Could you ever have imagined life without football? A time where football competitions were cancelled or postponed all over the world? A time when, in most parts of the world, a football match could not be scheduled due to social distancing? Well, that’s the situation we find ourselves in!
National competitions are cancelled or postponed indefinitely, international competitions such as UEFA Champions and Europa Leagues are facing the likelihood of cancellation this year after being postponed indefinitely, training sessions have been banned by law in most jurisdictions and football players are quarantined, just like the rest of the population, kicking toilet rolls and recording the challenge to upload it later on Instagram. In addition, UEFA has deferred their international competition Euro 2020 for a year due to the public health danger. In the United States, the NBA has postponed the season indefinitely. The challenge of Covid-19 is real and global for sure!
Football clubs – especially in Europe – are participating and promoting the global #Stay_At_Home campaign via their social media channels. Despite the positive message it’s a hard time for clubs and under the surface they have had to think about how they conduct their business and whether they can fulfil their financial obligations to their staff and players. With many clubs paying players to sit at home during the crisis, and with limited means to recoup wages through income, many clubs have been wondering if there’s a legal way for them to get out of their financial obligations to their staff and players.
The Clubs’ Argument
For football clubs, the main argument why they should not have to pay their players centres around the doctrine of Force Majeure. Under Swiss Statutory Law, there is no clear and accurate legal definition of Force Majeure and as a consequence, this doctrine has been developed through legal practice and jurisprudence. Force Majeure is used to describe an unforeseeable and unusual event that cannot be prevented by economically reasonable means (including by due care expected under the circumstances) and which, in view of the particular situation and due to the rarity of such an event, is not to be expected. Given that definition, CAS has occasionally accepted, that under Force Majeure circumstances, a party can be prevented from performing all or part of its contractual obligations (CAS Decision 2010/A/2144).
In its decision CAS describes Force Majeure as “an event which leads to the non performance of a part of a contract due to causes which are outside the control of the parties and which could not be avoided by exercise of due care. The unforeseen event must also have been unavoidable in the sense that the party seeking to be excused from performing could not have prevented it.” Despite it’s potentially wide scope, Force Majeure has often been construed narrowly requiring a direct link between the event and the effect of a party to uphold a contractual obligation, which will be dealt with in more detail later.
The Players’ Argument
So what are the arguments on behalf of the football players and staff? The permanent and stable jurisprudence both of the judicial bodies of FIFA (and national DRCs) and CAS upholds the right of a player to terminate a contract with just cause in the event that salaries of two months become outstanding (or an amount of money equal to that remuneration). This option is also set out article 14bis of FIFA Regulations on the Status and Transfer of Players. We should bear in mind that the term “football player” does not just include superstars such as Lionel Messi, Cristiano Ronaldo and Neymar. The cohort of football players worldwide may face certain dangers and insecurity in providing for themselves and their families, if it is determined that they are not entitled to their salaries during the lockdown period of football.
So, the main question is what is next and what should be done to reconcile the arguments of both sides?
First of all, we will examine Force Majeure clauses in contracts. Swiss law scholars have argued that in order for these clauses to be valid, they need to be precise and accurate about the force majeure incident. The Force Majeure and its consequences need to be outlined in employment contracts. Due to the lack of detail about potential Force Majeure incidents, especially about pandemics such as Covid-19, valid Force Majeure clauses are nowhere to be seen in footballers’ employment contracts. So is there really a way that clubs can get out of fulfilling their financial obligations by paying their players full salaries.
The global football industry is facing an unprecedented challenge and as a result of the Covid-19 outbreak clubs have cancelled or abandoned their sporting activities for the current season, at least for now. This situation has deprived them of various sources of income, such as ticket sales, participation bonuses in competitions (i.e. UEFA Champions League or UEFA Europa League) and TV broadcast rights. However, the modern football club is a complex and professional business and operates as a commercial enterprise as much as a sports club. This means that despite the quarantine and limit to activities reliant on the presence of employees, many of their commercial interests are still alive and kicking.
Companies were not forced to cease their activities as the virus did not pose a threat to clubs’ existences (at least at first instance!). Covid-19 brought certain difficulties to the global economy and limited freedom of movement, which then impacted on clubs. This indirect relationship between the force mature incident and clubs is the main difference between the current situation and the force majeure incident accepted by CAS in the aforementioned case. In CAS Decision 2010/A/2144, CAS had to decide whether the Egyptian Civil war that erupted in Egypt on March-April 2013 (which violently ended the 12/13 Egyptian football season and formed part of the Arab Spring) constituted a force majeure incident. The differences are stark. Even if Covid-19 lead to the cancellation of the European leagues certain differentiating features remain. For example, an outbreak of civil war leads to the extinction of a club in both sporting and commercial terms. On the contrary, the Covid-19 pandemic has only forced clubs to abandon their sporting activities, but as mentioned their commercial activities remain active.
It can be argued that football clubs have already missed out on a noticeable sum of income. Furthermore, it is easy to accept that football clubs could not have foreseen the current situation or taken any action to minimise the risk of it. However, in my point of view, a deprivation of certain sources of income cannot justify either a unilateral amendment of an employment contract or a reduction in salary.
A key principle of contractual Swiss law (depicted in FIFA regulations as well as jurisprudence of FIFA’ s judicial bodies and CAS) is pacta sunt servanda. This means that every dispute shall be examined by looking at the intentions of the parties at the time that they entered into an agreement. Respecting this principle, a unilateral amendment of a contract is strictly prohibited and under certain criteria it also may lead into abuse of dominant position by clubs. Such a move by clubs, may allow a player to terminate their contract with just cause. After all, a temporary loss of income may and shall (in my point of view) be perceived as a business risk that employers take when running a business.
Another option examined by clubs is a possible agreement with FifPro, the global representative body of football players, for a decrease of salaries. However, such a choice may create certain problems that cannot be overlooked. It is up for debate whether an agreement with FifPro is capable of affecting existing contracts and can re-structure the contractual relationship between a club and its player, without the written consent of the latter. Even if this agreement is a quasi- collective agreement, due to the special circumstances, I argue that such an arrangement with FifPro cannot be legally binding or be considered anything more than an instruction to be followed.
Certain ideas and suggestions are being discussed by the competent bodies in close collaboration with the representative bodies of the leagues and the players. Some of the ideas discussed between the parties suggest that the leagues may be prolonged, the transfer windows may be amended etc. However, the most noticeable suggestion has to do with the comment of FIFA’s president that “FIFA will also consult with professional football stakeholders to be able to shortly announce any necessary amendments or temporary dispensations to the Regulations on the Status and Transfer of Players’ to protect contracts for both players and clubs.” I anticipate that FIFA will send out a message to reinforce the doctrine of contractual stability.
In an effort to limit the impact of the pandemic on world football, FIFA has already begun considering a number of possibilities. Several teams in Europe are facing bankruptcy, such as the seven-time Slovenian champion MSK Zilina. The International Football Federation is considering setting up a fund where hundreds of millions of euros will be channeled to help reduce the damage caused by Covid-19, by financially assisting both clubs and football players.
Further solutions are being considered in cooperation with UEFA, in order to make it possible to complete domestic and international competitions. With the vast majority of European seasons ending on 30th June each year, an extension of this year’s competitions period is being considered. However, this may create specific problems for contractual stability, as the players’ contracts, which expire this season, also have a deadline of 30th June. A solution needs to be found or players will be “forced” to remain at their club without a contract. The same challenge is faced by those footballers who may have signed a pre-agreement with their new clubs to integrate them into their roster, immediately after the end of the current season. Contract extensions for a few days violate FIFA’s regulations which require loans to last two consecutive transfer periods, so what will the solution be? It remains to be seen!
The truth is that times and challenges such as these require drastic measures to address them. It is time for every federation, association, club or athlete to consider their role and shoulder the burden. Initiatives like those of Germany’s four major clubs to donate 20 million euros to support the weakest clubs in the league sets a great example to the rest of the world. However, we must always keep in mind that football must, among other things, be subjected to the national legal order in which it is conducted, so the above issues may be considered from a (slightly) different perspective in each state, along with any measures that may be taken by each respective government in order to assist business in its territory. For example, the British government is offering to pay 80% of workers’ salaries during this crisis.
So, what is to be done? I have to suggest a more romantic approach, especially for the top leagues and highly-remunerated players. In my view, the only sustainable choice for both sides is a gentlemen’s agreement between football clubs and players in order to decrease, delay or even avoid the payment of salaries related to the outbreak period of Covid-19. We have seen how this might work for some staff with England’s manager Gareth Southgate recently accepting a 30% wage cut in order to support the FA, but it’s about time this extended to players too. Lionel Messi and his Barcelona teammates recently cut 70% of their salaries, but it’s time for all players to do so. I believe that if football clubs opt for the unilateral amendment or breach of their contractual relationships and obligations, they are going to face tough challenges and claims submitted by their players. Perhaps clubs and players could go one step further and agree to donate part of the players’ salary to the national health services to assist on that way at the battle against the pandemic. The Premier League is proposing to donate £20m to the NHS and perhaps more leagues should stand up and take note, wouldn’t that be a neat solution for everyone?
No matter what, don’t forget to #StayAtHome.