You all remember Lassana Diarra, right?

I remember being so excited when he signed, with both a physical and playing resemblance to Claude Makelele. I was so sure he would be a perfect replacement and go on to make an indelible mark on Chelsea. As fate would have it, he might well have.

In 2014, Diarra fell out with his manager at Lokomotive Moscow and as a result, his contract was terminated by the club. Diarra lost his original case to FIFA and CAS in 2016, who upheld Lokomotiv Moscow's case stating the club acted within FIFA's rules, suspending Diarra from Russian football for 15 months, and fining him some part of the value of his contract (€10.5m).

When Diarra attempted to join Belgium's Charleroi in 2016, FIFA refused to issue him with an International Transfer Certificate (ITC) which clears him to transfer and be registered in a different association. In doing so, they confirmed Charleroi that it would be jointly and severally liable for the money Diarra owed to Lokomotiv Moscow as per FIFA rules for transfers.

The CJEU has ruled that this FIFA rule, and some of the processes involved in how FIFA arbitrate contractual disputes between player and clubs, breach EU employment and competition law. The ruling means that most of FIFA's Regulations on the Status and Transfer of Players are null and void in the EU.
 

What actually is a transfer/transfer fee?
According to the current FIFA transfer system, if you sign a player who owes a debt to their current club, you inherit that debt. You might even recall that Chelsea relied on these rules when it pursued Juventus and Livorno for transfer fees, after they signed Adrian Mutu before he had paid the money he owed Chelsea.

A player who moves to another club breaks their contract, and 'owes' their parent club money; under the current FIFA rules, any club that signs that player is also liable for the owed money. This is what a transfer fee is. The nature of the market is such that clubs will often pay more than just the book value of contract to secure player, but in effect a transfer fee is just an agreed amount to stop a club taking legal action against another club or player.
 

The decision and impact
For now, nothing will change.

FIFA has implemented interim rules which are subject to challenge and consultation. There is no stated time-frame for permanent change, but it will need to be soon.

The main points are that CJEU ruled in favour of Diarra/Charleroi's argument that clubs should not be held jointly and severally liable for a player breaking their contract, and that FIFA's requirement for an ITC unjustly impinged on the movement of employees within the EU. While this means that a player who unjustly terminates a contract can incur a huge personal debt to the club, the club actually has to take legal proceedings against them to recover it, and they are free to work for another club in the meantime. In effect this would limit the maximum transfer fee to the value of the player's contract remaining, since the buying club can simply consent to reimbursing the player for buying out his contract.

CJEU also found that FIFA's entire system for arbitrating contractual and transfer disputes as procedurally unfair, given that players had to prove just cause and the proceedings took months if not years, all the while the player is barred from playing. This was also found to violate EU employment rights.

What probably hasn't been reported well however is just how far CJEU went in criticising FIFA's current system. CJEU also questioned FIFA's argument that the Rules are there to ensure 'contractual stability'. While it accepted that FIFA has an important role to enforce contractual stability to ensure players are paid fairly and that football competitions have some stability to ensure integrity, CJEU believes that this is only valid for a current season and that FIFA's rules go too far in allowing clubs to enforce multi-year contracts, in a manner that is also inconsistent with EU employee rights.

Although it was not a key question in the actual Diarra case, it was an opinion expressed by CJEU, and therefore players and Fifapro could rely on it in a challenge. This is potentially the biggest threat to the current transfer system. In the absolute extreme, players could only be required to fulfill a contract for a whole season but would be free to transfer to any other club in the off-season, while the club must fulfill their end of the contract year on year. We could sign Cole Palmer and by season's end he could be off to Real Madrid for the remaining value of his contract.
 

The impact on Chelsea
At long last and as we all predicted on the old CSR and TSE, Diarra's finally made his mark on Chelsea.

Any club looking to wheel and deal players is likely going to be severely impacted by the new rules. Contracts will ensure that clubs pay players, but will no longer restrict the movement of players and will no longer give the power to clubs to dissuade players seeking a transfer. Transfer fees will be capped to the value of a player's contract, making FFP/PSR profit much harder indeed, but academy players on long contracts will be even more valuable as 'pure profit'. Clubs will need to compete on wages rather than rely on transfer fees to secure their targets, which means youth scouting and academy prospects are going to be even more vital. Transfers, as a source of revenue, are likely to be a thing of the past, which seems like it will seriously impact Clearlake's strategies.

'Bomb squads' will also be a thing of the past; any attempt by a club to force a player's transfer or impinge on their right to work could lead to 'just cause' and allow the player to walk away from their contract for free. CJEU believes that FIFA has too heavily favoured clubs in contractual disputes and the likely new rules will mean situations like Sterling/Chilwell/Chalobah allow players to simply terminate their contract and move elsewhere.

The current strategy of handing out long-term contracts actually might turn out to be a popular idea, since the only way to secure a player value is to ensure they have lots of years left to run on their contract. However, players will be freer to walk away, which means our lower wages/incentive scheme will be easy to exploit by buying clubs, and managers/clubs won't be able to simply not play them for contractual reasons as this is likely to give them just cause to terminate a contract.

In short, the end is nigh for the current transfer market. The new one will look very much like the old one, only with more power to the players, less power to the clubs, Clearlake needing to take stock of its investment strategy, and all because of Chelsea's 'little' Lassana Diarra.

Edited February 6Feb 6 by SydneyChelsea

I forgot to add one major point:

CJEU also criticised the way that FIFA and CAS calculate the compensation payable for breach of contract. The gist of their judgement is that FIFA/CAS can no longer solely rely on the wage value of the contract and that this makes for an illegal restriction in effect. For example, if a player breaches their 5m/year contract with 2 years to run, historically FIFA/CAS have calculated the compensation payable by the player to be around 10m.

CJEU are saying that calculation is too biased in favour of clubs to meet EU legal standards and needs to be changed, and their view is that compensation to clubs for release should be significantly less.

CJEU has also commented that FIFA/CAS's use of sporting restrictions, eg suspension if a player breaks contract to join another club, is illegal in the EU.

This means that transfer fees are likely to disappear entirely. Players will be able to end their contract for a token, arbitrated fee, and a buying club can recompense the player for doing so.

 

If it means we'll never have to see another of those tedious and meaningless 'net spend' graphs I'm all for it. 

How does this sit with our current status of not being in the EU?

And could this encourage European Clubs to revisit a Super league outside of FIFA/UEFA?  

On 07/02/2025 at 02:26, SydneyChelsea said:

I forgot to add one major point:

CJEU also criticised the way that FIFA and CAS calculate the compensation payable for breach of contract. The gist of their judgement is that FIFA/CAS can no longer solely rely on the wage value of the contract and that this makes for an illegal restriction in effect. For example, if a player breaches their 5m/year contract with 2 years to run, historically FIFA/CAS have calculated the compensation payable by the player to be around 10m.

CJEU are saying that calculation is too biased in favour of clubs to meet EU legal standards and needs to be changed, and their view is that compensation to clubs for release should be significantly less.

CJEU has also commented that FIFA/CAS's use of sporting restrictions, eg suspension if a player breaks contract to join another club, is illegal in the EU.

This means that transfer fees are likely to disappear entirely. Players will be able to end their contract for a token, arbitrated fee, and a buying club can recompense the player for doing so.

 

Thanks for this information mate.

Does the likely disappearance of transfer fees mean that our "plan" to buy young players and then sell them on for profit will no longer be possible?

12 hours ago, The Rising Sun said:

Thanks for this information mate.

Does the likely disappearance of transfer fees mean that our "plan" to buy young players and then sell them on for profit will no longer be possible?

To an extent, yes. It depends on how strongly FIFPro (players union) pursues FIFA in the EU courts. CJEU's decision is the latest in a long line of EU decisions that affirms the status of players as employees of clubs, not tradeable assets.

FIFA could yet have one rule for EU and one rule for everyone else, but in practice there are no clubs outside Europe - except Saudi - capable of paying mega transfer fees.

The key opinion of CJEU here is that contracts are necessary to retain players during a season, but shouldn't restrict the right of players to move between clubs between seasons. It ruled that the imposition of transfer fees is a restriction in terms of EU competition law. 

Practically speaking I think that means transfer fees will be effectively capped at the remaining value on a player's contract, and wages will be the new incentiviser.

 

 

9 hours ago, SydneyChelsea said:

To an extent, yes. It depends on how strongly FIFPro (players union) pursues FIFA in the EU courts. CJEU's decision is the latest in a long line of EU decisions that affirms the status of players as employees of clubs, not tradeable assets.

FIFA could yet have one rule for EU and one rule for everyone else, but in practice there are no clubs outside Europe - except Saudi - capable of paying mega transfer fees.

The key opinion of CJEU here is that contracts are necessary to retain players during a season, but shouldn't restrict the right of players to move between clubs between seasons. It ruled that the imposition of transfer fees is a restriction in terms of EU competition law. 

Practically speaking I think that means transfer fees will be effectively capped at the remaining value on a player's contract, and wages will be the new incentiviser.

 

 

Thanks for this information 👍

14 hours ago, SydneyChelsea said:

To an extent, yes. It depends on how strongly FIFPro (players union) pursues FIFA in the EU courts. CJEU's decision is the latest in a long line of EU decisions that affirms the status of players as employees of clubs, not tradeable assets.

FIFA could yet have one rule for EU and one rule for everyone else, but in practice there are no clubs outside Europe - except Saudi - capable of paying mega transfer fees.

The key opinion of CJEU here is that contracts are necessary to retain players during a season, but shouldn't restrict the right of players to move between clubs between seasons. It ruled that the imposition of transfer fees is a restriction in terms of EU competition law. 

Practically speaking I think that means transfer fees will be effectively capped at the remaining value on a player's contract, and wages will be the new incentiviser.

 

 

Great information. Thanks for sharing. I suppose if anything positive comes out of this, it means that Clearlake will have to change their strategy. Or perhaps they will realise that their money-making scheme is no longer valid and look for somebody to buy them out?

So being Aussie, I completely forgot one major, crucial detail to the above - Brexit!

Since CJEU's decision only applies to EU member states, FIFA must decide whether it will reform the transfer system as a whole or have a two-tier system - one set of rules for the EU, and one for the rest of the world.

In the most extreme, oversimplified interpretation, CJEU's decision means that transfer fees will no longer exist between EU clubs. A two-tier system would mean that EU clubs would not be able to charge transfer fees for movement between themselves, but non-EU clubs will.

The highest-spending transfer markets in the world at present are England and Saudi Arabia. Both are non-EU. If FIFA were to adopt a two-tier system, it would significantly advantage English and Saudi clubs because:

• English/Saudi clubs could pay transfer fees to EU clubs, meaning selling England/Saudi will remain the preferred option for financial reasons

• English/Saudi clubs could still require EU clubs to pay them transfer fees, protecting their assets

This sets up a tricky political situation for FIFA (and UEFA) to navigate, because while the EU is the spiritual and cultural home of football, the economy of football ultimately relies on England, Saudi Arabia, and the paying fans of Asia and America. England has already thrown its support behind Saudi Arabia and both AFC/CONCACAF in general, so they will make a formidable voting bloc if they decide to protect their own interests.

A useful comparison would be cricket, where despite the ICC having a global remit, nothing is done in the game without the consent of India, the game's financial powerhouse.

Since Brexit means that none of the above applies to clubs in the UK, I am assuming England would be excluded. However, since CJEU's decision relates to EU competition law, it is possible that the same principles apply in English law and Article 17 of FIFA also contravenes English law. That is yet to be decided, and may yet guide England's path. FIFAPro have already stated their intention to pursue this in other jurisdictions if FIFA do not make a suitable amendment.

From a Chelsea perspective, this presents us with a all-or-nothing situation. A unified FIFA rule will utterly torpedo the Clearlake trading model. A two-tier rule would land Clearlake a golden goose.

Edited February 26Feb 26 by SydneyChelsea

I'm thinking a Super League could have a part to play in the future and the current Champions League could expand to say 48 making it similar to a Super league in all but name.

Yeah, I think. Most people seem to think ESL will win its EU court case on competition grounds.

These cases seem to confirm that any obligation to FIFA is due to tradition rather than legal grounds. IFAB are the custodians of the game in that they define the rules of the actual sport, but FIFA is just a corporate bureaucracy that decided to become the sport's administrator and final arbiter.

There doesn't seem to be any legal reason why we can't have two competing "UEFAs", with different competition rules.

Given FIFA/UEFA's indifference to fans and players and incompetence dealing with clubs, others like @dkw have pointed out Super League done well might return football to some semblance of normality.

Interesting topic, thanks for the information SydneyChelsea.