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Olivier Bernard: Confirming the Favourable Approach in Principle of EU Law to the Transfer System

The first opportunity since Bosman to review aspects of the transfer system reached the Court in 2010. It was Olympique Lyonnais v Olivier Bernard, Newcastle United.[1] Once again, as in Bosman, the Court chose to show a receptivity to the claim that sport is special and that, in particular, this may be reflected in the existence of a transfer system which imposes collectively agreed and enforced restraints on the contractual freedom of individual workers; but, following Bosman, it refused to accept that the particular system under attack could be maintained.

Olivier Bernard was a young French footballer under contract to Olympique Lyonnais, one of the most prominent clubs in French professional football. He was a ‘joueur espoir’, which means a player between the ages of 16 and 22 who is employed as a trainee under a fixed- term contract. The term of the contract in Bernard’s case was three years. Before the expiry of that contract Olympique Lyonnais offered him a professional contract which would have lasted one year. Bernard rejected that offer. Instead he accepted an offer of a contract to play for Newcastle United in England.

Controversy and ultimately litigation arose because what Bernard had chosen to do was in contravention of the French ‘Charter’, charte du football professionnel, which governed the employment of footballers in France at the time. The Charter required a ‘joueur espoir’ to sign his first professional contract with the club that had trained him, provided the club wished to offer him a contract. The club had, in effect, an option to buy, designed to reflect and reward the investment already made in training the young player. The Charter did not provide for the payment of compensation in the event that the player refused to agree to sign a contract, but it did envisage that in such circumstances the club which had provided the training could bring an action for damages against the ‘joueur espoir’ under the French code du travail for breach of the contractual obligations set out in the Charter. Olympique Lyonnais, deprived of the player as a result of his decision to move to England, followed this route. A tribunal in Lyon found that Bernard had committed a unilateral breach of contract contrary to the Charter. It therefore ordered Bernard and Newcastle United jointly to pay damages of €22,867,35.

The Cour d’appelin Lyon set that judgment aside. It relied on EU law. It ruled that the French system under the Charter restricted the player’s freedom to choose his contracting partner once his training was complete, in violation of what was then Article 39 of the Treaty Establishing the European Community (EC), now Article 45 TFEU, governing the free movement of workers. Olympique Lyonnais appealed against that decision. The French Cour de Cassation then made a preliminary reference to Luxembourg in July 2008. It asked whether the Treaty, in particular the provision governing free movement of workers, covered the situation. This was the easy part. It obviously did. The award of damages in the circumstances that had arisen, as foreseen by the Charter, served to discourage and was intended to discourage a player from exercising a right of free movement. But the court, referring to the Bosman ruling/8 also asked a more difficult question. It asked the Court of Justice whether the need to encourage the recruitment and training of young professional players constituted a legitimate objective or an overriding reason in the general interest which was capable of justifying the French scheme. [2]

This provided the Court with its first opportunity to address the application of EU law to sport since the entry into force of the Lisbon Treaty in 2009 and the arrival of the sports-specific competence which is Article 165 TFEU. However, as explained in Chapter 7.2, the Court in Bernard showed no inclination to allow any deflection from the pattern of the case law which had steadily accumulated over the previous years. The Court cited both Bosman and Meca-Medina and Majcen v Commission and, embracing ‘the specific characteristics of sport in general, and football in particular, and of their social and educational function’/9 treated the relevance of those factors as ‘corroborated’ by their mention in the second subparagraph of Article 165(1) TFEU.[3] [4] [5] This is a statement of continuity. The Court reached its conclusion in Bernard with reference to its own case law, most of all Bosman, and only then does it mention the Lisbon Treaty.

The Court, finding that Bernard’s situation fell for examination in the light of Article 45 TFEU on the free movement of workers, proceeded to an analysis that was conventional and familiar. As explained in Chapter 4, Article 45 is interpreted to control not only the actions of public authorities but also rules of any other nature aimed at regulating employment in a collective manner, and accordingly the French Charter on which the claim against Bernard was founded was subject to review. As the Cour de Cassation had correctly recognized, the Charter tended to discourage the exercise of a player’s right of free movement by granting an option over the player to the club which had provided training. The Court agreed with Olympique Lyonnais that ‘such rules do not formally prevent the player from signing a professional contract with a club in another Member State’ and in fact that is exactly what had happened, but the rules make ‘the exercise of that right less attractive’/1

The Court then turned to the matter of justification. Could the French scheme governing ‘joueurs espoir’ be justified, despite its restrictive effect on labour mobility within the EU and despite the absence of any such scheme in normal labour markets. The Court asserted continuity in its case law by once again citing Bosman in explaining that:

A measure which constitutes an obstacle to freedom of movement for workers can be accepted only if it pursues a legitimate aim compatible with the Treaty and is justified by overriding reasons in the public interest. Even if that were so, application of that measure would still have to be such as to ensure achievement of the objective in question and not go beyond what is necessary for that purpose .. /2

This is not a sports-specific concession. As explained in Chapter 7, it is an orthodox statement of EU internal market trade law generally. In this vein Advocate General Sharpston, writing a particularly thoughtful and helpful opinion in Bernard,

explained that the specific characteristics of sport must ‘be considered carefully when examining possible justifications for any such restriction—just as the specific characteristics of any other sector would need to be borne in mind when examining the justification of restrictions applicable in that sector’.[6] [7] [8] The Court’s judgment, in assessing the justification of the French practice, then turned to the particular context of professional sport. It confirmed what it had articulated almost fifteen years earlier in the famous and centrally important paragraph 106 of Bosman, that:

... in view of the considerable social importance of sporting activities and in particular football in the European Union, the objective of encouraging the recruitment and training of young players must be accepted as legitimate^4

So the end is permitted; what matters is whether the means used are suitable to attain that end and do not go beyond what is necessary to attain it.

The Court accepted that ‘the prospect of receiving training fees is likely to encourage football clubs to seek new talent and train young players’ and once again it explicitly cited Bosman3 So in principle there is room for a system that encourages the training of young players. But—in line with Bosman—it proceeded to find that the scheme under examination could not meet the demands of EU law. The Court acknowledged that a club’s returns on investments in training are necessarily uncertain. Some you win, most you lose—only a minority of players proceeds to a professional career at the end of the training period. In any event there is no precise co-relation between costs incurred in training and benefits accruing to the club providing the training. The Court was persuaded that clubs might be discouraged from investing in the training of young players if they could not obtain reimbursement of the amounts spent for that purpose where a player moves on to another club at the end of the period of training. It expressed a particular concern in this light for small clubs ‘whose investments at local level in the recruitment and training of young players are of considerable importance for the social and educational function of sport’.36 So a scheme providing for the payment of compensation for training where a young player changes club at the end of his training ‘can, in principle, be justified by the objective of encouraging the recruitment and training of young players’.37

But the Court objected to the system of which Bernard had fallen foul. At stake was not compensation for training, but instead damages for breach of contract. It focused on the point that the amount was unrelated to the training costs actually incurred by the club.38 Instead the amount was calculated in relation to the total loss suffered by the club; moreover, the amount was established on the basis of criteria which were not determined in advance. This prompted the Court to treat the system as going ‘beyond what was necessary to encourage recruitment and training of young players and to fund those activities’^9 It was in breach of

Article 45 TFEU.

Bernard, like Bosman before it, reveals a generous receptivity to professional sport’s claim that it needs a scheme whereby training costs can be recouped as a means to promote incentives to invest in training, even if the result is that a player’s exercise of contractual freedom and right to move between Member States is affected in a way that would not be tolerated in a normal industry. Sport is special. Bernard, like Bosman before it, finds the particular system under review to be too restrictive and poorly designed. The ‘specific nature of sport’ announced by Article 165 TFEU is capable of framing this analysis but it does not change anything. Sport is not special enough to justify treating the French system of ‘joueur espoir’ as compatible with EU law.

The Court having in Bernard accepted that a compensation scheme (re-)designed to reward clubs that invest in training may be accepted under EU law, it rested with the football authorities (in France) to decide what to do. But the Court, though in formal terms confined to ruling on whether the chosen and challenged practices comply with EU law and not competent to provide a quasi-legislative blueprint for a revised transfer system, offered clues (as it frequently does).[9] [10] A compensation scheme must be capable of attaining the objective of encouraging the recruitment and training of young players and be proportionate to it, ‘taking due account of the costs borne by the clubs in training both future professional players and those who will never play professionally’^1 This is slightly evasive on the question how far compensation may cover costs incurred beyond the case of the trained player alone. The more one chooses to read Bernard as requiring that compensation be closely tied to, or even limited to, the costs incurred in training a particular player, the less ‘special’ football is permitted to be—and the less comfortable the governing authorities in sport will doubtless feel. Probably, however, the ruling is best interpreted to mean that the compensation payable by those who succeed as professionals should be inflated beyond the costs incurred in their particular case to allow also some coverage of training costs incurred but wasted on those players who fall by the wayside. The calculation is any event complicated by the practical reality that players are trained in groups, not individually: the cost of training twenty players is lower than the cost of training one multiplied by twenty thanks to the realization of economies of scale.

Bernard provides an authoritative judicial statement that some kind of system which compensates clubs which invest in youth training may be devised in compliance with EU law. This, it should be noted, is in line with earlier political and policy statements.

The Nice Declaration on Sport lauds training policies for young sportsmen and sportswomen as ‘the life blood of sport’ and adds that sports federations ‘are justified in taking the action needed to preserve the training capacity of clubs affiliated to them and to ensure the quality of such training’^2 It also has a special section dedicated to the transfer system, although it does not offer concrete approval but rather expresses the European Council’s keen support for ‘dialogue on the transfer system between the sports movement, in particular the football authorities, organisations representing professional sportsmen and -women, the Community and the Member States, with due regard for the specific requirements of sport, subject to compliance with Community law’.[11] [12] [13] [14] [15] [16] [17]

The 2007 Commission White Paper on Sport mentions discussions in 2001 between the Commission and the football authorities in connection with the revision of the FIFA Regulations on international football transfers.44 It declares that the Commission ‘considers such a system to constitute an example of good practice that ensures a competitive equilibrium between sport clubs while taking into account the requirements of EU law’.45

The 2011 Commission Staff Working Document, ‘Sport and Free Movement’ offers specific comment on Bernard^6 It notes that the Court confirmed what had already been decided in Bosman, that the recruitment and training of young players is to be considered a legitimate objective of general interest. It added that the Court had ruled that such schemes must be related to the actual cost of training players. The Commission went rather further than the Court in setting out an explicit view on whether the costs of training should cover those borne by the clubs in training both future professional players and those who will never play professionally, although it claimed to be simply following the Court. It is claimed that:

The Court affirmed hereby the principle that training costs may be calculated on the basis of the so-called ‘player factor’, i.e. the number of players that need to be trained in order to produce a professional player. 47

As mentioned earlier, this is probably the correct understanding of Bernard. Were compensation confined exclusively to the costs of training players who succeed in developing a professional career, the inducement to clubs to invest in training would be small and uncertain. But the Court did not spell that out as clearly as the Commission claims in its 2011 Communication.

In similar but slightly more cautious vein the Commission has, in an answer to a question put by an MEP, commented that ‘training compensation schemes may be considered compatible with EU free movement rules insofar as compensation is related to the actual cost of training’^8

In 2014 the European Club Association published its own a ‘Study on the Transfer System in Europe’.[18] [19] [20] Given the source of this study, it is not a surprise that it takes a favourable view of the transfer system. It treats it as part of a system that ensures the redistribution of income from top to bottom and so it acts as a counterweight to competitive imbalance. This approval is rather uncritical, but much the same can be said of the Court’s general positive view of the concept of a transfer system in both Bosman and Bernard.

  • [1] Bernard (n 1).
  • [2] Bosman (n 1).
  • [3] Bernard (n 1) para 40.
  • [4] ibid para 40 of the judgment. French: corroboree; the German version is differently structured: Fur die Relevanz dieser Faktoren spricht aufterdem ihre Erwahnung in Art. 165 Abs. 1 Unterabs.2 AEUV.
  • [5] ibid para 36. 32 ibid para 38 of the judgment.
  • [6] ibid para 30, Opinion of Sharpston AG. 34 ibid para 39.
  • [7] 35 ibid 41, citing Bosman (n 1) para 108. 36 ibid para 44.
  • [8] 37 ibid para 45. 38 ibid para 46. 39 ibid para 48.
  • [9] For comment, see J Lindholm, ‘Annotation’ (2010) 47 CML Rev 1187; K Pijetlovic, ‘AnotherClassic of EU Sports Jurisprudence’ (2010) 35 EL Rev 857; S Weatherill, ‘The Olivier BernardCase: How, IfAt All, to Fix Compensation for Training Young Players?’ (2010) 10(1—2) Intl Sports LJ 3;B Eichel, ‘Anmerkung’ (2010) 45 Europarecht 685.
  • [10] Bernard (n 1) para 45, citing Bosman (n 1) para 109.
  • [11] Nice Declaration on Sport, para 11. The full text is at accessed 29 November 2016. See Ch 6.3.
  • [12] ibid paras 16—17.
  • [13] White Paper on Sport, COM (2007) 391, 11 July 2007, available via accessed 29 November 2016. See Ch 6.5.
  • [14] ibid section 4.3, p 15.
  • [15] Staff Working Document, ‘Sport and Free Movement’ SEC (2011) 66 accessed 29 November 2016.
  • [16] ibid 6.
  • [17] Question for written answer E-007477/12, Peter Simon: answer given by Ms Vassilou on behalfof the Commission, 4 September 2012 [2013] OJ C270E/68.
  • [18] European Club Association, ‘Study on the Transfer System in Europe’, available via accessed 29 November 2016.
  • [19] 5° eg S Weatherill, Annotation of the European Court’s ruling in Bosman (1996) 33 CML Rev991; D O’Keeffe and P Osborn, ‘The European Court Scores a Goal’ (1996) 12 International Journalof Comparative Labour Law and Industrial Relations 111; M Uilhoorn, ‘The Bosman Case: Freedomof Movement for Sports Players and Its Implications’ [1998] European Current Law (October) xi;G Campogrande, ‘Les regles de concurrence et les entreprises sportives professionnelles apres l’arretBosman [1996] RMUE 45; M Thill, ‘L’arret Bosman et ses implications pour la libre circulation dessportifs a l’interieur de l’Union europeenne dans des contexts factuels differents de ceux de l’affaireBosman [1996] RMUE 89; L Nyssen and X Deno6l, ‘La situation des ressortissants de pays tiers a lasuite de l’arret Bosman [1996] RMUE 119; M Hilf and E Pache, ‘Das Bosman-Urteil des EuGH: ZurGeltung der EG-Grundfreiheiten fur den Berufsfussball’ (1996) 18 NJW 1169.
  • [20] eg [1992] OJ L326/31, distribution of package tours for the 1990 World Cup incompatible withArticle 85 [now TFEU, Art 101].
 
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