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  • Writer's pictureSigurður Ólafur Kjartansson

The Football Transfer System

Introduction

It can be said with great comfort, that football clubs’ most valuable assets are their players; without the players there would be no team. With this in mind, we acknowledge that the transfer window is a hugely significant factor in running a football team. Each FIFA member association must define two official registration periods for each season of professional men’s and women’s football. [1] Since the late nineteenth century, the transfer system has existed to regulate player movement between football clubs.


During the negotiation of today's transfer regulations, FIFA, UEFA, and the Commission determined that a contract breach during the season may disrupt the competition's balance of power and should thus be prohibited. It was deemed necessary to reinforce contractual stability and to implement a unique rule to ensure the competition's regularity and appropriate functioning. This was accomplished by a regulation requiring that football players only register with a national association during one of the two registration periods every year, commonly referred to as the transfer windows. [2]


When the FIFA "windows system" is considered, it is evident that it has the potential to impede players' capacity to seek other employment in another Member State and should thus be seen as a breach of Article 45 TFEU, which is the free movement act. [3] Nonetheless, the ECJ in the Lehtonen case [4] determined that restricted transfer periods were objectively justified as providing sports benefits in the Belgian Basketball league.


The Lehtonen Case no. C-176/96


The case concerned a dispute with a Finnish basketball player who desired to participate in the play-offs for a Belgian team following the regular season but registered after the transfer deadline. [5] The Court determined that the restrictions governing transfer deadlines obstruct workers' freedom of mobility. However, the Court observed that 'establishing deadlines for player transfers may serve the purpose of guaranteeing the regularity of competitive competitions,' demonstrating once again an appreciation for sport's unique characteristics. It went on to state that 'late transfers may have the potential to significantly alter one team's sporting strength during the championship, thereby jeopardizing the comparability of results between teams competing in that championship and, consequently, the championship's proper functioning. Finally, the Court of Justice delegated to the national court the task of determining whether separate transfer periods for players from different nations are objectively justifiable. [6] The Court stated in paras. 53-54;


53; "On this point, it must be acknowledged that the setting of deadlines for transfers of players may meet the objective of ensuring the regularity of sporting competitions."


54; "Late transfers might be liable to change substantially the sporting strength of one or other team in the course of the championship, thus calling into question the comparability of results between the teams taking part in that championship, and consequently the proper functioning of the championship as a whole." [7]


The issue in the Lehtonen case was that the justification for restricting transfers after February 28 was very questionable and arbitrary, given that players outside the European zone were permitted to transfer until the end of March. As a result, the ECJ concluded that article 48 of the EC Treaty precluded the application of rules prohibiting a basketball club from fielding players from another member state in national championship matches after a specified dateif that date was earlier than the date applicable to players from certain non-member states. Only objective factors pertaining to sport in general or to inequalities in the situation of players from European zone federations and those from non-European zone federations may justify such differential treatment. [8]


The European Transfer window


It is possible that the "window system," as it is implemented in European football, goes beyond what is essential to ensure club and player contract stability, since it is overly restrictive and redundant. As a result, the FIFA transfer windows violate the concept of proportionality and could thereby be seen as a breach of Article 45 TFEU if contested. [9]


Sport was not covered in the original Rome Treaty. The European Court of Justice established in 1974 in Walrave [10] and reaffirmed two years later in Donà [11] that sport remains subject to European law to the extent that it represents an economic activity within the meaning of the European Treaties. [12] The cases mentioned above will be addressed in greater detail later in this thesis.


Transfer windows in European football can potentially be viewed as a violation of competition law, specifically Article 101 TFEU. [13] The article outlaws any agreements between enterprises that impede competition and adversely influence intra-community trade with the goal of protecting consumers, enhancing their welfare, and facilitating the establishment of a unified European market. The ECJ has, however, recognised a certain form of athletic regulation that, notwithstanding its restriction of competition, is immune from Article 101 TFEU. FIFA's "windows system" should not be considered such a rule, as it does not meet the necessary criteria. [14]


Transfer windows make minimal difference to the competitive balance of European football. One may argue that it retains the allure and unpredictability of a championship's final phases. However, they also impede clubs' economic development and stifle the free play of market forces such as supply and demand. Additionally, the "windows system" prevents certain teams from improving the level of their sporting performance, as clubs in lower divisions with a closed window lose their top players to clubs in a higher league with an open window, leaving them without a replacement. All of this has a detrimental effect on smaller and economically challenged clubs while strengthening the position of financially sound clubs. As a result, and against the consumer's best interests, a few powerful clubs will continue to dominate European football. FIFA's transfer window control is therefore likely to come within Article 101(1) TFEU. [15]


Part 2 coming next week...


References

[1] 1 ‘TMS’ <https://www.fifa.com/legal/football-regulatory/origin1904-p.cxm.fifa.com/legal/football-regulatory/player-transfers> accessed 6 January 2022.


[2] Daniel Andersson, ‘The Legality of Transfer Windows in European Football – A Study in the Light of Article 39 and 81 EC’ (Jönköping University 2009).


[3] Consolidated version of the Treaty on the Functioning of the European Union 2016.


[4] Jyri Lehtonen és Castors Canada Dry Namur-Braine ASBL kontra Fédération royale belge des sociétés de basket-ball ASBL (FRBSB) [2000] A Bíróság C-176/96 sz ügy.


[5] Geoff Pearson, ‘Sporting Justifications under EU Free Movement and Competition Law: The Case of the Football “Transfer System”’ (2014) 21 European Law Journal.


[6] ibid.


[7] Jyri Lehtonen és Castors Canada Dry Namur-Braine ASBL kontra Fédération royale belge des sociétés de basket-ball ASBL (FRBSB) (n 32) Para. 53-54.


[8] Lars Halgreen, European Sports Law - A Comparative Analysis of the European and American Models of Sport (1st edn, Forlaget Thompson 2004) 55.


[9] Andersson (n 30).


[10] Walrave and Koch v Association Union Cycliste Internationale [1974] Case 36-74 [1974] [4].


[11] Gaetano Donà v Mario Mantero [1976] ECJ Case 13-76 [12.].


[12] Pearson (n 33).


[13] Treaty establishing the European Community (Consolidated version 2002) 2002 (OJ C) Article 81.


[14] Andersson (n 30).


[15] ibid.

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