Free movement in the world of sports

On March 16, the European Court of Justice delivered its judgment on the French case Olympique Lyonnais vs Olivier Bernard and Newcastle United FC.

The case revolved around a 29-year-old French player Olivier Bernard, who joined Newcastle United in 1997 at the end of a three-year training contract with French club Olympique Lyonnaise.

At the time, the Charter of the French Football Federation required promising football players between the ages of 16 and 22, employed as trainees by a professional club under a fixed-term contract, to sign at the end of their training their first professional contract with the club that trained them, if the club required them to do so. If they chose not to, they were barred for three years from signing with another French club.

Mr Bernard refused such on offer from Olympique Lyonnais preferring to sign instead a professional contract with the English club Newcastle United FC. Olympique Lyonnais sued Mr Bernard, seeking an award of damages against him and Newcastle United to the tune of €53,000, equivalent to the salary which the player would have received over one year if he had signed the contract offered by the French club.

The player and Newcastle United appealed and the French Court, before which the appeal was brought, made a referral to the European Court of Justice (ECJ) asking whether the principle of freedom of movement for workers permitted the clubs which provided the training to prevent or discourage their trainees from signing a professional contract with a football club in another Member State.

In its ruling, the ECJ ackowledged that the French rules are a restriction on freedom of movement for workers, including footballers. The ECJ stated, however, that such restrictions could be justified under certain circumstances, such as the need to encourage recruitment and training of young professional players, especially given the social importance of sporting activities, and in particular football in the EU. The court also held that the prospect of receiving training fees is likely to encourage football clubs to seek new talent and train young players.

In conclusion, therefore, the court ruled that it was justified for a football club to impose an obligation upon a young player to pay compensation for training he received at the end of his training should he sign a professional contract with a different club.

The damages requested in this case were not calculated in relation to the training costs incurred by the club providing that training but in relation to the total loss suffered by the club. In this regard, the ECJ stated that the French scheme went beyond what was necessary to encourage recruitment and training of young players and to fund those activities, and ruled that a justified scheme would be that which allows the club to recuperate the actual costs of training.

The court's decision in this case will henceforth ensure that clubs are adequately compensated for their investment in training youngsters.

Dr Grech is an associate with Guido de Marco & Associates and heads its European law division.