The football player transfer market – an argument for reform

Lucy Tallentire (School of Business, Economics and Informatics) and students Vasiliki Panou (MSc Sport Management & Marketing) and George Totomis (MSc Sport Management and the Business of Football) look at the debate surrounding the football player transfer market. football

On Tuesday 20 June 2017, the Birkbeck Sport Business Society (BSBS) was delighted to host an exclusive presentation by two of the world’s leading academic authorities in the sport economics and sport governance fields. The event – the second of its kind organised by BSBS – brought together a diverse range of perspectives on the theme of the reform of the football player transfer market; Professor Stefan Szymanski, of the University of Michigan, an economist, is a noted critic of the transfer system, and his co-presenter, Professor Stephen Ross, of Pennsylvania State University, is a sport law specialist with a particular interest in the laws of multi-year employment contracts. The seminar proved a great platform for healthy debate, with both experts in discordance over certain key issues.

An exception for exceptional talent?
In the European Union, generally, an employee’s ability to switch employers is governed by the contract law of EU member states.  But in football, further to a 2001 agreement between FIFA, the governing body of world football, the European Commission, and FIFPro, the global football players union, players ability to move between football clubs is more strictly regulated, with a “buying” club having to pay a “selling” club a transfer fee if the player is leaving mid-contract. Professor Szymanski argues that the current FIFA rules provide an unclear set of damages and penalties that sharply limit player mobility in a manner which is both unfair and without justification. Professor Stefan Szymanski and Professor Stephen Ross were invited to discuss the intrinsic issues in this “transfer system” – a product of private arrangement by European clubs adhering to FIFA regulations for when a player seeks to change teams despite having signed a multi-year contract.

Professor Stefan Szymanski began by highlighting the unfairness of the current system. Apart for  those exceptional highly paid players, the majority of professional football players are low-paid. Where European work law usually allows employees to change their position with no restraints, football players find themselves locked into multi-year contracts, from which it is difficult to exit without a “buying” club paying significant compensation, the transfer fee, to a “selling” club; he argued that this accentuates the dominance of elite clubs, who are best placed to pay a transfer fee and creates an exploitative culture trapping thousands of lower-paid players.

The current research focus of his co-presenter Professor Stephen Ross, however, suggests that a player’s ability to enter into a multi-year contract is not a restraint, but an exercise of free movement. A multi-year contract means a player must still be paid the terms of the contract even if they do not play. Professor Ross did not deny that the current FIFA system is restrictive. However, he stated that he  had struggled throughout his research to identify a less restrictive alternative – whatever the system adopted, players will still sign and play under a contract, and both players and clubs will continue to “gamble” by agreeing on a particular salary.

A unique system – without a solution?
Opening up the debate to the wider audience provided many insightful and critical questions on a range of issues, such as the legality of the transfer system, and the role of buy-out and release clauses in players contracts (whereby a player can break their contract if certain pre-determined conditions are met). An interesting debate arose around the idea of the stability that a multi-year contract can offer is a positive benefit for both a player and a club – Professor Szymanski was adamant that selling your labour for more than a year could be considered equal to selling your freedom, by violating the regulations of free movement and security. Professor Ross, on the other hand, argued that multi-year contracts enable especially young and talented players to settle and develop – a great benefit of the current system. Ultimately, players who do not advance to a more elite level can also benefit from multi-year contracts; they can remain where they are without returning the intended value to the club.

In conclusion, the experts and the audience were able to agree on some crucial areas for development, namely providing stronger, more supportive player unions for players of all abilities and pay-packets, or challenging the current law in court.

It is also important to acknowledge the difference between the professional sports’ industry and other business sectors; there is no one-size-fits-all solution, as is obvious in the difference of opinion between these experts. Vision and new proposals for a more inclusive and legal system are vital – the current absence of articulated alternatives should not mean a perpetual problem for professional football players seeking to move employer.

Find out more about BSBS here: Birkbeck Sport Business Society

For further information about the Society, please contact: mailto:bbksportsociety@gmail.com

Notes made by:

Vasiliki Panou – Student in MSc Sport Management & Marketing

vas.pan@hotmail.com

George Totomis – MSc Sport Management and the Business of Football

g.s.totomis@gmail.com

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One thought on “The football player transfer market – an argument for reform

  1. Speaking as a Villa fan with many overpaid players, Inwonder if anyone knows if there are any examples of players being paid substantially or entirely on results? I hear John Terry gets a big payoff if Villa get promoted. But also understand he’s on £60,000 a week (oh and why on earth are these figures always weekly not annually?!)

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