Will Santos earn money from NEYMAR again?
Despite the transfer window being in full swing, there is probably no doubt that Neymar's transfers from FC Barcelona to PSG will overshadow any other transfer. The Brazilian moved to Paris, and according to reports in the media, Barcelona received a record-breaking 222 million euros for the transfer. Earlier this week, the Brazilian club Santos announced that they will be seeking 5% of the specified amount from Barcelona. Is Santos' claim justified, and if so, who should be the recipient? I will try to answer these questions in today's post.
First, let's establish a few facts. Of course, in this regard, we have to rely on press information, so it should be noted that the actual state of affairs may be different. Neymar was a player for FC Barcelona, to which he moved in July 2013 from FC Santos. In the contract binding the player with FC Barcelona (after its extension), there was a clause stating that the player could unilaterally terminate the contract with the club by paying the amount of 222 million euros.
The specified clause is a consequence of regulations arising from Spanish law, specifically Real Decreto 1006/1985, which gives the athlete the possibility of unilaterally terminating the contract. In such a case, the player is obliged to pay the club compensation, the amount of which is usually specified in the contract (in the absence of a contract, the court determines the amount of compensation). It should be added that the club is bound by the player's statement. In the "Neymar case," the player exercised his right. Acting through his representatives, the player paid the amount resulting from the clause, and then signed a contract with PSG. The speculation remains about who financed the termination of the contract. Officially, Neymar made the payment, but media reports suggest that the funds came from one of the companies associated with the owners of the Parisian club.
Well, you might ask, what does Santos have to do with all of this?
Well, Santos, Neymar's first club, intends to demand 5% of the amount from Barcelona that the player paid for the unilateral termination of the contract. On what grounds? Probably by invoking regulations concerning the solidarity mechanism. I will remind you that according to FIFA regulations:
"If a Professional is transferred before the expiry of his contract, any club that has contributed to his education and training shall receive a proportion of the compensation paid to his previous club (solidarity contribution). The provisions on the solidarity contribution are contained in Annex 5 to this Regulation."
In Annex 5, we read:
"If a Professional moves during the term of his contract, 5% of any compensation, with the exception of Training Compensation, paid to his Previous club shall be deducted from the total amount of such compensation and handed over by the New club as a contribution towards the solidarity mechanism for the clubs involved in training and educating the player over the relevant years."
So, reading the first of the cited provisions, the issue seems clear: the solidarity mechanism applies to situations where a transfer is made. Neymar "bought himself out," so the provision does not apply, especially since the other provisions of the cited regulation suggest that the transfer is a transaction made between clubs. However, analyzing the next cited article, which specifies the rules of the solidarity mechanism, doubts arise. It mentions the transfer "during the term of the contract."
Indeed, Neymar changed clubs after terminating the contract, so when he moved to a new club, the contract did not bind him anymore. However, it must be kept in mind that in a classic "transfer," where by virtue of a transfer agreement the player changes club affiliation, in exchange for which the acquiring club undertakes to pay a specified transfer fee, it is also necessary to terminate the contract between the player and the previous club. The transfer can therefore be made after terminating the contract with the player or simultaneously with its termination.
These provisions leave us with the question of whether, in a situation where the player unilaterally terminated the contract, the provisions on the solidarity mechanism should be applied or not?
Let's look at how similar cases were considered by the CAS, the Court of Arbitration for Sport, which is the appeals body for decisions made by FIFA authorities.
In 2011, the Court of Arbitration for Sport (CAS) considered the case of the appealing party, Sevilla FC, which appealed against the decision of FIFA authorities ordering it to pay RC Lens an amount of 1,300,000 euros. The factual background of the case was as follows: RC Lens entered into a transfer agreement with Sevilla, under which Seydou Keita became a player of the Spanish club. In the transfer agreement, the French club reserved the right to a share of the profit from the next "sale" of the player.
In the contract between Keita and Sevilla, there was a clause (resulting from Real Decreto 1006/85) authorizing the player to unilaterally terminate the contract, which entailed the obligation to pay the club an amount of 14,000,000 euros if the contract was terminated before February 15, 2009, or 10,000,000 euros after that date. The player exercised this clause, and the amount resulting from the contract was paid by FC Barcelona, with whom the player signed a contract. In this case, the Tribunal ruled that obviously, the term "further sale" used was inadequate to the situation of the player's transfer.
Therefore, it held that the term "sale" referred to a situation where the player, the previous club, and the acquiring club agreed to change club affiliation. Accordingly, the additional compensation for RC Lens was dependent on whether the change in the player's club affiliation resulted from an agreement between the parties. The Tribunal stated that because Sevilla had no influence on Seydou Keita's move to FC Barcelona and therefore did not consent to the early termination of the player's contract, Sevilla (lacking consent) was not obliged to pay any amount to RC Lens.
If you think that the quoted decision unequivocally settles the matter, I draw your attention to one important circumstance: the player's termination of the contract was interpreted in the context of the concept of "resale" of the player, not in the context of the regulations governing the solidarity mechanism.
The issue of the solidarity mechanism was examined in the case of Mauro Zarate's club affiliation change.
In 2007, Mauro Zarate was transferred from the Argentine club Velez to the Qatari club Al Saad. During his contract with the Qatari club, he was loaned out to Birmingham and later to Lazio. In the agreement between Zarate and Al Saad, there was a provision authorizing the Qatari club to receive compensation of 20,000,000 euros in the event of the player unilaterally terminating the contract without the club's fault. During the player's loan to Lazio and shortly after its conclusion, the Italian club negotiated the player's permanent transfer with Al Saad, but the parties did not reach an agreement. Soon after, the player declared that he unilaterally terminated his contract with Al Saad, citing the mentioned provision authorizing the player to terminate the contract for compensation. The compensation of 20,000,000 euros was paid by Lazio. Velez demanded payment from Lazio, citing the provisions governing the solidarity mechanism. What did the tribunal decide?
The Tribunal ruled that the key to resolving this case was to assess whether the player's change of club affiliation was a transfer (or a move to another club during the term of the contract as mentioned in the cited annex 5).
In the reasoning, it was pointed out that the elements identifying a transfer are:
– the consent of the player's current club to the player's move,
– the consent of the acquiring club, and
– the consent of the player.
With this in mind, the Tribunal ruled that Mauro Zarate's move constituted a transfer within the meaning of FIFA regulations, and thus Velez's claim is justified. While the existence of consent from the player and Lazio was not in question, the consent of Al Saad was highly debatable. However, the Tribunal deemed that the Qatari club, by agreeing to the provision allowing for early termination of the contract for compensation, impliedly consented to the transfer in the future. The Tribunal also referred to the judgment in the aforementioned case of RC Lens versus Sevilla concerning the change of club affiliation of Seydou Keita. The Tribunal emphasized that the discussed cases are not identical, as Sevilla was obliged to include a clause in the contract allowing the player to unilaterally terminate the contract, in accordance with the prevailing Spanish domestic law, whereas the clause in Zarate's contract resulted from an agreement between the parties. For these reasons, the Tribunal ruled that Keita's move was not a transfer, while Zarate's was.
In this context, we can also refer to the case of RC Lens against AS Monaco regarding the change of club affiliation of Geoffrey Kondogbia. The player moved from RC Lens to FC Sevilla. In the player's contract with the Spanish club, there was a clause allowing for the unilateral termination of the contract, based on Real Decreto, which the player utilized, or rather AS Monaco utilized by providing a check to cover the required amount (20,000,000 euros). It is worth noting that the FIFA Dispute Resolution Chamber as the first-instance body decided that RC Lens is entitled to compensation from AS Monaco under the solidarity mechanism.
Unfortunately, since Monaco did not appeal the entire decision but only challenged the designation of AS Monaco as the club obligated to pay (instead of Sevilla), the Tribunal did not examine the basis of the claim for payment under the solidarity mechanism.
So, what are Santos' chances of receiving compensation under the solidarity mechanism? Firstly, if Santos intends to pursue these claims, the addressee should be PSG, not Barcelona 1)the percentage indicated by the media for the transfer also does not correspond to the number of seasons the player spent in Brazil. The regulations specify that the new club of the player is obliged to pay the amounts under the solidarity mechanism. Therefore, any claim against Barcelona would have to stem from the provisions of the transfer agreement between Santos and FC Barcelona, rather than FIFA regulations. Assuming Santos would revise its position and decide to sue PSG, what happens next?
It should be emphasized that the first instance to adjudicate claims under the solidarity mechanism is the FIFA Dispute Resolution Chamber, which in a similar case (Kondogbia) found the claim justified. What will the Tribunal decide in case of an appeal? If they intend to continue their previous jurisprudence, the claim would have to be dismissed. FC Barcelona was obliged by Spanish law to provide the player with the possibility of unilaterally terminating the contract, and thus the introduction of the mentioned clause was not a consequence of the club's free decision. Considering that, according to the Tribunal, the transfer depends on the simultaneous consent of the former club, the new club, and the player himself, in the present case, the first of these elements is missing.
However, the question remains whether the Tribunal will need to reconsider its previous jurisprudence? The approach adopted by the Tribunal does not entirely convince me because although Spanish clubs are obliged to allow players to unilaterally terminate contracts, the amount of compensation is already negotiated with the player, as well as the salary, contract duration, etc. The amount of the agreed-upon compensation is therefore an element that the club can shape and agree upon.
Undoubtedly, the most desirable solution would be to clarify the regulations by FIFA, and perhaps the eventual "Neymar case" will provide the necessary impetus.
Fot: Nathan Congleton via Foter.com / CC BY-NC-SA