BUYOUT CLAUSES IN FOOTBALL TRANSFER AGREEMENTS AND EUROPEAN UNION COMPETITION LAW
Buyout clauses, also known as release clauses, are contractual provisions allowing association football players to terminate their employment contracts by paying a pre-agreed sum, thereby facilitating a move to another club. Whilst they are legally required in Spanish professional sport under Real Decreto 1006/1985, such clauses are not universally accepted across legal systems.
In French football, for instance, buyout clauses are strictly prohibited by a combination of labour law, sports law, and collective bargaining rules. Article L.1243-1 of the French Labour Code provides that a fixed-term employment contract may only be terminated before its expiry in limited circumstances: mutual agreement, gross misconduct, force majeure, or certified unfitness.
In parallel, Article L.222-2-7 of the French Sports Code renders null and void any clause allowing unilateral termination of a professional athlete’s employment contract. Reinforcing this framework, Article 257 of the National Collective Agreement for Professional Football (2024/2025) expressly forbids provisions that permit unilateral termination in exchange for financial compensation. Any agreement which includes such a clause is automatically rejected by the Legal Committee, and any undeclared side agreement may trigger disciplinary proceedings.
These provisions are of a public policy nature and cannot be derogated by private agreement. As a result, buyout clauses cannot be lawfully relied upon in French football agreements.
Beyond the national level, European Union (EU) law introduces additional layers of scrutiny, taking into account the fact that buyout clauses operate at the intersection of contractual freedom, sporting regulation, and internal market principles.
Article 45 of the Treaty on the Functioning of the European Union (TFEU) guarantees the free movement of workers, including professional footballers. Where the amount stipulated in a buyout clause is set so high that it effectively prevents a player from moving clubs, the clause may be challenged as a restriction on free movement. In addition, Article 101 TFEU prohibits anti-competitive agreements or concerted practices. If buyout clauses are structured in a way that restricts market access to only the wealthiest clubs, or serve as a coordinated barrier to entry, they may fall foul of EU competition rules.
However, buyout clauses are not inherently unlawful. The principle of proportionality, developed in EU jurisprudence, plays a key role. Under this test, restrictions may be justified by legitimate objectives, such as contractual stability or the preservation of sporting balance, provided that they are necessary and proportionate.
The Court of Justice of the EU (CJEU) has applied this reasoning in key cases, such as Meca-Medina (Case C-519/04 P) and Diarra (Case C-650/22), requiring that sporting rules be assessed in light of their actual effects and their necessity in achieving a legitimate aim.
Accordingly, any buyout clause must be carefully calibrated: excessive or punitive provisions are likely to be struck down, whilst transparent, proportionate clauses may be upheld.
At the transnational level, the FIFA Regulations on the Status and Transfer of Players (RSTP) are silent on buyout clauses. FIFA does not prohibit them per se, nor does it mandate their inclusion. This relative regulatory neutrality leaves room for divergent national approaches and private autonomy—within the bounds of applicable laws.
In CAS 2021/A/8543 PSG v. FC Barcelona, the Court of Arbitration for Sport (CAS) confirmed that, under Spanish law, a buyout clause must be executed unconditionally and at full face value, with no deductions. The amount is considered net, and the FIFA solidarity contribution must be paid in addition to the release fee. The case also clarified the definition of a “transfer” for the purpose of triggering the solidarity mechanism under Article 21 and Annex 5 of the RSTP. According to CAS, a transfer occurs when four elements are satisfied:
- (i) consent of the original club to the early termination;
- (ii) willingness of the new club to acquire the player’s rights;
- (iii) player’s consent; and
- (iv) financial consideration.
In conclusion, buyout clauses involve a delicate legal and economic balancing act. Their enforceability depends upon national employment law, their compatibility with EU internal market rules, and their proportionality in transnational practice.
Whilst lawful in certain jurisdictions and tolerated under FIFA Regulations, buyout clauses are not per se legal or illegal. However, they require careful drafting, tailored to the applicable legal environment and the competitive dynamics of modern football.
We act in all aspects of football transfer agreements, including disputes, and further information is available form Dr Estelle Ivanova and Dr Lucien Valloni, by emailing them at ivanova@valloni.ch and valloni@valloni.ch respectively.