By ABC (Business) | Created at 2024-10-07 15:45:33 | Updated at 2024-10-07 18:18:21
2 hours ago
The global soccer transfer market, worth more than $10 billion each season, is facing a revolutionary overhaul or a nuanced evolution following last week's ruling by the European Court of Justice in the Lassana Diarra case.
By ruling that some FIFA regulations on player transfers are contrary to EU legislation relating to competition and freedom of movement, the bloc's top court has paved the way for deep changes in the sport's economy.
Here is a look at the key elements of the case and the possible impact of the landmark ruling.
Lassana Diarra is a former much-traveled footballer whose career saw him play for prestigious clubs such as Chelsea, Paris Saint-Germain and Real Madrid. He represented France 34 times. At one point in his career, Diarra moved to the Russian league. It’s a dispute with Lokomotiv Moscow that triggered the legal case examined by the European Court of Justice (ECJ).
Diarra signed a four-year contract with Lokomotiv in 2013. The deal was terminated a year later after he was unhappy with alleged pay cuts. Lokomotiv applied to the FIFA dispute resolution chamber for compensation and the player submitted a counterclaim seeking compensation for unpaid wages. The Court of Arbitration for Sport found the Russian club terminated the contract “with just cause” and the player had to pay 10.5 million euros ($11.2 million). Diarra said his search for a new team was hampered by FIFA rules stipulating that any new club would be jointly responsible with him for paying compensation to Lokomotiv.
Free movement is a fundamental right of workers in the European Union within the single market. On that basis, the EU’s top court said that the FIFA rules, including the one that resulted in the refusal to provide Diarra with an international transfer certificate (ITC) for a move to Charleroi, restricted his freedom of movement.
The court also found that FIFA regulations breached the bloc’s competition law because they aim at restricting and preventing “cross-border competition which could be pursued by all clubs established in the European Union.”
The ECJ ruling will now be referred back to the appeal court in Mons, Belgium, which will rule on the Diarra case. This could take years rather than months. Although FIFA said it was satisfied “that the legality of key principles of the transfer system have been reconfirmed,” Diarra’s lawyers claimed “total victory.”
The judges in Luxembourg acknowledged having stability in player rosters and regularity in competitions are legitimate objectives for FIFA, but that rules must be applied proportionally.
Some analysts have compared it to the ECJ’s 1995 decision on Belgian Jean-Marc Bosman. That ruling removed restrictions placed on foreign EU footballers within national leagues and allowed players in the bloc to move to another club for free when their contracts ended. Those principles had an obviously wider focus than the narrower scope of Diarra, about terminating a contract for cause.
For now, the decision on Diarra does not change how the transfer market functions. But many legal experts believe that the ruling will ultimately have major effects on the sport’s economy.
“The decision essentially says the current system is too restrictive and so will have to change,” said Ian Giles, a partner at Norton Rose Fulbright law firm. “It’s entirely possible this means players will feel they can now break contracts and sign on with new clubs, without the selling club being able to hold them or demand significant transfer fees. This will likely result in reduced transfer fees and more economic power for players — but over time things will have to stabilize to allow clubs to remain economically viable."
It took more than five years after the Bosman ruling for updated FIFA transfer rules to be published in 2001. Some of those debates then will now be revisited.
A major reset of transfer fee values can seriously affect many smaller market clubs. Bosman already accelerated gaps in wealth and competitive balance across European soccer, which is increasingly dominated by a small group of clubs. They can lure free-agent players with higher signing bonuses and salaries – money that previously would be more widely distributed via transfer fees.
Spending by super-wealthy clubs can still reward smaller ones who excel at investing time and expertise in scouting and developing local and global talent: Ajax, Brighton, Genk in Belgium, which nurtured Kevin De Bruyne, Thibaut Courtois and Leandro Trossard.
The influential European Club Association, which represents more than 700 teams, sees potential threats to the industry’s health in the fallout from Diarra. Transfer fees and payments to clubs from former players being sold later in their career “are an efficient and effective means of wealth distribution from bigger clubs to smaller ones,” the ECA noted.
The soccer industry is increasingly a game being played by lawyers in courts and government offices.
FIFA is being challenged in several legal arenas, in part because it works (Diarra, Super League, agents regulations ). There is also a growing perception FIFA does not listen before launching projects and that pro-transparency reforms demanded and passed a decade ago are in decline.
Within hours of the Diarra ruling Friday, the group of domestic leagues and player unions announced a news conference in Brussels for Oct. 14 to explain their filing to the European Commission. The complaint on competition law grounds argues FIFA adds new and bigger tournaments to the congested calendar without proper consultation.
European Leagues and FIFPRO once had a seat at FIFA’s Football Stakeholders Committee that was a key forum for debate, including on the transfer market. FIFA paused the panel in 2021 and soon its president Gianni Infantino pushed for playing World Cups every two years. The idea was resisted by a widespread backlash. The leagues group says the Diarra ruling shows how representation at FIFA is “becoming legally essential.”
FIFA had indicated before Friday it would consult widely on transfer market reforms it believes can focus on specific issues raised by Diarra, rather than a total overhaul.
Diarra’s lawyer Jean-Louis Dupont — who also represented Bosman 30 years ago — sees a bigger picture. He appeared to be recruiting for a wider suit against FIFA by claiming “all professional players have been affected by these illegal rules” and could now seek compensation.
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