Football Transfers, Third Party Player Ownership and UEFA’s Home-Grown Rule

1. Football Transfers, Third Party Player Ownership and UEFA’s Home-Grown Rule Daniel Geey Solicitor in the Sports Group at Field Fisher Waterhouse LLP 27 November 2012

2. Introduction • About Me • I have provided advice, briefings and presentations on a whole raft of football related issues including: • football takeovers; • the Premier League, Football League, Football Association, UEFA and FIFA rules; • dual ownership prohibitions; • third party ownership of football player issues; • UEFA and Football League Financial Fair Play; • advice on football broadcasting deals, tenders and distribution channels; and • transfer disputes.

3. Talk Structure • Transfers • Bosman and the old 3+2 • New Transfer Regulations • Third Party Ownership • Home Grown Players Rule • UEFA Restrictions • The Proposed FIFA 6+5 rule

4. Context • Regulation of the football labour market: types of intervention • TPO restrictions • UEFA Home Grown Players Rule • Transfer Window • Transfer Fees/Training compensation • Where does TPO fit into how national/European/world governing bodies regulate their sport? • Sports labour markets different. Stability of contract, huge transfer fees, restrictions on spending (FFP)

5. Bosman • 1995 Decision • Three foreign and two assimilated players (3+2 rule) only in European Competitions. Direct discrimination. • Free transfer to another member state club if a player is out of contract • Does it apply to non-EU workers? • Can an out of contract player transfer to a team in the same member state? • Do UEFA have quota’s in place today?

6. New Transfer Regulations Main aspects • Training compensation for players under the age of 23 • Solidarity mechanism in order to redistribute a significant proportion of income to professional and amateur clubs involved in the training of a player • A transfer window • Minimum and maximum contracts (1-5 years) with protected periods of 3 years for under 28 year olds and 2 years for over 28 year olds

7. Where a football club does not own, or is not entitled to, 100% of the future transfer value of a player that is registered to play for that team Companies, businesses and/or individuals provide football clubs or players with money in return for owning a percentage of a player’s future transfer value.  This transfer value is also commonly referred to as a player’s economic rights. There are instances where entities will act as speculators by purchasing a percentage share in a player directly from a club in return for a lump sum that the club can then use as it wishes. The TPO Basics

8. Regulatory Background: Summary of Current Premier League, Football Association, Football League, FIFA and UEFA Rules • FIFA, UEFA, PL, FL and FA rules ensure that: • no entity can influence any club’s autonomy to make decisions. These rules are governed by a generic “material influence” clause. E.g. FA Rule C 1 (b) (iii): “No Club shall enter into a contract which enables any party to that contract to acquire the ability materially to influence the Club’s policies or the performance of its teams in Matches and/or Competitions. This Rule shall be applied in conjunction with any regulations governing Third Party Investment in Players as may be adopted by The Association from time to time.” • PL, FL and FA rules ensure that: • no entity when a player is registered with any of the organisations can own the economic rights of a player bar the club. Any economic rights have to be extinguished upon registration and transfer into the relevant club association. E.g. PL rule L37 “In respect of a player whom it applies to register as a Contract Player, a Club is permitted to make a payment to buy out the interest of a person or entity who, not being a Club or club, nevertheless has an agreement either with the club with which the player is registered, or with the player, granting it the right to receive money from a new Club or club for which that player becomes registered.”

9. Past PL Rules, Tevez and Faurlin The PL agreed to change its rules in the summer of 2008. • There was no express clause prohibiting third party ownership; only the act of influencing a club’s policies or performance was forbidden. • This rule was cited against West Ham in the Tevez tribunal and arbitration decisions. Tevez’s third party contract contained a clause giving exclusive power to the third party owner to facilitate the transfer of the player. West Ham did not have a veto over this right and such a stipulation breached the PL Rules. • If there had been a veto right exercisable by West Ham, it is likely there would have been no breach. • Faurlin: No breach as TPO suspended and confusion as to implementation date of FA TPO rules.

10. UEFA Financial Fair Play Link • PL clubs are likely to be at a disadvantage in UEFA competitions, due to rules banning any TPPO. • Clubs in other jurisdictions can split the transfer cost with third party companies; and • When non-PL clubs submit their accounts for FFPR scrutiny, non-PL club’s transfer amortisation costs have the potential to be lower.  This makes compliance with the FFPR more difficult for PL clubs.

11. Questions • Could a third party owner buy a right in a player transferred out of the PL? • Could the rules be challenged by third party rights owners? • What is the difference between a sell-on clause entitling a club to e.g. 10% of any future transfer fee and a third party agreement entitling the third party to 10% of any future transfer fee (so long as the third party cannot impose any decision making ability on the selling club)? • Conflicts of interest- ownership of clubs and players

12. UEFA Home-Grown Players Rule • Home grown player rule definition for European club competitions. • Can be either “club-trained” or “association-trained”. • The player must have been registered with the club (or with another club affiliated to the same national association) for three full seasons, or 36 months, between the age of 15 and 21. UEFA has gradually introduced the rule in three phases: • Season 2006-07: minimum of 4 homegrown players in a squad limited to 25; • Season 2007-08: minimum of 6 homegrown players in a squad limited to 25; • Season 2008-09: minimum of 8 homegrown players in a squad limited to 25.

13. UEFA Home-Grown Players Rule (cont) • No nationality restrictions but age discrimination? • Clubs have no obligation to put a certain number of home grown players on the field of play. • Would Fabregas be a home grown player as a Barcelona player? • New Trend? Greater importation of young foreign players stifling opportunities of, for example, English youngsters? • These UEFA regulations have also been adopted by certain national football associations including Germany, Italy, Portugal and Russia.

14. Previous FIFA Proposals (6+5 rule) • True quota for foreign players. Bosman problem? • Every team must consist of at least 6 home grown players. • It is important to highlight here that a “home grown” player is not necessarily the same thing as the UEFA “locally-trained player” rule. • A home grown player is a national of the league in which the club he plays for is registered. i.e. Lampard playing for Chelsea as an Englishman.

16. Further Materials • Articles • http://www.danielgeey.com/third-party-player-ownership-a-uk-perspective/ • http://www.danielgeey.com/champions-league-and-premier-league-player-quotas/ • YouTube • http://www.youtube.com/watch?v=2RbNGoUWQZw&feature=plcp • Twitter: www.twitter.com/FootballLaw • Website: www.danielgeey.com • Email: Daniel.Geey@ffw.com