Signed for Chelsea on a transfer ban
Introduction
Hello readers and welcome to the first instalment of the second meaning of Law Stories. In the blog section of the website, it is intended to depict and convey stories involving the Law that I have researched, found interesting and wanted to write about.
In our first blog we are diving into a story that hooked me into the realm of Sports Law and involved one of the world’s most prominent clubs, the club that I support, Chelsea. In this blog, I’ll be exploring the legal issues and proceedings that culminated in the clubs 2020 transfer ban the legal decision, the clubs appeal and its implications of this on the club.
This is a story that was and remains close to my heart. I will never forget watching Sky Sports with my Dad on a morning before school and seeing a flood of lawyers come out of the Court of Arbitration of Sport (CAS) and my Dad turning to me and going ‘that could be you one day’. Since that point I have been fixated not only on a career in law but within a sporting context. So without any further hesitation, let’s take a dive and a look back into Chelsea and their transfer ban.
Early Proceedings
So it’s early 2019, and Chelsea FC are playing under Maurizio Sarri, are in the top 4 and on the verge of their second Europa League Title. Behind the scenes however, a storm was brewing with a transfer ban looming. FIFA, the international governing body of football, had launched an investigation into Chelsea's transfer dealings, specifically focusing on the club’s practices concerning the signing of foreign underage players.
The investigation concluded that Chelsea had violated FIFA regulations designed to protect young players, predominantly regulations protecting children from exploitation and trafficking. These rules, outlined in FIFA's Regulations on the Status and Transfer of Players, aim to ensure that minors are given proper educational and training conditions, safeguarding their development and preventing exploitation.
One of the most high-profile examples is Bertrand Traore, a Burkina Faso international (he made his debut for them at just 15) who was at Auxerre but moved to London at age 15 and now plays for Ajax. Chelsea could not legally sign him in light of the fact the exceptions outlined in Article 19 of FIFA’s Regulations on the Status and Transfer of Players were not applicable. The exceptions are as follows:
The players parents move to the country in which the new club is located for ‘non-footballing reasons’
The player is not from outside the European Economic Area (EEA)
The player lives no further than 50 kilometres from a national border to the club, with the maximum distance being 100 kilometres.
The player is moving to the country for educational reasons without his parents.
The player flees his country of origin for humanitarian reasons. [1].
Instead, Chelsea paid to send Mr Traore to a private boarding school in Surrey and he appeared in a few friendlies for the youth team as a trialist and eventually signed for the club when he turned 18 [2]. It is alleged that the club had lied about the number of appearances the player made despite the fact Mr Traore was not registered by the Football Association (FA).
FIFA announced its findings in February 2019 and Chelsea was found guilty of multiple breaches in respect of signing of underage players without adhering to the necessary regulations[3]. As a result, FIFA imposed a significant sanction: a two-window transfer ban. This meant that Chelsea would be prohibited from registering any new players, either domestically or internationally, for two consecutive transfer windows. For a club like Chelsea, known for its aggressive transfer market strategies (even more so now than ever), this was a severe blow.
But what were the legal grounds for such a decision, and how did Chelsea respond?
To understand the legal basis, we need to look at FIFA's regulations. As referred to above, Article 19 of the Regulations on the Status and Transfer of Players, international transfers of players are only permitted if the player is over the age of 18. Chelsea was found to have breached Article 19 in 29 cases involving minors out of the 92 investigated with further documents being released by FIFA revealing the club had breached regulations on over 150 occasions [4].
Chelsea were also found to be in breach of article 18b, which relates to "third-party influence." That's the practice of entering into agreements with outside parties (usually agents) that influence how another club operates in employment and transfer-related matters [5]. FIFA haven't gone into specifics on this, but such cases in the past might have involved players or their agents and family members being paid to breach their contracts. Chelsea have been charged for this in the past with players such as John Obi Mikel and Ashley Cole [6]. In both cases, they agreed to financial compensation and subsequently the charges were dropped.
Chelsea denied any wrongdoing and swiftly lodged an appeal with FIFA’s Appeals Committee. They argued that they had complied with the rules and that many of the alleged violations involved players participating in short-term trials, which did not constitute official transfers. However, the Appeals Committee upheld the ban, prompting Chelsea to take their case to the Court of Arbitration for Sport (CAS).
CAS serves as the highest authority in resolving international sports disputes, providing an independent and impartial forum. The CAS hearing was critical for Chelsea. The club presented detailed arguments, emphasizing procedural errors and misinterpretations of the regulations by FIFA.
CAS delivered a partially favourable verdict in December 2019. The Sole Arbitrator found that CFC did violate Articles 19.1 [related to the international transfer of minors] and 19.3 [related to the first registration of minors] but for a significantly smaller number of players, about 1/3 of the violations found by FIFA. In addition, the violations of other RSTP rules were found to be less serious than those attributed to Chelsea FC by FIFA. Accordingly, the Sole Arbitrator reduced the sanction to one single transfer ban which Chelsea FC had already served during the 2019 summer registration period, and halved the monetary sanction [7].
This allowed Chelsea to resume signing players after just one transfer window, not that they took much advantage of this. While this was a relief, it still meant significant operational and strategic adjustments for the club.
So, what were the implications of this transfer ban for the club and the resolutions for them?
Firstly, the ban had its financial implications. The inability to sign new players especially in a season where the club lost arguably its greatest player in Eden Hazard, meant that Chelsea had to be more strategic in managing its resources, focusing on player development and smarter financial planning to comply with both the Premier leagues and UEFA’s financial fair play (FFP).
One element however I was really interested in was the club being able to sign Mateo Kovacic on a permanent basis despite being handed the transfer ban. Chelsea signed Mateo Kovačić in a two-stage process that involved an initial loan for the 2018-19 season followed by a permanent transfer in July 2019, Chelsea completed the permanent signing of Kovacic from Real Madrid for a reported fee of around £40.3 million despite the fact that Chelsea were under a transfer ban imposed by FIFA for the 2019 summer transfer window.
However, the club was allowed to make Kovacic’s loan move permanent because he was already registered with Chelsea during the loan period. FIFA's regulations permitted the registration of players already on loan at the club and with there being a buy option in the loan agreement. [8]
By navigating the transfer regulations effectively and leveraging the existing loan agreement, Chelsea was able to secure Kovacic’s services on a permanent basis despite the transfer ban. This strategic move ensured continuity in the squad and bolstered Chelsea's midfield options for the upcoming season especially given the injuries to key players such as Ruben Loftus-Cheek.
Secondly, it forced the club to rely heavily on its existing squad and promote youth players from its academy, which in turn was no bad thing and arguably a perfect opportunity for the club to move forward from the trend of just buying the best and not sticking with the academy. This turned out to be a blessing in disguise. Manager Frank Lampard, a club legend, embraced the challenge when no other manager would, giving opportunities to young talents like Mason Mount, Fikayo Tomori, Tammy Abraham, and Reece James. These players not only stepped up but also became key figures for the team especially in obtaining champions league qualification which led to the eventual 2021 Champions League Winning Campaign as well as making it to an FA Cup Final.
Whilst not all academy graduates remain at the club for one reason or another, all four players are well established players playing on the international stage at massive clubs around the world including Manchester Utd and AC Milan. Without the transfer ban would the careers of these individuals panned out the way they have ?
The transfer ban also underscored the importance of compliance and robust internal controls which is even more crucial in 2024 with Profit and Sustainability (PSR) being a phrase no one can escape at the moment. Football clubs worldwide took note of Chelsea’s plight, leading to increased scrutiny and tighter adherence to both regional governing bodies and FIFA regulations.
Conclusion
Chelsea's transfer ban saga is a compelling example of how legal issues intersect with sports, impacting not just the clubs involved but also the wider sporting community. It highlights the importance of regulatory compliance and the potential repercussions of falling afoul of international governing bodies. The legal tales and compliance of the rules and regulations however is certainly far from over for Chelsea with the club currently being investigated for an extremely serious matter regarding off shore payments to agents and players during the Roman Abramovic era. Richard Masters has confirmed recently that a conclusion to the investigation is close and I intend to write about the same once a decision has been made [9].
Thank you for those that have read the first instalment in Law Stories blogs. Whilst the podcasts are dedicated to fantastic individuals and their own personal stories, the blogs will be used to share stories within the law that I am intrigued by and spike my growing interest.
References:
[1] Article 19 (Protection of minors), FIFA Regulations on the Status and Transfer of Players, Oct 2020 Ed., https://resources.fifa.com/image/upload/regulations-on-the-status-and-transfer-of-players-october-2020.pdf?cloudid=kgl4gp7cl25ut2dbuz7y (last accessed 03 September 2024)
[2] Chelsea Transfer Ban: Club to appeal against FIFA decision (2019) BBC Sport. Available at: https://www.bbc.co.uk/sport/football/47329293 (Accessed: 03 September 2024).
[3] Decision 160620 APC ENG ZH, Chelsea Football Club (2019) [2]. https://digitalhub.fifa.com/m/6333da30377d17a3/original/xoyz3gkc4u18rbsellqr-pdf.pdf
[4] Chelsea Transfer Ban: Fifa punishment 'after 150 rule breaches involving 69 academy players' (2019) BBC Sport. Available at: https://www.bbc.co.uk/sport/football/50261117 (Accessed: 04 September 2024).
[5] Article 18b (Third-party influence on clubs), FIFA Regulations on the Status and Transfer of Players, Oct 2020 Ed., https://resources.fifa.com/image/upload/regulations-on-the-status-and-transfer-of-players-october-2020.pdf?cloudid=kgl4gp7cl25ut2dbuz7y (last accessed 03 September 2024)
[6] Geey, D. (2020) Done deal: An insider's guide to football contracts, multi-million pound transfers and Premier League Big Business. London: Bloomsbury Sport,19-20 Makes reference to Chelsea tapping up Ashley Cole in 2005.
[7] (2019) Football case chelsea FC – FIFA: Sanctions reduced by half - Available at:
https://www.tas-cas.org/fileadmin/user_upload/CAS_Media_Release_6301_decision.pdf (Accessed: 04 September 2024).
[8] Johnson, S. (2019) Chelsea will sign Kovacic for £40.3m, Evening Standard. Available at: https://www.standard.co.uk/sport/chelsea-agree-to-buy-mateo-kovacic-for-ps40-3m-from-real-madrid-a4177091.html (Accessed: 04 September 2024).
[9] Pickworth, W. (2024) Investigation into Chelsea Finance ‘rule breaks’ under Roman Abramovich is ‘reaching a conclusion’, Premier League chief Richard Masters announces, as fans fear a transfer ban, Daily Mail Online. Available at: https://www.dailymail.co.uk/sport/football/article-13741737/Investigation-Chelsea-finance-rule-breaks-Roman-Abramovich-Premier-League-chief-Richard-Masters.html (Accessed: 04 September 2024).