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The Legal and Economic Implications of the Bosman Ruling: Contract Negotiation and ‘Player Power’

Bosman required the abolition of a system that required payment of a transfer fee by the new club not only where the player remained in contract with the former club but also even where the player’s contract with his previous club had expired. The sole concession made by the Court to the alarm expressed by the

15 Eastham (n 6) 439.

governing bodies about the effects of such an intervention was to concede that for reasons of legal certainty a claim could not be brought relating to a fee which had already been paid or was already payable unless the claim had already been lodged at the time of the Bosman ruling.[1] [2] [3] But clearly for the future the system had to change: the transfer system could no longer be used to affect the freedom of choice and earning capacity of a player whose contract of employment had come to an end. The footballer whose contract had ended was placed by Bosman in the same position as any other worker whose contract has come to an end. He or she can negotiate new terms with a new employer. And so it quickly became common to refer to an out-of-contract player being ‘on a Bosman’: which means only that, like a car-maker or a banker, the footballer is free to choose a new employer without any regard for the concerns of the employer with whom his or her contractual agreement has reached an end.

The diminution in scope of the transfer system which followed the Bosman ruling led immediately to significant commercial consequences within the industry. Money that would previously have been paid by one club to another when an out- of-contract player was transferred was now available for other purposes, most of all to increase the wages offered to the player to entice him or her to enter into a new contract. The player would now be able to negotiate to seek to gain a share of the sum that would previously have gone to the previous club.

It happened quickly. Precisely this pattern could be identified over the summer of 1996. ‘Out-of-contract’ players were able to secure better deals by joining clubs in other Member States and obtaining part of the pot that would otherwise have been grabbed by the previous club as a transfer fee. The player’s previous club had now lost the entitlement guaranteed it under the transfer system condemned by the Court in Bosman. John Collins, the Scottish midfield player whose most famous moment arrived in 1998 when he scored for his country against Brazil in the opening match of the World Cup Finals in France, changed club in the summer of 1996. He left Glasgow Celtic for Monaco, despite interest from English sides. He commented: ‘I was going to cost an English team ?3 million whereas Monaco could get me for nothing’^7 The crucial factor was that moving from Scotland to England is cross-border in football terms, but it is not cross-border in the context of the EU. But moving from Scotland to France triggers the necessary cross-border element which brings EU free movement law into play and allowed John Collins, as a player out-of-contract, to take immediate advantage of the path broken by Jean-Marc Bosman. Celtic took its claim for compensation to the CAS, but lost: the CAS ruling is based on the application of EU free movement law and it explicitly relies on the effect of Bosmanl The amount of wages the player could command would be favourably affected by the ?3 million that thanks to EU law Monaco had not had to pay Celtic, though of course exactly how much of that sum he could trouser would depend on the skill of those representing him in contract negotiations with his new club.

Out-of-contract players were placed in a stronger negotiating position by Bosman. This, it should immediately be noted, did no more than bring the position of the footballer as an employee closer to that of any employee who chooses to change employer in conformity with his or her contractual rights and obligations. In principle, one would expect player wages to rise simply because the pot is swelled by money that would otherwise have been paid to another club as a transfer fee. The precise effect post-Bosman could not possibly be measured. In part this is because clubs would doubtless do their best not simply to recycle all the money saved from abolition of transfer fees as wages: exactly how much would be so used would depend on the relative skills of contract negotiation between player representatives and clubs. Moreover, at the time, the mid- to late 1990s, one would anyway have expected player wages to rise, because sport’s, and especially football’s, money-making capacity was higher than it had ever been and increasing, principally as a result of the intensification of competition in broadcasting markets. This is addressed in Chapter 11 which, without denying the transformative significance of Bosman, shows that deregulation and technological advance in the broadcasting sector has been the principal source of enhanced commodification and juridification in sport.

Wages did rise quickly post-Bosman. For example, the wage bill at Tottenham Hotspur was reported to have risen by 20 per cent to ?10 million a year as a result of renegotiation of contracts after the ruling.[4] [5] [6] [7] An increase of ?5 million was reported at Manchester United as a result of a restructuring of existing deals.2° These adjustments to the nature of the relationship between players and clubs led in turn to alteration in the treatment of players as club assets for accountancy purposes.21 Moreover, footballers were able to command fees for more than simply playing the game. Image rights and commercial sponsorship became an increasingly important part of the financial pattern of the game.22 Football clubs are a brand: so are footballers.

But footballers had not been placed in exactly the same position as a typical employee. The transfer system applicable to players who were still under contract had not been addressed in Bosman. It lived on. A footballer under contract wishing to change employer would have to reckon with contract and employment law, as would any employee, but the transfer system and the typical demand for a fee added an extra restraint on the player’s freedom of action. So the player ‘in contract’ was more valuable to the club than the player out of contract. Clubs accordingly changed their own strategies. If a player could simply walk away once the contract expired—as a car-maker or a banker can walk away—then clubs had an incentive to keep players in contract so that, if it emerged that a player was determined to leave, the club could at least still, as before, enjoy the protection of the transfer system. So clubs shaped their strategies with the aim of tying players to longer contracts or to ‘rolling’ contracts (which automatically continue until a break-clause is activated).[8] The reported increase at Manchester United, mentioned earlier,[9] [10] [11] was explicitly tied to contracting on a longer-term basis. To induce players to sign such a deal the club would typically need to provide an incentive. Higher wages offer the most obvious method, although there are other supplementary strategies too, such as offering loyalty bonuses that become more lucrative the longer the player stays at a club. This is not so very different from the normal labour market, but football remained different because of the transfer system’s application to players ‘in contract’. In fact refining incentives for sportsmen and sportswomen, especially in team sports, is something of an art in its own right.25 Loyalty bonuses and contracts that are automatically renewed have a role, but so too performance-related pay has appeal as a means of allowing owners to call poorly performing players to account for losses incurred and also, if well balanced, as a means to induce players to exceed their norm. On the other hand, offering individual-focused rewards in a team sport may be unwise. For example, paying a striker by goals may discourage him from passing; paying a defender by clean sheets may discourage him from coming forward to the extent required by the team.26

  • [1] Bosman (n 1) paras 139—46.
  • [2] ‘Collins Primed to Lead by Example’ The Independent (London, 9 October 1996) 30.
  • [3] CAS 98/201 Celtic v UEFA, award of 7 January 2000. On the CAS, see Ch 2.
  • [4] ‘Bosman Ruling Costs Spurs ?7.3m’ The Independent (London, 11 October 1996) 22 (?7.3mrefers to adjustment of balance sheet value).
  • [5] 2° ‘United Wages Soar after Bosman’ The Independent (London, 9 October 1996) 22.
  • [6] cf at the time P Morris, S Morrow, and P Spink, ‘EC Law and Professional Football: Bosman andIts Implications’ (1996) 59 MLR 893.
  • [7] See eg I Blackshaw, Sports Marketing Agreements: Legal, Fiscal and Practical Aspects (TMC Asser2012); K Gordon, Guide to the Tax Treatment of Specialist Occupations (Bloomsbury 2012) ch 15;J Davis, ‘Fame and Its Exploitation: The Legal Protection of Celebrity in the United Kingdom’in B Bogusz, A Cygan, and E Szyszczak (eds), The Regulation of Sport in the European Union (EdwardElgar 2007) ch 9; L Colantuoni and C Novazio, ‘Intellectual Property Rights in Sports: A ComparativeOverview of the USA, UK and Italy’ and S Cornelius, ‘Image Rights’ in J Nafziger and S Ross (eds),Handbook on International Sports Law (Edward Elgar 2011) ch 15 and ch 17, respectively.
  • [8] See eg B Frick and R Simmons, ‘The Footballers’ Labour Market after the Bosman Ruling’ inJ Goddard and P Sloane (eds), Handbook on the Economics of Professional Football (Edward Elgar 2014)ch 13; B Buraimo, B Frick, M Hickfang, and R Simmons, ‘The Economics of Long-term Contracts inthe Footballers’ Labour Market’ (2015) 62 Scottish Journal of Political Economy 8.
  • [9] See n 20.
  • [10] See eg F Carmichael and D Thomas, ‘Team Performance: Production and Efficiency in Football’in J Goddard and P Sloane (eds), Handbook on the Economics of Professional Football (Edward Elgar2014) ch 10.
  • [11] 26 Ian Lynam, ‘In the Financial Fair Play Era Clubs Must Pay Smart, Not Pay More’ Financial Times(London, 11 June 2013) 47. On ‘Financial Fair Play’ (FFP), see Ch 10.9.
 
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