ANALYSIS OF THE REFORMS PRESENTED AT FIFA FOOTBALL LAW ANNUAL REVIEW 2018
In March 2017, a Task Force was set up under the auspices of the FIFA Football Stakeholders Committee (FSC) to investigate the football transfer system and provide proposals and recommendations to the FIFA Council based on their findings.
On 15 February 2019, the FIFA Football Law Annual Review 2018 was held in Zurich, where the international governing body presented to the football stakeholders the most important and profound reforms in organised football system since 2001. Several statistics and case law – both from FIFA bodies and CAS – were presented to motivate and justify the changes for the next editions of FIFA regulations.
The main goal of this article is to briefly analyze the reform package and its possible repercussions on the transfer market.
The first and maybe the most controversial implementation to be introduced is the creation of a global “Clearing House”, which has the objective to centralise and control all payments related to:
- “Solidarity contribution” and “training compensation” to training clubs
- Commissions to intermediaries
- Transfer fee to selling clubs
Such innovation aims to increase the integrity and transparency of the market, effectively enabling FIFA to keep an eye on all the money circulating within organised football. However, there are some practical questions that remain unanswered: will FIFA be able to manage and control all the amounts circulating in football, which sums more than USD 7 billion per year? Will FIFA obstruct or delay the receipt of the amounts by clubs and intermediaries? Will these amounts suffer taxation or any extra expenses due to the fact that they would “change hands” twice and – usually – between three different countries?!
Moreover, in order to increase transparency and protect the integrity of the sport, the introduction of an electronic registration system at national level will be mandatory to the member associations – the so-called “Domestic Transfer Matching System” (“DTMS”). This measure aims to modernise the transfer and registration systems of associations and facilitate the enforcement of the provisions of the FIFA RSTP.
Training Compensation/Solidarity Payments
Another important change is the increase of the percentage/amounts to be distributed to training clubs as solidarity contribution and training compensation. Such changes confirm one of the most important goals set by FIFA: to encourage and reward clubs that invest in the training and education of youth players. But why FIFA has only decided to increase their reward now? According to the latest TMS Reports, between 2013-2018 agents received a total sum of USD2.14 billion in commission for their services, whilst training clubs received USD 466 million in solidarity contributions and training compensation during the same period. Such a discrepancy motivated FIFA to intervene.
FIFA also decided to apply solidarity contribution to domestic transfers (i.e. between clubs belonging to the same association), as long as the transfer has some aspect of international dimension. For example, if an Argentinian club is the training club of a player who has been transferred – upon the payment of a transfer fee – between two Italian clubs, they will be entitled to receive solidarity contribution and, if necessary, claim before FIFA decision-making bodies.
FIFA also decided to proceed with an extensive review of the intermediary system implemented in 2015, which had replaced the FIFA Player’s Agents Regulations. Football stakeholders understand that the Regulations on Working with Intermediaries (RWI) have not achieved the goals expected by the governing body and FIFA has decided to establish new and stronger regulations for agents, which will include the reinstatement of the licensing system and the requirement to register all of their operations into the FIFA TMS. In addition, it has been indicated that FIFA decision-making bodies may once again have jurisdiction to hear claims involving licensed agents, which is great news for agents who render services for clubs and players all around the world.
Enforcement of Awards
Another simple but valuable inclusion is the possibility of enforcement of awards rendered by CAS in ordinary arbitration proceedings before the FIFA Disciplinary Committee. Everybody wants integrity and contractual stability in football, and these measure would give creditors:
- An opportunity to keep the dispute within the football system and
- A quicker enforcement alternative apart from the procedure via New York Convention (which usually takes a long time until the credit is duly satisfied.)
In the last topic of the reform package, FIFA introduced two restrictions that are being inserted for the purpose of youth development as opposed to commercial exploitation.
The Elephant In The Room
A wide range of reforms were presented, but the governing body remained silent on some controversial issues that were expected to be addressed; most importantly the prohibition of Third-Party Ownership (TPO), outlined in FIFA RSTP 2015. In this respect, FIFA issued a media release in June 2018 in which the Disciplinary Committee had decided that players are not to be considered as “third parties” in Article 14 and Article 18ter of the RSTP. The grounds of this decision was not disclosed and stakeholders were curious about the potential permissibility of FIFA in relation to the assignment of economic rights to players. As this topic was not addressed in Zurich, stakeholders remain unsettled and insecure. Despite this, it seems that the next FIFA RSTP will expressly determine that players shall not be considered third parties.
Thank you, next
As noted, several changes are to be inserted in the next editions of FIFA regulations – which will probably come into force later this year. Most of them seem promising and positive, but time will tell. One thing is certain: football regulations keep changing and evolving faster than any other sport in the world.