On March 27, 2014, a Brazilian
court ruling authorized the
Football Players’ Union in the State of Sao Paulo[1]
to tap funds generated by TV rights agreements destined to a Brazilian Club,
Comercial Futebol Clube (hereinafter “Comercial”). The Court came to this
decision after Comercial did not comply with its obligation to pay players’ salaries. It is a peculiar
decision when taking into account the global problem of clubs overspending and
not complying with their financial obligations. Furthermore, it could create a precedent for
future cases regarding default by professional sporting clubs.
In 2013, 19 players
were victims of financial mismanagement of the football club based in Ribeirao Preto. This year, with the
problem still unresolved, the 19 players once again were facing financial
distress. The total sum that Comercial still owed players, which consisted of
overdue salaries, social security contributions and severance pay after
contract expiration, amounted to R$ 363,147.71, or €120,000.00. By means of
meeting the player’s demands, Comercial had issued unredeemed cheques in order
to pay part of the salaries of the Players before this year’s carnival. To receive
the salaries Comercial owed, the Players’ Union filed a complaint against Comercial
in front of the Labour Court of Ribeirao Preto, representing eight players who
are members of the Union. It asked, inter
alia, for a provisional measure that would freeze the amount that Comercial would receive from the
Football Federation of Sao Paulo and the Brazilian television network Rede
Globo for the TV rights. Rede Globo is the biggest broadcasting company in
Brazil and holds the rights to broadcast the main competitions in football,
including the upcoming FIFA World Cup. For Comercial, this would mean not
receiving up to €850,000.00 from the Football Federation of Sao Paulo for the TV
rights agreement. The agreement included the broadcasting of the Campeonato
Paulista, for which Comercial was to be paid in four instalments (January,
February, March and April 2014). At the time of the request, three out of four
instalments had already been paid. Therefore, the Players’ Union could only acquire
the amount of the fourth instalment due in April 2014, equal to €210,000.00.
In accordance with
the tradition of Roman Law, on which the Brazilian legal system was developed, the
Court had identified the existence of both legal requirements in order to issue
a provisional measure: fumus boni juris,
i.e. that the claim has a reasonable prospect of success and periculum in mora, i.e. the danger that
claimant's rights may be impaired by the lapse of time. Regarding the first
requirement, the Court established (in accordance with Article 335 of Brazilian
Civil Procedural Code[2])
that Comercial had issued cheques that afterwards could not be claimed by the
players. As regards the second requirement, the Court took in consideration the
fact that Comercial was relegated to the second division of the
Sao Paulo State League[3]
and that the players were dismissed.
As a consequence, the
Court accepted the request of the Players’ Union, and ordered the Football
Federation of Sao Paulo and Rede Globo to deposit the amount that was due to CFC
on the Union’s bank account instead. Whether Comercial exerted its possibility to
challenge this measure within five days is yet unknown.
This decision is, to
our knowledge, a novel and efficient method (from the point of view of the
players) to tackle the problem of unpaid salaries in the world of football. It has,
therefore, also been welcomed by FIFPRO. The measure issued in this particular case is of
limited importance, because it only applies to the eight players affiliated to
the Players’ Union. However, the method used by the Union, ceasing the TV
rights income directly, might prove very useful for players in similar
situations worldwide, it ensures that, even in case of default of their employers,
the contractual demands of the players can be satisfied.
2nd Labour Court of Ribeirao Preto SAPESP-Comercial F C (3).pdf (14.6KB)
[1] Sindicato de Atletas Profissionais do Estado
de São Paulo, one of the five founding members of the Brazilian National
Players’ Union (FENAPAF)
[2] that states the application of rules of common
experience in absence of specific regulations
[3] Paulistão da Série A2