International Sports Law: Deadline Day Drama: Concluding Transfer Agreements

Image source: Stretty News

Deadline Day is often a day full of speculation and drama as all eyes are on the various clubs up and down the country, watching the players coming and going and who's attracting the largest fees. Although deals made on deadline day usually appear to be last minute (and some are), they have usually been in the pipeline for weeks, in some cases even months. However, notwithstanding that the last few days leading up to the deadline are some of the most hectic of the season as clubs attempt to bring their negotiations to a successful conclusion.

Transfer Negotiations

During the transfer window, several negotiations will usually take place at the same time between the (1) the buying and selling club; (2) the buying club and the player's agent (aka intermediary) over a player's personal terms and; (3) the buying club and player's agent in relation to the agent's commission.

Under Article 18(3) of the FIFA RSTP, the selling club must first give permission to the potential buying club to speak to a player about a potential move. However, it would not be unusual for the buying club to gauge a player's interest, first of all, through their agent, before making any formal move.

The selling club will only give permission to the buying club once the parameters of any potential transfer deal are agreed between the clubs. The selling club is always in the "driving seat" in the initial negotiations. If the selling club is not interested in selling one of its contracted players, they cannot be compelled to sell, even if the player puts in a transfer request.

In the event that a player is looking to move and his club is willing to sell, his agent will make enquiries to clubs that he knows could potentially meet the player's wishes from both a career and financial perspective.

During the negotiations, it is not unusual for 'dual representation' to occur whereby the agent will act on behalf of both the club and the player. This is not a conflict of interest so long as it is disclosed to both parties and consent is given.[1]

The club, player and agent will generally be in compliance, in such circumstances, so long as:-

The intermediary has a pre-existing representation contract with the player lodged with the relevant association

Both the club and the player are aware of the conflict of interest

Both the club and player are aware of full particulars of the proposed dual representation

Both the club and the player are given the opportunity to seek independent legal advice

Both the club and the player consent to dual representation in writing, and

The relevant paperwork is submitted to the relevant association

When negotiating transfer agreements, consideration must also be given to any interested parties such as third party owners (particularly in relation to international players from South American countries or Spain). Third party owners can be difficult when faced with giving up their interests and rights, and as a result, clubs will have to be prepared to make significant offers to extinguish such rights.

Once the above has been successfully negotiated, the transfer fee will be discussed and hopefully, agreed upon with some skilled negotiation. There is no specific formula when calculating how much to buy and sell players for, as it ultimately depends on the current market. However, some criteria that a buying club might consider when making an offer are:

The age of the player - careers typically peak in the mid-twenties and finish in the early 30s;

Time remaining on player's contract - the closer the player is to his final contract year, at which state he will be a 'free agent', the lower the transfer fee.

Playing position - a striker will normally command a higher fee than a defender, for example.

International success - there is a premium paid for national team A players

Commercial value - what off-pitch value does the player have to increase club's commercial value?

Further to that, selling clubs will negotiate a number of add-ons which will see them receive further payments if the player reaches particular milestones in his career, at the new club. This will include trigger payments for specific number of goals scored and number of first-team appearances made. Add-ons can also include payments made once the player makes a number of caps for his country and for significant achievements such as inclusion in team of the week awards, Ballon d'Or rankings and wins, just to name a few.

Many clubs rely on transfer sales to help pay for club expenditures and as such, will often be prepared to accept a slightly smaller fee paid immediately, in full, rather than receive a larger fee that is paid in instalments over the course of two or three years from the date of sale.

Once the transfer fee has been agreed upon, the agent can begin negotiations with the buying club in relation to the player's personal terms which will include but not limited to the following:-

The Player's salary

Signing-on fee

Usually over annual instalments if the contract duration is longer than one year as per premier league rules

Generally, if a club sells a player, the club must pay the player any outstanding balance of the signing on balance

The exception is where the player hands in a written transfer request and the club, thereafter, sells the player

Bonus payments

Appearance Fees

Accommodation costs

Goal bonuses

Can be negotiated to include all competitions or restricted to just league performance.

Payments can be in instalments rather than one lump sum, if necessary

Protective clauses can be included to ensure that such payments are only payable on the basis that the club remain in the top flight.

Image Rights

Players with commercial potential may wish to negotiate a separate image rights deal via their image rights company

Premier League clubs,usually, have the right to use players' images in commercial contracts under standard Premier League player contracts.

Agent Fees

Club will cover agent's fee, usually in instalments over an agreed period.

If player leaves the club before the agreed period expires, the agent will waive the remaining outstanding dues.

Release Clause

Good faith provision

Does not place the club under any obligation to sell the player but merely requires them to enter into 'good-faith' discussions with bidding club if threshold is triggered.

Completing the Formalities

In order to register a player, clubs have to send all their documents to the relevant association (SFA in Scotland) and this includes the contract, transfer agreement and any details regarding payment of compensation and/or fee in relation to a player. Permission to work in the UK will also have to be obtained, if applicable, by applying to the relevant association for endorsement prior to the transfer window closing.[2]

Once all the paperwork has been received, it will be checked against the relevant association/governing body's rules. If further details are required, clubs will be notified as soon as possible so they can in-gather the necessary information in order to successfully register the player.[3]

In addition to the domestic requirements, if an international transfer is agreed, the buying and selling club must register the transfer on FIFA's transfer matching system (TMS) in order for international clearance to be granted. The buying club uploads all the relevant information to FIFA TMS and the selling club thereafter matches it.

The Deadline

The current system imposes strict rules in relation to transfers and once the deadline expires for the relevant association, FIFA's Transfer Matching System stops processing transfers with no exceptions.

Some examples of failed deadline day transactions include:

David de Gea

Roberto Soriano

Pajtim Kasami

Peter Odemwingie

However, some countries do exercise some flexibility and the English Premier League, is a prime example. The PL recently introduced some flexibility into the process with the use of a "deal sheet", which allows a club to confirm that a deal has been reached within the deadline time-frame, while obtaining additional time to submit the missing documentation.[4]

Image source: Premier League

Image source: Daily Mail

The 'deal sheet' can only be completed if the transfer has been agreed within the last two hours of the deadline expiring and can only be submitted to the PL and FA between 9pm and 11pm.

Under EPL rules, clubs have an extra 2 hours (if domestic) or 1 hour (if international) to submit the full paperwork (employment contract, transfer agreement and permission to work in the UK).

Examples of deal sheet transactions include Darren Fletcher's move from Manchester United to West Bromwich Albion, Radamel Falcao's move from Monaco to Manchester United and Dame N'Doye from Lokomotiv Moscow to Hull City.[5]

For a more detailed insight into the legal workings of the football transfer market, click here.

IMPORTANT: This post is not intended to be a legal briefing, it is not intended to be a statement of the law and no action should be taken in reliance on it without specific legal advice.