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With the transfer of Phil Jones to Manchester United in ‘tatters’ as reported by the Telegraph, the very foundation of the term ‘Buy – Out Clause’ has been put under scanner. With Liverpool reportedly swooping in with a lucrative eleventh-hour attempt to hijack the United deal, Blackburn’s Indian owners Venky’s are seeking legal advice on the player contract and transfer issue, and thus have stalled the deal, for now at least. The current transfer scenario brings into mind the similar ‘Sergio Aguero’ bidding war between the perennial rulers of the transfer window, Real Madrid and their English competition, Chelsea. So, what is this clause and what are the legal repercussions associated? Let’s find out…
The initial question that springs to the mind is: What is a buy-out clause??
Well, a buy-out clause is essentially a pre-nuptial agreement between two contractual parties who feel that there is nothing like ‘Eternal Love’, and that Cupid may well be overshadowed by the evil of money, eventually. So, it acts as a ‘friend in need’ for the grieving party if infidelity sours up their relationship. So, enough of this companion shit! In layman terms, it is a clause in a player’s contract with their club which guarantees that the club will allow them to leave if another club makes an offer meeting some minimum value (specified in the clause). Well, in actuality, with the malign force of club administration at helm, this definition is confined to the dark interiors of the books only.
1. Sergio Aguero Transfer Saga:
Football ain't so easy, afterall…
The premier point to consider about La Liga is that a buy-out clause is ‘legally necessary’ in the contract. Hence we hear the princely sums of £150m and more vested in each of the Blaugrana and Galacticos’ contracts. These clauses are more than symbolic warnings to trespassers and form a part of the legal framework and serve as a gentleman’s agreement between clubs.
Taking Aguero’s case, the diminutive Argentine had a buy-out clause of €45m in his contract; essentially it means table an offer worth €45m and take the player. But there is a legal scope to it. If the current club perceives the bid as hostile and doesn’t want to sell their asset, the bidding club may have to resort to the legalities. Thus, the technicalities start.
- Scenario 1: If the bidding club takes the legal route, they will be permitted to trigger the clause at €45m but will have to pay VAT @18%, thus effectively hiking the price to €53.1m, thus proving to be a deterrent in the smooth processing of the deal.
- Scenario 2: The ultimate option for the current club is: simply refuse to sell, until forced to. That’s where the legal buyout clause kicks in, Decreto Real 1006/1985. According to it, technically a player can trigger the clasue and buy himself out anytime the relationship sours. So Aguero can pay €45m to Atletico Madrid and he’s gone for good. But the grass isn’t greener for the bidding club. As soon as the bidding club pays Aguero to transfer it to Atletico, it’ll count as income and will be subject to taxation at 44%; thus the bidding club will have to pay €80m to acquire his services; another stumbling block.
To top all the legalities involved, the buy-out clause is essentially a Spanish agreement; ergo it’s a moot point when a bid from across the border surfaces. So, the bidding clubs could not have muscled Atletico into selling their prized asset.
Thus, Tottenham’s last-ditch effort in the January window was met with stone-faced Atletico Madrid officials, basking away in the glory of the legal intricacies of the football world.
2. Phil Jones Transfer Saga:
Where does his future lie ?
The current candy of the English media, this transfer was set to be complete before Jordan Henderson moved to Anfield; but for the shrewd Indian owners of Blackburn, the Venky’s.
Here’s how it all unfolded:
- After a splendid season with Blackburn Rovers in top flight, the favourite pupil of England U21’s coach, Stuart Pearce, Phil Jones was a subject of a massive transfer tussle between the Big Four of the Premier League, with each looking to bolster their defensive ranks.
- Although every bidder triggered the release clause of £16m, Jones’ heart was set out on a dream move to the ‘Theatre of Dreams’ and he agreed personal terms with the club after passing the medical. Fair enough…or so?
3. Enter Venky’s; the owners of Blackburn weren’t convinced that a player of such potential be released for £16m and sought legal advice. Their stand is:
“An offer of £16 million merely allows a club to talk to Jones, and if the player is determined to leave, there should be an auction for his services.”
which seems to be a valid point; as the buy-out clause, if triggered simultaneously, by many suitors, the selling club has the right to hold on to the best deal.
4. Enter Liverpool. With the Blackburn owners in doubt, the Liverpool administration perceived a golden opportunity to out-muscle United by placing an audacious £22m offer on table. Arsenal and Chelsea are also reported to have better United’s offer. May Wenger’s economics degree Rest in Peace.
5. The current scenario: Venky’s have stalled the United deal until a decision is finalized and have wreaked havoc in Ferguson’s well-deserved vacations.
6. Though the buy-out clause enables a player to leave his club for greener pastures, but a bidding war enables the selling club to have their say and according to FIFA transfer rules, Jones and United may not be in a very strong position to enter into hard negotiations with Rovers.
According to Article 17 of FIFA Regulations on the Status and Transfer of Players,
The following provisions apply if a contract is terminated without just cause:
In all cases, the party in breach shall pay compensation. Subject to the provisions of article 20 and Annexe 4 in relation to training compensation, and unless otherwise provided for in the contract, compensation for the breach shall be calculated with due consideration for the law of the country concerned, the specificity of sport, and any other objective criteria.
In addition to the obligation to pay compensation, sporting sanctions shall also be imposed on any player found to be in breach of contract during the protected period. This sanction shall be a four-month restriction on playing in official matches. In the case of aggravating circumstances, the restriction shall last six months.
In addition to the obligation to pay compensation, sporting sanctions shall be imposed on any club found to be in breach of contract or found to be inducing a breach of contract during the protected period. It shall be presumed, unless established to the contrary, that any club signing a professional who has terminated his contract without just cause has induced that professional to commit a breach. The club shall be banned from registering any new players, either nationally or internationally, for two registration periods.
With the player under scanner, having agreed personal terms with the club and the afore-mentioned legal intricacies involved, the Phil Jones’ transfer tussle is bound to get more interesting and whatever may be the conclusion, we are in for what could prove to be a symbolic transfer in English Premier League; an example for similar future transfer feuds.
For now, the only universally accepted fact is:
In today’s world, nothing comes cheap!!
