APAC Sports Update – The Anatomy of a Football Transfer

Footballers (even very well paid ones) are much like employees of other large companies. They have an employer (a club), an employment contract and even a place of work…albeit a slightly different one to most people.

For a typical employee of a well-known company, leaving their job for a rival firm involves handing in their notice, sitting out (or paying out) a notice period and then clearing out their desk before they start work with their new employer under a new employment contract. So when a player like Carlos Tevez, Oscar or Didier Drogba moves to a Chinese Super League Club, what actually happens? Do they simply quit their job at their previous club and move their things to China? If so, why do clubs need to pay so much money to one another to buy and sell players?

The answer is a relatively simple one – when a club "buys" a footballer from another club, what they are actually buying is the right to register that player with their national football association. Under the FIFA Regulations on the Status and Transfer of Players, a footballer is only allowed to participate in organised football if they are registered to do so with their national association and a player may only be registered to play for one club at a time.

This means that when a club in Europe agrees to transfer a player to a club in China, a number of things have to happen:

  1. The clubs will agree to transfer the registration of the player from one club to the other, normally in return for the payment of a fee, documented in a transfer agreement. This transfer agreement will normally be conditional on a few things, including the completion of the transfer of the registration and the granting of visas and work permits, as described below.
  2. The employment contract of the player with his current club will be terminated and the player will agree a new employment contract with the new club. Employment contracts will contain details of issues such as salary, bonuses and holiday entitlements. They may also contain other interesting clauses, such as morality and ethics clauses, which may give the club rights to penalise the player or terminate the contract in the event that the player acts unethically or immorally. Some leagues, such as the EPL and La Liga, have standard forms of player contract, where only certain commercial terms are tailored.
  3. The national footballing associations of the clubs involved (who administer the registration system on a domestic level) and FIFA (who administer it on an international level through their "Transfer Matching System") will need to be notified and will need to complete the various processes to transfer the players' registration from one club to another, including the provision of the "International Transfer Certificate" to the domestic association of the purchasing club and matching and authorisation by FIFA via the "Transfer Matching System". As the national footballing associations, such as the Football Association in England or the CFA in China, are delegated responsibility by FIFA to make their own transfer rules, there may be other hoops to jump through, such as ensuring the documents are received and approved in specific "transfer windows".
  4. Clubs and players may also need to consider visas and employment permits, depending on the jurisdiction. For example, in the case of a foreign footballer transferring to China, the player generally needs to obtain a "Z" visa prior to entering China. Upon arrival in China, they will also need to obtain employment and residency permits.
  5. There will often be ancillary arrangements to be negotiated and finalised, such as agents' fees or image rights arrangements, which, in some cases, may determine the success or failure of the deal. Although third party ownership of the "economic rights" in players has been banned since 2015, deals signed before the ban came into force continue to apply for their duration, meaning that third party ownership may still need to be considered in certain situations.

In short, a single football "transfer" is actually a complex web of separate transactions, meaning that the success or failure of a deal can often be out of the control of the clubs and/or the player.

One final thought is that, as more and more foreign players look to secure big money moves to the Chinese Super League, the terms of the employment contracts will come under increasing scrutiny. Agents and players will need to consider carefully issues such as the governing law of the contracts, to determine where they want disputes to be heard in the event that, for example, clubs fail to pay wages on time or players seek to shirk their contractual commitments.

For now, it appears that the money is too good for many to turn down, but if market conditions change, many players and their agents may be taking a very close look at the fine print of those contracts as they look at exactly what they have agreed to.

Bird & Bird is proud to have a market leading sports practice. We advise clients across the sports sector, including rights holders, clubs, governing bodies, broadcasters, sponsors and investors. Our sports team has wide-ranging experience of corporate and commercial matters, as well as of matters concerning employment, rules and regulations, discipline, anti-doping and general disputes, meaning our clients benefit from a "one stop shop" for sports law expertise across Asia Pacific through our offices in Hong Kong, Singapore, Beijing, Shanghai and Sydney. We also have a number of sports law experts based across our offices in Europe.

If you have any questions, or if you would like to discuss our sports practice further, please don't hesitate to contact Alex Norman, Justin Walkey or Pattie Walsh in our Hong Kong office.

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