01 Aug How to deal with the X Factor in Football
The 2016/17 Premier League season is well underway and the headlines in transfer news have been dominated by Paul Pogba’s transfer to Manchester United for a reported fee of £89 million. The hashtag #POGBACK was rife on all possible platforms of United’s social media to highlight that Pogba was returning to the club he left 4 years ago. United had just re-signed their “ex”, but this time as the world’s most expensive player and at some 90 times more than the sum for which they sold him.
The case of Paul Pogba
The story goes like this. Pogba joined United from French club Le Havre in 2009 as a 16-year-old, but made just seven appearances before his contract expired in July 2012. Italian giants Juventus then signed him on what was reported as a free transfer, however United did eventually receive a fee of approximately £1.5 million. Given Pogba’s age at the time and pursuant to FIFA’s rules on training compensation, United were entitled to a relatively nominal fee for their part in developing the young Frenchman.
Another Similar Case
United are not the only club to have had a “case of the ex”. The same, albeit on a comparably smaller scale, happened to Chelsea when they re-signed defensive midfielder Nemanja Matic in January 2014 for a reported £21 million. Matic initially joined Chelsea from Slovakian club MFK Kosice on a four-year deal for £1.5 million in 2009, but was subsequently used as a makeweight in the deal that saw defender David Luiz join Chelsea from Benfica in January 2011. At that time of his move to Benfica, Matic was valued at less than £5 million. Chelsea re-signed him for more than four times that price only three years later.
Dealing with the “ex”
Notwithstanding the fanfare greeting Pogba’s return, some outside Old Trafford remain skeptical. Why did they let Pogba go in the first place? Why have they had to re-sign him at almost 90 times the price? Was this avoidable? Could United have paid less than the astronomical fee? In an attempt to justify this unprecedented fee, new Manchester United Manager, Jose Mourinho has said that he would have preferred the club not to have let Pogba go in the first place, but warned that it would be an even bigger oversight not to re-sign Pogba, given what he could contribute to the team. However the critics maintain that United’s astronomical outlay could have been avoided with greater care in the contract negotiation and drafting.
The “Buy Back” Provision
Inserting a “buy back” provision in the contract of sale, so that the selling club is in the driving seat when wanting to re-sign a former player, invariably caters for such an eventuality. A buy back provision would detail the conditions upon which the selling club may re-sign the player from the buying club. Additional clauses may determine the price at which the selling club may re-sign the player, the time frame within which to do so and whether or not the selling club would reserve the right of first refusal, when the player becomes available for sale.
Advantages of the “Buy Back” Provision
Buy back provisions are not uncommon in player transfer contracts, particularly in continental Europe. The most high profile in recent times has been Real Madrid re-signing of striker Alvaro Morata during the summer 2016 European Championship. Morata joined Juventus in 2014, after four seasons with Real. The terms of his move to Italy included a buy back provision for Real to re-sign him, with the fee reported to be €30 million (approximately £23 million). The advantages are clear in this case, given that the market rate for such a top quality striker would have been a multiple of the sum eventually paid by Real. The buy back provision thus ensured that Real were able to avoid the pit fall of re-signing Morata for an exorbitant fee.
Including a buy back provision does not necessarily bind the selling club to exercise it. Francesc Fabregas moved from Arsenal to Barcelona for a reported £35 million in 2011 after 8 years at the Gunners. When he was back on the market in June 2014, Arsenal did have first refusal to re-sign him, but did not exercise it. It was said by some that this was due to the number of similar players within the Arsenal squad at the time. Some on the other hand, contending that none of those other players were actually of Fabregas’s quality, considered Arsenal’s failure to resign their “ex” one of the worst decisions in football transfer business.
There may be several good reasons why a buy back provision may not be exercised, but it is prudent counsel to include such a provision wherever practicable, particularly with respect to young, promising talent that may not currently fit into the clubs plans, but may do so at a later date. In so doing, the selling club would have satisfactorily planned for taking back their “ex” on their terms.
Samuel Okoronkwo is a practicing Barrister. He specialises in Sports Law with particular emphasis in Professional Football and can be contacted at www.mercantilebarristers.com or through his Clerk at firstname.lastname@example.org