Changes as of 1 January 2025
FIFA has implemented new – temporary – transfer rules[1] as a result of the Diarra judgment of 4 October 2024.[2] In this judgment, the European Court of Justice (“ECJ”) held that a number of rules around football transfers – as set out in the FIFA Regulations on the Status and Transfer of Players (“RSTP”) – are in conflict with EU free movement of employees and competition law.
The new rules apply since 1 January 2025 and will also be applied to proceedings already pending before the FIFA Football Tribunal. FIFA has stated that the rules are temporary and that adjusted transfer rules for the more distant future are still in the making. The changes implemented by FIFA relate only to aspects of the RSTP that the ECJ considers to be in conflict with the law. In this article, the main changes will be discussed.
Compensation based on lost revenue
One of the main changes concerns the calculation method of the compensation payable by players who terminate their employment agreement early without just cause, as provided by Article 17 (1) of the RSTP. In the Diarra case, the ECJ ruled that the calculation criteria prescribed by FIFA that had to be taken into account – such as the salary the new club will be paying to the player and the costs incurred for a player by the former club – were not objective and necessary.
The adjusted rules provide that if the club incurs a loss as a result of early contract termination without just cause, compensation should in principle be calculated on the basis of the lost revenue. This means that the player should pay compensation that gives the former club the position the club would have been in if the early termination had not happened. The former club will have to make a plausible case for this loss and this amount.
No automatic liability or sanctions new club and mandatory transfer
Another change is that a new club no longer automatically bears joint liability for damages if it hires a player who has terminated his employment agreement early without just cause (Article 17 (2) of the RSTP). In addition, no disciplinary sanctions – such a ban on transfers – can be imposed on the club anymore in that case (Article 17 (4) of the RSTP). Joint liability or disciplinary sanctions are only possible still if it can be established that the new club has induced the player to commit breach of contract. The burden of proof to demonstrate this lies with the former club, although it was added to the rules that all parties are under an obligation to cooperate in clarifying the facts and furnishing relevant evidence. Besides, football federations cannot stop the transfer to a new football club anymore for unlawful early termination by a player, or if they have a dispute about this with the club. Football federations are obliged to grant a transfer within 72 hours after a request to that effect
Implications of changes
FIFA commented on the way it will deal with termination of contracts in the coming period. However, the calculation of compensation for termination without a just cause remains a tricky business. As follows from FIFA and CAS case law, a calculation based on the lost revenue may still result in complex, unpredictable and high compensations for players (considerably higher than the remaining wage value). Besides, the FIFA regulations make it possible for now to impose a four-month suspension on players who terminate their contract early and unlawfully.
These rules will not apply directly to a player who terminates his employment agreement early and switches to another Dutch club. If that happens, Dutch employment law will have to be consulted to calculate the amount of compensation. Under the Diarra judgment it is very doubtful whether the Arbitration Committee of the KNVB or a court can award a club compensation that exceeds the remaining wage value in the event of early termination.
Please contact Tim Wilms if you have any more questions about new regulations and advice in the field of transfers.
[1] https://inside.fifa.com/legal/football-regulatory/news/bureau-of-the-council-adopts-interim-regulatory-framework-concerning-rstp.
[2] ECJ 4 October 2024, ECLI:EU:C:2024:824.
