Monday 26 February 2018

Clubs need to cover cost of players' power surge

TV rights will be the new battleground as the wage bill keeps on rising, says Jack Anderson

T he Champions League game between Manchester United and Rangers last month ended goalless.

Even without their injured Scottish international Andy Webster, Rangers delivered an impressive defensive display. They were helped by a subdued performance from Wayne Rooney, who ended the night by twisting his ankle. Later, a dispute about that injury would prompt last week's revelation that Rooney wanted to leave United.

Although Rooney did not face Webster in September, an employment dispute involving Webster and a previous club of his, Hearts, had an impact on Rooney's eventual negotiation of a new five-year deal and demonstrates the growing influence that law -- contract, employment and even EU law -- has on professional sport.

Professional football is not a normal contract of employment situation where a worker, who receives a better offer from another employer, is generally free to accept it on serving their notice period. Professional footballers are restricted in when and to whom they can move.

In fact, until well into the 1990s, professional footballers, even after their contract had expired, could not move to another club. The employing club had the right to retain the player's registration until a transfer fee was paid. The European Court's Bosman ruling in 1995 changed all that. Players are now free agents at the end of their contract.

Even when still under contract, the balance of power remains with players who, as they approach the end of an existing contract, can threaten that they will let that contract run down and leave for free on a Bosman, unless their current employer offers them something better. Clubs then have a choice: either attempt to sell the player quickly and cheaply at the next transfer window or agree a new, extended deal.

The Bosman ruling is limited however in the sense that transfer fees still have to be paid in order to buy a player under contract. FIFA's transfer regulations, drafted in consultation with the EU Commission, are built on the principle of 'contractual stability', and they try to ensure that players honour their contracts in full. As a result, many elite player contracts now contain prohibitive 'buy-out' clauses. So, if Manchester City, for example, wanted to buy Lionel Messi from Barcelona at the next transfer window in January, they would have to pay at least €250m in order to break the Argentinean's contract.

This has not stopped players from attempting to circumvent such clauses, and this is where Andy Webster comes in. In 2006, he was in the third year of a four-year contract with Hearts but wanted to move to Wigan. In a complex dispute, he argued that by exploiting a loophole in FIFA's regulations, he could move without the payment of a transfer fee and by simply buying out his basic earnings on the remaining one year of his contract.

The matter ended in the Court of Arbitration for Sport where Webster won and subsequently left Hearts for £150,000 -- a fraction of what he would normally have been valued at. Although the Webster ruling has been called into question in subsequent CAS awards, Wayne Rooney's agent, Paul Stretford, let it be known last week that if it applied, Rooney could potentially have walked away from United for less than £5m. That scenario would have been a disaster for the American owners of the heavily indebted Manchester club.

As the recent sale of Liverpool shows, indebted American owners are becoming a feature of the Premier League. The Liverpool saga was played out in a legal setting that jumped from the High Court in London to a federal court in Texas and back again. Corporate law and football seem the most unlikely of partners but fans of the Premier League are going to have to become more accustomed to the partnership.

The role that law and lawyers had in the Liverpool sale, and in sport more generally, can, unsurprisingly, be explained in terms of money. The Royal Bank of Scotland initiated things because they wanted the outstanding debt to be repaid. George Gillett and Tom Hicks disrupted things in the hope they might receive some 'clear-off' compensation.

The new owners, NESV, have bought the club with the aim of making a return on their investment. Similar to the Glazers at United, NESV's experience of club ownership in the US leads them to believe that the Premier League's leading clubs are still not realising their full income potential.

The huge purchasing power of Real Madrid and Barcelona is related to the fact that they can sell the television rights to their games on an individual basis and keep the profits mainly for themselves. In the Premier League, TV rights are sold collectively and the money divided amongst the clubs. If United, Arsenal, Liverpool, Chelsea and others were, however, permitted to sell their rights individually, they could be exploited globally for huge sums.

This is a long-term objective for NESV and expect them and their lawyers to bring, not just an American corporate model to their newly acquired 'soccer franchise', but also look out for the use of that most American of phrases -- see you in court.

Jack Anderson lectures at Queen's University Belfast. His latest book, 'Modern Sports Law', will be published this week by Hart Publishing, Oxford.

Sunday Independent

Promoted Links

Sport Newsletter

The best sport action straight to your inbox every morning.

Promoted Links

Editor's Choice

Also in Sport