The economic and legal aspects of g p transfers of players Results of the study Didier PRIMAULT and Christophe LEPETIT Friday, 8 th March Sport Directors meeting Dublin Sport Directors meeting, Dublin
Objectives and scope of the study Objectives and scope of the study Objectives Objectives Objectives Objectives To provide a comprehensive analysis of the legal aspects of the transfers of players (legal framework). transfers of players (legal framework). To understand the economics of transfers and assess their weight at EU level. To explain how transfers actually work. p y To make recommendations regarding transfers in Europe. Scope Scope The 27 countries of the EU . Two sports: football and basketball (in fact especially football).
General framework General framework Characteristics of the economics of professional sport Characteristics of the economics of professional sport Characteristics of the economics of professional sport Characteristics of the economics of professional sport A unique situation in economics: competitors (clubs) have to agree to produce agree to produce produce together produce together together (the match) without it being a strategic together (the match), without it being a strategic choice. Sporting Sporting opponents Sporting opponents Sporting opponents opponents – clubs – must be economic clubs must be economic economic partners economic partners partners. partners. The value of the product derives, in particular, from its uncertainty uncertainty , but it also needs to ensure: uncertainty uncertainty , but it also needs to ensure: The The integrity integrity of of competitions competitions The The fairness fairness of of competitions competitions p
General framework General framework A booming economy subject to significant challenges A booming economy subject to significant challenges g g y y j j g g g g Continued growth growth in revenues since the 80s (for the main markets) A debt debt crisis crisis which threatens financial stability in the sector (football and basketball). Threat of criminal criminal activities activities (trafficking, corruption, fraud, abusive terms of employment, etc.). t f l t t ) New forms forms of of investment investment in clubs (LBO, Sugar daddies ) and in players (third party ownership) players (third-party ownership).
Selected examples Selected examples – income growth income growth Broadcasting Sponsorship Ticketing incomes Commercial revenues Total revenues €12 797 €11 995 TCAC 5.6% €11 393 €2847 €2847 €10 034 €10 034 €2130 €2 30 TCAC 7.2% €9032 €2007 €1785 €1697 €2606 €2571 TCAC 0.7% €2549 €2317 €2317 €2059 €3179 TCAC 5.2% €3063 €2848 €2576 €2448 TCAC 8.2% €4516 €4231 €3989 €3358 €2828 2007 2008 2009 2010 2011 Source : UEFA
Selected examples Selected examples – top division net profit top division net profit 2007 2008 2009 2010 2011 0 00 0,00 -0,20 -0,40 0 40 -0,60 -0,60 -0,60 -0,80 -1,00 -1,20 1 20 -1,20 -1,40 -1,60 1 60 -1,60 -1,70 -1,80 Source : UEFA
PLAN PLAN THE LEGAL FRAMEW ORK AND ECONOMI C REALI TY OF TRANSFERS I N EUROPE REALI TY OF TRANSFERS I N EUROPE I SSUES AND RECOMMENDATI ONS
PART 1 OVERVIEW OF TRANSFERS OF PLAYER IN EUROPE A. Legal framework B. Economic reality
A Legal framework A. Legal framework 1. 1. Justification for transfers Justification for transfers The necessity of maintaining maintaining fair fair and and balanced balanced competition competition can justify restrictions on free movement of players, and these are organised notably into transfer rules. Firstly, the principle is to sign short short term term contracts contracts . Secondly transfer rules are a derogation Secondly, transfer rules are a derogation derogation from derogation from from normal from normal normal practices normal practices practices in practices , in the following ways: They limit freedom of players during their contract to move y p y g from one employer to another and set restrictive conditions for such moves. In order to prevent a total ban on players’ mobility, they establish a system of transfer fees between clubs, when the contract is broken.
A Legal framework A. Legal framework 2. 2. Transfer rules in the EU Transfer rules in the EU Two Two categories categories of of regulation regulation have to be differentiated: Sports bodies’regulations (private). Public law and rules. They may be drawn up at the national national or the international international level. This diversity and complexity can raise the question of how how all all these these rules rules are are compatible compatible . However, except in certain special circumstances, the study did not highlight major problems.
A Legal framework A. Legal framework 2. 2. Transfer rules in the EU Transfer rules in the EU Sporting bodies’ regulation The overall framework is defined defined by by the y the International International Federations Federations . It is imposed on the National Federations, which can nevertheless make specific provisions, if required. p p q
A Legal framework A. Legal framework 2. Transfer rules in the EU Public law and rules: There is little little impact impact made made by by national national public public law law . On the other hand, European European law law has has a a significant significant impact impact on the development of regulations (the Bosman and Lethonen cases, etc.). )
A Legal framework A. Legal framework 3. 3. The agreement of 5th March 2001 The agreement of 5th March 2001 An agreement Negotiated Negotiated Negotiated between the different stakeholders (EC FIFA Negotiated between the different stakeholders (EC, FIFA, UEFA, FIFPro). Under the pressure of the EC. Led to a radical reform Led to a radical reform reform of the transfer system in football. reform of the transfer system in football. Five Five important important modifications modifications: Contractual stability (transfer windows, duration of contract) y ( , ) Youth development and protection of minors Solidarity mechanism Training compensation g Dispute resolution mechanism
B Economic reality B. Economic reality 1. 1. Transfer weight assessment in football Transfer weight assessment in football g At the European level, an exponential exponential growth growth in the number and value of transfers since the 1990s (liberalisation of the labour market and the explosion in revenue by professional clubs). The number of transfers has multiplied multiplied by 3.2; their value by 7.4 since 1995. The weight was estimated at more more than than € €3 3bn bn in in 2010 2010/ /11 11 at the European level (domestic transfers within EU countries and international E l l (d ti t f ithi EU t i d i t ti l transfers between EU countries).
B. Economic reality B Economic reality Transfer weight in football 20000 20000 3500 3500 18307 18307 18000 3000 15952 16000 2500 2500 14000 12000 2000 10000 8531 8531 1500 8000 5735 6000 1000 4000 500 2000 403 1705 1952 3002 0 0 1994/95 1999/2000 2005/06 2010/11 Value (€m) Number of transfers
B Economic reality B. Economic reality 1. 1. Transfer weight assessment in football Transfer weight assessment in football Two Two distinct distinct periods periods since1995: 1995/2002: a speculative speculative and and inflationary inflationary logic. 2002/11: return to a“ sporting sporting ”logic. Explanatory factors External External economic factors(crisis). Internal Internal Internal factors (2001 agreement and FFP) Internal factors (2001 agreement and FFP).
B Economic reality B. Economic reality 2. Transfer weight assessment in basketball A completely different reality: Contract rarely exceeds a sports season. Then, very few transfers fees . Contractual stability in less a problem than squads instability (high turnover). At the global level, a market whose weight is €12m - €16m , i.e. 6 to 7 times less than the transfer fee for just Cristiano Ronaldo i l h h f f f j C i i R ld (M (Manchester h United Real Madrid, €94m).
Selected example: basketball player careerpath Selected example: basketball player career path Source : CIES
B. Economic reality 2. National economic mapping Two categories of country: Two categories of country: Countries importing sports talent (England, Germany, Spain, Italy, Austria, Greece, Romania, Cyprus). Countries exporting (trainers) sports talent (France, Netherlands, Scotland, Portugal, Hungary...). A variable impact on the overall economy of clubs: For some countries, the economic impact is significant: , p g England, Spain, Italy very negative impact Netherlands, Portugal very positive impact For others, this activity is more neutral (Germany, Scotland, Denmark...).
B. Economic reality 2. 2. National economic mapping National economic mapping – – different profiles of countries different profiles of countries Source : CIES
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