In the course of the past century, football has become one of the most important sports in the world, and as a result of this, businesses around it have increased and sophisticated considerably. In this context the concepts of “Federative Rights” and its derivate economic rights have given rise to various interpretations.
The “Federative Right” is the right of any sports entity to register a player in a specific official competition organized by a federation or an association; this allows the player to participate on behalf of the sports entity and represent such entity in the relevant competition. This right is also often called: “right of transfer” or even “right of pass”.
The Federative Right begins its existence for the club, when the club enrolls the player, with his/her consent, in a federation or an association, being irrelevant the discipline and category.-
That is the reason why it is necessary to distinguish the players “registration” with the “employment contract” as such that exists between the club and the sportsman. Despite being closely related, these are two different acts: the employment contract can be executed at any moment, either before or after the registration, or perhaps never held as in the case of minor amateur players.
In connection with professional players, both acts are necessary to effectively fulfill its purpose. That is the reason why, although a player can have a contractual relation with a club, such player cannot develop his/her professional services in an official competition on behalf of the entity, if he/she is not registered before the relevant association or federation; and vice versa, even if the club holds the players’ federative rights, he will not render his sports services until the contract with the relevant institution is performed.
This distinction is important for rights arising from one act or the other are not the same.-. For example, the federative right creates a series of rights that cannot be shared with other sports entity, such as the relevant clubs’ right over a player representation in an official competition. Many refer to this particular right as the real exercise of the federative right. A certain club cannot share with another club a percentage of this right, considering that a player can only compete officially for one single entity.
However, it is commonly accepted that athletes’ federative rights possess also a great economic content, which are normally referred to as the “economic rights derived from the federative right”.
These economic rights are the result of the federative rights; hence all the legal prohibitions that govern federative right are applicable to such economic rights.
Economic rights are not autonomous; these are ancillary to the club rights because of the players’ registration in the relevant federation. As a result, only clubs that are directly or indirectly affiliated with a national association belonging to FIFA can take advantage of the economic rights derived from the federative rights, and not individuals or legal entities who do not have such affiliation, since these cannot acquire the principal right, that is, the federative right.
That is why these economic rights cannot be subject to negotiations or transactions by businessmen and companies that are not sport entities. Such acts would entail fraud to applicable law, and such contract would be null and void. Because of this, it is very important the action of the judges who have the responsibility and obligation to punish with the most severe consequence (nullity) any contract that executes such negotiations with people not allowed by law. Fortunately, in the specific case of Argentina, there have been cases where courts have decided the nullity of contracts that violated the current legislation in this sense.
It is important for this analysis the changes made in 2001 and 2005 to the FIFA “Regulation of the Status and Transfer of Players”. Because of these changes, the federative right on its own, no longer possess that great economic value as above mentioned, instead it is highly necessary that the contract between the club and the player continues to be in force. This means that today it is more important the labor contract than the registry title in this economic aspect.
Section 17 of FIFA’s “Regulation of the Status and Transfer of Players”, the club that has a valid contract with a professional soccer player, will be entitled to compensation if the player executes a new contract with another club during the validity of the previous contract.
The Federative Right has lost much of its economic content, since the title of the Federative Rights has no actual transfer value in itself if there is not a valid labor contract. This is because nowadays FIFA provides for a compensation for the breached labor contract and not a compensation for the player transfer to another entity.
Thus, the economic value of the federative rights is related to payment of training compensation and solidarity mechanism. The first is the right that belongs to clubs which have trained players between 12 and 21 years old, and refers to a compensation for each transfer of the relevant player until the player is 23 years old. And the solidarity mechanism provides that if the professional player is transferred before the contract expires, the clubs, which have contributed to his education and training, will receive a percentage (5% at most) of the compensation paid to former club.
For this reason, nowadays, the economic rights derived from federative rights will only include training compensation and solidarity mechanism. Instead, compensation for prematurely breached contracts would not be included, considering this is the counterpart of the early breached labor relationship between the player and the former club and not the consequence of the registration’s title transfer. Section 2 of the “Regimen of Notes and File of Economic benefits’ Cession Transfer Contracts ” issued by the Argentine Football Federation (AFA), allows rights to be assigned to individuals or legal entities regularly constituted as a compensation for an early breach of contract, understanding these rights are not ancillary to the Federative Rights.
Should you have any question or comment regarding the foregoing, please contact us by calling at (54-11) 5252-2462, via Fax to (54-11) 5252-2463 or by e-mail to info@canosa.com.ar.
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