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

Leave a comment

Happy 9th Birthday 6th Door Ltd

Tue 19th, May

As I’m leaning on the stand-up desk in my makeshift home office, that over the weeks has been turned into a video and podcast recording studio

How to take back control of your water costs

Fri 13th, Mar

While most businesses already have a comprehensive strategy in place for their electricity and gas consumption, water management is often overlooked.

How to choose an energy consultancy

Fri 13th, Mar

Most business owners recognise the advantages of shopping around for the best energy deal, but without the time, resource and expertise to find the best tariff, it can be an almost impossible task.

Business energy: Don’t get caught out by rollover rates

Fri 13th, Mar

As a busy business owner, you may feel there are not enough hours in the day to secure your next energy contract. You know you’ll get around to it, but when you’ll get around to it is another matter.

Business water matters – Top 3 water saving tips

Fri 13th, Mar

Water is often referred to as ‘the forgotten utility’. While many large businesses are clearly focussed on their comprehensive energy strategies, it seems many are yet to implement a strategy around managing their water usage.

Know where your cloud data is stored or risk a GDPR fine

Thu 27th, Feb

For businesses who have chosen cloud-based data hosting services there’s a temptation to relax and think “great, we’re paying someone else to take care of our data, we don’t need to worry about it any more.”

Transparency plans could slow down region’s business growth

Thu 27th, Feb

Efforts by regional start-up initiatives that have led to Merseyside outperforming the rest of the UK when it comes to business growth could be hampered by new government proposals, a leading legal expert has claimed.

Backup or risk losing your business

Thu 13th, Feb

Maintaining a robust backup is hard work, it’s important to not only build the correct solution for your business and trust your IT support provider to look after it, but to also maintain a sense of urgency as a business owner to...

Information Destruction and Compliant Data Handling in the Education Sector

Thu 13th, Feb

Identity theft costs the UK economy £5.4 billion and a recent BSIA report showed 169,592 cases of identity fraud, representing an increase of 49% over the previous year.

Give Your Business Utilities a Refresh for 2020

Mon 20th, Jan

January is a time for reflection for most people and this includes business owners, with the new year bringing with it an opportunity to take stock of performance during the past 12 months, create goals for the year ahead, and ensure...