opinion: reports of the death of the football transfer system are exaggerated, says Russell Brimelow
Wednesday 18 October 1995
It is clear from a more measured review of Carl Otto Lenz's opinion that what he has stated, particularly in respect of transfer fees in domestic football, is much more limited than has been reported, and also open to serious criticism, in that it ignores how football actually works. Three major points have emerged:
Domestic transfers not affected
Most newspaper reports proceeded on the basis that the transfer fee system generally in the UK and in Europe will be swept away if this opinion is adopted next year. However, Lenz did not go this far. His opinion dealt with the Fifa and Uefa rules, which govern global and European football respectively, and the domestic rules in Belgium, which are more restrictive than those in the UK. What he says is that transfers over international boundaries are probably caught by the provisions of Article 48 of the Treaty of Rome, which secures freedom of movement for workers. He stated that Article 48 is "of course inapplicable" to purely internal situations. He goes on to state that it is "settled case law that the provisions of the Treaty on freedom of movement admittedly cannot be applied to activities which are confined in all respects within a single Member State".
The opinion also pondered the question of whether transfer fees were unlawful as being anti-competitive under Article 85 of the Treaty. The Advocate-General states that while an argument along these lines could be made, football might be an exceptional market which could be given a "negative clearance" by the Commission, in effect waiving Article 85.
It is therefore questionable whether anything in the opinion will have an enormous impact on the transfer fee system in the UK. The opinion could, however, set up an anomalous situation where players transferring internationally might be able to do so without a transfer fee, thereby greatly increasing their (and their agents') bargaining power.
Tax on larger clubs
Even in relation to international transfers, the Advocate-General did not state that transfer fees were definitely unlawful. He said that they would be lawful if they were justified by "imperative reasons in the general interest and do not go beyond what is necessary for retaining those objectives".
The justification for transfer fees is that it helps to keep smaller clubs financially viable. While he accepted the fact that transfer fees were a vital source of income to smaller clubs, however, the Advocate- General suggested that smaller clubs could be helped in other ways. First, a collective wage agreement specifying limits of the salaries to be paid to players by clubs (an impractical idea if the experience of American baseball clubs is anything to go by). Second, he suggested that a transfer fee which realistically covers legitimate training or development costs might be justified. Third, and in most detail, he suggested a scheme whereby income is redistributed from larger to smaller clubs, essentially by a tax on the larger and wealthier clubs. Just how such a scheme is to work, particularly if there is a distinction to be made between international and domestic transfers, was not addressed by the Advocate-General and we would strongly argue that such a scheme would be impractical in practice, with endless arguments (and litigation) over drawing up its rules and how income is distributed.We would suspect that a lot of smaller clubs would prefer to rely on scouting out new talent and developing it themselves (over which they have some control) rather than becoming poor relations dependent entirely on grudging hand-outs from the bigger clubs.
Three-foreigner rule - justified by cultural arguments?
Finally, the Advocate-General found that Article 48 prohibits the rule that only three foreign players may play for a club in European football. The argument raised in support of the limit was that there must be some national aspect to a team to give it any identity and character. The Advocate- General dismissed this by pointing to the fact that foreign players such as Eric Cantona, Jurgen Klinsmann and Ruud Gullit have become very popular with fans of clubs for whom they play outside their home countries.
This misses the point. To have no limit would make it theoretically possible, for example, for 11 Italians to represent Manchester United, with the consequent destruction of a strong cultural heritage. Interestingly, the opinion took no account of the new Article 128 of the Treaty of Rome, introduced at Maastricht, which specifically obliges the community to take cultural aspects into account in its action under other provisions of the Treaty. This article, brought in to protect the individual traditions of member states, should surely have been an important part of the discussion of legal principles by the Advocate-General, and could be used by the Court to overturn this argument.
The writer is a solicitor specialising in employment law at the London firm Boodle Hatfield.
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