Phil Parkinson, Head of Commercial law at Blacks Solicitors.jpg
Phil Parkinson, head of Commercial law at Blacks Solicitors, shares his best advice on what both clubs and players need to be aware of when it comes to signing contracts and what needs to be considered before a football transfer.

Transfers and transfer fees

 

When signing new players, football clubs must pay transfer fees, which are often paid in instalments. Transfer fees may also include additional charges known as “percentages’’ that are added to the total “sale price” of a player to cover management fees as well as other additional expenses. These fees are determined by way of contractual agreements with the terms being negotiated between parties. 

Wage increase or reduction clauses 

 

Players should consider negotiating wage increase and reduction clauses in the event of promotion or relegation. Players are also advised to argue narrow grounds for a reduction in fees, for example, a player’s fees should not be reduced in case of injury. Clubs, alternatively, will be geared to suggest alternative ways in which to save money by insisting that a variety of instances could qualify as reducing pay. 

Match appearance fees and winning bonuses 

Consideration must be taken to negotiate match appearance fees and winning bonus clauses. Prior to signing a contract, both parties must define “appearance”. This term is typically defined as a set number of minutes a player must appear on the pitch for a club. Depending on the agreed contractual terms, a player’s salary may qualify for an increase by appearing on the pitch above ‘x’ amount of minutes for the club. 

 

Another clause to be considered is a player’s entitlement to a one-off bonus for reaching a milestone number of appearances or number of wins. Consideration should be given to the inclusion of additional payment clauses such as players being selected to make an appearance for their national team. Clubs are likely to seek to protect their interest by introducing performance based payments, as they believe this will increase players’ motivations. Players, alternatively, will be minded to take into consideration the perceived risk and uncertainty associated with this type of payment structure. A balance therefore needs to be struck in the interest of all parties when negotiating these clauses.

Additional Fees

 

Additional costs such as travel, accommodation and expenses must also be negotiated accordingly between both parties. Players are also advised to negotiate a ‘signing bonus’ with their respective ‘new’ club. Likewise, players should negotiate loyalty bonuses, which are typically payable on specified dates provided that the player is still employed by a particular club. Transfer fee clauses must also be negotiated when signing a contract, and even though players do not directly receive a percentage of this fee, there are various other payments and bonuses that can be agreed between the parties for the benefit of a player. 

 

Before transfers, clubs must consider sell-on clauses, which can be incorporated into contracts to enable third parties to receive a percentage of a transfer fee. Similarly, clubs should also bear in mind training compensation clauses, whereby a ‘new’ club must pay training compensation to the previous club that trained the player between the ages of 12-21. 

Image rights

Image rights typically cause difficulties when negotiating contracts. Often ‘new’ clubs demand the exclusive right to control how the image of a player appears in various forms of advertising and publicity. Players should be aware of any potential conflict of opportunities that their ‘new’ club’s sponsors may present in both a club and personal capacity. 

Release and buy out clauses 

Release clauses detail a mutually agreed and non-negotiable fee which, when paid, automatically releases a player from its contract. Whilst release clauses are typically subject to qualifying conditions, such as transfer windows, such clauses automatically require a club to accept a transfer bid offer of a predetermined amount.

 

An alternative to Release Clauses, which are common in Spain, are Buy-Out clauses. These clauses state the amount of money a player can pay to terminate their contract with a club. Such clauses must be included within Spanish football contracts and are usually negotiated at high figures that do not necessarily reflect the realistic market value of a player. 

Negotiation of agent fees 

Players typically appoint an agent who will organise their personal transfer fee and are the first point of contact between the two clubs. It is typical that the agent will receive a percentage of the transfer fee for their services. Players should consider negotiating the associated fees relating to their agent, with a percentage of the transfer fee having the possibility of being split between the player and the agent. 

 

In accordance with new FIFA regulations, agent fees are capped at 3% if they are representing the player or the buyer and up to 10% of the transfer fee if they are representing the sale of a club. 

 

There are several provisions that both clubs and players should consider when signing contracts and preparing for a transfer to ensure financial security and commitment to guidelines set by FIFA and the Football Association. Clubs and Players must not only consider these provisions but also additional factors such as transfer fees, grace periods and time frames regulated by multiple football regulators and in accordance with national laws.

For more information, please visit www.lawblacks.com/business/commercial-law