Islj 2009 3-4 - TMC Asser Instituut

A more basic question is what weight should be attached to the
option transfer fee which assumed such importance in the compensation
awarded by the CAS? Alternatively, what does an option clause
for a transfer fee of €14 million in the loan agreement tell us about the
value of Matuzalem? An option clause provides a party with an option
to make a purchase. It constitutes a testing of the market. The party
who has this option will take it up or it won’t. It will take it up if it
believes that it is in its interests to do so, and vice versa. Lazio did not
exercise its option clause rights. It decided it was not in its interests to
affect a ‘definitive’ transfer of Matuzalem for €14 million.
Economic theory postulates that value is determined by the intersection
of the forces of supply and demand. If these two forces do not
intersect there is no transaction; hence the good or service under consideration
has no value. The €14 million was the supply price that Real
Zaragoza placed on Matuzalem. It represents the price it wished to
receive for him. Lazio was not prepared to pay such a price. There was
no transaction and in the absence of a transaction it is impossible to
prescribe any value for Matuzalem on the transfer market. This is the
stuff of a tutorial in a first year economics course.
The option fee represents an unsuccessful testing of the market;
income that Real Zaragoza hoped to obtain for Matuzalem. What is
disturbing here is that the CAS has accepted that what a club hopes
to receive in a transfer fee in calculations concerning the value of a
player. Moreover, this fictional transfer fee assumes the lion’s share (72
per cent) of the compensation subsequently awarded. If the option
transfer fee is subtracted from the amount the CAS awarded, ceteris
paribus and ignoring the Palermo offer, the compensation payout is
equal to €2,525,601. Revision Three. If the real transfer offer of Palermo
(amortised over two years) is substituted for the option transfer fee
used by the CAS, the payout would be equal to €5,986,268. Revision
Four.
The CAS included the three year contracts Matuzalem negotiated
with Lazio, for the 2008/2009 to 2010/11 seasons, and the first year of
his first contact (the 2007/2008 season) with Real Zaragoza and the
first two years of his second contract (2008/2009 and 2009/2010 seasons),
which were amortised over two years and then averaged, 65 as an
indicator of his worth as a player in the determination of its calculations.
Under the terms of the loan deal between the two clubs he
could not receive income from both contracts. The averaging of both
helps to diminish criticisms concerning double counting. The values
the CAS ascribed to these amounts, however, leads to a more fundamental
problem.
If Matuzalem had have played out his five year contract with
Shakhtar Donetsk he would have been able to take up employment
with another club free of the encumbrance of a transfer fee. He would
have been a free agent. He unilaterally left Shakhtar Donetsk with two
years remaining on his contract. Article 17 (1) says that one of the ‘particular
criteria’ that needs to be taken account of in determining a
compensation payout is ‘the time remaining on the existing contract’.
66 This should mean, to the extent that Shakhtar Donetsk
should receive compensation for income earnt by Matuzalem from
other clubs, it should be for the 2007/2008 and 2008/2009 seasons.
The CAS inflated its calculations on income earnt during seasons
after the expiry date of his contract when he could have become a free
agent; and on fictional levels of income rather than what he actually
earnt.
65 Paragraphs 107, 108 and 177 of The
Court of Arbitration for Sport, The
Matuzalem Decision, 19 May 2009.
66 Article 17 (1), Federation International
de Football Association, Regulations for
the Status and Transfer of Players [1 July
2005].
67 Paragraphs 18 and 21 of The Court of
Arbitration for Sport, The Matuzalem
Decision, 19 May 2009.
68 Paragraph 131 of The Court of
Arbitration for Sport, The Matuzalem
Decision, 19 May 2009.
69 Paragraph 26 of The Court of
Arbitration for Sport, The Matuzalem
Decision, 19 May 2009.
70Paragraphs 20, 21 and 22 of the Court of
Arbitration for Sport, The Matuzalem
Decision, 19 May 2009.
71 Paragraph 131 of The Court of
Arbitration for Sport, The Matuzalem
Decision, 19 May 2009.
72 Paragraph 178 of The Court of
Arbitration for Sport, The Matuzalem
Decision, 19 May 2009.
73 Paragraph 138 of The Court of
Arbitration for Sport, The Matuzalem
Decision, 19 May 2009.
In the 2007/2008 season he received €1 million from Real Zaragoza
and in 2008/2009 €895,000 from Lazio. 67 If these two are summed
and substituted for the fictitious earnings the CAS ascribed in its
determination (€4,325,600) the compensation payout, ceteris paribus,
falls to €9,428,333. Revision Five. If this revision is incorporated with
those conducted above, the levels of compensation would be equal to
€6,495,000 for the average of the amortised value of the Palermo
transfer offer and the option transfer fee as calculated by the CAS
(Revision Six); €4,361,666 for the average of the Palermo offer and one
year amortised value of the option transfer fee (Revision Seven);
€95,000 if both the Palermo offer and the CAS’s calculation of the
option transfer fee are ignored (Revision Eight); and €3,555,667 if the
Palermo offer is included and the option transfer fee excluded
(Revision Nine).
The CAS accepted that an amortised value of the transfer fee that
Shakhtar Donetsk paid Brescia to secure Matuzalem, an amount
equal to €3.2 million, should be incorporated into its decision. It
refrained from doing so, however, because it was ‘able to calculate at
the moment of the breach’ the value of the lost services which it
claimed it incorporated in its decision making. 68 This statement is
most ingenuous. Matuzalem breached his contract on 2 July 2007. 69
The overwhelming majority of the CAS’s award - the option transfer
fee negotiated between the clubs on 17 July 2008, Matuzalem’s three
year contract with Lazio on 22 July 2008 and with Real Zaragoza on
12 August 2008 70 - was based on developments which occurred many
moments, more than a year’s worth, after ‘the moment of the breach.’
A major problem with the CAS’s handling of the Brescia transfer fee
offer is discerning whether transfer fees should be included or not,
and if they are how they should be included in calculations of compensation.
On one reading they should. On another they should not,
if they have ‘been incorporated’ 71 with other factors in the decision
making process.
The CAS added €600,000 to its award because Matuzalem had
abandoned Shakhtar Donetsk prior to the beginning of the UEFA
Champions League. 72 It failed to provide any rationale (such as how
his absence ‘changed’ the results of various games and the translation
of this into a monetary amount - note here its problems in attributing
a value for an equivalent or replacement player) 73 on how it
arrived at this figure. Its failure to provide an explanation on this matter
will require a resolution in future cases.
Webster enunciated the principle that Article 17 (1) should apply
equally to players and clubs and compensation payments should not
be punitive or lead to enrichment. Matuzalem favours clubs over players
and enables the enrichment of clubs that cannot be replicated by
players. If Shakhtar Donetsk had unilaterally terminated Matuzalem’s
contract he would have been entitled to receive €2.4 million, income
owing to him on his contract. Matuzalem unilaterally terminated his
contract and Shakhtar Donetsk was awarded €11,658,934. Matuzalem
has developed principles which do not treat players and clubs equally
and are punitive towards players. Can this be rectified?
There are three ways in which clubs can end an employment relationship
with a player. The first is to simply pay out his contract. The
second is to unilaterally terminate the contract using Article 17 and
wait for a ruling from the DRC or the CAS as to the level of compensation.
With both these approaches the player would presumably
receive the same level of compensation. If he finds himself terminated
by the second option should he receive a top-up for the increased
strain and the need to litigate to realise his rights over the more gentle
termination of having his contract paid out? The third is to transfer
the player to another club during the life of the contract and
receive the concomitant payment of a transfer fee. This third option
may provide a potential way for Matuzalem to be squared with Walker
for players transferred to other clubs.
This third option could be viewed as a club bringing about the
constructive unilateral termination of a player’s contract. In the various
ways that a club has available to it to influence the behaviour of a
player, it can convince him that it is time to move on. When a player
unilaterally terminates a contract, Article 17 assumes the club that
takes up his employment is severally involved and jointly liable for the
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