I wrote the other day about a legal challenge to the transfer fee policy within the EU. It’s quite a big deal – easily a deal the size of Bosman.
But there is another legal battle on the horizon, and just as the Bosman case involved a player you’d probably not heard of, so this one involves a club that may well have slipped under your radar.
In this case the club you probably don’t know is SV Wilhelmshaven of Lower Saxony, who some years ago signed Sergio Sagarzazu, aged 19. He had an Italian passport so could be signed by the German club, although the player originated from Argentina.
He came to Germany on a free transfer, got 11 games in 18 months, and then went back to Argentina on a free.
But Fifa, in their almighty wisdom and insanity, said that although there was no transfer fee, there should be a payment of “training compensation,” which is paid by the club taking on a player as a pro for the first time. It is a payment that follows a player in his transfers, until he is 23 years old.
So to bring this home, Arsenal have to pay Aston Villa for Dan Crowley this sort of fee, even though (as I understand it) Crowley was not a professional at Villa, but is about to, or just has, signed pro forms with Arsenal. There is talk on one web site of £1m being paid. Under the arrangements as I read them, if Arsenal sell Crowley before he is 23, some of the money has to go back to Villa under Fifa regulations.
Now back to the Sergio Sagarzazu case. He had two former “training” clubs, River Plate and Atletico Excursionistas. They demanded money from the third division German club, and took the case to Fifa. Fifa said that Wilhelmshaven owed 157,500 euros, even though the guy only played a handful of third division games.
And even though it represents around two thirds of the annual turnover of the German club, that’s what was demanded. It would have bankrupted the club.
Now there is a particular issue about training compensation, because in the EU we have very, very strong laws about restraint of trade. No one, not an employer, nor anyone else, can do anything that stops an individual legally carrying out his/her trade. So even if you have signed a contract that says that if you were to leave your current employer you must not work for a rival for three years, that contract is not enforceable in the EU because it is a restraint of trade. (You can stop a person giving away your secrets to a rival, but you can’t stop them earning a living).
As it happens, in 2004 Wilhelmshaven used this part of fundamental EU law when another German club had made the demand for this sort of compensation. The local court naturally threw the demand out. Training compensation restricts an individual’s freedom to choose the employer of his choice.
At this time Wilhelmshaven decided not to take on Fifa, despite having won in the local court – because as we all know, Fifa has a rule that says you can’t go to court on a footballing matter. So the German club offered to pay a fraction of the fee but Fifa said no.
The matter then went to the Court of Arbitration for Sport, a court which upholds the validity of the Fifa claim to be above the law in that it fixes its own super-national laws. In 2009 the CAS said that the Argentine clubs’ claim was valid under Fifa rules, and steadfastly ignored both EU and German law on restraint of trade.
Fifa, never an organisation to resist an opportunity to kick the little fellow when he’s down, told the German FA to deduct six points from Wilhelsmhaven.
Then, for a reason that I still can’t get to the bottom of, Fifa ordered the German FA to deduct another six points in 2012, although there was no new case. It might be because the club had still not paid the fee, but I really can’t be sure of this.
Then in November 2013 Fifa told the German FA that they had to demote Wilhelmshaven – again I am guessing because Wilhelmshaven still had not paid the compensation fee to the Argentine clubs – on the grounds that the fee was illegal in German law. Fifa also told the German FA that if it didn’t relegate the club and get the matter sorted, Fifa might ban Germany from the World Cup.
So now the club is going back to court, to get an order that the Fifa demand that the German FA relegate the club, is unlawful in German and EU law. If they win that one, then the German FA will not be able to comply with Fifa regulations, since if it deliberately acts in an illegal manner after being told by the court explicitly that this action is illegal, then the FA will be in contempt of court, and so would presumably be seriously fined by the courts until it stopped being in contempt – which would mean reinstating the club.
That would then trigger action by Fifa, who have a habit of taking any attempt to reduce their power very seriously.
Of course, such fights can often end in some sort of fudge, especially where a big hitter realises it has got itself into a corner from which it can’t escape except by fudging.
But it is interesting that here and there these issues keep cropping up, as people do realise that just because Fifa or Uefa say something, that does not put them above the law, even though they like to think they are.
The Anniversary Files… (part of the AISA Arsenal History Society blog)