Hey there! Shounak here 👋
Welcome to Issue #11 of Your Weekend Beer - a weekend newsletter that hits your inbox every Sunday. We are a 160+ member community that helps you make sense of the business world of football - with a pint of Beer.
If you are new to your Beer club, you can check out your previous Weekend Beers here.
We are an inclusive community- if you have any inputs or ideas on topics that you want me to write on, feel free to get in touch. I reply to each and every message- in fact, I look forward to hearing from each and every one of you!!
If you’ve been forwarded this email, you can…
Friends,
The football business juggernaut is moving faster and stronger than ever. Over the past few years, European football has witnessed multiple transfer records being made and broken. Cristiano Ronaldo’s world transfer record to Real Madrid in 2009 pales in comparison to Neymar’s massive transfer fee which saw him make a move from FC Barcelona to Paris Saint Germain.
Much of this transformation in European football can be attributed to a landmark case decided by the European Court of Justice on December 15th, 1995 – The Jean-Marc Bosman case.
Prior to Bosman, football clubs were vested with the power to transfer players. For instance, in England, if a player wanted to move to a new club, he had to put in a written transfer request. If the club refused the request, the player had no choice but to stay at the club for as long as they kept paying the same amount of wages.
Although the rules of the National Football Association of Belgium (URBSFA) were slightly different from that of their English counterpart, the power vested in the clubs remained the same. It was here that Jean-Marc Bosman was plying his trade in the first tier of Belgian football at RC Liege.
The Bosman Story
Jean-Marc Bosman’s contract with RC Liege was due to expire on June 30, 1990. Under the URBSFA Rules, clubs were required to offer professional players new contracts at least 65 days before their expiry. RC Liege obliged and offered Bosman a fresh contract. However, Bosman rejected it as the new deal was paying him 25% less than his previous one.
Subsequently, he was put on a list of players available for “compulsory transfers”. This transfer had to be finalized between the 1st of May till the end of the month. The transfer, if finalized, was subject to payment of a compensation fee to RC Liege for training and developmental costs to the tune of Bfr 12 million.
Unfortunately for Bosman, no club came forward to acquire his services before June 1st. Which meant the compulsory transfer period ended and the "free transfer" period began. During this period, an agreement for the temporary transfer of Bosman was reached between RC Liege and French Second Division Club, FC Dunquerque, a club contacted by Bosman himself.
The agreement was however subject to two variables.
First, FC Dunquerque had to pay a reduced “registration fee” to RC Liege. Second, an International Transfer Certificate had to be issued by the URBSFA to the French club before August 2, 1990.
Feeling uncertain about the solvency of the French club, RC Liege did not instruct the URBSFA to issue the clearance certificate for the transfer. As a result, the whole deal fell through. Under the URBSFA Rules, RC Liege suspended Bosman, so that he was unable to play throughout the duration of the 1990-1991 season.
On 15 December 1995, after several domestic hearings in Belgium and numerous aborted attempts to take the matter before the European Court of Justice (ECJ), the ECJ finally heard Bosman’s case referred to by the Liege Court of Appeal.
The Court first addressed the primary issue as to whether the scope of Article 48 of the Rome Treaty included professional football. Article 48 guarantees the freedom of movement of workers throughout the European Union and prohibits discrimination based on nationality, as regards employment and remuneration.
The Court answered this question in the affirmative stating that all that was required to apply Article 48 to the rules of professional football was the existence of or an intention to create an employment relationship.
More importantly, the Court held that Article 48 does not envision that a professional fee had to be paid to a club for the sale of a player whose contract had expired, and its, therefore, no longer a part of the club.
The application of these rules, the Court held, were likely to restrain the freedom of movement of players guaranteed under Article 48.
Although the ECJ regarded the transfer rules to be an unnecessary restraint on the freedom of workers, such rules would be considered lawful if they pursued “a legitimate aim compatible with the Treaty” and are “justified by pressing reasons of public interest”.
The 3+2 Rule
Another major issue brought before the Court in Bosman was the issue of the legitimacy of the famous “3+2” rule, and whether or it was in violation of Article 48.
The “3+2” rule had its roots in the 1960s when football associations, including UEFA, introduced rules limiting the number of foreign players any club could field in a match.
In 1978, two years after the ECJ held in Dona that sporting associations which restricted the rights of players who are European nationals violated the free movement principle under Article 48, the UEFA entered into negotiations with the European Commission.
The UEFA agreed to allow up to two foreign nationals from the Member States to play in each of the clubs of the various national federations under its jurisdiction. Additionally, all foreign players who had resided for five years in the state of the association would also be allowed to play.
In 1991, following discussions with Mr. Bangemann, the then Vice-President of the Commission, the UEFA altered its rules with respect to foreigners.
On July 1, 1992, each team under the UEFA was now permitted to play with three foreigners, as well as two additional "assimilated" foreign players, who have played in the country for an uninterrupted period of five years, including three years as a junior. This regulation came to be commonly known as the “3+2” rule.
The Court in Bosman held that the nationality requirement acted as an impediment to the free movement of persons since it reduced the opportunities of players to be employed in other European member states.
One of the arguments put forward by UEFA was that it only restricted the number of foreign players who could be fielded during a game and not the number of foreign players teams were permitted to employ.
Dismissing this argument the Court held that “in so far as participation in such matches is the essential purpose of a professional player's activity, a rule which restricts that participation obviously also restricts the chances of employment of the player concerned”.
With regards to the argument put forward by UEFA that fielding foreign players would hamper the identity of the particular club, the ECJ held that “the nationality of individual players is entirely dissociated from the sporting identity of the football clubs”.
The conservative approach taken by clubs prior to Bosman not only prevented talented players from leaving for a club of their choice at the expiry of their contract but also led to discrimination on the grounds of nationality by allocating a quantitative restriction on the number of foreign players permitted to be fielded by a club.
What Now?
Post Bosman, players are free to leave on a free transfer at the expiry of their contract. The problem however is still far from resolved. The massive increase in transfer fees has seen rich clubs grow richer at the expense of smaller clubs, who struggle to hold on to their players.
This has resulted in a cartelization of European powerhouses, making it extremely difficult, and honestly unfair, for smaller clubs to compete with the big clubs. Attorney General Lenz, appearing in the Bosman case was of the opinion that there should be a system of income distribution resulting in economic co-dependence between clubs.
The transfer fees have nothing to do with the training and developmental costs incurred by the club, as the fees are directly proportional to the increase in the salary of the player in question.
For us football lovers, the Bosman ruling gives us hope that maybe the day is not far away when we see FC Nordsjaelland defeat Manchester City in a closely contested Champions League final.
PS: You can read the original judgment here.
For Your Eyes Only…
The exuberance of youth: A young Joachim Low playing for Eintracht Frankfurt in 1981.
The Young French Magicians: Karim Benzema, Hatem Ben Arfa, and Samir Nasri celebrate their U17 Euro win in 2004.
Ballers: Ricardo Quaresma, Cristiano Ronaldo, and Paulo Bento.
What Else Are We Reading…
- Gregg Oldfield, CEO of Engage Media Partners, explains how "digital-first and personality-driven” content performed best during the pandemic.
- 3 Hare Court Chambers has launched a new sports law podcast, kicking off with Macclesfield Town's recent winding-up order and financial sustainability.
- The modern sports bar: LaLiga has launched TwentyNine’s - a tech-driven sports bar concept with an in-built stand - to promote LaLiga globally
- The sports industry’s Gen-Z problem: Fewer fans. Lower Viewerships.
- How Chester City’s American Dream turned into a nightmare.
Strike Of The Day…
Your Weekend Beer took us 30+ hours to brew. Phew!
I am exhausted.
It’s not easy juggling work and maintaining an OC newsletter. If you liked Your Weekend Beer, please go ahead and share a pint with your football buddies.
Until then…