Barcelona transfer ban will remove source of investment from football market, says expert

Out-Law News | 04 Apr 2014 | 11:44 am | 4 min. read

A year-long transfer ban imposed on Barcelona Football Club by governing body FIFA will have a knock-on effect on the wider football investment market, a sports law expert has said.

James Earl of Pinsent Masons, the law firm behind, said that the transfer ban handed to Barcelona by FIFA, which prevents the club buying players until the summer of 2015, could have "potentially huge significance" for wider football finance.

"We know that Barcelona is one of the most prolific spenders in the global player transfer market and the proposed ban on inbound transfers to the club, if it remains imposed, will remove a major source of investment from the market," Earl said. "Barca would also have to radically review their player management program since they may not be able to pursue intended targets, and will also need to re-appraise parts of their existing squad who were otherwise for sale."

"This will, in turn, also have a knock on affect on forecasts for clubs anticipating sales to, and purchases from Barcelona, so the overall impact would be potentially even greater than it appears at first glance," he said.

FIFA, the world governing body for football, fined Barcelona and banned the club from bringing in new players for a year after "serious" breaches of its regulations on the transfer of young players.

FIFA said Barcelona and Spain's national football federation (the RFEF) failed to adhere to rules concerning the international transfer and registration of 10 "non-Spanish minors" and the registration of players for participation in football competitions in Spain between 2009 and 2013.

Barcelona has already announced that it will appeal the decision to FIFA and said it would be willing to take its case to the Court of Arbitration for Sport (CAS) to rule over "should it be necessary".

Earl also said that sponsors may consider their relationships with Barcelona and that the ban could have implications for the club's brand value unless the club can show that its governance practices are up to standard, an expert has said.

"Barcelona holds a range of very lucrative arrangements with sponsors and commercial partners and this high-profile breach of rules comes hot on the heels of a number of tax investigations involving Messi and the Neymar transfer, and a state aid challenge regarding the club’s stadium redevelopment," Earl said. "With this pattern of events, those sponsors and partners may re-examine their respective relationships with Barcelona if such concerns cannot be allayed."

"It is no surprise that Barcelona has immediately announced an appeal against this decision from FIFA, and their intention to run the appeal to CAS if necessary – the stakes are simply to high for the club to take any lesser approach," he said.

In a statement, Barcelona defended the way it treats young players.

"The statute that FCB allegedly infringed upon is intended to protect minors from the actions of sports clubs that incorporate players without ensuring the required attention necessary for proper development, FCB itself does guarantee the development of its players through the model of La Masia," it said.

"La Masia’s model incorporates educational training programs, accommodation, meals, medical care, attention to the needs of children and sports development plans. FCB forms people before athletes, a fact that has not been considered by FIFA, which applies a penalty criterion that ignores the educational function of our training program," the club added.

Under FIFA rules (44-page / 125KB PDF), clubs are generally banned from transferring players across national borders when they are under the age of 18. However, several exceptions apply and permit such transfers of minors to take place, including where "the player’s parents move to the country in which the new club is located for reasons not linked to football".

The rules also permit transfers of 16 or 17 year old players within the EU or European Economic Area (EEA), subject to a number of "minimum obligations" being adhered to. Those conditions include ensuring that the players are given "an adequate football education and/or training in line with the highest national standards" and that they have access to schooling or other education or training so as to be able to "pursue a career other than football should he cease playing professional football".

A further exception allows under-18 transfers to take place if the player and the club are both based within 50 kilometres either side of a national border, so long as the player continues to live at home and the national football authorities on both sides of the border "give their explicit consent" to the transfer.

"The exception for the transfer of players within the EU and the EEA has clearly been included to accommodate the EU Treaty provisions which protect competition and freedom of movement within the EU," competition law expert Angelique Bret of Pinsent Masons said. "However, the exception is subject to certain conditions and it is not clear whether it applies to non-EU nationals."

"To the extent that it could be argued that the FIFA rules go beyond what is necessary to achieve the legitimate objective of protecting the interests of minors, there is some scope for a challenge on the basis that the rules infringe the EU Treaty provisions, in which case they would be unenforceable. However, if there is a balancing exercise to be done, it seems likely that the interests of minors would be prioritised," Bret added.

FIFA said that its FIFA Transfer Matching System (TMS) company had conducted the initial investigations into the alleged improper transfer dealings of Barcelona before the FIFA Disciplinary Committee took over the case.

The TMS is an online platform that FIFA funds through which clubs submit information and documentation when seeking to transfer a player across national borders. TMS checks the details submitted and issues a certificate to clubs to authorise the registration of the player by the national association of the new club. TMS also provides a platform for the first registration of under-18 players and manages international transfers of those players.

FIFA has said that two of the main aims of the TMS scheme are to ensure transparency in the transfer market and help protect children. It is mandatory for clubs to use when making an overseas transfer of players.

Barcelona has been fairly active in the transfer market in recent seasons and bought one player, Brazilian Neymar, for more than £50 million alone last summer.