Why goal of single market is wrong for European football

Date: 15/02/1996

CONFLICT is more interesting to read about than the resolution of problems.

It was probably not so surprising, therefore, to read the many inaccurate press reports suggesting that, in the wake of the Bosman judgement, UEFA was “defying” European law and that the European Commission had been pursuing us for years.

UEFA groups together 49 national football associations. Eighteen are in the EU, with four in the UK and one each elsewhere. Between them, our national associations take in more than 170,000 clubs and 20 million players (at professional and amateur level).

It is our responsibility to assist the organisation and development of football at every level. This is an important principle to grasp. Sport is shaped like a pyramid, with a small number of professional clubs at the top.

The most successful of these are indeed very successful, with modern stadia, numerous coaching staff, full crowds at big matches, and large squads of highly-skilled professional players. These are the clubs which hit the headlines; they also form a very small élite in the structure of European football.

Below the top clubs come the far more numerous clubs which play in the lower divisions of national leagues. At this level, money is tighter and there are fewer full-time and more part-time players. Next down are the clubs with only part-time players, a low-paid coaching staff, and more modest facilities. Last, and most numerous, come the thousands of amateur clubs. Football at this level may be far less glamorous, but it is every bit as important. Every administrator knows that football at the top cannot flourish unless there is a successful grassroots game with millions playing or watching.

At the top of the pyramid, football generates large sums of money through television, merchandising and gate receipts. It is part of the function of UEFA and the 49 national associations to ensure that an appropriate amount from the top flows down to the levels of the game which are not self-financing. But it is not always easy to get the balance right. If too much is taken from major players, they could always decide they have had enough and form an organisation of their own. It is the job of the governing body (UEFA or national associations) to strike the right balance. This is a delicate task, especially today.

According to a published study of English football club accounts, about three-quarters of all clubs in the four English divisions do not earn enough from ticket sales, sponsorship or television rights to cover their operating costs.

So where does the balance come from? The transfer market. The top professional clubs are net spenders on the transfer market and the smaller clubs net beneficiaries. This is basically the law of comparative advantage: a club in the third division is not going to attract General Motors as a sponsor, but it may be able to identify, train and develop a young player who then turns into a successful professional. When that player is recruited by a top club, the former club should get an indemnity for its contribution to training the player. Only in this way can smaller clubs continue their youth training schemes and recruiting efforts.

But it does not follow from this that all transfer systems work well. Clearly, a transfer system must respect the player's right to choose his place of work. It would not be legitimate for a club to try to hold on to a player (even when that player is no longer under contract) until the club receives a satisfactory transfer fee. Yet we know this has happened in the past, either because the national transfer system was inadequate or because the appropriate rules were ignored. The Bosman case seems to have been a bizarre combination of both.

A modern transfer system must have appropriate guarantees which provide not only that clubs be compensated for their training efforts, but also that the player's right to freedom of movement is respected.

One way of testing whether the system meets these requirements is by asking the players themselves. This is not an easy exercise either because players, like clubs, vary enormously. Roberto Baggio, earning well over a million dollars a year, might not like the idea of a transfer system because he could earn even more money as a “free agent”. But an unknown player in the second division of the French league might like one because, without it, his club would be out of business and he might never have the chance of a football education in the first place.

National football associations have to reconcile the interests of those who have “made it” and those who have not. Its responsibility is to develop the game as a whole, not just look after the interests of top clubs and top players. And in some EU countries, transfer systems have evolved which are fully supported by the associations, clubs and players. What policy objective is supposed to be achieved by deeming such systems illegal?

The European Court of Justice was right when it recognised that the transfer system had legitimate aims, the most important of which is to secure the financing of small and medium clubs and provide employment opportunities for players.

But the Court was probably wrong when it suggested that transfer fees payable for the training of players were, in principle, contrary to EC law. The Court reached this conclusion on the basis that transfer fees could be replaced by another source of income, namely by re-distributing wealth from the top clubs. In other words, the ruling was based on a factual assumption which may or may not be correct. But if the Court has got it wrong as a matter of fact, does that mean it got it wrong as a matter of law as well?

In reaching its conclusion, the European Court (either deliberately or by accident) chose to ignore an unmistakable trend in football over the last decade. Wealth has been, and is being, concentrated in the hands of the top clubs: voluntary redistribution of wealth has not been part of the agenda. But the Court effectively told UEFA and national associations that they should reverse this trend. In other words, the major clubs should give more of their television, gate and merchandising income to finance the training of players at the very lowest levels of the league. How realistic is this?

As to the “three plus two” rule, some clarification is needed here as well. UEFA has never ordered associations to limit the number of foreign players in their domestic competitions. Some associations impose no such limits.

UEFA simply told leagues that if they had limits on foreign players, these could not be more severe than three foreign players plus two “assimilated” foreign players. This agreement was negotiated over several years between UEFA and the European Commission, leading to a deal signed in 1991 with Vice-President Martin Bangemann. So do not blame UEFA for the limits on the number of foreign stars who could play in a league game in Italy: that rule originated in Italy. In any event, it will now disappear following the Court's ruling and we shall be watching closely to observe the impact on our game at national level.

The Court said membership of national teams can be limited to nationals, but no restrictions can be imposed in national leagues. It also suggested that limits on the number of non-nationals were permissible in the case of matches between teams “representing their countries”. In European club competitions, such as the UEFA Champions League, a club obviously plays as the “representative” of its country. It participates in the competition as the national champion team of that country and the whole aim of the competition is to find the best national club team in Europe. If the clubs themselves do not wish to retain the rule for their competitions, it will no doubt disappear in due course.

There has been a lot of ill-judged comment in the media about football thinking it is “above the law”. This is ridiculous. Of course football is not above the law. The real question is whether we should, in the EC legal structure, be willing to make an intellectual effort to recognise that sport is something different.

The EU's primary aim is to eliminate national boundaries and create a single “common market”. Whilst this makes sense in most areas of economic life, it is difficult to apply exactly the same logic to sport, where national tradition and identity are so important.

In sport, national boundaries are not mere “barriers to trade”, but a vital part of the whole activity. Is it not about time this was recognised?

Alasdair Bell is a partner at Forrester Norall & Sutton and legal adviser to UEFA.