Rules to move
Why the IPL needs a well-defined legal framework to govern player transfers
Amrut Joshi
03-Oct-2008
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Why are transfers - and a legal framework to enable them - necessary?
The issue of transfers is particularly relevant in league-based sports such as soccer, basketball and baseball, where professional players seek to play for franchises/clubs that offer them the most attractive remuneration packages. To put it rather simplistically, market economics takes over and ultimately it is about survival of the fittest. However, unlike in other industries, in sport it is imperative to have healthy competition between teams so that it is attractive to viewers. Australia's dominance in cricket and the Williams sisters' domination of tennis were both cited as examples of unattractiveness of sport for viewers. Hence the need for a regulated transfer market to preserve a competitive balance in sport.
The issue of transfers is particularly relevant in league-based sports such as soccer, basketball and baseball, where professional players seek to play for franchises/clubs that offer them the most attractive remuneration packages. To put it rather simplistically, market economics takes over and ultimately it is about survival of the fittest. However, unlike in other industries, in sport it is imperative to have healthy competition between teams so that it is attractive to viewers. Australia's dominance in cricket and the Williams sisters' domination of tennis were both cited as examples of unattractiveness of sport for viewers. Hence the need for a regulated transfer market to preserve a competitive balance in sport.
In cricket, the setting in place of a player transfer system will represent another step in
the commercialisation and professionalisation of the game. An orderly player transfer system will give players the freedom to ply their trade in a free market economy.
Is the IPL considering rules and regulations in the matter of player transfers?
According to recent media reports the IPL's governing council has tabled a few propositions on player transfers. These are to provide, firstly, for the trade of players among franchisees. Crucially, the transfer fees will not be subject to the cap of US$5 million placed on player fees per team, which was prevalent in the first season of the IPL. Secondly, it has been reported that the franchisee who transfers a player will be entitled to keep 75% of the transfer fee, with the remaining 25% going to the player. Finally, a "transfer window", from December 15, 2008 to January 15, 2009, has been suggested, which is to be the only period available for franchisees to effect player transfers.
According to recent media reports the IPL's governing council has tabled a few propositions on player transfers. These are to provide, firstly, for the trade of players among franchisees. Crucially, the transfer fees will not be subject to the cap of US$5 million placed on player fees per team, which was prevalent in the first season of the IPL. Secondly, it has been reported that the franchisee who transfers a player will be entitled to keep 75% of the transfer fee, with the remaining 25% going to the player. Finally, a "transfer window", from December 15, 2008 to January 15, 2009, has been suggested, which is to be the only period available for franchisees to effect player transfers.
What are the issues that would need to be addressed by the IPL?
While the above proposals suggest a basic framework for player transfers, there needs to be clarity on various issues so that player transfers do not become contentious.
While the above proposals suggest a basic framework for player transfers, there needs to be clarity on various issues so that player transfers do not become contentious.
Failure to outline firm foundational principles on which player transfers are regulated could have far-reaching business and legal consequences for the IPL, the franchisees and the players. A sketchy transfer system could lead to a chaotic situation within the IPL marketplace, which would be counter-productive to the overall growth of the league. The legal validity of such a system can be challenged by dissatisfied players, franchisees or both.
It would be in the interests of all concerned parties - the BCCI, the franchisees and the players - to examine issues, especially those to do with the termination of contracts. When and under what circumstances can a player's contract be terminated? Can a player terminate his contract with a franchisee before the expiry of the agreed term if he is unhappy with the management of the franchise? Can a franchisee terminate the contract of the player before the expiry of the agreed term if it is unhappy with a player's services? Can any compensation be claimed by either party for premature termination of a contract?
| A sketchy transfer system could lead to a chaotic situation within the IPL marketplace, which would be counter-productive to the overall growth of the league. The legal validity of such a system can be challenged by dissatisfied players, franchisees or both | |||
How does football deal with contract termination?
FIFA's regulations specify that a contract between a player and a club may only be terminated on expiry of the term of the agreement or by mutual agreement. The only exception to this rule is that a contract may be terminated by either party without consequences of any kind (either payment of compensation or imposition of sporting sanctions such as bans) in the case of "just cause". For example, FIFA Regulations stipulate that a professional footballer who has in the course of a season appeared in less than 10% of the matches involving his club may terminate his contract on the ground of "sporting just cause". What constitutes "sporting just cause" is determined on a case to case basis.
FIFA's regulations specify that a contract between a player and a club may only be terminated on expiry of the term of the agreement or by mutual agreement. The only exception to this rule is that a contract may be terminated by either party without consequences of any kind (either payment of compensation or imposition of sporting sanctions such as bans) in the case of "just cause". For example, FIFA Regulations stipulate that a professional footballer who has in the course of a season appeared in less than 10% of the matches involving his club may terminate his contract on the ground of "sporting just cause". What constitutes "sporting just cause" is determined on a case to case basis.
Does football have provisions for protecting investments made by clubs in younger players?
Yes, it is interesting to note that FIFA has specified a system where training compensation is required to be paid to a player's training club (s) in the following cases: (1) where a player signs his first contract as a professional, and (2) on each transfer of a professional until the end of the season of his 23rd birthday. This is to compensate a former club for its investment of time, money and effort in an Under-23 player's training and education over the years during which he was contracted to them. The IPL's governing council and franchisees would do well to consider providing for similar compensatory mechanisms, especially in the context of Under-19 players contracted by franchisees. Else franchisees run the risk of seeing promising talent groomed by them being poached by other franchisees.
Yes, it is interesting to note that FIFA has specified a system where training compensation is required to be paid to a player's training club (s) in the following cases: (1) where a player signs his first contract as a professional, and (2) on each transfer of a professional until the end of the season of his 23rd birthday. This is to compensate a former club for its investment of time, money and effort in an Under-23 player's training and education over the years during which he was contracted to them. The IPL's governing council and franchisees would do well to consider providing for similar compensatory mechanisms, especially in the context of Under-19 players contracted by franchisees. Else franchisees run the risk of seeing promising talent groomed by them being poached by other franchisees.
Has any foolproof system of player transfers been devised?
The systems and rules governing player transfers have been subject to intense judicial scrutiny, particularly in Europe. The most common grounds for challenging the regulations pertaining to player transfers are that, (a) they are anti-competitive in nature in that they impede the freedom of movement of labourers; and (b) they distort competition in the relevant market by imposing barriers to the movement of players between clubs. Undoubtedly, similar debates on the validity of the rules and regulations governing player transfers will commence as soon as IPL proposals take effect.
The systems and rules governing player transfers have been subject to intense judicial scrutiny, particularly in Europe. The most common grounds for challenging the regulations pertaining to player transfers are that, (a) they are anti-competitive in nature in that they impede the freedom of movement of labourers; and (b) they distort competition in the relevant market by imposing barriers to the movement of players between clubs. Undoubtedly, similar debates on the validity of the rules and regulations governing player transfers will commence as soon as IPL proposals take effect.
Considering the IPL has players from a number of countries - among them England and Australia, where labour laws are generally more rigorously upheld than in Asia - will the regulations not have to pass muster across these countries?
Every player's (and this includes overseas players) IPL contract is governed purely by provisions of Indian law. Therefore, even a transfer system will be governed only by applicable Indian law (in this case the regulations of the IPL governing council on player transfers specifically).
Every player's (and this includes overseas players) IPL contract is governed purely by provisions of Indian law. Therefore, even a transfer system will be governed only by applicable Indian law (in this case the regulations of the IPL governing council on player transfers specifically).
Amrut Joshi is an advocate at MMB Legal in Bangalore and leads the firm's sport practice initiatives. He can be contacted on email here. The views expressed in this article are his own