Over the past decades, football has seen an exponential growth in its economic landscape; notably in transfer fees and player salaries, with transfermarkt.co.uk claiming that in the last 10 years, the total spent on transfers (valued in millions) in the Premier League was £5501.72, as of early September 2020. Across Europe a similar pattern occurs. Indeed, one can wonder whether this meteoric rise will continue. Or could the potential introductions of salary caps cause a drop in such numbers? Perhaps the detrimental impact of the Covid-19 virus have large scale impacts on clubs, with Begbies Traynor, football finance expert and former chairman of Leeds United, claiming that most of England's football clubs face "unprecedented financial distress.” This all therefore comes with great legal implications; one may wonder what the legal requirements are in order for a transfer to be complete, and whether the introductions of salary caps or the Covid-19 pandemic has affected the contract law behind it.
The Legal Side of Transfers
When dealing with transfers, fees and salaries, there is an abundance of legal details that must be attended to before a transfer can be fully completed. Naturally, a player would require legal assistance during the transfer window, so players normally have agents, who negotiate deals with the lawyers and executive hierarchy of the buying and selling club.
Some big names have what is known as a ‘super-agent’, such as Jorge Mendes and Mino Raiola, who sort out the extremely big transfers and also receive a somewhat hefty fee. For example, Mino Raiola, agent of Paul Pogba, and was instrumental in ensuring his return to former club Manchester United in the summer of 2016. Raiola reportedly earned a total of £41 million for his role (per fourfourtwo), demonstrating the importance of agents and lucrative money involved with the transfer.
However, it is clear that "the transfer environment is subject to different layers of rules and regulations." In football, the head international association that deals with transfers (amongst many other things) is Fédération Internationale de Football Association, known more commonly as FIFA; it is the governing body that set out the rules and regulations for the legality of transfers. Of course, contract law is probably the largest aspect of law within football transfers. There is always a potential issue with player contracts. For example, under the '2001 agreement' between the European Commission and International football bodies, a rule was stated that "the duration of minimum and maximum contract would be between 1-5 years respectively, unless National legislation provides otherwise." Whilst the majority of transfers follow this rule, there area few irregularities. This was seen in Saul Niguez’s new contract at Atletico Madrid, where he agreed an 8 year contract in 2017. Despite being reviewed by FIFA through domestic law, the Spanish employment law enabled the club to go around the regulations put in place (per Mirror).
Of course, there is a plethora of other rules and regulations that make a transfer so complex. Dependent on the fee, salary or even additional clauses (such as buy-backs or first refusal) can't halt the speed of a transfer. The law within transfers is pivotal.
Benchmark Transfers Over the Past Decade: Inconsistency?
In the summer of 2009, Cristiano Ronaldo joined Real Madrid from Manchester United for a reported transfer worth £80 million. Despite obvious debates, it would not be unreasonable to suggest that Cristiano was, and arguably still is, the best player in the world; scoring 118 goals for United, winning the Ballon d’Or award in 2009, reaffirming his status as the world’s best and leading United to a Champions League win with vital goals against Lyon & Roma in the run in to the final, where he also scored a header as United defeated Chelsea to lift the trophy. This was all before his big-money move to Madrid. As such a highly regarded player, the high transfer fee can therefore be seen as good business from all parties.
However, fast-forward 11 years and a large number of transfers have made Cristiano’s transfer seem somewhat more of a bargain. According to forbes.com, in August 2017, Brazilian star Neymar Jr. joined Paris Saint-Germain from FC Barcelona in a deal worth $263 million. TalkSport claim his contract earned him a monthly wage of £2.6 million, making him the highest paid player at the club, earning £1 million more than his attacking counterpart Kylian Mbappe, who also joined the Parisians that year on loan, with an option to buy a year later for a fee of £165.7 million. There is no doubt these two deals blow the majority of other transfers out of the water completely. Whilst both players of course drastically improve PSG’s squad, it seems the main objective of the signings were to ensure PSG a greater chance of winning the Champions League for the first time in their history.
Yet, despite winning the domestic league three times in a row and the domestic cup twice since making these signings, PSG still failed to win the Champions League. It had become a trend that PSG struggled to make it past the last 16 round, only reaching the final in the 19/20 season to be defeated by Bayern Munich. Therefore, this begs the question, were these players ‘value for money’? Were the hundreds of millions spent on these players worth it?
Due to the lack of competition in the domestic league and cup, it can be said that PSG would have been firm favourites to win the league even without these two players, having won it in 4 of the last 5 seasons before Neymar and Mbappe arrived. However, with their failure to achieve the greatest success in Europe, it could be argued that even though these players where a huge upgrade, the transfer fees and salaries are still not justified even though the talent of both players cannot be questioned.
Since then, further big name transfers such as the swap deal involving Henrikh Mkhitarayan and Alexis Sanchez in their moves to Arsenal and Man Utd respectively demonstrated to inflation in the current transfer market. It was also a perfect example of transfers that do not work out, thus further exaggerating the inconsistency within transfers and salaries. Sanchez reportedly secured a wage at United for £350,000 a week (per goal) only making 14 goal contributions in 45 games (per transfermarkt). According to the Daily Mail, Alexis Sanchez cost Man Utd £13.2 million per goal. These astronomical figures amplify the high costs of such transfers, and also the huge risks clubs take, and in some cases, like this one, these huge risks become a failure; on and off the pitch.
The Possibility of Salary Caps?
A salary cap is an amount of money that clubs can use in order to pay player wages, with every team having the same salary ‘budget’, reducing inflation and making it a fairer playing field. Salary caps have in fact been brought in already in some sports across the world. In 1999, Premiership rugby union in England introduced a salary cap set at £7 million, with sanctions if a club were to go over that limit. This was seen in 2017-18 when Harlequins were fined £6,239.50 for exceedingly the salary cap limit by £12,479 (per hoddereduction).
In football, we have seen very little consideration for salary caps; until this summer. On the 7th August 2020, the EFL, the English Football League governing body, announced that squad salary caps would be introduced into leagues 1 and 2 (per EFL). In terms of the contractual shape of the salary cap, the EFL states it would include:
Basic wages
Taxes
Bonuses
Image rights
Agent fees
Other fees and expenses paid directly or indirectly to all registered players.
Once more, the shape of the salary cap further demonstrates the legal complexity of transfer and player salaries, as there are many different avenues that must followed appropriately and effectively in order to make such contract legally binding. The legal penalty for exceeding the cap is a financial penalty payable for every £1 in excess, thus being referred to an Independent Disciplinary Commission (Chroniclelive). In relation to the Covid-19 pandemic, introduction of the cap supposedly gives clubs greater financial security (EFL). Furthermore, it would reduce teams from inflating the market and casting financial doubt.
Salary Caps in the Premier League?
Could we possibly see salary caps being introduced into the Premier League? The answer is that it is very unlikely.
The gulf in finance between Leagues 1 and 2 and the Premier League is too large of a difference. In the lower leagues, wage bills are much smaller in contrast to the Premier League. If we look at the four teams that finished highest in the League in 2019/20 who were Manchester United, Manchester City, Liverpool and Chelsea, the range of wage bills between them is £244 million to £332 million. Conversely, the 4 teams who finished at the bottom of the pile, Norwich City, Watford, Bournemouth and Aston Villa have a wage bill range of £13.8 million to £45.91 million (per Sportekz). So, not only is the gulf too large between Leagues 1 and 2 and the Premier League, but there is a more substantial gap in the Premier League itself. Therefore, there would arguably be no way of pleasing all clubs if salary caps were introduced. And so, statistics display an unreasonableness to introduce salary caps into the Premier League.
However, an alternative way that inflation could perhaps decrease within the market would be down to the clubs themselves and with the Covid-19 outbreak. Manchester City boss Pep Guardiola announced in June that Man City may have to refrain from spending (per Sky Sports). Whilst transfer dealings since have gone through notably the likes of Timo Werner, Kai Havertz joining Chelsea and Donny Van De Beek joining Manchester United, there is no doubt that there has been a reduction in transfer fees and wages on the whole. With Werner costing Chelsea a reported £47.7 million and Van De Beek costing £38.5 million (per teamtalk) there is no doubt that in a normal transfer window, the cost of these two players may have been much higher in respective to their quality.
Conclusion
There is no doubting that over the past decades, football has grown astronomically in a variety of sectors. More live streams, greater financial power within club ownership and sponsorships are just a handful of reasons why football has become what it has today. It is apparent that the inflation of the market and player salaries has been on the up for many years, and it is highly unlikely we will ever see it go back to the way it was. This inflation has made some of us look at certain deals and reported contracts and become bewildered in its lucrative nature. But, that is how football has evolved.
Yet, with this rise, the legal complexities have too grown. Like most things in life, law is vital in sport. However, most fans do not consider the legal significance of a transfer if it involves their club, they just want the deal done as soon as possible and see that player wear their colours. It is in some way a mechanism that football clubs run off.
Oliver Wakefield is currently a second year Law student at Newcastle University from Wigan. He represents the University football team and also plays rugby union and golf in his spare time. Oliver aspires to work within the sports law industry.
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