Neil Rose looks at a ruling which looks to have given clubs some power back from the players

When Andy Webster used an obscure FIFA rule to buy himself out of his contract with Hearts for a relatively nominal sum and then sign for Wigan, it was seen as a contract-breaker’s charter. But a recent ruling involving Brazilian Matuzalem appears to have restored some balance in the never-ending power struggle between players and clubs.

Matuzalem was the captain and top scorer of Ukrainian side Shakhtar Donetsk, but followed Webster in using article 17 of the FIFA player regulations to terminate his contract and join Real Zaragoza in Spain. This provision essentially enables a player to break his contract after a “protected period” – three years if the player was under 28 when he signed it or two years if 28 or over – in return for compensation, which the Webster case limited mainly to the equivalent of the player’s salary for the rest of his contract. Breaking a contract within the protected period can lead to sporting sanctions.

Welcomed by players’ unions as the most significant ruling since Bosman by shifting power to their members, the doom-mongers argued that Webster had upset contractual stability. Why pay big transfer fees when a rival could snatch the player after two or three years just for the cost of unpaid salary? Would the response be to hike wages of top players, fuelling salary inflation and clubs’ indebtedness further? Or would it lead to shorter contracts and greater player mobility?

Matuzalem had a €25 million (£21.6m) buy-out clause in his contract, and when he moved to Spain the Ukrainian club sought to enforce it. A FIFA panel initially awarded €6.8m but this was nearly doubled to €12m on appeal to the Court of Arbitration for Sport (CAS), even though CAS found the clause did not apply because there had not been an offer to buy the player. It said article 17 does not give a player or club “a free pass to unilaterally breach an existing agreement”.

The significance of the ruling is in the substantial compensation CAS awarded, which is seen as a signal that the consequences of using article 17 will be severe for both player and, more likely, his new club (as both are technically liable for the pay-out). It said compensation should aim to put the club that loses the player in the position that it would have been had the contract not been broken.

This means considerations other than just salary come into the equation, such as the value of the lost services, difficulties caused by the timing of the departure (in this case, it came shortly before the start of the Champions League qualifying rounds), and the player’s status (he was captain). Zaragoza subsequently loaned Matuzalem to Lazio with an option to buy for €13-15m, which was a key part of the calculation.

In fact, given that putting a figure on what a club has lost is not an easy task, it seems more than coincidental that the sum CAS arrived at was similar to the value Zaragoza and Lazio put on the player. That there will be this broader view of a player’s value in future may well explain the reported details of Cristiano Ronaldo’s contract with Real Madrid. He is supposedly receiving £9.5m in the first year of his six-year contract, rising by 25 per cent a year until reaching £29m in the final year. Jonathan Brogden, a sports lawyer at solicitors Davies Arnold Cooper, says that as well as incentivising Ronaldo to see out his contract, this rising value will also make it far more expensive for his next club if he does walk away after the protected period.

Other tactics clubs are employing to protect their investments, Brogden says, include regularly renewing contracts to ensure, in particular, that buy-out clauses track a player’s development and value, and stating a compensation figure that would be paid in the event of article 17 being invoked.

Though from a legal point of view this CAS decision does not necessarily trump that of a differently constituted CAS panel in the Webster case, lawyers reckon the Matuzalem ruling will be more influential. It is clear, says Brogden, that CAS wanted to set a precedent for interpreting article 17.

The normal rules of employment, where you can move job by giving notice, simply do not apply to football because the wider interests of the game are also taken into account. Ultimately the Matuzalem case will not stop players walking out on clubs if they want, but, if followed, it should mean that those clubs are better compensated for their loss.

From WSC 271 September 2009

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