Player contracts: FIFA TMS: operation, integrity and sanctions

As the summer transfer window draws to a close, Barry Lysaght, Integrity and Compliance Counsel for FIFA Transfer Matching System GmbH, explains how the registration period – or ‘transfer window’ – functions and how it is policed by FIFA. He examines cases where players can be registered outside of the ‘window’ and how these exceptions can be abused, as well as how FIFA warns clubs and national associations against facilitating such practices. He also explains the sanctioning process should a breach of the rules occur.

 

Introduction

 

As the summer transfer window closed, media headlines remained dominated by big money transfers such as James Rodriguez to Real Madrid, Luis Suárez to Barcelona and Alexis Sanchez to Arsenal. What is less newsworthy, however, but perhaps appreciated more by the clubs themselves, is the extent to which such blockbuster transfers are in the minority. It may come as a surprise to note that 70% of all international transfers worldwide are in fact ‘free transfers,’ or players who are engaged out of contract¹. With the liberating impact of Bosman² on players’ freedom of movement at the end of their contract and with most clubs operating on frugal budgets, the ‘free transfer’ has rapidly become the most popular means of engaging new playing talent across the globe. But what are the legal obligations on clubs and national associations (‘Associations’) when it comes to conducting these transfers?

 

Revolutionising the transfer market

 

International transfers of footballers are processed through the FIFA International Transfer Matching System (ITMS) in accordance with the FIFA Regulations on the Status and Transfer of Players³ (RSTP) – a groundbreaking development which has revolutionised how such transfers are done. In 2007, the 57th FIFA congress voted to create the ITMS online system⁴ for male 11 a-side international football transfers as one of the recommendations of the FIFA task force ‘For the Good of the Game.’ The objectives were to increase integrity and transparency in the market by increasing data available to football authorities on every transaction and to enforce rules on the protection of minors. In October 2010, the regulations relating to use of ITMS were included in annex 3 of the RSTP, making ITMS a mandatory step for all international transfers of professional male footballers.

 

Data integrity

 

A number of legal obligations apply under annex 3, but we shall focus in this article on those aimed at fulfilling the objectives of integrity and transparency in the context of a ‘free transfer’ or, to use the technical ITMS term, an ‘Engage Out of Contract’ transfer instruction. Art. 4.2 of annex 3, for instance, sets out the compulsory information which a club must disclose. This includes:

 

– contractual details (e.g. employment start and end dates, total fixed remuneration, start and end dates of player’s contract with former club);

 

– personal data (e.g. player name, nationality, date of birth); and

 

– financial information (e.g. buy-out fee, solidarity contribution and training compensation).

 

Clubs are further obliged under Art. 4.3, annex 3 to upload certain mandatory documents to support this information – listed under Art. 8.2.1, annex 3 as the employment contract, a passport or other proof of identity, nationality and birth date, and – importantly – the proof of the player’s last contract end date with his former club and the reason for termination. Once this is confirmed in ITMS, the releasing Association is requested to confirm the player’s details against their own registration records, to verify that he was in fact registered with them (Art. 5.2.1, annex 3). As mentioned at Art. 1.2, annex 3, this will help ensure that it is indeed a real player who is being transferred, as opposed to a fictitious player being entered for money-laundering or other illicit purposes.

 

Registration periods

 

As ITMS is the first initiative of its kind to offer users a real-time system, the second set of obligations to consider concerns the timing of the transfer. Article 6.1 of the RSTP sets out the rules governing registration periods (known more colloquially as ‘transfer windows’). The rule will be familiar to transfer deadline day aficionados: players may only be registered during one of the two annual registration periods fixed by the relevant Association – any player who is not registered before that period closes will not be eligible to play official matches for his new club, and will have to wait until the next registration period before his registration can be validly completed. This rule sets the stage for the drama of deadline day, with clubs and Associations racing to get all their business done before midnight – and ensuring frustration for those who fail to get their paperwork done in time.

 

Sports journalists, for example, occasionally refer to a transfer which has been delayed as ‘awaiting international clearance’. From an ITMS perspective, this usually refers to the fact that the engaging Association has not requested the player’s International Transfer Certificate (ITC) in ITMS prior to the end of its registration period. According to Art. 8.1.1, annex 3, a player may only be registered with his new club after the ITC has been both delivered and confirmed as received in ITMS. Where the ITC is requested before the deadline, the delivery, receipt and registration may validly take place outside the registration period. However, where a deal is done but the Association fails to request the ITC before the transfer window closes, the rule under Art. 6.1 will mean that the player cannot be validly registered until the next registration period.

 

Art. 6.1 exception

 

International transfers of out-of-contract players are subject to this rule in the same way as transfers involving a transfer agreement. However, Art. 6.1 also contains an important exception which allows for the registration of players outside the registration period, provided that certain exceptional conditions have first been met. Consider, for instance, an English club challenging for the title. Due to injuries and suspensions, it suddenly finds itself lacking in defensive cover at a crucial point in the season. New recruits are urgently needed and a foreign target has been identified in Spain – but the English registration period is closed. What can it do?

 

Under the exception to Article 6.1, the English club could engage the player from Spain outside the registration period if, and only if:

 

– The player is being engaged as a professional;

 

– the player is out of contract; and

 

– his last contract with his Spanish club either expired or was mutually terminated prior to the end of the English registration period.

 

The exception in Art. 6.1, then, provides a valuable avenue for out-of-contract players to resume their careers without delay, and is a useful means for clubs to engage players outside the strict deadlines of the registration period. In the first six months of 2014 alone, over 8,000 international transfers worldwide were to engage players out of contract. However, as is inevitably the case with such provisions, there have also been attempts to circumvent the rule, abuse the exception and try to illicitly engage players outside the registration period.

 

Forgery, falsification & fakes

 

The integrity of the data in the Proof of Last Contract End Date is fundamental to the eligibility of a player to be transferred outside the registration period. Correspondingly, this document is also a common vehicle for deception by unscrupulous clubs attempting to evade their regulatory requirements.

 

For instance, a club may enter a transfer instruction in ITMS after its registration period has closed, claiming that the player is out of contract, and uploading a document which purports to show that his former contract expired or was mutually terminated before the end of the engaging Association’s registration period. Forgery and falsification of these documents, which are doctored so as to convey false information which would qualify the player for the exception, is a relatively common method of abuse of the exception to Art. 6.1.

 

The FIFA TMS Integrity and Compliance department (I&C) has access to all transfers in ITMS and, as such, has the entire database of international transfers at its disposal. In our work, we pay extremely close attention to transfers which engage players outside the registration period, and scrutinise the information and documentation uploaded. Severe sanctions are imposed against clubs who abuse this exception by declaring false information.

 

I&C typically requires that the Proof of Last Contract End Date is signed by a representative of the former club and/or of the former Association. In its training and education programmes, I&C warns clubs against accepting the Proof of Last Contract End Date from the player or his agent. The reasons for this are twofold.

 

Firstly, clubs (Art. 4.1, annex 3) and Associations (Art. 5, annex 3) are ITMS stakeholders – and as such are bound to uphold the RSTP. By holding these parties directly accountable for the validity of the data entered in ITMS, I&C is better able to ensure that due diligence is exercised and the values of transparency and integrity are upheld across the transfer market generally. Art. 9.1.3, annex 3 confirms that ‘Associations and clubs are liable for the actions and information entered by their TMS managers.’

 

Secondly, players and agents may have a vested interest in ensuring that a transfer goes through immediately, even if under the Regulations it would be required to take place during a registration period. As a result, players and agents may present the engaging club with a fabricated document which they claim is valid proof of last contract end date. Best practice, therefore, remains for clubs to refuse such documentation when provided by players and agents, and to insist instead on a document provided to it directly by the former club and/or former Association. Clubs which negligently fail to perform the adequate background checks with the former club and Association of the player and upload a falsified document in ITMS will be investigated and may be sanctioned according to the FIFA TMS Administrative Sanction Procedure (ASP).

 

Sanctions

 

Accountability is one of the key elements of ensuring the integrity of the transfer market. Art. 9 of annex 3 of the RSTP states that ‘Sanctions may be imposed on any Association or club that violates any of the provisions of the present annex.’ It goes on to state that such stakeholders may also be sanctioned for entering untrue or false data into the system, or for having misused ITMS for illegitimate purposes. A prime example of this would be any attempt to invalidly benefit from the exception to Art. 6.1, such as by uploading a false Proof of Last Contract End Date or the declaration of incorrect dates and other information in ITMS.

 

Sanctions can range from a reprimand or warning (for example) to fines, transfer bans, annulments, forfeits and points deductions (Art. 9, annex 3). Under FIFA Circular no. 1259⁵, the FIFA Disciplinary Committee delegated its competence to deal with certain infringements of Annex 3 to FIFA TMS through the application of the ASP. This empowers I&C to investigate and, where appropriate, sanction stakeholders up to a maximum of CHF14,000 (€11,600). Throughout the ASP, I&C adheres to the principle of audi alterem partem by first contacting the stakeholder to identify the infringement and to request a response, which usually includes correcting the infringing behaviour within a defined deadline. Subsequently, an administrative sanction letter may be issued, recommending a sanction. Where compliance is not effected by the deadline and where the sanction is not accepted, the case is transferred to the FIFA Disciplinary Committee, which has an upper fine limit of CHF1,000,000 (€829,170). Accordingly, I&C reminds the stakeholders in ITMS to ‘pay particular attention to any enquiries or requests for statements’ (Art. 3.2, annex 3) and to ‘comply…with requests for any documents, information or any other material’ (Art. 7.4, annex 3). Failure to do so by the deadline can be extremely costly.

 

Conclusion

 

Despite transfers at the top end of the market reaching ever more exorbitant levels, the ‘Engage Out of Contract’ remains by some distance the most popular method of engaging professional players internationally. Indeed, given the current economic climate, this type of transfer looks set to continue to make good economic sense for clubs with an eye on the bottom line. For its part, I&C continues to educate, monitor and investigate activity in the market, sanctioning breaches and improving stakeholder awareness of their regulatory requirements and best practices. Our goal? Ensuring that the values on which the market relies – transparency, integrity and accountability – may foster and maintain a level-playing field for all.

 

 

 

Barry Lysaght  Integrity and Compliance Counsel FIFA TMS, Zurich barry.lysaght@fifatms.com

 

 

 

1. FIFA TMS Reports, 01.01.2014 – 30.06.2014: http://bit.ly/WCZnhS

 

2. Union Royale Belge des Sociétés de Football Association ASBL v. Jean-Marc Bosman (1995) C-415/93, available at: http://bit.ly/ZfFC1L

 

3. http://fifa.to/1ln5UFA

 

4. http://fifa.to/WCZwBX

 

5. http://fifa.to/WLx1Cr

 

This article was originally published in World Sports Law Report Volume 12 Issue 9, September 2014. You can access the original at:

http://e-comlaw.com/world-sports-law-report/article_template.asp?Contents=Yes&from=wslr&ID=1701