Clauses in soccer transfers

Soccer transfers have seen the emergence of new contractual practices not usually seen in other areas of law. Some clauses have even become the norm for a good transfer. Here’s an overview of these clauses, which frequently feature in the transfer section.

Transferring a player to a club: what are the practices?

The pre-emption clause

This clause is well known in real estate or in the sale of company shares, but it has arrived in soccer in a very noticeable way with the practice of the great Spanish clubs such as FC Barcelona or Real Madrid, who have been forever marked by the transfer of players gone to the enemy after a transfer to a third club, or by the late blossoming of gems from their training centers.

The pre-emption clause is the clause that allows club 1 to buy its former player outright, should the latter leave club 2, to which he has recently transferred, before joining club 3, to which he was about to sign. The effect of this clause is powerful: club 2 and club 3 agree on the amount of the transfer fee, the player also agrees with club 3 on his new contract, but it is at this point that club 1, informed of the situation by club 2, can buy the player at the price and under the conditions agreed between club 2 and club 3. This is how the player finds himself once again a player of the club 1 he had left a few years earlier.

One of the best recent examples is Mariano Diaz, a striker recruited by Olympique Lyonnais from Real Madrid for 8 million euros. After a fine season with Lyon, Sevilla agreed with Olympique Lyonnais to buy the player for 35 million euros. However, Real Madrid did not want Sevilla to triumph overnight with one of its former players, and decided to activate its pre-emption clause to buy its former player from Olympique Lyonnais for 35 million euros. The latter never joined Sevilla, returning to Madrid and, ironically enough, not only does he not play in Madrid, but Sevilla have never won another European title. This is where the second effect of the pre-emption clause comes into play: drying up a potential competitor.

What happens if a club does not respect the pre-emption clause in a player’s sale contract? If the contract is governed by French law, the penalty is simple: the transfer can be annulled under article 1123 of the French Civil Code. The same sanction can be applied to contracts governed by Spanish and English law, even if English clubs do not have this culture of pre-emption.

The resale bonus clause

The resale bonus clause is perhaps the one that brings the most delayed satisfaction to a club’s transfer. This clause was very rare seven or eight years ago, but has since become more widespread, particularly with the explosion of TV rights in the English and Spanish leagues. The resale bonus clause enables a club to recover a percentage of a player’s resale capital gain when that player is transferred by his new club. When club A sells a talented player to the more prestigious club B, it knows that the player’s value will most likely increase in club B, and that club B will sell him for more to club C than it bought him from club A. Anticipating this capital gain, club A inserts a bonus clause on the resale, enabling it to receive from club B a percentage of the player’s resale capital gain.

The case of French international Ousmane Dembélé illustrates the value of this clause. Trained at Stade Rennais, he made a name for himself in Ligue 1, and Rennes transferred him to Borussia Dortmund for the sum of 15 million euros. A year later, Ousmane Dembélé was transferred to FC Barcelona for 120 million euros, with Borussia Dortmund realizing a capital gain of 105 million euros. However, Stade Rennais had included a bonus clause on the resale, amounting to almost 30% of the capital gain, which enabled Borussia Dortmund to pay back the sum of 30 million euros. In the end, Ousmane Dembélé brought in 45 million euros for Stade Rennais, a magnificent operation.

Thanks to this clause, the original selling club benefits from the player’s increased value over the course of his career. However, this clause must be negotiated with care for the second selling club, in view of its treasury situation. In the case cited as an example, Borussia Dortmund had to pay the sum to Stade Rennais immediately, whereas Borussia Dortmund only received the money from FC Barcelona in instalments. Many bonus clauses have been negotiated at the end of negotiations without taking into account this cash flow effect for the intermediary club. A rebalancing consists of negotiating the bonus payment under the same conditions as the transfer payment.

Bonus clause based on the number of matches played

The match-play bonus clause enables the value of a player sold by a club to be adjusted upwards if that player plays more than a certain number of matches for his new club.

When AS Monaco sold Anthony Martial to Manchester United, Monaco included a bonus clause based on the number of games Anthony Martial played for his new club. However, being used to Manchester’s bench, the target number of matches played would never be reached during the life of the clause, and Monaco would never receive this bonus.

The automatic purchase option clause

This clause is found in player loan contracts, where the lending club stipulates that if the loaned player completes a certain number of matches with the new club, then the new club is obliged to buy the player at a price previously agreed between the parties.

This clause can sometimes lead to funny situations, with loaned players suddenly stopping playing official matches for their new club. A well-known case in point is that of defender Aymen Abdennour, on loan from FC Valencia to Olympique de Marseille, who played very few games for Olympique de Marseille for this legal reason.

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