Life after Bosman – the ramifications of the decision in Bosman and how the market has reacted to the impact of free movement

Posted on Sep 15, 2015
Life after Bosman – the ramifications of the decision in Bosman and how the market has reacted to the impact of free movement

The simple consideration given here is that the footballer may in many aspects be likened to the worker, and the relationship to the club may be viewed as akin to a standard employment. Although we view these players as artists, often talented beyond belief, it is important to first establish that they are workers. And as workers within the EU, free movement covers them. But it was not always this way. Perhaps much of the dominance of European football may be attributed to one specific case that altered the face of the transfer market. As we settle down and watch some of the strongest teams in the world sign incredible talent for vast amounts of money, we must also consider this an outcome of the shift introduced nearly two decades ago.

As such, the Bosman ruling is in many ways a case study of the pros and cons of the free movement of workers within the EU.

Background

EU member states have certain obligations incurred upon them due to their membership as such. One of the most important obligations, and in a sense the very basis for a fully functioning Union, is of course the free movement within the EU. Article 45 on the Treaty of the Functioning of the European Union regulates the free movement of workers and sets out to abolish any discrimination of workers between EU member states based on nationality. This seems straightforward enough, however the provision also sets out the right for workers to freely move within the EU to seek employment; in other words to move from an employer in member state A to member state B. This freedom of movement was long overlooked in certain markets, and within the footballing market certain forms of discrimination in terms of nationality-based quotas also existed. Although workers were allowed to move between different clubs in Europe, there existed certain thresholds that needed to be overcome; among others that of the compensation demanded by clubs to release players. It was fully understood that players under contract could not simply demand release and leave for new employment, however the issue was instead that of players with expired contracts who were not allowed to move between clubs without first affording their employers compensation.[1] The Bosman ruling effectively changed the outlook of this market to allow for the free movement of workers.

Bosman

The Bosman ruling[2] changed European football[3] forever. It also had great ramifications in terms of the free movement of workers within the EU, but it is easier to think about it as the case that changed the face of transfers within football. Bosman was a Belgian footballer looking to try his luck in France considering his contract expiration, but saw his fortune falter at the hands of his Belgian club; they simply refused to release him without compensation. That may seem acceptable, given the vast amounts of money paid for footballers today, however the catch was that Bosman’s contract had not yet been renewed and as such his club was simply looking to receive some compensation for the player. This refusal to release the player was eventually viewed as a violation of the free movement of workers.

A slight note is necessary to mention; although sports may seem to be self-governing mechanisms, the ECJ established that it had jurisdiction over such activities within the EU in the Walrave case.[4] In the Bosman case the ECJ then went on to uphold this stance and found that football indeed fell within the scope of an economic activity within the EU. Sports within the EU will come under scrutiny in terms of transfers, nationality requirements and free movement as well as compensation for training.[5]

Post-Bosman

Ever since the ruling in the Bosman case, sporting clubs have had to make peace with the fact that players are allowed to move freely within the EU and as such, players may now enter into negotiations with future employers within 6 months of their contract termination. This has meant a great deal for free movement as well as the world of organized sports, however it has also meant that clubs have had to change the way they behave in certain situations. One impact of the Bosman ruling, arguably one that was not pre-conceived, is that clubs now choose to place players that are within one year of their termination on the bench, the bleachers, or within the reserve squad (as a punishment of sorts for not renewing the contract and meaning that they may freely leave the club instead of providing a handsome signing transfer fee for their owners upon sale). The following piece explores the ramifications of the Bosman ruling in terms of organized sports as well as considering the legitimacy of the ”bench/relegation” practice currently adopted towards players not willing to renew their contracts.

Currently a model adopted by, among others, the football clubs Ajax as well as PSV Eindhoven in the Netherlands, benching or relegating players not willing to renew their contracts is an effective way of treating them as persona-non-grata within the club, while retaining their services in hopes of still being able to sell them (instead of the option of having to relieve them of their contracts or losing them on a Bosman-transfer). From the club’s standpoint (as an employer and engaged within a competitive sport) it may make sense, investing in the squad that you know will be there for the long run, however such employment tactics are arguably illicit, or at the very least not legally sound considering the employment contract and what the action is doing toward the player. It is effectively a restriction of service of sorts, keeping the player within the club while clearly admonishing the player for exercising the right not to renew said contract.[6]

An obvious byproduct of the Bosman aftermath has been that players near the end of their term of contract have been afforded a far better stance in terms of negotiating power (often using the Bosman option as a way to coax their club into renewing said contract). However, a downside to this, in relation to the free movement of players, has been their near-relegation type status afforded to them if they are unwilling to renew their contracts (something viewed as recently as with the treatment of Swedish striker Ola Toivonen by his club PSV Eindhoven[7]). The problem is further provided for when such a relegation to a “B-team” may mean that the player’s wages are reduced (an effect that the Bosman ruling had previously countered). Clubs are effectively getting around the barriers set by the Bosman ruling by restricting players near the end of their contract term, but not near enough to fall within the Bosman scope.[8][9]

A different offset of the Bosman ruling has been that clubs with less financial power than their European counterparts have been unable to retain the services of players for longer periods of time (meaning a brain-drain of sorts – which arguably could be construed as setting about a situation where the dominant market actors are abusing their powers and therefor keeping the best players out of the poorest clubs).

What did Bosman mean for the market?

Initially, the Bosman ruling meant that no transfer fees could be demanded for players that were no longer under contract for their clubs and subsequently also allowed for players that had a short amount of time left on their contracts to negotiate with other clubs. The ruling also ended the previous cap on foreign players in clubs, i.e. the limitations set out by administering quotas as to how many foreign nationals could be represented in a squad. The second aspect, that of foreign players, will be touched upon slightly but the focal point of this piece is to investigate how the market has reacted in terms of the ability for players to effectively leave their clubs without affording remuneration for their employers and how the employers on the market have reacted accordingly.

The situation at hand

It is clear that the Bosman ruling opened up the market for football transfers. Critics of the ruling claim that the negative effects may outweigh the positives. In terms of negative effects, an influx of foreign nationals into domestic leagues has meant that the richest leagues and richest clubs also attract the best players, providing for strong leagues, but in some situations also weak national teams.[10] A more competitive analysis in terms of critique would also consider the fact that players on the verge of contract termination/non-renewal could be benched so as not to “waste” valuable starting team space on them. The logic here is that even though the player is still in the club’s employ, it would be wasteful to offer them a starting position if that player would nonetheless transfer to another club after the contract is terminated.  Authors have discussed the post-Bosman ramifications in terms of how it has affected the sport of football in general,[11] and that may also provide a glance into how teams have actually reacted to the ruling in terms of what can be regarded through a legal scope.

In a sense, the Bosman ruling did a great deal for workers and changed the face of professional football in Europe and the world. However, the point of this piece is not merely to consider how the rules regarding free movement had an impact on a certain market sector, but instead how free movement may have had other, unintended, ramifications. What the ruling did was create a situation where workers (players) could leave their clubs if their contracts had expired and also allow for a further influx of foreign workers (players). The ruling opened up the market but also created a problematic situation in which clubs were now free to pursue both foreign and young players.[12] FIFA[13] as the international governing body of football presented new rules in terms of player transfers and UEFA[14] was quick to adapt to the Bosman ruling. However, certain loopholes still existed and the potential of free movement created a situation where the aforementioned “brain-drain” of sorts was clearly apparent; the richest clubs bought the best players. This may in itself seem acceptable; the best employers will always attract the best workforce, through different forms of incentive programs for example. However, when young players were also viewed as “up for grabs” and targeted by the richer clubs; a situation occurred where former employers who fostered young players, were no longer receiving adequate compensation for the investments they had made in educating each player.

Cross-border employment

Considering the vast ramifications of the ruling, what has to be mentioned is the fact that the employment situation in this context is not of a standard nature.[15] In terms of the opening up of the market and a greater focus on free movement within the economic sphere, players within the context of employees could consider the entire European market to be their workplace.[16]

Structural aftermath

Given the changes that the Bosman ruling meant, the structure of the market shifted with positive and negative outcomes. Although the market was effectively opened to allow for free movement of workers within the realm of football, one unexpected outcome was the mass influx of the practice of poaching talent from lesser leagues (as well as the poaching of young talent). Furthermore, and something that has not been equally highlighted, although the ruling set about an open market in the sense that employers would not be allowed to require compensation for employees who had ended their contract and wanted to transfer within the EU, it also meant that the European leagues were no longer allowed to set quotas or caps on foreign nationals coming from other EU member states. Previously the format for this was that leagues and governing bodies set out quotas for players not born in the country of the domestic league.[17]

Although player transfers were incumbent on certain remuneration in terms of compensation afforded to a player’s current employer, this practice was greatly impacted as of the late 90’s. Instead of having to offer compensation based on the amount of resources an employer had pumped into their workforce, clubs from larger (and more financially “stable” leagues) were now able to pick and choose between the crème de la crème of European talent.[18] The previous system of transfer fees adopted by UEFA was set in place to guarantee compensation to the employer that had fostered the now transferring talent. In other words, this previous system of compensation would require that a fee be paid to the previous club and this sum was considered logical as it would cover costs incurred in terms of training and developing the talent. The problematic nature of the previous UEFA regime was that clubs would often require transfer fees that greatly exceeded the mere costs of training and development of a player, and would therefore be unwilling to simply release a player. The previous transfer system afforded clubs a guaranteed source of revenue in a sense.[19] This provides for the unwillingness of clubs to release players on the simple notion that it would promote free movement. However, the aftermath of the Bosman ruling effectively meant that the issue of receiving compensation for training and development was instead replaced with a system of receiving compensation for valued goods.

One final thought in terms of the structural aftermath has been that the obvious overspending by clubs has now been counteracted in a sense by UEFA’s rules on financial fairplay.[20]

Bosman-Eligibility

But what is a Bosman-player today? Upon having six months left on an employment contract, a player is free to negotiate with any employers within the EU.[21] This effectively means that players no longer held under contract are free to transfer to new clubs. This has also meant that foreign and young (minor) players have been found eligible for transfer if not held under contract. As the governing European body of football, UEFA sought to implement eligibility criteria which would be in line with the Bosman ruling. The main focus was to fill in the gaps in terms of the violations to the free movement of workers. What had not been fixed or focused on in great detail however was the issue of just how open the market had become after these new rules and what this meant for younger talent. FIFA has since sought to remedy these issues, with limited success.[22] One of the main issues here has been that of offering employment to the parents of a child in order to obtain the child as an “employee” of sorts. Effectively this means receiving the signature of the legal guardians on the appropriate documentation that would afford the child the opportunity to train with the youth squad of a certain club.[23] It would mean bringing in the next Lionel Messi for little to no transfer fees.[24]

Market reaction

The Bosman ruling did enough for European football; it practically changed the way clubs looked at the transfer market. All of a sudden, younger talent could be approached, and new talent could be signed without this being a costly issue. Stars had always existed, but all of a sudden players who had a year or less left on their contracts became hunted prey on the market and saw their stakes rise in terms of internal contract negotiations. This was a positive outcome, meaning that an employee’s worth was finally realized. However, the negative outcome that followed meant that the employers with the strongest financial clout were also those that could pull in the greatest players. Fine. That seems fair enough as well, if the issue of poaching is not considered. As the market was opened up and included within the scope of free movement, it also meant that any player within the confines of Bosman-eligibility, could also be picked up for little to no compensation afforded to current employer. To counteract this new outcome, an educational fee of sorts was implemented, which effectively meant that clubs that had helped players throughout their formative years were also liable to receive certain compensation based on future transaction fees.[25]

As mentioned above, the Bosman ruling helped open up the market in terms of foreign players and their eligibility to play for a team within the EU. Previously, UEFA adopted a so-called 3+2 rule, which effectively meant that foreign nationals had to first train within a youth club of a team for three years, otherwise they would be encompassed by the rule only allowing 3 foreign players.[26] The ECJ found that the 3+2 rule would have been permissible in terms of a form of nationality-criteria.[27] However, such limitations in terms of EU citizens within clubs were found not to be permissible.

As the market reacted to the Bosman ruling, the interpretation was clear and simple; any player from another EU member state would fall outside of any set quotas and be eligible to play for any team within the EU. However, considering the vast upswing in the transfer market, this meant that foreign nationals, from outside of the EU could now enter into the market. As they were not encompassed by the restrictions to the practice of set quotas, they would have to obtain EU citizenship to be eligible to play for their clubs without being counted within the foreign quota.[28] The ruling seems to have made it extremely interesting for clubs to instead adopt a practice whereas minors are effectively poached from their domestic leagues and placed in the youth clubs of European employers during their formative years so as to make them eligible to play as EU nationals should they ever reach the senior ranks of their team. The market adapted to the terms of the ruling in that out-of-contract players were no longer required to afford clubs a transfer fee. This meant a great loss of revenue for clubs, especially smaller clubs from the lesser European leagues. Although larger transfer fees could effectively be demanded, it also meant that younger talent that could not effectively be under an employment contract could be picked up for next to nothing by larger clubs.

A final reaction from the market has been directed at the players. If a player chooses not to extend a contract, and as such has less then a year left with the club, the club will want to try to sell the player as quickly as possible. This is done to avoid the lack of income resulting from a Bosman-transfer. However, what clubs may effectively do, as mentioned, is bench the players, or relegate them to the reserve squad, so as to show them that they are not welcome any longer. This has been viewed as a reasonable measure within sports; managers need to base their squads around players that they know will be around for a long time. However, this may also be viewed within the scope that psychologically speaking, the club still wants to receive payment for a player, a player that is losing value for the club day by day due to Bosman, but a player that is also losing his own value each day because of a lack of play. Such players may then agree to be transferred to any and all clubs, simply to rise out of the lower ranks and retain their market value. This psychological play is permissible as such, and has not yet been deemed to violate the free movement of workers.

Concluding remarks

One may claim that society is built on a strong foundation that supports the rights of workers. It would not be such a farfetched claim. In terms of the free movement of workers, the issue is fairly simple; workers should be free to move within the EU. It is when this freedom is fully realized that the understanding of its impact truly comes into play. In the world of football, promoting free movement of workers (through Bosman) also meant that the already weakened clubs and leagues would forever stand by as the richer clubs could attract any and all players under the guise of free movement.

It is an issue that is perhaps best solved by accepting that although everyone has the right to play, and to work as such, not everybody has the right to be the best. It is a right reserved for those who got the best out of the Bosman ruling but hopefully, certain measures such as UEFA’s financial fairplay rules will work to counteract this. Another aspect of this may simply be that the market will find ways to counteract the negative aspects of free movement; as of writing this piece, several European teams have been eliminated in the group stage of the 2014 World Cup. Very few people would have bet that Costa Rica and Uruguay would have gone on to the next round, leaving Italy and England behind. And even more so, the former giants (Spain), a clear symbol of a league and nation using the Bosman ruling to its fullest extent, were also knocked out. At the end of the day, regardless of how lacking a league or a club may be in a financial sense, it all comes down to the skill of the players. And say what you will about the Bosman ruling and its implications for the free movement of workers; players are now arguably far better off in terms of being able to display their skills.

 

Malki Afram is a Partner at Idrottsjuristerna and a doctoral candidate at the University of Linköping focusing on intellectual property rights and public international law. If you’d like to get in touch with Malki or anyone else at the firm, please feel free to use this contact sheet

 


[1] This would be in the form of the new employer paying a certain transfer fee for the employee to compensate the former employer for the costs incurred in terms of training and educating the employee.

[2] Union Royale Belge des Sociétés de Football Association ASBL v Jean-Marc Bosman (1995) C-415/93.

[3] As it is presented here, the term ”football” is to be viewed as being exactly the same as the term ”soccer”.

[4] Case 36/74, Walrave & Koch v. Association Union Cycliste Internationale, 1974 E.C.R. 1405.

[5] See The Centre for Law and Economics in Sports, the economic and legal aspects of transfers of players, Pg. 15. (2013). http://ec.europa.eu/sport/library/documents/cons-study-transfers-final-rpt.pdf (last retrieved June 24 2014).

[6] Arguably the right not to enter into a new agreement with an association, which in a sense would be a violation of the negative freedom of association – e.g. not having to belong to a club; however said rules have only been tried in terms of labor organizations and unions.

[7] A situation which has since been remedied by an apparent move to Stade Rennais in the French Ligue 1. See http://www.uefa.com/teamsandplayers/players/player=97690/profile/index.html for more information (last retrieved on June 24 2014).

[8] I.e. being allowed to negotiate with other clubs when six months are left of the player’s contract.

[9] Union Royale Belge des Sociétés de Football Association ASBL v Jean-Marc Bosman (1995) C-415/93.

[10] As of writing this piece, Spain, Italy and England, the grand three in terms of transfers, were all eliminated from the group stages of the FIFA World Cup.

[11] The Effects of the Bosman Ruling on National and Club Teams in Europe, John J. Binder and M. Findlay, 2011.

[12] In terms of ”young players” the meaning presented here is players under 18 years of age.

[13] Fédération Internationale de Football Association.

[14] Union of European Football Associations.

[15] I.e. working in the country of employment. See also A. Afonso – Employer Strategies, 2010.

[16] This is of course mentioned in regards to larger clubs most often represented in several international tournaments.

[17] See also Dejonghe & Opstal – The Consequences of an Open Labour Market in Separated Product Markets in European Professional Football, 2009.

[18] Ibid.

[19] FIFA Transfer Regulations and UEFA Player Eligibility Rules: Major Changes In European Football and the Negative Effect On Minors, Emory Law Review, Vol 25, 2011. Pg. 545.

[20] For a quick overview on the rules, see UEFA’s FAQ – http://www.uefa.com/community/news/newsid=2064391.html (last retrieved on June 24 2014).

[21] See Bosman ruling. See also FIFA Transfer Regulations and UEFA Player Eligibility Rules: Major Changes In European Football and the Negative Effect On Minors, Emory Law Review, Vol 25, 2011. Pg. 546.

[22] FIFA Regulations for the status and transfer of players (2009) [see http://www.fifa.com/mm/document/affederation/administration/66/98/97/regulationsstatusandtransfer_en_1210.pdf.)

[23] This has to an extent been explored widely in terms of the practices adopted by the club FC Barcelona – an argument given a bit of creedence at the very least when considering the fact that a young Lionel Messi travelled across the world with his parents to sign with the club.

[24] See  http://www.uefa.com/teamsandplayers/players/player=95803/profile/ For player profiles (last retrieved on June 24 2014).

[25] For example the fees received by Zlatan Ibrahimovic’s former Swedish employers in Malmö. Note that the mere existence of such an educational fee also caused certain controversy in terms of different employers claiming to have helped a player during their formative years. See http://www.uefa.com/teamsandplayers/players/player=59217/profile/index.html for player profiles (last retrieved on June 24 2014).

[26] FIFA Transfer Regulations and UEFA Player Eligibility Rules: Major Changes In European Football and the Negative Effect On Minors, Emory Law Review, Vol 25, 2011. Pg. 546.

[27] In other words, limitations on which players get to play on the national team.

[28] A prime example of this is the Spanish football league. As the Brazilian national Diego Costa had spent most of his career in Spain, he also obtained a Spanish citizenship and would not be counted against any caps set against foreign nationals from outside of the EU. See also http://www.uefa.com/teamsandplayers/players/player=1900730/profile/index.html for player profiles (last retrieved on June 24 2014).