The Sell-on Clause in Football: Recent Cases and Evolutions

Abstract

The use of sell-on clauses is a regular practice in the world of football. Whenever a talented player is being transferred, several interested parties try to have a piece of the transfer fee, often by means of a sell-on clause. In its most common use, the sell-on clause is inserted in transfer contracts between two clubs, whereby the selling club, against a lower immediate transfer fee, retains the right to a certain percentage of a potential future transfer fee of the player to a third club. In this case both clubs enter into a partnership aimed at a win-win situation. In general, certain conditions need to be fulfilled to trigger the sell-on clause and this caused the occurrence of several disputes before FIFA and CAS, of which some will be discussed below. Among those, the case enrolled as ‘CAS 2014/A/3508 FC Lokomotiv v. Football Union of Russia & FC Nika’ will be discussed in more detail as it covers a series of interesting legal and practical issues and can be viewed as a recent leading case in that matter. However, the selling club is not the only interested party which may obtain a possible sell-on fee: the reality of football shows that even private investors could be interested in a return on a future transfer by retaining such type of percentage fees. This practice is prohibited now by recently implemented changes of the FIFA regulations, due to FIFA’s combat against the so-called ‘TPO—Third Party Ownership’, but some comments should be drawn upon, as the practice of sell-on fees seems to be still legitimate after the new FIFA regulations and circulars, if the percentage is retained by the club (and/or by the player, this being even compulsory in some countries).