HomepageCommercial LawPrivate LawPublic Law & Human RightsCriminal LawEU & International LawCareers

Accessibility

Have Irlen Syndrome, or need different contrast? Click the button below for options.

Background Colours

Subscribe

Enter you email address below to subscribe to free customisable article notifications.

Alternatively, click the button below for our various RSS Feeds (available journal wide, or per section).

Fixed-Term Contracts in Football: Foul Play or Fair Game?

Article Cover Image

About The Author

Ben Cisneros (Regular Writer)

Ben is a third-year law student at Selwyn College, Cambridge, currently spending this year studying law at the Universidad Autónoma de Madrid as part of the Erasmus scheme. He has a keen interest in Sports law, and is a future trainee of boutique firm, Morgan Sports Law. Outside of academia, Ben is a keen singer and actor with a unflinching love of Wasps and England rugby.

Some people believe football is a matter of life and death. I'm very disappointed with that attitude. I can assure you it is much, much more important than that.

Bill Shankly

The football labour market is volatile. Having grown irrepressibly since the dawn of professionalism 130 years ago, its turnover of players and coaches is unlike that of any other industry. This season alone has seen a raft of transfer records broken, and eight of the Premier League’s twenty managers have already been sacked.

But while football may be the world’s richest sporting market, job security and stability – particularly for those outside the elite – is very poor. Unlike in most labour markets, contracts of a fixed duration are the norm and clubs manage their players as assets rather than employees. These contracts make it hard for players to predict where they might be in five years’ time and are often underpinned by competing interests.

On the whole, however, having a fixed-term playing contract usually works for all relevant parties and the status quo has prevailed without any major challenge. So, as this article examines, it was of great interest and worry that the football world awaited the outcome of a recent case in the German courts brought by a German footballer that represented perhaps the first substantial attempt to take on the current system.

Heinz Muller v 1. FSV Mainz 05

On 16 January 2018, the German Federal Labour Court handed down its decision in Müller v 1. FSV Mainz 05 7 AZR 312/16, the final judgment in a long-running case between German goalkeeper Heinz Müller and his former club, the Bundesliga team 1. FSV Mainz 05 (Mainz). The dispute centred on whether the fixed-term employment contracts that are commonplace in football – and many other sports – were valid under German labour law.

Müller was employed by Mainz on a fixed-term contract between July 2009 and June 2012. This was subsequently extended by two years, with an option of a further one year extension if he made at least 23 appearances for the club’s first team during the 2013/14 season. In December 2013, Müller was sent to play with the reserves and never appeared for the club’s first team again. As such, he failed to make necessary 23 appearances and the club decided not to extend his contract.

Müller sued Mainz for lost earnings and prize money that he would have accrued during the 2014/2015 season. His principal argument was that the fixed-term contract was invalid under Section 14 of the German Part-Time Work and Fixed-Term Employment Act 2000 (TzBfG 2000) because Mainz had not provided an objective justification for it.

Crucially, given that German labour law in this area is heavily influenced by EU Directives, the outcome of this case had the potential to cause a major shakeup of European football. Indeed, after the first-instance court – the Mainz Labour Court – found such contracts invalid in Müller v 1. FSV Mainz 05 3 Ca 1197/14, the case looked set to be the biggest sports law decision since Bosman [1995].

However, fortunately for sports clubs, the State Labour Court of Rhineland Palatinate in Müller v 1. FSV Mainz 05 4 Sat 202/15 overturned the first-instance decision on 16 February 2016, a result which the Federal Labour Court conclusively affirmed in January in Müller v 1. FSV Mainz 05 7 AZR 312/16.

Are Fixed-Term Contracts Out of Bounds for Football Clubs?

The instinctive answer to this question is something like “no, that’s just how football works”. It is widely accepted that while many people work under employment contracts without an end date, footballers sign deals for a fixed-period of time. Though this common-sense position was the one ultimately accepted by the Federal Labour Court in Müller v 1. FSV Mainz 05 7 AZR 312/16, in light of its rejection by the first-instance court, it is interesting to delve into the reasoning underlying it.

As contracts of employment, the contracts between professional footballers and their clubs are governed by the same labour law as any other employment contract. As fixed-term agreements, they are subject to  the requirements of Section 14 of the TzBfG 2000, domestic legislation which implements EU Directive 1999/70/EC into German law. It has the primary aim of protecting workers from discrimination and abuse using repeatedly renewed contracts.

Section 14(1) of the TzBfG 2000 states there must be an objective reason to justify the definite duration of a contract. Typically, such reasons exist where the need for work is only temporary – for example, being employed for the duration of a festival – or where the nature of the particular job justifies a fixed-term, as with maternity leave cover, perhaps. If there is no objective reason, a fixed-term contract will only be valid if it fulfils the requirements of Section 14(2) of the TzBfG 2000; for example, where the term of employment is for no more than two years. Given that Müller was on a three-year deal – which was extended for a further two – Mainz were therefore required to show an objective justification.

Section 16 of the TzBfG 2000 states, if the fixed-term is found to be invalid, the contract shall be deemed to run for an indefinite period. Therefore, had Müller succeeded in arguing there was no objective reason for the definite term, the result would have been a contract of unlimited duration. The potential change to the German, and European, football industry would have been almost inconceivable.

Objective Justifications for Fixed-Term Contracts?

In 2015, the first-instance court in Müller v 1. FSV Mainz 05 3 Ca 1197/14 held the fixed-term was invalid due to the lack of an objective justification for justify the contract’s definite duration. In reaching this conclusion, the court stated neither football’s high salaries nor the aging of players could be reasons to excuse the protection afforded by the TzBfG 2000, the latter due to the prohibition of age discrimination.

Furthermore, the first-instance court disagreed that a fixed-term contract could be the wish of the player, stating this could only be so where a player would have chosen a fixed-term contract even if offered an indefinite one. Therefore, Müller’s contract was to be treated as indefinite under Section 16 of the TzBfG 2000.

Given the impact this could have on the footballing world, it was with a collective sigh of relief from clubs and their owners that the decision of the first-instance court was overturned by the State Labour Court in Müller v 1. FSV Mainz 05 4 Sat 202/15 and conclusively affirmed by the Federal Labour Court in Müller v 1. FSV Mainz 05 7 AZR 312/16. In reversing the initial decision, both courts provided a thorough analysis of a variety of relevant considerations.

The Merits of Fixed-Term Contracts from a Club’s Perspective

The (Un)Certainty of Player Performance

The first potential justification for the definite length of the term was that the period in which the player will be available to achieve the employer’s targets is uncertain. The risk of injury, factors affecting individual performance, including the performances of teammates, and other unforeseen circumstances make this particularly so. It was held that, although an employee’s performance could vary in ‘ordinary’ jobs, this uncertainty was particularly pronounced in the incredibly fast-moving, performance-based industry of football.

One of football’s biggest “flops” demonstrates this well. In 1998, Real Betis signed twenty-year-old Denílson de Oliveira on a 10-year contract, for a world-record fee. Having shown buckets of potential as a young star, the Brazilian was being touted as the next Ronaldo. But the deal back-fired: he never shone, and the team was relegated in 2000. In the end, he was sold to Bordeaux with four years left on his contract. His subsequent contracts were months, rather than years, long.

Other such unforeseen circumstances include a change in manager. As recognised by the State Labour Court in Heinz Müller v 1. FSV Mainz 05 4 Sat 202/15, any coach has the discretion to ‘assemble the team according to his own ideas’. As England goalkeeper Joe Hart found out when Pep Guardiola arrived at Manchester City, previously first-choice players can quickly become surplus to requirements. Given managers come and go so frequently in the modern game, it would not only be contrary to the interests of the club to pay the wages of someone not being selected, but it is also surely contrary to the interests of such a player to be tied to the club indefinitely.

Equally, the possibility of relegation means players might suddenly find themselves playing at a level much lower than they had previously wished, and clubs may be unable to pay their wages due to reduced income. On the flip-side, newly promoted clubs will need to bring in higher quality players to compete and are never guaranteed to successfully remain in that division. In light of this, it is brave player who is willing to commit themselves to an indefinite deal with a club which has just been promoted.

In August 2017, it was reported that “Virgil van Dijk, Naby Keita, Philippe Coutinho, and Ousmane Dembélé are all under contract until at least 2020, and they all want to leave their current teams”. The transient nature of football means that players quickly become unhappy and want to move on, often to pursue greater goals. Others, like former Arsenal player José Antonio Reyes, get homesick, while some just do not fit in at a particular club – Robbie Keane signed a 4-year deal with Liverpool but was back at Tottenham after just half a season. Of course, these concerns are not unique to football. In 2016, Castleford rugby league star Denny Solomona left the club unannounced, obviously in breach of contract, for rugby union side Sale Sharks. In the same year, South African rugby international Johan Goosen “retired” aged just 24: it is believed he chose to “retire” to escape his 4-year contract with French club Racing 92. It is clear that if four or five-year deals can sometimes be problematic, indefinite contracts would be a nightmare.

A Dubious Justification: The Need for Variety

The State Labour Court in Müller v 1. FSV Mainz 05 4 Sat 202/15 had regard to the ‘special pressure’ – from fans and investors – for clubs to improve year on year, which often necessitates the bringing in of new players. It opined that:

The need for variety for the audience is an essential consideration. Every season, the audience expects new players in the team, attractive football and a successful performance.

This is particularly interesting. Comparisons were drawn between football and radio or theatre, for which past cases had accepted the need for variety as an objective reason for fixed-term employment. This argument is not entirely convincing: it underplays the extent to which loyalty is a key part of football. While football may be a business, this reasoning fails to recognise that clubs should put faith in their players during dips in form, sticking together through good times and bad. That is something unique that separates sport from other industries.

The State Labour Court in Müller v 1. FSV Mainz 05 4 Sat 202/15 also held that a Bundesliga club, for sporting reasons, must constantly strive to improve its team by signing new players’. Again, this can be questioned. It ignores the importance of one-club players (just look at Steven Gerrard) and that signing new players is not the only way to improve. While individuals are undoubtedly important, team spirit is equally, if not more, so: just ask Leicester City.

Indeed, some of football’s most successful teams have been those who played together for some time. The stability of Arsenal’s ‘Invincibles’ of 2003/2004 was key to their success, likewise with Manchester United’s ‘Class of 92’. Real Madrid’s team – the first to ever successfully defend the Champions League – was almost unchanged between the 2016 and 2017 finals, while Spain’s victories in three consecutive major tournaments from 2008 to 2012 also revolved around much of the same squad.

This considered, perhaps variety per se should not be such an essential consideration. The State Labour Court in Müller v 1. FSV Mainz 05 4 Sat 202/15 did subsequently seem to accept this but its reference to it speaks volumes about attitudes in modern-day football, where it is believed that change always equals success. This is where the court’s reasoning becomes somewhat circular: its argument is that the football sector is characterised by players coming and going on a regular basis, and thus the nature of the industry justifies fixed-term contracts. However, this overlooks that but for the fact fixed-term contracts have been used for years without challenge, this attitude towards player turnover would not exist. This, alone, is not enough to justify fixed terms.

Of course, there are many other reasons in favour of having fixed-term contracts. There is truth in the fact that variety is important outside a specifically sporting viewpoint, given the incredible profits clubs can make from selling both players and their shirts. In 2013, Liverpool signed Phillippe Coutinho for just 13m, before selling him to Barcelona for 120m this January, while Paul Pogba’s 105m switch to Manchester United was paid for twice by his shirt sales within just three weeks. From the business perspective, variety must be important.

Team Planning and Transfers

Clubs have a need for flexibility in staff planning and team composition. If clubs know for how long players are with them, they will be able to budget and manage the make-up of their squad effectively to create a balance with the mixture of youth and experience that is essential for long-term success. If contracts were indefinite, squads could easily become oversized and impossible to finance. Furthermore, as Mainz’s lawyers argued, indefinite contracts would lead to fewer opportunities for young players and, consequently, reduced investment in youth facilities, stunting the development of elite footballers.

Perhaps most drastically, football’s international transfer system would be undermined. As the State Labour Court in Müller v 1. FSV Mainz 05 4 Sat 202/15 observed, the fact that the football labour market is regulated (by FIFA) can be used to justify fixed-term employment. The current system operates by clubs buying out the contracts of players, meaning their value depends on the length of the deal they currently have. In Spain, all footballers have buy-out clauses in their contracts by law which state the player’s value. Meanwhile, when players are out of contract, the Bosman [1995] decision guarantees there will be no fee – players are free to move.

Contracts of indefinite length would be far more difficult to value; this could precipitate a return to a pre-Bosman [1995]  position, where players are unable to leave their clubs. Given clubs generate revenue through the purchase, development and sale of players, indefinite contracts would fundamentally alter the nature of the business.

The Benefits of Fixed-Term Contracts: A Player’s Perspective

Freedom of Movement and Financial Benefits

Fixed-term contracts have benefits for players, too. For one thing, shorter, fixed-term contracts allow players to earn more because there is less risk involved for the club. Equally, professional footballers have an interest in maintaining their freedom of movement and control over their own careers, given the transient nature of the industry, and the possibility of moving to better clubs. The State Labour Court in Müller v 1. FSV Mainz 05 4 Sat 202/15 also considered important the fact that players at least temporarily discharge their risk of losing their job by signing a fixed-term contract and that, owing to limited squad places, it is in the interest of players that places can become available by others moving on.

It is also worth considering that players on shorter length contracts will be more able to demand a higher wage at their subsequent clubs: given that their transfer market value will be lower, a purchasing club will be able spend less money on the transfer fee, thereby leaving more cash for salaries. That is, of course, if you are a top player – if a player does not perform well, they might be out of a job very quickly.

That said, there is plenty to be said for long-term deals, the logic of which is also applicable to indefinite deals. As Tottenham player Christian Erikson said in a recent interview, a long-term contract means:

[Y]ou feel comfortable, you feel aware of everything around you and you don't think about anything other than football when you're on the pitch.

Furthermore, such contracts could be viewed as a way of repaying loyalty. Whether this is true, however, is debatable: even the longest football contracts have an end date. For example, though Andres Iniesta recently signed a “lifetime contract” with Barcelona, this, will inevitably be measured in years. Even the best players cannot continue at the highest level forever: professional footballers have a sell-by-date.

Are Footballers Vulnerable Workers?

Mainz’s lawyers sought to argue that the extraordinarily high remuneration of modern-day footballers meant the EU Directive did not bite on Muller’s case. After all, they contended, the EU Directive aims to improve the situation of vulnerable workers in need of social protection, meaning that footballer’s high pay surely shifts – or even leaves them outside – its ambit.

While this has some appeal, it ignores the fact that – though footballers in the upper echelons of the game can take home up to £600,000 a week – for professional footballers in lower leagues, it can be a struggle to make ends meet. In 2016, FIFPro reported that 45% of players worldwide earned less than $1,000 a month. With some contracts as short as a few months, it is clear that the glamour of the top-flight hides an ugly underbelly.

Of course, this is the choice that individuals make when deciding to become a professional footballer. It is much like any other talent-based career: actors, too, have extremely poor job security, and their careers can be cut short by injury or illness. Talented individuals are treated like pawns and are constantly competing with other talented people. The path of a professional footballer is one of high reward, but also high risk.

Nonetheless, it is clear that – although fixed-term contracts may bring risks for athletes – the nature of the modern football industry demands they be used. While indefinite contracts with extensive opt-out clauses might offer players job security and control over their own careers, this would limit their earning capacity and place the clubs in a state of great uncertainty. Equally, a greater danger of indefinite contracts would be that lower-league players – who often lack the legal representation/advice to negotiate proper termination clauses – could find themselves trapped in a deal that is no longer what they want. In an industry which is so fast-moving, indefinite contracts could produce precisely the effects that the EU Directive aims to avoid.

Conclusion

The decision of the German Federal Labour Court in Müller v 1. FSV Mainz 05 7 AZR 312/16 must be correct. There are sufficient objective reasons to justify the use of fixed-term contracts in the football industry, not least because it is so volatile. Circumstances can change at a moment’s notice, and clubs are faced with managing huge budgets to keep fans and investors happy. While players would theoretically be better protected by employment contracts of indefinite duration, their earning capacity would fall significantly due to the uncertainty this would bring for their clubs, and they would lose the ability to control the progression of their careers.

The football industry has evolved based on fixed-term contracts and, though this alone does not justify their use, a consideration of the interests of all involved sees that it is justified. Nonetheless, the position of non-elite professional players is far more precarious, and there is a lot more that needs to be done to better regulate the lower echelons of the football industry. For now, though, the decision in Müller v 1. FSV Mainz 05 7 AZR 312/16 should be good news for clubs, players and, of course, their agents.

For the latest articles straight to your inbox, you can subscribe for free. Alternatively, follow @KeepCalmTalkLaw on Twitter or Like us on Facebook.

Tagged: Contract Law, Discrimination, Employment Law, European Union, Litigation, Sport Law

Comment / Show Comments (0)

You May Also Be Interested In...

Nationality in Sport: Nailing your Colours to the Mast?

21st May 2019 by Mark O'Neill

A Dose of Privacy? The Impact of GDPR on the NHS

29th May 2018 by Ceylan Simsek

A Christian Marginalisation Narrative? Religious Symbols in the Workplace

23rd Mar 2018 by Keir Baker

Should Obesity be Protected as a Disability?

30th Jan 2018 by Sol Gelsomino (Guest Author)

ECJ and the UK - Surrogacy Arrangements

7th Jul 2014 by Emily Clements

Associative Discrimination: Equal Treatment?

4th Jul 2014 by Hannah Larsen

Section Pick February

Routier v HMRC: Redefining 'Charitable Purposes' For Inheritance Tax

Editors' Pick Image

View More

KCTL News

Keep Calm Talk Law: Moving Forward

3rd Sep 2019

Changing of the Guard: Moving Keep Calm Talk Law Forward

12th Aug 2018

An Anniversary or Two: Four Years of Keep Calm Talk Law

11th Nov 2017

Rising from the Ashes: The Return of Keep Calm Talk Law

18th Nov 2016

Two Years On, Keep Calm Talk Law’s Legacy is Expanding

11th Nov 2015

Twitter

Javascript must be enabled for the Twitter plugin to function. Click below to visit us on Twitter.

Free Email Subscription

Subscribe to Keep Calm Talk Law for email updates, and/or weekly roundups. You can tailor your subscription on activation. Both fields are required.

Your occupation / Career stage is used to tailor your subscription and for readership monitoring.

Uncheck this box if you do not want to receive our monthly newsletter.

By clicking the Subscribe button, you agree to our privacy policy and terms of service. Please ensure you read these in full.

Free Subscription