depending on TPO financing, the more negotiating power third party investors have. The second TPO study mentions the purchase of economic rights at preferential prices, pre-emptive rights on new players or even greater influence on transfer policy.[xii] Moreover, with players’ economic rights in the hands of various investors the fragmentation of interests within a club increases. The independence of clubs can only be guaranteed by preventing a partial takeover of the clubs’ control by third parties especially with regard to transfers.

2.1.3      Stability of Squads

The aforementioned clash of interests between investors speculating on the purchase and sale of players’ economic rights and clubs reoccurs when it comes to the frequency of transfers. Whereas an investor makes money out of transfers, a club may be more interested in building a stable team and team cohesion for sporting reasons. The Demographic Study of CIES in 2014 found that “in general, the number of transfers carried out by teams during the current season is at an all-time high” and stated that “the increasing speculation surrounding players’ transfers is also visible through the progressive drop in the number of club-trained players, which has attained its lowest level since 2009”.[xiii] Pursuant to the same study, players recruited from January 2013 onwards represented 41.3% of squads on average (10.2 signings per club). At the same time, the best performing clubs generally have the most stable squads. For instance, FC Barcelona has the most stable squad among European top division teams. Its Players have been for 5.5 years in the first team squad on average pursuant to the Demographic Study of CIES in 2014.[xiv]

Leagues and club representatives stressed in the Second TPO study that the increasing gaps between clubs in terms of stability contribute to the general decline in the competitive balance both at national and international level.[xv] FIFA’s overall objective to promote football, laid down in Art. 2 a) of the FIFA Statutes, is endangered by such contractual instability caused by TPO.

2.2           Art. 18ter RSTP Provides an Incentive for Investment in Clubs

Football clubs play the central role with regard to the aforementioned legitimate aims. In order to achieve those objectives, appropriate financing mechanisms are fundamental for football clubs. It is undisputed that clubs need external sources. A solution that takes sufficiently into account the role of the clubs and their needs can only be to finance clubs directly. By prohibiting the TPO of single players’ economic rights, Art. 18ter RSTP creates an incentive for investors to invest in the clubs themselves.

Admittedly, some football clubs have been affected by financial difficulties and thus do not seem to be attractive for investors at first sight. In this context, however, it must be taken into account that clubs that seek regular access to talent by means of TPO are becoming even more and more dependent on the regular injection of funds from external investors which may lead to a “vicious circle of debt and dependence”.[xvi] With a club selling its players’ economic rights to third parties, the value of the respective club’s assets decreases. As a result, it is even harder to find potential investors interested in financing the club.[xvii] Therefore TPO cannot be a sustainable financing option. Improving the overall financial health of club football is a major concern for football associations. Therefore the UEFA Financial Fair Play Regulations (FFP) were established to prevent professional football clubs from excessive spending. Although the regulations only contain disclosure requirements with regard to TPO, they were released in view of a TPO ban.[xviii]

Overall, critics therefore have to take into account that Art. 18ter RSTP prohibits only one single form of investment whilst it promotes at the same time investment in the clubs specifically tailored to the overarching aim of fostering the integrity of the game.

3.              Conclusion

Art. 18bis RSTP has already targeted the aforementioned legitimate aims. However, this provision may be easily circumvented by inserting a clause into the TPO agreement stating that it does not permit any exercise of influence by the third party within the club’s employment and transfer-related matters, policies or performance of its team. In practice, the engaged third parties will interfere with a club’s sporting decisions in many cases despite such a contractual clause. Interviewees in the second TPO study reported that in practical terms, many third­party investors do influence the transfer of players.[xix] Therefore, there is a consensus among football stakeholders that TPO should be restricted. The legitimate aims underlying Art. 18ter RSTP can be achieved most effectively by a total ban of the TPO practice. Whereas critics point to the lack of financing options caused by the prohibition of TPO, this blog has argued that in the specific context of football competitions the integrity of the game benefits from direct investments in the clubs.

[i] Cp. FIFA Circular no. 1420 of 12 May 2014.

[ii] Third-party ownership of players’ economic rights, Part II., Centre de droit et d’économie du sport et Centre international d’étude du sport, June 2014, p. 3.

[iii] Moreover, Poland has a rule which is interpreted by its football association as prohibiting third parties to hold a player’s economic rights with an exception for former clubs, cp. TPO study I, p. 3, 17 et. seq.

[iv] Art. 18bis RSTP, as introduced in 2008, reads:

1.   No club shall enter into a contract which enables any other party to that contract or any third party to acquire the ability to influence in employment and transfer-related matters its independence, its policies or the performance of its teams.

2.   The FIFA Disciplinary Committee may impose disciplinary measures on clubs that do not observe the obligations set out in this article.

[v] European Commission, Rejection Decision of 25 June 2002, Case COMP/37 806: ENIC/ UEFA, para. 47.

[vi] Arbitration CAS 98/200 AEK Athens and SK Slavia Prague / Union of European Football

Associations (UEFA), award of 20 August 1999, para. 48 (available at http://jurisprudence.tas-cas.org/sites/CaseLaw/Shared%20Documents/200.pdf).

[vii] Third-party ownership of players’ economic rights, Part II., Centre de droit et d’économie du sport et Centre international d’étude du sport, June 2014, p.  9, 81.

[viii] Cp. Third-party ownership of players’ economic rights, Part I., Centre international d’étude du sport, p. 33.

[ix] Third-party ownership of players’ economic rights, Part II., Centre de droit et d’économie du sport et Centre international d’étude du sport, June 2014, p. 81 et. seq.

[x] Third-party ownership of players’ economic rights, Part II., Centre de droit et d’économie du sport et Centre international d’étude du sport, June 2014, p. 8.

[xi] Available at: http://www.fr-online.de/eintracht-frankfurt/carlos-zambrano-eintracht-frankfurt-zambrano-deal-gefaehrdet,1473446,29843342.html.

[xii] Third-party ownership of players’ economic rights, Part II., Centre de droit et d’économie du sport et Centre international d’étude du sport, June 2014, p. 88.

[xiii] Available at http://www.football-observatory.com/demographic-study-2014-now.

[xiv] Available at http://www.football-observatory.com/demographic-study-2014-now.

[xv] Third-party ownership of players’ economic rights, Part II., Centre de droit et d’économie du sport et Centre international d’étude du sport, June 2014, p. 78.

[xvi] Third-party ownership of players’ economic rights, Part II., Centre de droit et d’économie du sport et Centre international d’étude du sport, June 2014, p. 9.

[xvii] Third-party ownership of players’ economic rights, Part II., Centre de droit et d’économie du sport et Centre international d’étude du sport, June 2014, p. 88.

[xviii] Available at http://www.uefa.com/community/news/newsid=2064391.html.

[xix] Third-party ownership of players’ economic rights, Part II., Centre de droit et d’économie du sport et Centre international d’étude du sport, June 2014, p. 88.

Editor’s note: Kester Mekenkamp is an LL.M. student in European Law at Leiden University and an intern at the ASSER International Sports Law Centre. This blog is, to a great extent, an excerpt of his forthcoming thesis, which he shall submit in order to complete his master’s degree.

This is the second part of a three-piece blog on FIFA’s provision on the protection of minors, Article 19 of the Regulations on the Status and Transfer of Players. The contribution in its entirety aims to provide an encompassing overview of the rule’s lifespan since its inception in 2001. The previous (first) part has shed light on the “birth” and “first years” of the provision, and as such illustrated the relevant developments from 2001 till 2009. This second part covers the rule’s “adolescent years”, which span from 2009 to the present. The major changes put forward in the 2009, 2015 and 2016 versions of the RSTP will be addressed. Thereafter the important CAS decisions concerning Article 19, Muhic, Vada I and II, FC Barcelona, RFEF, and the FIFA decisions relating to Real Madrid and Atlético Madrid, will be scrutinized. The third, and final, part will constitute a substantive assessment of the provision under EU Internal Market law.

Given that the version adopted in 2008 left Article 19 untouched, the 2009 RSTP represented the next significant step in the regulation of the protection of minors. It had become clear that the system as used up to that point was inadequate to achieve its goal,[1] most notably because several national associations still neglected to strictly apply the rules.[2] In response to this perceived failure, a new set of rules and procedures was adopted and came into force on 1 October 2009: the creation of a special FIFA oversight sub-committee of the PSC, the introduction of a special provision on football academies, and the instalment of a transfer matching system.[3] Importantly, with the enactment of these new regulations, Articles 19 and 19bis RSTP were included in the set of provisions binding upon the national level, which consequently had to be incorporated into the national associations’ regulations without alteration.[4]

This new 11-member PSC sub-committee (consisting of representatives of the confederations, leagues, clubs, players and the PSC’s chairman and deputy chairman) became the supervising body concerning the examination, and potential approval, of every international transfer and first registration of a minor player.[5] Its approval is mandatory and needs to be obtained prior to any request for any association’s ITC-request.[6] Moreover, non-compliance can be sanctioned by the FIFA’s Disciplinary Committee, although a limited exception from this obligation exists for minor amateur players.[7]

Article 19bis RSTP on the registration and reporting of minors at academies was another substantial modification with respect to the protection of minors.[8] A football academy is defined by the regulations as “an organisation or an independent legal entity whose primary, long-term objective is to provide players with long-term training through the provision of the necessary training facilities and infrastructure. This shall primarily include, but not be limited to, football training centres, football camps, football schools, etc.”[9] With the creation of this new provision, all minor players that attend an academy, indifferent to whether or not that academy takes part in a national championship or has a legal, financial or de facto link to a club participating in a national championship, must be reported to the national association upon whose territory the academy operates.[10] This regulation of academies resembles an attempt to deal with what was previously a major loophole, the unregistered academies.[11]

The third major change was the instalment of a transfer matching system (“TMS”), which is a web-based data information system that, first of all, aims to simplify the processing of international transfers.[12] Its task is to provide more details to football’s governing bodies on all transfers taking place.[13] This should furthermore increase the transparency of the individual transactions, and in doing so, it will “improve the credibility and standing of the entire transfer system, and additionally also “safeguard the protection of minors”.[14] In practice, the TMS is a central database that monitors the international movement of players. As mentioned earlier, every application for an international transfer by a minor player must receive the approval of the PSC sub-committee. This process is managed through the transfer matching system, the details of which are stipulated in annexe 2 of the RSTP.[15] The sub-committee decides with three of its members, or, in urgent cases, through a sole member acting as “single judge”.[16] The national association wanting to register a player, files the application for an approval of an international transfer (or first registration) into the TMS.[17] Accompanying this application, the TMS requires a great number of specific documents, depending on the facts of the case and the exception that is being invoked.[18] This mandatory release of information spans documentation on, inter alia: academic and football education, accommodation, player’s and/or player’s parent(s) contract, parental authorisation and a birth certificate.[19] Subsequently, the sub-committee decides whether or not it gives its approval. If so, an ITC will be delivered via the TMS and the transfer can be finalized.[20] Parties involved have 10 days to inquire for the grounds of the decision, after that an appeal before the CAS is still open. Note that this procedure for minors differs from a regular international transfer, in that for the latter there is no substantive review by a third party. The clubs provide the relevant information and the TMS merely, automatically, checks whether the two strands of facts match.[21]

The Elmir Muhic case

The regulatory system laid down in the 2009 RSTP operates in roughly the same manner today, as the revisions of 2010, 2012, 2014, 2015, did not substantially amend the core rules.[22] The case law of the CAS during this period, from 2009 to 2012, provides some examples of the application and interpretation of the 2009 rules.

In Elmir Muhic v. FIFA, a 16-year-old football player from Bosnia-Herzegovina joined the German OFC Kickers Offenbach.[23] Following the PSC sub-committee refusal to give its approval, the case ended up before the CAS. The Panel found that none of the three exceptions applied in the matter at hand. It did specify, in relation to the “parents-rule” of Article 19(2)(a), that the term “parents” needs to be applied stricto sensu.[24] Even though it could “conceivably cover situations beyond the natural parents”, such was not the case here.[25] Muhic’s parents still lived in Bosnia and Herzegovina (and it remained uncertain why they did not joined their child), while the player stayed at his aunt’s house.[26] The Panel stated that an aunt (and relatives alike) cannot replace the player’s parents in order to invoke the exception.[27] 

The Vada II case

Around the same time, Vada II made an important contribution to the application of Article 19(2)(b) (the first case had evolved along the lines of the Acuña award).[28] Valentin Vada was a football player living in Argentina, with dual citizenship. Next to possessing the Argentinian nationality, Vada also owned an Italian passport.[29] The 16-year-old was of the opinion that he could transfer to the French Club Girondins de Bordeaux, based on the “EU and EEA-rule” of Article 19(2)(b) RSTP.[30] FIFA’s single judge rejected the request, as he found the facts of the transfer not to match the strict requirements of the exception.[31] The arbiter reasoned that this exception is based on the criterion of territoriality, not nationality, and thus only refers to “a transfer taking place within the territory of the EU or EEA”.[32] Therefore, as Vada wished to transfer from an Argentinian club, Article 19(2)(b) RSTP could not be applied. Be that as it may, the CAS Panel argued (in length) otherwise. It agreed that the “EU and EEA-rule” merely stipulates a criterion of territoriality not nationality.[33] Still, it also noted that the FIFA’s RSTP commentary (as abovementioned) revealed that this exception was included in the 2001 informal agreement between FIFA/UEFA and the Commission in order for it to respect EU free movement law.[34] Thus, this objective to comply with EU free movement rights could not be ignored.[35] Additionally the CAS found, in line with FC Midtjylland, that the list of exceptions in Article 19(2) is not exhaustive.[36] This was supported by a document submitted by Girondins de Bordeaux setting out the case law of the PSC sub-committee. It explained that “if a club believes that very special circumstances, which do not meet any of the exceptions provided…the association of the club concerned may, on behalf of its affiliate, submit a formal request in writing to the FIFA sub-commission to consider the specific case and make a formal decision”.[37] Moreover, the document showed that the sub-committee in the majority of cases takes free movement law into consideration when “assessing the transfer of a player who, with a passport from an EU or EEA country, wishes to register with a club in an EU or EEA country”.[38] Consequently, the Panel accepted an unwritten exception allowing a player such as Vada, with the nationality of one of the EU or EEA member countries, to invoke Article 19(2)(b) RSTP.[39] 

The Spanish lawbreakers

From 2013 onwards the three biggest and richest football clubs in Spain, at the same time belonging to the top 15 clubs worldwide, Atlético Madrid, Real Madrid and FC Barcelona, found themselves embroiled in a number of legal disputes as a result of signing minors.[40] A significant step unto its own, as it demonstrates that FIFA will not shy away from taking on the big iconic clubs when enforcing its regulations.

This “Spanish saga” kicked-off with a dispute concerning a US teenager, of 13 years old, who moved to Spain together with his parents and wanted to register with Atlético Madrid in September 2012.[41] Once more, the main question was whether the factual constellation of the case supported the application of the “parents-rule” (did the parents move to the country of the new club for reasons not linked to football?), and again the Panel stressed, in line with both Acuña and FC Midtjylland,[42] the need to apply the protection of minors rules in a “strict, rigorous and consistent manner”.[43] This means, following its decision in Vada I, that the family’s move must be unconnected altogether to football.[44] It is insufficient to establish that the move is partially connected to their child’s football activities, although not being the primary aim.[45] The Panel’s factual assessment distinguished multiple relevant elements to come to a decision on the possible application of the exception. Contra: the short timeline (six weeks) between the minor’s arrival in Madrid and the registration request (which hints at a previous intention); the player’s previous footballing activities; the player’s statement, reported on his school’s official website, “that the reason of his move to Spain was the possibility that he has been given to play with the Club Atlético de Madrid”.[46] Pro: the family of the player is partially Colombian, which connected them to Spain for reasons of culture and language; “The family is wealthy and…the basic maintenance of the family is not dependent of a working activity of the parents”; The player’s sister had already moved to Europe for her studies; The first preparations were undoubtedly made several months before the interaction with the club commenced; The club does not have a particular interest in the player “other than having in its team a teenager which may have a certain talent for football, such as many others in the Madrid area”.[47] In sum, the CAS concluded that, due to the exceptional facts, there is no link between the move of the family and their son’s football activities.[48]

The FC Barcelona case

Atlético’s fellow-townsman Real Madrid ended up in a likewise dispute with FIFA regarding a 13-year-old player from Venezuela.[49] The main hitter however was the case regarding their Catalonian archenemy: FC Barcelona.[50] The FIFA TMS, in January 2013, became aware of a potential breach, which ultimately lead to a case involving registrations of 31 minors.[51] These players, of various nationalities, were registered at FC Barcelona in the period from 2005 until 2012.[52] Via the FIFA Disciplinary Committee and Appeal Committee, who both found the club to have violated i.a. Articles 19(1), 19(3), 19(4), 19bis, and Annexe 2 of the RSTP, the case ended up before the CAS.[53] The Panel addressed the different potentially breached articles in a consecutive order, starting with Article 19(1) RSTP. The Panel found FC Barcelona to have infringed this provision with respect to nine players. The club had tried to shelter behind the fact that it had complied with all the rules laid down by the regional Catalonian football association, and, as such, had acted rightfully. The Panel held instead that the ban on internationally transferring minors is without doubt “addressed to both ‘associations’ and clubs”.[54] It thereby emphasized that national associations are paramount to the enforcement of FIFA’s statutes, and in the extent thereof the enforcement of the RSTP. Regional associations, such as the Catalonian, cannot govern the international transfer of players.[55] Given that clubs are the starting point of every international transfer, they “must primarily observe this ban”. The Panel stressed furthermore that Article 19(4) RSTP marks this by obliging the associations to ensure the clubs’ compliance in this matter, and moreover, Article 1(4) RSTP, explains that the Regulations “are binding for all associations and clubs”.[56] FC Barcelona may thus not hide behind apparent mistakes/breaches by both the Catalonian and the Spanish football associations, given that it “did not even try to request the transfers based on any one of the exceptions”.[57] Furthermore, FC Barcelona “should have been aware of the simple fact that they [the Spanish and the Catalonian associations] could not register the minors in any legitimate way under the RSTP”, which the CAS compared to “wilful ignorance” or, the “deliberate shutting of eyes”.[58]

Of the group of minors at the centre of the dispute, three were below the age of 12. FC Barcelona put forward a restrictive reading of the personal scope of application of the Articles 19 and 9(4) RSTP (2010 edition), arguing “that there are no prohibitions for the transfer of players under the age of 12”.[59] It thereby relied on Article 9 of the 2006 RSTP Commentary that stipulates “for players younger than 12, the Regulations do not provide for an obligation to issue an ITC for international transfers”.[60] The Panel nonetheless made short work of this argumentation by explaining that Article 9(4) RSTP’s absence of an obligation to issue an ITC for under-12 players merely addresses a formal requirement. The substantive rules for the international transfer of minors (irrespective whether below or above 12 years of age) are found in Article 19 RSTP, including paragraph 2 of that article.[61] This led the Panel to conclude that “no ITC was required when the transfers occurred for players below the age of 12; their transfer nevertheless, can only be lawful if it complies with the requirements embedded in Article 19(2) RSTP”.[62] The Panel also noted the amendment to Article 9(4) RSTP, effective as of 1 March 2015, which lowered the age at which an ITC is required from 12 to 10.[63]

In short, the CAS also ruled that FC Barcelona had violated Article 19(3) RSTP in relation to one minor, for the same reasons referred to in its findings under Article 19(1) RSTP.[64] Moreover, six cases violated Article 19(4) RSTP, as the Catalonian association had failed to refer these transfers to the PSC sub-committee. These infringements of paragraph 4 further justify that “sanctions may also be imposed (…) on the clubs that reached an agreement for the transfer of a minor”. The CAS in this regard defined the interpretation of the word “agreement” to include “agreements concluded between the registering club and the player himself, his parents, agents, etc”.[65] Further, the Panel established a breach of Article 19bis RSTP for all 31 players under investigation.[66] This constitutes a procedural violation, being “the lack of reporting of information regarding the progress and development of players” attending FC Barcelona’s well-known academy ‘La Masía’”.[67] Be that as it may, the CAS did praise the training and educational track record of La Masía. Thereby it deviated from the Appeal Committee’s ruling. In opposition to the latter it found that the attending players’ potential football careers are not endangered. On the contrary, if FC Barcelona in the future commits itself to its reporting duties under Article 19bis RSTP, then it “will be contributing to the overarching principles governing the protection of minors, since it will be providing other clubs with an enviable benchmark for the education and training of players”.[68] The CAS Panel found the sanctions imposed by the FIFA Disciplinary Committee and the Appeal Committee to be proportionate, and hence confirmed the earlier verdict.[69] Concretely, FC Barcelona was imposed a transfer ban for two transfer periods, as well as a fine of CHF 450,000.[70]

The RFEF case and latest developments

Things had not completely settled down yet with regard to the Spanish national football association: Real Federación Española de Fútbol (“RFEF”).[71] As has become clear in the coverage of the Barcelona case, apparent mistakes were made in the Spanish supervision of the ban on international transfers of minors. In a dispute regarding 31 international minor transfers to several Spanish football clubs[72], the RFEF was found by the CAS to have violated its guarding role and thereby induced a passive infringement of Articles 19(1), 19(3), 19(4) together with Annexes 2 and 3, and Articles 5(1) and 9(1) RSTP. [73] A fine of CHF 280,000 was imposed. The Panel pointed out that the RFEF could not justify its failure by arguing that the RSTP was conflicting with Spanish law, given that the rules on the protection of minors had come about in the 2001 agreement between FIFA/UEFA and the EU, which was acknowledged by Spain as a Member State of the EU.[74] Also, for 21 players below the age of 12 the RFEF had failed to fulfil its notification obligations, which the Panel condemned for the exact same reasons as in the FC Barcelona case.[75] The RFEF had failed to “make use of the statutory frameworks and tools at its disposal to ensure the full protection of minors”, and was found negligent as it failed to ensure that clubs and regional associations strictly complied with Article 19.[76] Furthermore, it had in some cases not fulfilled its obligation to seek the approval of the PSC subcommittee nor even submitted an application for such transfers.[77]

Ultimately in 2016, a fate similar to that of “Barça” fell upon both Atlético and Real Madrid.[78] The concise FIFA press release indicates that investigations were conducted by FIFA TMS, which “concerned minor players who were involved and participated in competitions with the clubs over various periods”, between roughly 2005 and 2014. Both clubs were sanctioned for violating, amongst others, Articles 19 and 19bis as well as annexe 2 of the RSTP. The clubs appealed (by which the sanctions were temporarily lifted), yet in September 2016 these appeals were similarly rejected by FIFA’s Appeal Committee.[79] This meant that Atlético Madrid and Real Madrid will have to serve a transfer ban lasting two consecutive transfer periods (e.g. until January 2018), during which they will not be able to attract any players, and were fined CHF 900,000 and CHF 360,000 respectively. The clubs were given a 90 day period “to regularise the situation of all minor players concerned”.[80] A little over a week later, Real Madrid informed the CAS that it would appeal FIFA’s decision before the court in Lausanne.[81] The final outcome of this appeal is still unknown.

In a similar vein, very recently, the English club Manchester City has come under suspicion for allegedly wanting to transfer a 15-year-old player from Argentina, while the Dutch club Ajax was denied by the CAS to sign an American player aged 15.[82] These cases exemplify that clubs might just not be ready to put the practice of internationally transferring minors to bed yet. Moreover, the adaptation of the relevant rules is a sign for the need of continuous monitoring the effect of the provision on the protection of minors. The latest update, the June 2016 version, has incorporated another exception to the prohibition for the international transfer of minors, which has been created through the Sub-Committee’s case law.[83] Players that have for the five years preceding the request continuously lived in the country (other than that of their nationality) of intended registration are now exempted from the prohibition.[84]

In this part 2 of the blog, I have shown that FIFA’s restrictions on minor transfers have become more stringent after the 2009 reform. In recent years, FIFA has also cracked down on various prominent clubs, especially in Spain, which were still involved in recruiting minor players while disregarding, with the tacit support of their national federation, FIFA’s rules. Unsurprisingly, these developments have also flared up again the debate on the compatibility of those rules with EU law.[85] Thus, the next, third and final, part of this blog on FIFA’s provision on the protection of minors will offer a substantive assessment of FIFA’s rule under the requirements of EU Internal Market law. 

[1] A. Najarian, “’The Lost Boys’: FIFA's Insufficient Efforts To Stop Trafficking of Youth Footballers”, Sports Law. J. 2015, p. 167; R. Simons, “Protection of Minors vs. European Law”, Eur Sports Law Bulletin 2010, p. 172.

[2] R. Simons, “FIFA Transfer Matching System wel effectief?”, TvS&R 2011, p. 100.

[3] FIFA Circular no. 1190, 20 May 2009.

[4] Ibid.

[5] Art. 19(4) FIFA RTSP 2009.

[6] FIFA Circular no. 1206, 13 October 2009.

[7] FIFA Circular 1209, 30 October 2009.

[8] Art. 19bis FIFA RSTP 2009.

[9] Definition 12 FIFA RSTP 2009.

[10] Art. 19bis(1) and (2) FIFA RSTP 2009; Supra at 5.

[11] V. Derungs, “Protecting underage football players in the transfer system”, World Sports L. Report 2015, p. 15.

[12] Definition 13 FIFA RSTP 2016.

[13] N. St. Cyr Clarke, “The beauty and the beast: Taming the ugly side of the people’s game”, 2011 Columbia Journal of European Law, p. 619.

[14] FIFA Circular No. 1174, 12 January 2009.

[15] Annexe 2 FIFA RSTP 2016

[16] Art. 3(2) Annexe 2 FIFA RSTP 2009.

[17] Art. 5(1) Annexe 2 FIFA RSTP 2009.

[18] Art. 5(2) Annexe 2 FIFA RSTP 2009.

[19] FIFA Document, Protection of minors – Pertinent facts to be included in documents.

[20] Art. 9 and Annexe 3 FIFA RSTP 2009.

[21] For precise steps see FIFA TMS, Global Transfer Market Report 2016, p. 8; Supra at 4, p. 101.

[22] FIFA, Transfers, Player’s status, Clubs, Agents Regulations - Archived regulations

[23] Arbitration CAS 2011/A/2354 E. v. Fédération Internationale de Football Association (FIFA), award of 24 August 2011: At the same time, he participated in a three-year educational/trainee program at a company in Frankfurt, which aimed “to prepare him as office clerk to apply for a job as ‘Airport Manager’”. The German national football association, on behalf of Muhic and Kickers Offenbach made a request to FIFA for an exception via a special authorization for the transfer, founded on the “hardship based on the specific circumstances of the present case, namely the move of the player from Bosnia and Herzegovina to Germany without his parents, but with their expressed consent, for reasons not linked to football but to benefit from a humanitarian educational project” (p. 2.).

[24] Ibid, para. 17.

[25] Ibid, para. 18.

[26] Ibid, para. 18 and p. 2; Furthermore, the Panel recalled that Bosnia and Herzegovina is neither a member of the EU nor of the EEA and, as a consequence thereof, a player with this nationality cannot rely on the exception of Article 19(2)(b) RSTP (para. 20). The Panel subsequently, by emphasizing that the rationale for this exception is the “free movement of services and services suppliers within the EU and the EEA (and other production factors)”, quickly dismissed the appellant’s claim for the application of this provision resting on “the Stabilization and Association Agreement signed between the EU and Bosnia and Herzegovina” (paras. 21-23). In final, the CAS once more indicated that Article 19’s rationale was not to stop voluntary movement, yet it felt compelled to apply the protection of minors strictly: “Opening up the door to exceptions beyond those carefully drafted and included in the present text would unavoidably lead to cases of circumvention of the rationale for this provision” (para. 26). Moreover, Muhic could still continue his education, which was his primary reason to move to Germany, and likewise train with his team. He did have to wait a few months before becoming 18 years of age and thus eligible to start in professional matches. Nevertheless, the Panel concluded that this could not amount to constitute an “exceptional hardship going beyond the general impact of the provisions on the protection of minors” (para. 27).

[27] Supra at 11, p. 15.

[28] Arbitrage TAS 2012/A/2862 FC Girondins de Bordeaux c. Fédération Internationale de Football Association (FIFA), sentence du 11 janvier 2013 (Vada II); Arbitrage TAS 2011/A/2494 FC Girondins de Bordeaux c. Fédération Internationale de Football Association (FIFA), sentence du 22 décembre 2011 (Vada I).

[29] TAS 2012/A/2862 (Vada II), para. 3.

[30] Ibid, para. 18.

[31] Ibid, para. 19.

[32] Ibid, para. 19; Bulletin TAS CAS Bulletin 2014/2, p. 29.

[33] Supra at 29, para. 91.

[34] Ibid, para. 94.

[35] Ibid, para. 95.

[36] CAS 2008/A/1485 FC Midtjylland A/S v. Féderation Internationale de Football Association, paras. 19-21.

[37] Supra at 29, para. 96; Bulletin TAS CAS Bulletin 2014/2, p. 29.

[38] Supra at 29, para. 97.

[39] Ibid, paras. 98-100.                                                                                                                                                                  

[40] The Guardian, 29 April 2015, “Atlético Madrid and Real deny reports they are facing Fifa transfer embargo”.

[41] Arbitration CAS 2013/A/3140 A. v. Club Atlético de Madrid SAD & Real Federación Española de Fútbol (RFEF) & Fédération Internationale de Football Association (FIFA), award of 10 October 2013.

[42] CAS 2005/A/955 Càdiz C.F., SAD v FIFA and Asociación Paraguaya de Fútbol and CAS 2005/A/956 Carlos Javier Acuña Caballero v/FIFA and Asociación Paraguaya de Fútbol; CAS 2008/A/1485 FC Midtjylland A/S v. Féderation Internationale de Football Association.

[43] Supra at 41, paras. 8.20-8.23.

[44] TAS 2011/A/2494 FC (Vada I), paras. 31-38.

[45] Supra at 41, paras. 8.25.

[46] Ibid, para. 8.30.

[47] Ibid, para. 8.31.

[48] Ibid, paras. 8.32-36.

[49] Arbitration CAS 2014/A/3611 Real Madrid FC v. Fédération Internationale de Football Association (FIFA), award of 27 February 2015: The PSC Sub-Committee had rejected the request, which was again founded on the “parent rule”. It did so inter alia since the player’s parents had merely obtained a temporary residence permit that denied them the right to work, while the submitted employment contracts “made reference to enterprises incorporated and domiciled in Venezuela” (para. 11). This in combination with the fact that the player had moved to Spain one month in advance of his parents, led the PSC to believe that their move was linked to Real Madrid’s interest in their son (paras. 12-14). The subsequent proceedings before the CAS are only of interest in relation to the procedural aspects, since the appeal was declared inadmissible and consequently did not address the merits (paras. 63-66).

[50] CAS 2014/A/3793 Fútbol Club Barcelona v. Fédération Internationale de Football Association (FIFA), award of 24 April 2015.

[51] Bulletin TAS CAS Bulletin 2015/2, p. 76; Supra at 52, paras. 2.3-2.11.

[52] Supra at 50, para. 2.2.

[53] Supra at 51, p. 77.

[54] Supra at 50, paras. 9.1-9.2.

[55] Ibid, paras. 9.2-9.3.

[56] Ibid, para. 9.4.

[57] Ibid.

[58] Ibid.

[59] Ibid, para. 9.7.

[60] Ibid.

[61] Ibid, para. 9.8.

[62] Ibid.

[63] Ibid, para. 9.9.

[64] Ibid, paras. 9.10-9.12.

[65] Ibid, para. 9.14.

[66] Ibid, para. 9.18.

[67] Ibid, para. 9.19.

[68] Ibid.

[69] Ibid, paras. 9.29-9.36 and 10.

[70] Ibid, para. 2.18.

[71] CAS 2014/A/3813 Real Federación Española de Fútbol (RFEF) v. Fédération Internationale de Football Association (FIFA), 27 November 2015.

[72] Coincidentally the exact same number of minors under investigation as in the FC Barcelona Case. Be that as it may, in the case a hand the minors transferred to various Spanish clubs.

[73] Bulletin TAS CAS Bulletin 2016/1. P. 66.

[74] Ibid, p. 63, the Panel stated “As a member of the European Union, the Kingdom of Spain had acknowledged the application of this general prohibition throughout Spain and no express Spanish law stating otherwise had been brought to the Panel’s attention”.

[75] Supra at 73, p. 63.

[76] Ibid, p. 64.

[77] Ibid.

[78] FIFA, 14 January 2016, “Atlético de Madrid and Real Madrid sanctioned for international transfers of minors”.

[79] FIFA, 8 September 2016, “FIFA rejects appeals of Atlético de Madrid and Real Madrid in relation to transfers of minors”.

[80] The Guardian, 8 September 2016, “Real Madrid and Atlético Madrid lose appeals against Fifa transfer ban”.

[81] CAS, 16 September, “Request for stay filed by Real Madrid CF granted by the Court of Arbitration for Sport”.

[82] Independent, 22 September 2016, “Manchester City could face transfer ban after being reported to Fifa for 'trafficking' of youngster”; USA Today, 29 October 2016, “CAS rejects US teenager’s challenge to FIFA transfer rules”.

[83] Supra at 11, p. 15; FIFA Circular no. 1542, 1 June 2016.

[84] Art. 19(3) FIFA RSTP 2016.

[85] Reuters, 24 November 2016, “FIFA faces lawsuit over rules banning transfer of minors”.