Tribunals and Tribulations of the Transfer Window – The Danny Ings Case Study
As the summer transfer window looms in England, Chief Executives, Directors of Football, Transfer Committees, Managers and/or Agents ought to be aware of how Tribunals may play a part in determining what they may pay for their next signing.
A contemporaneous case in point is that of Burnley striker, Danny Ings. The 22 year old has rejected a new contract offer from Burnley and is on the market for new employment having scored 11 goals in 35 Premier League appearances. Many top flight clubs in the Premier League and abroad will be looking to acquire his services, especially given that he is out of contract this summer. Although recent reports suggest that Tottenham Hotspur have had a £12m bid accepted by Burnley, Ings gas not agreed personal terms with them. Rather, he has agreed terms with Liverpool who have had a £4m offer rejected.
However, one may wonder why any fee should be payable if the Player is to all intents and purposes, a free agent?
Why a Tribunal?
Pursuant to the well-established Bosman rule the Player, as a free agent, ought to be able to seek new employment with his prospective employer only having to be concerned with the Player’s wages and signing on fee, if any, rather than an additional transfer fee. In the Ings case, however this will be different given that the player is (and at the time of any prospective move, will be) under 24 years of age.
A Tribunal becomes a necessity when Players falling into that category have 6 months or less to run on their contract of employment, which in essence is a Bosman scenario, and the Player has rejected the offer of a new contract in favour of one on similar or better terms from another Club. In these circumstances Rule C1 of the Rules of the Association and Rule 64 of the Football League Rules state that such prospective employers must still pay a fee to the Player’s parent Club to reflect their investment in nurturing, developing and educating the Player.
There are two ways to square the circle. Firstly, both Clubs may with sound and amicable negotiation agree on a fee to reflect the Club’s development of the Player. This is usually the best option as it avoids unnecessary costs of adopting the second option. The second option consists of a specially convened Tribunal to determine the level of compensation payable by the new Club to the parent Club for the Player. This is usually convened in the guise of a League Appeals Committee (“LAC”) or Professional Football Compensation Committee (“PFCC”).
These consist of a panel including an independent Chairman and two members appointed by the Premier League and/or Football League to determine the difference between the parties. From time to time a member from the League Managers Association and/or the Professional Footballers Association may also be included to assist in the adjudication.
Elements of a determination
Notwithstanding some assertions that the PFCC simply splits the difference or takes an average between the two Clubs valuation of the Player, this is in fact not the case. If that were the case such a determination would have no legal or commercial basis to be accepted by either party.
To the contrary, a number of factors are taken into account when the PFCC adjudicate on such a matter. This non-exhaustive list includes,
- The Player’s age and performance in recent seasons;
- The market rate for similar Players;
- Formal interest shown in the Player;
- Financial footing of each Clubs Academy;
- Comparison of terms proposed by both Clubs.
Quite apart from establishing the level of compensation payable, it is not unusual that in the course of determining a figure, proportions of the compensation could be staggered to be paid at certain intervals or paid upon the achievement of certain milestones in order to properly reflect the true value of a Player, which is subject to change over time.
As such when English Clubs are considering snapping up an out of contract Player, 24 years old or under, they should be mindful that a fee will still be payable. What that fee may be, will depend on a number of factors upon which specialist Counsel could advise upon whilst the bid is being contemplated. In any event specialist Counsel quite apart from assisting the parties to reach an amicable conclusion would also be of great assistance to the Tribunal if the same becomes inevitable.