Football Transfers - Who typically makes contact first?

Posted by Andrew McGregor

Brabners

Tue 01st, Aug

As the transfer window activity intensifies, we want to provide you with an insight into the transactional process which sees a player move from one club to another and highlight some of the main commercial and legal issues for the parties to consider.

The initial process:
After the preliminary conversations setting the scene, a representative of the Buyer Club will often submit a formal offer to the Seller Club for the transfer of the Player's registration from Seller to Buyer. The formal offer is an important piece in the deal process. Whilst the opening offer, and the subsequent counter proposals, should be 'without prejudice and subject to contract' (meaning the preliminary offers and counter offers are only outline terms to be incorporated into a formal transfer agreement), they set the structure for the deal and, often the tone for the negotiation. The preliminary negotiations will cover terms like: guaranteed transfer fee (including any staged payments); and contingent payments (for example: player appearance, player performance, team performance related trigger events and sell on provisions). Clearly, there is a lot to consider in a very limited space of time.

Once the parties have agreed the outline terms of the deal, one party will produce a draft transfer agreement for the other party to consider. The most efficient clubs will always want to be the party to produce the initial draft transfer agreement to allow them to be the party that is negotiating on their own standard terms. Here is where the true value of the preliminary negotiations and offer and acceptance correspondence is realised. If the parties have negotiated carefully, considered and addressed all issues and recorded a clearly written record of the terms agreed in principle, then the formalities of negotiating the content of the transfer document will be a smooth experience. However, if the parties have simply outlined the 'Heads of Terms' in a short email exchange (or even a few scribbles on the back page of a match day programme - which is often the case given the time pressures and irregularity of the times at which parties negotiate) finalising the terms of the transfer document can turn into a stressful and complicated experience.

Negotiation issues:
It is at the point that one party presents its draft transfer document to the other that the parties often find out that they are further apart on the deal than they first thought. Some of the following issues often require further negotiation, agreement and drafting before the transfer agreement can be concluded and executed:

  • How much of the guaranteed transfer fee is to be paid immediately?
  • Is payment of the transfer fee conditional on the Player agreeing personal terms and passing a medical?
  • Is the transfer fee agreed net of any regulatory imposed deductions, expenses, costs and/or levies?
  • Are any player appearance related contingent payments based on 'starts' or 'appearances' and are there any further criteria to satisfy (minutes on the pitch, teams or competitions) which qualify a performance related event by a player as a start or an appearance?
  • Are any team performance related contingent payments based on the player's contribution in a particular season and are those trigger events capable of being repeated during the time that the player is at the club?
  • Is any future sell-on fee payment entitlement attached to the gross amount received by the Subsequent Seller Club (in the subsequent transfer) or is it a net fee related to the excess 'profit' made by the Subsequent Seller Club relevant to the monies it has paid to the Seller Club in the current deal?
  • Are the terms of the deal confidential?
  • Do the parties want to retain a right to approve the other party's press release?

The above is certainly not an exhaustive list of issues to consider and address by the parties to the transaction, however, it might represent some of the common themes in a relatively basic domestic transfer.  Now try to imagine the issues, and potential 'deal breakers' in a complicated international transfer, where respective national regulations and laws need to be factored in, as well as FIFA regulations.

Now you have an understanding of the process, imagine you are a busy Chief Executive of a professional club and the closing of the transfer window is a few days away, primary targets have been missed, players have requested to leave the club and agents are attempting to force through last minute moves for their clients. Moreover the team has lost its last 3 games and supporters are reacting negatively, and you also have the business of a football club to oversee. Even with the best will in the world, the most efficient and prudent club representative might be excused for failing to address a particular issue during the deal making process and, in light of the above, it is easy to see how these relatively small issues might evolve into something that might protract the deal and, potentially, derail it.

We hope you have found this blog interesting. If you are a club representative, player or intermediary wanting to find out more about the transfer process, and how Brabners dedicated sports law team can help you, then please do not hesitate to contact Andrew McGregor

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