Their absence is no more felt than in the Premier League. Leicester City will lose three players, including BBC African Footballer of the Year 2016, Riyad Mahrez. West Ham will be without two of their stars, including Andre Ayew who has been called up by Ghana. Sunderland will lose three players, including Lamine Kone who joins up with the Ivory Coast. Manchester United’s Eric Bailly has also been called up by the Ivory Coast alongside newest recruit, Wilfried Zaha of Crystal Palace. Idrissa Gueye of Everton and Sadio Mane of Liverpool have been called up by Senegal.

The topic has come to the fore because Mane’s team mate for club and country, Joel Matip, as well as countryman Allan Nyom, had initially refused a call up to the Senegalese side for this year’s tournament. It has been reported that Matip’s previous experience with the Cameroon Football Association and its management team (“Fecafoot”) was a “bad” one and that Nyom told Cameroon coach Hugo Broos that he wanted to stay at the Baggies to maintain his place in the team. Both players have coincidentally not been included in the Cameroonian squad, however before the announcement, Broos is reported to have stated that these players, amongst others who have refused call ups for a myriad of reasons, “have put personal interest above those of the national team and the federation reserves the right to take action against the players in accordance with Fifa regulations.”

So, what are the rules? Firstly, they can be found in FIFA’s Regulations on the Status and Transfer of Players (“the Regulations”) and specifically within Articles 3-6 of Annex 1 of the “Release of Players to Association Teams”. The general rule is that  “every player registered with a club is obliged to respond affirmatively when called up by the association he is eligible to represent on the basis of his nationality to play for one of its representative teams” (Article 3). A player is only obliged to refuse the call up if they are ill or injured and said illness or injury has been approved by their national association (Article 4). The sanctions for a player refusing a call up for any other reason include their preclusion from playing for their domestic team for the duration of their national team’s inclusion in the tournament, plus an extra five days (Article 5). Prior to an amendment of Annex 1 on 1 June 2016, sanctions also included points deductions and the forfeiture of matches in cup competitions in which the player played, whilst his national team was participating in the tournament. However any additional sanctions to those stipulated in Article 5 of Annex 1 are now “to be decided by the FIFA Disciplinary Committee based on the FIFA Disciplinary Code” (Article 6), pursuant to an amendment to Annex 1 in June 2016. This potentially gives the Committee a wider range of sanctions to choose from.

Therefore, unless a national federation such as Fecafoot have their own rules and regulations that allow them to punish their players for not answering a call of duty, it is likely that a complaint to the domestic football association to which the player is registered, followed by a complaint to FIFA, would be the appropriate route to seek compliance.

There are wider issues that arise from this. For example, can a federation force a player to play for their country when they do not want to? Although they can make it difficult for that player to play for their club during the tournament, practically it would be nigh on impossible to force them do so. Managers of the participating countries would not want an unwilling player potentially affecting team morale and consequently the team’s progress in the tournament.

Another issue is that AFCON is held during the domestic season of the top European leagues. The majority of African players undoubtedly consider playing in such leagues as the pinnacle of sporting achievement and therefore attempt to secure moves to Europe where possible, leading to the aforementioned challenges. However, in 2012 then vice-president of the Confederation of African Football (“CAF”) argued that January was an appropriate time to hold AFCON, given that climatic conditions in certain parts of Africa do not allow African countries to host the tournament during the northern hemisphere’s summer time.

Any advice to federations would be to remind them that they have a right to pursuant to the rules of the game to make unwilling players suffer some sort of consequence for not making themselves available for international duty. Practically, however, this would route may have a negative impact in the federation’s future relationship with their top stars.

On the other hand, this stance cannot be an excuse for players to take advantage of African federations, or hold them to ransom. One tactic which is not uncommon is for a player to officially ‘retire’ from international duty to concentrate on domestic football. In my opinion, players should be wary of this approach because federations will be less likely to consider these players in the future if they attempt to reverse their decision to retire and make themselves available for more convenient tournaments, such as the World Cup.

Pursuant to rule 7.3 of the EFL Chekatrade Trophy Rules, “each EFL Club shall play its full available strength in and during all Matches. The League will from time to time issue a policy as to what constitutes ‘full available strength’. Any Club failing to meet this requirement will be required to pay a fine of up to £5,000.”

According to the EFL, “the ‘full strength’ policy for the season 2016/17 competition was five of the starting line-up must have started the previous or following game (a reduction from six in season 2015/16) or five of the starting 11 who have made the most starting appearances in League and domestic Cup competitions fixtures during the current season.”

Luton and Portsmouth have been fined £15,000 each for breaches in three games. Bradford, Blackpool, Bristol Rovers, MK Dons, Millwall, Charlton, Peterborough, Sheffield United and Southend have been fined £3,000 and Fleetwood £5,000. They all have the right to appeal.

The EFL say they considered “mitigating factors” and considered “transgressions that were not within the spirit of the rules”. They may be referring to Bradford City’s attempt to adhere to the rules by replacing Bradford’s regular goalkeeper Colin Doyle with reserve Rouven Sattelmaier after only three minutes of their match against Bury on 4 October 2016. No doubt the EFL have provided written reasons particularising each of the aforementioned teams’ breaches.

It appears from a variety of reports that the EFL implemented the rule and policy in order to increase fan interest, participation and attendance in a cup competition that has seen anything but. The BBC reports that 284 spectators attended West Brom’s academy side play at home to Gillingham and 308 saw Middlesbrough’s development side lose 3-0 at home to Shrewsbury during the final round of group matches.

From a legal perspective, the rules are clear and have been breached. Luton chief executive Gary Sweet was even quoted by the BBC as saying “We entered those teams with our eyes wide open and we accept that we would be fined for doing so”. However, the level of the fine was not to his liking. Mr. Sweet said that he was “staggered” Luton had “been fined the maximum amount for our first offence, which was winning away from home at a club from the division above with half-a-dozen first-team regulars in their team”. He felt that his team was being punished for giving their younger players experience.

Two issues arise here in Luton’s case. Firstly, there is the harshness of the sanction. The EFL fined them the maximum amount for the three games that they breached the rules. This may be because of the frequency with which they have knowingly flouted the rules. However, it is unclear how they have considered that Luton’s actions were not “in the spirit of the game”, especially given their scalps in the competition, which included Premier League side West Brom “containing four players, two of whom who were internationals and had been transferred for several million pounds”. In my view, they may be able to argue that giving young English players the opportunity to play in the senior side is in the spirit of the game and is ostensibly the reason why competitions such as the Chekatrade Trophy are in existence.

The second issue is the validity of the rule in the first instance. The implementation of rules and regulations in associations and companies such as the EFL is usually governed by its Articles of Association. Pursuant to regulation 2.1 of the EFL Rules, no amendment may be made to the rules without following procedure Article 13 of the Articles of Association. These appear not to have been made public, but it is unlikely the individual clubs, as members of the EFL would have voting rights to directly effect these rules.

In any event, it seems that the EFL are stuck between a rock and a hard place in attempting to revamp the EFL Trophy. On a commercial view, it needs sponsorship and the way to entice commercial entities such as Chekatrade, an online search engine for tradesmen; and Johnstone’s Paint before it, is to provide an attractive competition for them to attach their name. It appears as if they do not have confidence in fans turning up to support their teams if the youth players and more often than not, the less recognisable members of the team, are in the starting line up.

On the other hand and some may say on a moral or ethical view, one would hope that the EFL would want to assist clubs such as Luton nurture their young talent by giving them valuable game time. Resources at such clubs are limited and players in the youth teams are more likely to be closer to the first team squad, so one may argue that their participation in the competition is inevitable. It is likely therefore that the EFL and not the clubs that have been fined, have not been acting “in the spirit of the game”.

The case of Paul Pogba

The story goes like this. Pogba joined United from French club Le Havre in 2009 as a 16-year-old, but made just seven appearances before his contract expired in July 2012. Italian giants Juventus then signed him on what was reported as a free transfer, however United did eventually receive a fee of approximately £1.5 million. Given Pogba’s age at the time and pursuant to FIFA’s rules on training compensation, United were entitled to a relatively nominal fee for their part in developing the young Frenchman.

Another Similar Case

United are not the only club to have had a “case of the ex”. The same, albeit on a comparably smaller scale, happened to Chelsea when they re-signed defensive midfielder Nemanja Matic in January 2014 for a reported £21 million. Matic initially joined Chelsea from Slovakian club MFK Kosice on a four-year deal for £1.5 million in 2009, but was subsequently used as a makeweight in the deal that saw defender David Luiz join Chelsea from Benfica in January 2011. At that time of his move to Benfica, Matic was valued at less than £5 million. Chelsea re-signed him for more than four times that price only three years later.

Dealing with the “ex”

Notwithstanding the fanfare greeting Pogba’s return, some outside Old Trafford remain skeptical. Why did they let Pogba go in the first place? Why have they had to re-sign him at almost 90 times the price? Was this avoidable? Could United have paid less than the astronomical fee? In an attempt to justify this unprecedented fee, new Manchester United Manager, Jose Mourinho has said that he would have preferred the club not to have let Pogba go in the first place, but warned that it would be an even bigger oversight not to re-sign Pogba, given what he could contribute to the team. However the critics maintain that United’s astronomical outlay could have been avoided with greater care in the contract negotiation and drafting.

The “Buy Back” Provision

Inserting a “buy back” provision in the contract of sale, so that the selling club is in the driving seat when wanting to re-sign a former player, invariably caters for such an eventuality. A buy back provision would detail the conditions upon which the selling club may re-sign the player from the buying club. Additional clauses may determine the price at which the selling club may re-sign the player, the time frame within which to do so and whether or not the selling club would reserve the right of first refusal, when the player becomes available for sale.

Advantages of the “Buy Back” Provision

Buy back provisions are not uncommon in player transfer contracts, particularly in continental Europe. The most high profile in recent times has been Real Madrid re-signing of striker Alvaro Morata during the summer 2016 European Championship. Morata joined Juventus in 2014, after four seasons with Real. The terms of his move to Italy included a buy back provision for Real to re-sign him, with the fee reported to be €30 million (approximately £23 million). The advantages are clear in this case, given that the market rate for such a top quality striker would have been a multiple of the sum eventually paid by Real. The buy back provision thus ensured that Real were able to avoid the pit fall of re-signing Morata for an exorbitant fee.

Including a buy back provision does not necessarily bind the selling club to exercise it. Francesc Fabregas moved from Arsenal to Barcelona for a reported £35 million in 2011 after 8 years at the Gunners. When he was back on the market in June 2014, Arsenal did have first refusal to re-sign him, but did not exercise it. It was said by some that this was due to the number of similar players within the Arsenal squad at the time. Some on the other hand, contending that none of those other players were actually of Fabregas’s quality, considered Arsenal’s failure to resign their “ex” one of the worst decisions in football transfer business.

There may be several good reasons why a buy back provision may not be exercised, but it is prudent counsel to include such a provision wherever practicable, particularly with respect to young, promising talent that may not currently fit into the clubs plans, but may do so at a later date. In so doing, the selling club would have satisfactorily planned for taking back their “ex” on their terms.

However, is Gray guilty of an offence pursuant to the FA Rules, despite his comments being posted over four years ago?

The FA Rules and Social Media

Rule E of the FA’s Rules of the Association sets out when the FA may act against a Player in respect of any “misconduct”, in other words, breach of the plethora of rules which help govern the beautiful game. In particular, Rule E3 (1) states that players “shall at all times act in the best interests of the game and shall not act in any manner which is improper or brings the game into disrepute or use any one, or a combination of, violent conduct, serious foul play, threatening, abusive, indecent or insulting words or behaviour”. The content of Gray’s tweets would prima appear to satisfy these criteria and also may be considered as an ‘aggravated breach’ pursuant to Rule E3 (2) as his tweets referred to “gender… (and) sexual orientation”.
 

Possible Punishments

Pursuant to Rule E3 (3), Gray could be punished with an immediate 5 match ban and if the FA find any further aggravating circumstances, may increase the suspension within their discretion. However, since it was only on Twitter and not on the field of play or during a Premier League or club commercial event, it is likely that Rule E3 (4) would apply so that a “Regulatory Commission will not be bound to impose an immediate suspension of at least five matches for a first such breach” and “may impose any sanction that it considers appropriate, taking into account any aggravating or mitigating factors present”.

Rule E3 Precedent

• In 2011, former Liverpool striker Luis Suarez was charged pursuant to Rule E3 for racially abusing Manchester United’s Patrice Evra during a Premier League match between their respective teams. An independent Regulatory Commission decided that Suarez was guilty of the majority of the charges. The panel imposed a £40,000 fine, suspension for eight first team matches and warned Suarez as to his future conduct as well as ordering him to pay costs.
• In July 2012, former Arsenal player Emmanuel Frimpong was charged under Rule E3 for improper conduct in relation to comments made on Twitter in response to abuse from a Tottenham fan. He was fined £6,000 by the FA for bringing the game into disrepute.
• In February 2014, former West Bromwich Albion forward and France international Nicolas Anelka was found in aggravated breach of Rule E3 after performing the controversial “quenelle” gesture during a match against West Ham United in the previous December. The quenelle has been considered by many to be an inverted Nazi salute and was created by Anelka’s friend and controversial French comedian Dieudonne M’bala M’bala. Dieudonne had maintained at the time that the quenelle was not anti-Semitic. When banning Anelka for 5 matches and fining him for £80,000 it was interesting to note that the Commission, “did not find that Nicolas Anelka is an anti-Semite or that he intended to express or promote anti-Semitism by his use of the quenelle”.

The Gray Case

It is unlikely that Gray would be subjected to punishments as onerous as the aforementioned examples. This will likely be due to the timing of his tweets, the fact that he has publically and formally apologised for them and assured the footballing community he no longer holds such views. His club, Burnley has supported Gray’s apology and rejected such behaviour. Gray has also attempted to delete the offending tweets. Consequently, Gray is more likely to be given a written reminder of responsibilities and at most a small fine in the region of several thousand pounds. This will depend largely on what message the FA would like to send to football community of their intention to punish offensive historical tweets whenever those tweets.

Consequently, aspiring premier league players quite apart from tweeting prudently ought now to be revisiting their historic unguarded tweets, just to ensure that any comments that are likely to prove embarrassing in future are removed.

Its aim appeared altruistic to expose the outlawed practice of third party ownership of players by Portuguese and Dutch clubs, through publishing confidential football contract documents. FC Porto, Sporting Lisbon and Boavista were early targets of Football Leaks as was the sports management company, Doyen Sports.

Their publication indicated that Doyen Sports loaned £3.8 million to FC Twente, winner of the 2010 Eredivisie title with manager Steve McClaren, in return for a proportion of the economic rights of their star players. One of these players, Dusan Tadic, was subsequently sold to Southampton in the Premier League for £11.5 million in 2014. The third-party agreement was not unlawful at the time, but an investigation by the Dutch FA precipitated by the publication led to the resignation of the club president and the club being banned from European competitions for three years. The regulator concluded that it had been deliberately misled as Twente had apparently not fully disclosed the details of their arrangement with Doyen Sports, which placed the club in a position to sell these key players so that the investor could profit.

Against this background FIFA’s Head of Transfer Matching System Mark Goddard, said “… all streams of information are very, very useful and that one has been as well…”

Further leaks revealing that Gareth Bale’s transfer fee was indeed world record- breaking; Manchester City paid an excessive fee for Eliaquim Mangala; Manchester United overindulged in the acquisition of Anthony Martial and that Real Madrid inserted a buy-back clause in the contract of Mesut Ozil, all make for excellent football ‘banter’.

The situation was however different prior to 1961, when Football League clubs abolished the £20 maximum wage cap in England. Then, players’ income and contracts were of very limited, if any interest. The abolition of maximum wage cap initiated the progressive period in which players could negotiate their remuneration, commensurate with their worth and market forces. The landmark Bosman ruling in 1995 completed the substantial shi in the balance of negotiating power from the clubs to the players.
Fans funding the sport through paying rocketing ticket prices, television subscriptions and merchandising costs seek transparency of player contracts and associated fees. This is resisted by players and clubs who profit from the game, which has made player contracts topical and newsworthy.

So where is the balance between Transparency and Confidentiality?

Notwithstanding the universal appeal and popularity of football, it is not a public service organised by the state or public authorities to which an entitlement to information as per the Freedom of Information Act 2000 is applicable. This Act creates a public “right of access” to information held by public authorities. It obliges public authorities to publish certain information about their activities and gives members of the public an entitlement to request information from public authorities.
Professional football is sport and entertainment organised by private enterprises for pro t. As such, a fan has no legal entitlement to con dential information which is not part of his contract of purchasing tickets, satellite TV subscriptions and merchandise.

Fans may withdraw their custom and exert their economic power to compel desired action by clubs as was recently demonstrated at Liverpool football club. Following an unprecedented mass walkout during Liverpool’s match with Sunderland at An eld on 7 February 2016, the club owners by a subsequent letter addressed to the supporters, apologised for the distress caused by their plans that tickets will rise by £18 to £77. Fenway Sports Group conceded that the ticket prices will freeze at the current rate of £59 for the next two seasons.

Fan economic power cannot however compel publication of player contracts where the regulator will not publish under their own rules and will have additional statutory duty not to publish, on account of the Data Protection Act 1998.

The media wishing to exercise their right of free speech under Article 10 of the European Convention on Human Rights to publish such information will have that right balanced against Article 8 of the European Convention on Human Rights and the Human Rights Act 1998. This provides that everyone has a right to respect for his private and family life, his home and his correspondence.
In the balance to be struck between freedom of expression protected by Article 10 and the Article 8 rights of individuals to private and family life, the media attracts special protection because of its role as a public watchdog, and restrictions on freedom of expression are subjected to very close scrutiny. The right to freedom of expression is however limited so there is a natural tension between the Article 10 interest in openness and transparency and Article 8 interest in privacy. The structure of these provisions permits a proportionality-based approach to the reconciliation of these competing rights.

Where these rights conflict, focus is brought on the comparative importance of the specific rights being claimed in the individual case. In addition to the type of expression at stake, the factors which impact the balance to be struck include:

• the public stature of the individual
• the degree of interference with privacy
• any breach of the law or of professional ethics by the reporter

In Mosley v Newsgroup Newspapers, Max Mosley, former Formula 1 boss successfully sued News of the World following its 2008 publication of a story and clandestinely filmed video relating to his allegedly Nazi themed sado-masochistic activities with a number of prostitutes. Given the limited public interest supposedly served by that publication, his Article 8 rights of a reasonable expectation of privacy in relation to sexual activities, albeit unconventional, between consenting adults on private property, superseded the newspaper’s Article 10 rights of freedom of expression.

Conversely in Ferdinand v Mirror Group Newspapers, the balance favoured the freedom of expression and MGN’s Article 10 rights. In 2010 the newspaper paid a woman for her story and published the details of their “on and o ” sexual relationship over a period of 13 years. Ferdinand had made public statements relating to leaving his “wild man” past behind him to settle down with the mother of his children. He had taken up captaincy of the England national football team a er his predecessor was dismissed for an extramarital a air. His “family man” image and the expectation for him to be a role model both on and o the pitch, meant that there was a substantial public interest in the newspaper’s disclosure sufficient to justify the publication.

It follows that there can be no lawful justification for the mass publication of otherwise con dential player contracts of the type espoused by Football Leaks. The balance remains in favour of the confidentiality of player contracts against the transparency desired by football fans, unless conduct of any particular player or club raises substantial public interest to justify publication.

Origins of TPO

Well-heeled clubs prospered by developing their own talent. Surplus talent is traded in the transfer market for profit because clubs own the economic rights in the talent they have developed. However not all clubs have resources to maintain the talent production line or are blessed with a constant supply of youthful raw talent to develop. Enter the third party investor who may be an individual, firm, bank or fund and the only party able to finance the acquisition and development of often unknown youthful talent. In some cases that talent may never get the opportunity to blossom.

To put the matter in better context, consider that talents such as Sergio Aguero (Manchester City) Diego Costa, Ramires, Radamel Falcao (all Chelsea), Anderson (ex-Manchester United) Jo (ex-Manchester City) and Deco (retired) to name only but a few are all products of one form of TPO or another.

The investor will then own all or a proportion of the talent’s economic rights rather than the club where the talent is being showcased. The investment is realised when the talent can be transferred for profit. This practice has been entrenched since football transformed from amateur sport to serious business and has become a legitimate revenue source upon which the survival of certain clubs as well as their ability to comply with financial fair play regulations depend.

The problems with TPO

The problem with TPO was not that most fair minded people in football governance decried any investor performing such a positive function, a fair return on their investment. The concern arose from the fact that these investors are not registered with and regulated by the football regulatory authorities. Their practices and ethics are therefore opaque and their motives may be entirely financial, even ulterior rather than sporting. This, if unchecked would give them such undue influence over their players and client clubs which could compromise the integrity of football matches and competitions with destabilising effects on the beautiful game.

From this perspective a high ranking English football official described TPO as “… an unedifying trade in young people that rips the heart out of the clubs which try to develop players, sell them and reinvest in more player development”. Gordon Taylor, chief executive of the Professional Footballers’ Association said that “…it is like trading in human beings. And it’s destabilizing for outsiders to have a financial interest in players.” And by Richard Scudamore, chief executive of the English Premier League, as comparable to “indentured slavery”.

The Demise of TPO

TPO was thus flourishing and regulated in world football. The now repealed Premier League Rule U18 provided that the third parties were not permitted to “materially influence” a club’s “policies or performance of the teams.” Article 18bis of FIFA’s Rules on the Status and Transfer of Players provided that “No club shall enter into a contract which enables any other party to that contract or any third party to acquire the ability to influence in employment and transfer related matters its independence, its policies or the performance of its teams.”

The chain of events precipitating the demise of TPO began in August 2006 when Carlos Tevez and Javier Mascherano were transferred from the Brazilian club Corinthians to West Ham United in the Premier League for an undisclosed fee. Their economic rights were owned by four offshore companies, Media Sports Investments and Just Sports Inc., in the case of Tevez, and Global Soccer Agencies and Mystere Services Limited in the case of Mascherano. It was the failure to disclose the third party contracts involved in that transfer, which purported to breach Rule U18, to the regulator by West Ham that did the damage.

That was not apparent at the time. It was disclosures five months later by Liverpool Football Club when they signed Mascherano on loan from West Ham that alerted the regulator to the undisclosed TPO by West Ham. It resulted in charges against West Ham in which they suffered a world record £5.50m fine for those breaches in April 2007. By then the clandestine nature of that third party ownership contract had attracted public opprobrium in England. With its image beyond salvage, its fate was sealed and nothing short of abolition will do.

The Premier League’s new Rules L34 and L35 promptly outlawed TPO in England from the beginning of the 2008/09 season. France and Poland followed suit but the practice continued elsewhere. On 1 January 2015 FIFA completed TPO demise through its Article 18ter (1) which provides that: “No club or player shall enter into an agreement with a third party whereby a third party is being entitled to participate, either in full or in part, in the compensation payable in relation to the future transfer of a player from one club to another, or is being assigned any rights in relation to a future transfer or transfer compensation.”

A third party is defined as any party other than the two clubs involved in the transfer or any previous club with which the player has been registered. These new FIFA banning regulations are binding on all national football associations and must be included in their rules. All existing third party ownership agreements must be registered with FIFA TMS by the end of April 2015, with those pre-dating 1 January 2015 being allowed to run their contractual course without extension. Those entered between 1 January and 30 April 2015 may not have a contractual duration of more than one year. Clubs and players falling foul of these new rules are exposed to disciplinary sanctions.

Surviving the TPO Ban

For clubs, investors and players with existing TPO agreements, the first essential step must be to ensure that registration with FIFA TMS has been effected. If not, that omission must be rectified voluntarily as soon as possible with a proper explanation of the reasons for the late registration. If properly done with professional assistance then the potential sanctions for out of time registration could be mitigated.

The second essential step must be a proper review of the provisions of the agreement and assessment of its practical operation. This will determine when it could by mutual consent be brought to an end in the optimum commercial interest of the contracting parties. Again this is best undertaken with the benefit of proper professional assistance.

The legitimate need that TPO was serving is not satisfied much less fulfilled by the ban. As a result, some critics have said that TPO will simply go underground, become more sinister and therefore beyond regulation. This however need not be the case and reputable individuals and organisations need not run such an avoidable risk. Instead, professionally well-crafted arrangements which meet the needs of the parties while fully complying with the new regulations should be their prudent way forward.

Today’s UEFA Club Licensing and Financial Fair Play Regulations (“FFP”) which were updated in June 2015 began life in 2010 and had its first assessment in 2011. Since then clubs wishing to participate in UEFA competitions were required to demonstrate that they are not carrying overdue football creditor debts and social/tax liabilities.

From 2013 the clubs were additionally assessed against break-even requirements which required them to balance their spending with their revenues and restricted them from accumulating debt. In establishing compliance, UEFA’s Independent Club Financial Control Body (“CFCB”) each season will take into consideration three years’ worth of club financial figures. Generally clubs can spend up to 5 million Euro above their revenue for the assessment period of three years. This level can be exceeded to a certain limit provided the overspend is entirely covered by a direct contribution from the club owners. The limit for the 2013/14 and 2014/15 season was 45 million Euro whereas the limit for the 2015/16 until the 2017/18 season is reduced to 30 million Euro.

From 2015 investment in stadiums, training facilities, youth development and women’s football are excluded from the break-even calculation. Further, the role of the CFCB is expanded to include clubs not yet qualified for UEFA competitions but who aspire to participate as some stage in the future.

There are nine specified possible sanctions for non-compliance ranging from warning; reprimand; fine; points deduction; withholding of revenues from a UEFA competition; prohibition on registering new players including a cap on aggregate player wages; disqualification from competitions and withdrawal of a title award.

Since FFP came into force in 2011, six clubs have been denied access to UEFA competitions because they have either failed to pay players wages or fees to other clubs for transfers and one club has been excluded from UEFA competitions due to failure to comply would break even requirements. In 2013/14 season nine clubs and in 2014/15 season 14 clubs entered into Settlement Agreements with UEFA due to FFP breaches.

One criticism of FFP is that it is a rule that is designed to protect the rich whilst disenfranchising the poor in that it entrenches the existing financial inequalities in European football where the rich will continue to become richer and poorer clubs are denied the opportunity to attract investment that could enable them to challenge the richer clubs.

In this context it can be seen that the outcomes of most leagues in Europe including UEFA’s champions’ league are predetermined and are usually dominated by the same rich clubs almost every season. So for example in the Premier League no other club outside of the usual top 4 of Arsenal, Manchester City, Manchester United and Chelsea have won the Premier league in the last 20 years. The same pattern is repeated in Spain, Germany and Italy and it is clubs from these football rich nations that dominate the UEFA champions’ league. Thus, the European football operates on a pyramid class system. So FFP is justifiably criticised for denying mobility, deterring investment and effectively limiting competition from new entrants and specifically neutralising circumstances where new investment could transform otherwise average clubs by providing them the resources to challenge the established order.

As a result, it is not surprising that FFP has been beset by legal challenges. At the time of drafting this article European Court of justice has just handed down a ruling rejecting the referral brought about by the Brussels court of first instance that the ECJ adjudicate on the interpretation of EU law provisions in the lawsuit filed by agent Danielle Striani against FFP. The ECJ described the request as “manifestly inadmissible”, in respect of which UEFA promptly announced its satisfaction with the ruling.

This euphoria may however be premature given that the ECJ decided to refuse the request on the basis of the failure of the referring court to meet its procedural requirements in the way in which the questions were put to the ECJ.

Quite clearly the court has yet to consider the matter referred to it substantively and it is entirely open to the Brussels court to correct the procedural deficiencies in its referral and submitted a new referral. The challenge to the FFP rules relies upon its alleged incompatibility with EU competition provisions as well as several of the EU Single Market core freedoms and a substantive ruling by the ECJ on the issues raised is desirable.

It is noteworthy that the applicant, Danielle Striani, whose locus standi in challenging the rules designed to regulate clubs financial conduct rather than agents financial conduct might well come under scrutiny. To that extent aggrieved club or clubs that contend that they are being discriminated against in the investment markets as a direct result of the FFP rules joining his challenge might be invaluable.

The foregoing notwithstanding UEFA acknowledges that the differential in wealth in between clubs predated the introduction of FFP and that whilst FFP rules when not intended to redress that imbalance, they are necessary for the purposes of ensuring that investments in football are targeted at the long-term, rather than seeking a short-term fix. Noble as this statement may sound, it intrinsically fails to admit that the effect of FFP would be to entrench the status quo rather than fostering a financial regime which does not amount to a one size fits all by imposing the same deficit limit on all the clubs notwithstanding the peculiar circumstances.

Football is not just the ‘beautiful game’, it can also be a lucrative one at the upper echelons of the sport. With Sky and BT Sport investing significant sums in the acquisition of broadcasting rights for top tournaments, such as the Premier League and the UEFA Champions League, it is easy to think that broadcasting is now the main source of many a clubs income. Although this is true for some clubs, match day income and commercial revenue completes the income structure of football clubs.

Match day income is self explanatory. From ticket sales to the ill-fated prawn sandwiches, everything sold on match day generates income for clubs.

Commercial Revenues

Commercial income includes retail, merchandising and mainly income generated from third party non-footballing brands that desire to associate themselves with football. It is the clubs commercial directors in tandem with a sound legal team that can cement this ever increasing stream of commercial income for clubs.

Commercial revenue increases continue to underpin the growth in recent years for many top clubs. According to Deloitte’s Money League analysis of the top 20 earning clubs in Europe, commercial revenues for the 2013/14 season accounted for 44% (1.90bn Euros) of (4.30bn Euros) total revenue. 10 years ago this proportion was circa 30% which confirms that commercial revenue has become as important as, if not more important than, broadcasting and match-day revenue.

Varying Performance

A more detailed look at the figures however shows that much of this positive commercial performance is mainly the preserve of the larger clubs. In England for example, in the 2013/14 season, 80% of the commercial revenues generated by all the clubs were generated by the top six Premier League clubs (Arsenal, Chelsea, Manchester United, Manchester City, Liverpool and Tottenham Hotspur). So while Manchester United will generate £185 million in commercial revenues a quarter of the Premier League clubs will generate less than £10 million.

Room for Improvement

Regardless of size, every club in the Premier League has a substantial capacity to significantly increase commercial revenue. Clearly those clubs most likely to challenge for trophies will have a greater capacity to increase commercial revenue than those most likely to be relegated, but that does not deprive the smaller clubs of their ability to generate significant income through commercial sources.

The Power of Fandom

The fan base is the lifeblood of every football club, not just because they are the ones that turn up religiously wherever and whenever possible to support their club, but they are also more likely to purchase the club’s branded products. They remain the secret of clubs success in generating commercial revenue.

Most commercial brands have customers that they struggle to convert into loyal fans. Football clubs on the other hand have passionate fans that could readily be converted into customers, provided they are well harnessed. Therefore, Premier League clubs in particular have a strong platform on which to build a range of commercial programs given that football is one of the world’s most popular sports, engaging society across all ages, genders and ethnicities.

Understanding, segmenting and growing the fan base both locally, nationally and internationally to create an interactive community has significant commercial value. This will enable the club to devise a clear commercial strategy on the basis of which to sell more of its own branded goods and services as well the creation of partnership programs which can enable commercial sponsors and partners to take advantage of a football club’s goodwill.

Commercial Deals

The formation of commercial contracts are key to the development of this revenue stream for clubs. Commercial brands from all parts of the world are keen to be associated with the Premier League due to its popularity and it is noteworthy than in 2014/15 season 50% of the shirt sponsors were from Asia. So the smaller clubs should also extend their commercial reach to every part of the world where the Premier League has become compulsive viewing.

Various commercial revenue generating strategies have are in use including, but not limited to

• shirt sponsorship
• kit sponsorship
• club broadcasting
• a whole host of digital platforms
• stadium naming rights
• training ground naming rights
• travel sponsorship
• facility/key component design and branding
• merchandising of goods and services
• catering/hospitality
• retail
• conference/banqueting
• overseas tours
• start/end of season matches
• a nations player in the squad
• community initiatives
• infrastructure initiatives

A comprehensive business plan for maximising a club’s commercial revenue will necessarily include some, all or even more strategies than those identified above. What is more significant is that the club properly understands and develops the value of its own brand which will facilitate the attraction of suitable commercial partners.

The revenue that the club will ultimately be able to earn and the dynamism of the arrangements that it is able to settle with its commercial partners, will depend upon the negotiating skills of its commercial and legal teams. The success or otherwise of these commercial deals depend heavily on how well they have been drafted on behalf of the clubs. Commercial brands and the bigger clubs have specialist counsel advising on these commercial deals as a matter of course. Smaller clubs wishing to increase their commercial revenues regardless of size ought properly to be following suit.

The primary duty of the CEO of every football club, like in most other businesses, is to take the necessary steps to maximise the clubs revenue whilst minimising its costs in order to leave a substantial residue which is the profit. Thus effective cost management increases profits.

The single most significant component in the costs structure of top flight football clubs is the player wage bill. Get effective control of this and the club’s profitability will rise. By way of illustration, in the 2013/14 season, player wages in the Bundesliga totaled 1 billion euros, representing 51% of the league’s revenue while a similar wage bill in Spain represented 56% of La Liga’s gross revenue. In France’s Ligue 1, 66% of their 1.3 billion euro revenue was spent on player wages whilst Serie A, Italy’s top flight, with revenue of 1.7 billion euros, spent 1.2 billion euros on player wages, a ratio of 71%.

The picture in the Premier League is not dissimilar. £1.8bn (2.1 billion euros) was spent on player wages from a total revenue of £2.5bn (2.9 billion euros), again representing 71%. The ratio is even worse in the England’s Championship, where on revenue of £435million player wages soared to £462m, representing 106% of total revenue.

With these statistics if follows that every football club, particularly those that are susceptible to relegation from their respective top flights, should have a proper strategy for managing the player wage bill. Quite apart from negotiating the transfer fee and the player’s wages, it is in skillful drafting of the player’s contracts that the initial opportunity arises for the clubs to exert control over the wage bill as a whole.

Although player’s contracts follow a standard form, it does not follow that they are incapable of amendment to suit the contracting parties needs. Clubs should tailor individual player contracts to suit rather than adopting a one size fits all approach. It is often the case that a club suffers a substantial decline in its revenue due, for example, to relegation, but finds itself stuck with inflexible player contracts entered into in the previous season. The dilemma of player wages being disproportionate to the clubs now reduced revenue is a common problem. Prudence dictates that the introduction of suitable provisions should be considered at the outset to cater for such eventualities. The key contractual provisions that merit particular attention include,

Review & Break Provisions

Review and Break clauses are not ordinarily standard in player contracts yet they are essential tools that could be inserted to give the club and the player the necessary flexibility to adapt the contract that can no longer be performed due to the club’s change in circumstances. Clearly this will have to be negotiated and drafted with considerable care in order not to avoid undue prejudice to the player.

Salaries & Incentives

Instead of adopting the approach that the negotiated player’s salary should always follow the pattern of a fixed weekly or monthly amount to be paid in all circumstances, it may be more effective to adopt the approach that the player’s salary should contain a fixed component as well as a performance related component. This should reflect the club’s expectation of the player’s performance with the appropriate provisions for the player’s remuneration to increase in line with him meeting the specified performance targets, together with commensurate flexibility for adjustment in the unlikely event that either the club as a whole or the player in particular fails to meet its expectations.

Image rights

This is more applicable to elite players whose image and personality have acquired a distinctive value which the club could leverage for commercial benefit. This could be in merchandising or in the digital economy. The necessity is that a proper mechanism is introduced which properly relates the fee paid under the player’s image rights to the actual revenue generated by the club through the acquisition of those rights.

Retention, Release and Buyout Provisions

Every club wishes to retain its most talented players who are sought after by competitors. It is the quality of the drafting of the retention provisions that will enable the club to achieve that objective.

It is important to note that players are one of, if not the, most important components in the game of football. Hence why they figure so prominently on football club’s balance sheet, regardless of how big or small they are. However, the current trend shows that if clubs are unable to appropriately manage wages in line with business targets and external economic factors, they may suffer beyond returning to their former glories. Leeds United FC and Portsmouth FC in recent footballing history come to mind here. Therefore, it is important that club directors presiding over transfer business in the upcoming window strike a balance between bringing the best players possible to the team and keeping the business alive. This begins and ends with how the player contract is drafted.