Blog #2
Rafael Leão, A Transfer And Compensation Fee?
Introduction
Rafael Leão is currently one of the best young football players in the world. After winning Serie A MVP for the 2021/22 season, he is being tracked by the likes of Manchester City and Chelsea. Chelsea reportedly attempted to sign the forward this summer but had an informal bid of £75 Million rejected by AC Milan technical director Paolo Maldini [1].
Moving off the pitch, Leão and his former club, LOSC Lille, have been ordered to compensate Sporting Club Lisbon, Leãos former club [2]. The sum, reportedly, is a massive €16 million [3].
How did we get here?
Why did Leão leave Sporting?
In May 2018, fifty Sporting fans forced their way into the Alcochete training centre due to being angered after the club failed to qualify for the champions league. This incident resulted in the assault of first-team players. Their star striker at the time, Bas Dost, who scored an impressive 34 goals, suffered cuts to his head, and others were targeted, such as academy graduate William Carvalho [4]. This attack resulted in forty-one people being convicted for assault and threatening behaviour. Of the forty-one, nine received five years of prison, twenty-nine received suspended sentences, and three received fines [5].
The attack prompted Leão to terminate his contract with Sporting on the 14th of June 2018 [6]. He subsequently signed with French club LOSC Lille on the 8th of August 2018 [7]. Despite only being at the French club for one year, Italian giants AC Milan signed the Portuguese forward for a reported €35,000,000.
Why did Sporting bring proceedings against Leão and Lille to CAS?
As a result of the attack, not only did Leão terminate his contract, seven other players terminated their contracts [8]. Some players, such as Bruno Fernandes, now at Manchester United, re-signed with Sporting [9], but a few did not. Rui Patricio, Gelson Martins and Daniel Podence signed with different clubs after terminating their contract. It was confirmed to ESPN FC on 3 August 2018, by Sporting, that:
‘Sporting filed a complaint to FIFA and CAS regarding the former Sporting players Rui Patricio, Daniel Podence and Gelson Martins and the clubs they represent at the moment’[10].
The outcome of these complaints are as follows:
1. Wolverhampton Wanders agreed to pay Sporting €18m for goalkeeper Rui Patricio [11].
2. Atletico Madrid agreed to pay Sporting €22.5m for forward Gelson Martins [12].
3. Olympiacos FC agreed to pay Sporting €7m for forward Daniel Podence [13].
Fortunately for these three players, their clubs settled outside of court. Unfortunately, this was not the case regarding Leão, and Sporting brought proceedings against the player and Lille in the Court of Arbitration for Sport (CAS).
CAS Case – Sporting Club de Portugal v Rafael Alexandre de Conceiçao Leão & FIFA
The main issue brought against Leão was whether he had terminated his employment contract with just cause [14]. To better understand the case, we need to understand the key regulations regarding the issue [15]:
1. Article 14.1 of The Regulation on the Status and Transfer of Players (RSTP) states that either party may terminate a contract without consequences of any kind where there is a just cause.
2. Article 17.1 of RSTP governs the consequences when a contract is terminated either by a professional player or the club without a just cause. There are two different consequences, payment of compensation and sporting sanctions.
3. Article 17.2 of RSTP states whenever a professional player must pay compensation to a club for a breach of contract, the player’s new club will be jointly and severally liable to pay that compensation.
Where just cause is present, previous CAS jurisprudence [16] has stated the following:
‘the party willing or planning to put an immediate end to the employment agreement on the grounds of a just cause has only a short period of reflection, after which it must be assumed that the said party chose to continue the contractual relationship until the expiry of the agreed period. A period of reflection of two to three days is a maximum’.
Due to this, Leão terminating his contract on 14 June 2018 and notifying Sporting on 15 June 2019 exceeded the admissible period justified with regard to the practical requirements of everyday and economic life. As a result, the time window for Leão to terminate his contract closed, meaning he terminated his employment contract without just cause. Therefore making him liable to pay compensation for the damages suffered by Sporting as a result of the early termination [17].
Although, the situation does not end here. Remember article 17.2 RSTP. Even though LOSC Lille did not induce the player, the club is held jointly liable for the breach of contract and must pay part of the compensation to Sporting. Lille, in the view of the panel, clearly benefited from the contractual violation of the player. They signed the player without paying a transfer fee and were able to transfer him shortly after, to AC Milan, for a considerable sum of money [18].
According to RMC Sport, Lille was surprised to be declared jointly and severally liable [19]. The ruling prompted Lille to appeal the CAS decision. Although it has recently been reported that Lille has been unsuccessful in its attempts to acquit itself [20].
Similar Legal Dispute – Chelsea FC & Adrian Mutu
The dispute starts in 2004 when Chelsea terminated Mutu's employment for a repudiatory breach after testing positive for cocaine. Mutu subsequently signed with Juventus in 2005. The Football Association Premier League Appeals Committee (FAPLCA) found that Chelsea was entitled to seek compensation from Mutu from FIFA’s Dispute Resolution Chamber (DRC) [21].
Mutu appealed the decision from the FAPLAC, claiming that as Chelsea had terminated his contract he was not liable for compensation. However, CAS concluded that there is no distinction between a player terminating his contract and a player unlawfully breaching his contract through serious misconduct. In this case, it was Mutu’s unlawful breach of contract that gave rise to the claim for compensation irrespective of the fact that it was Chelsea who terminated the contract as a result of that breach [22].
After a lengthy court process, with several appeals, CAS in 2009 upheld the DRC’s 2008 decision to award Chelsea a sum of £14,5000,000 in compensation. Despite being awarded the sum, Chelsea has been unable to enforce the award as Mutu cannot afford the hefty fine [23].
Chelsea, also brought claims against Juventus and Livorno, for joint liability of the compensation Mutu owed. Chelsea relied on Article 14.3 of the 2001 RSTP which stated:
If a player is registered for a new club and has not paid a sum of compensation within the one-month time limit referred to above, the new club shall be deemed jointly responsible for payment of the amount of compensation [24].
However, the major difference between this case to that of Leão is that because Chelsea terminated the contract and not Mutu, neither Juventus nor Livorno was jointly liable for the compensation award. CAS confirmed that a new club could not be jointly liable for compensation when the previous club terminated a player’s contract [25].
What’s next for Leão?
With joint liability of the compensation fee looming over him, Leão could push for a move away from Milan if he or his representatives can convince a buying club to pay his portion of the compensation fee. His contract expires on 30 June 2024 [26], so there is a possibility that this scenario may play out within the next two summers.
Although according to Corriere dello Sport, in contract negotiations for a renewal, Leão is asking the Italian giants to contribute towards the compensation fee he is ordered to pay [27]. Furthermore, reportedly Milan is in direct contact with Sporting to help reduce the amount he owes to his former club [28]. Although, there is no mention of whether Milan will contribute to the fine. If Milan are able to convince Sporting to reduce the fine, or even pay the fine themselves, this show of loyalty could be the driver in convincing Leão to extend his contract.
Conclusion
It is clear that wherever Leão’s future lies, any club willing to help reduce the compensation he owes has a good chance of securing his services. No player wants a judgement of this magnitude lingering over them, and the quicker it is sorted, the better.
Although, the compensation figure hasn’t seemed to have affected his play, especially given that he scored an impressive brace in the Milan Derby this season. In addition, Milan has secured qualification for the next round of the Champions League, something that will excite new owners, RedBird Capital. Milan has failed to qualify for the round of 16 since the 2013-14 season, and the owners may hope this will convince Leão to sign a new contract.
References
[1] Fabrizio Romano, ‘Haaland and the top secret club story! Leão: real Chelsea proposal…’, YouTube, published on 16 September 2022, ‘https://www.youtube.com/watch?v=sykZVDY_kxo’ (last accessed November 2022)
[2] Get French Football News, ‘Lille could appeal CAS decision on Rafael Leão compensation’, Get French Football News, published on 22 February 2022, https://www.getfootballnewsfrance.com/2022/lille-could-appeal-cas-decision-on-rafael-leao-compensation/ (last accessed November 2022)
[3] Freddie Keighley, ‘AC Milan star Rafael Leao ordered to pay £13.8million to former club Sporting Lisbon’, Mirror, published on 24 January 2022, https://www.mirror.co.uk/sport/football/news/milan-rafael-leao-sporting-lisbon-26033165 (last accessed November 2022)
[4] Guardian Sport, ‘Sporting Lisbon players and staff attacked by intruders at training ground’, The Guardian, published on 15 May 2018, https://www.theguardian.com/football/2018/may/15/sporting-lisbon-intruders-training-attack-players-staff (last accessed November 2022)
[5] Agence France Presse, ‘41 Convicted After Attack At Sporting Lisbon Training Ground’, Barron’s, published on May 28 2020, https://www.barrons.com/news/41-convicted-after-attack-at-sporting-lisbon-training-ground-01590684008 (last accessed November 2022)
[6] BBC Sport, ‘Rafael Leao: The Lille forward dubbed the 'Portuguese Mbappe', BBC Sport, published on 7 February 2019, https://www.bbc.co.uk/sport/football/47165013 (last accessed November 2022)
[7] Hal Walker, ‘Official | Lille sign wonder-kid Rafael Leão on a free transfer from Sporting Portugal’, GFFN, published on 8 August 2018, https://www.getfootballnewsfrance.com/2018/official-lille-sign-wonder-kid-rafael-leao-on-a-free-transfer-from-sporting-portugal/ (last accessed November 2022)
[8] Matt Davis, ‘Sporting Lisbon: Seven players terminate contracts after training ground attack’, BBC Sport, published on 14 June 2018, https://www.bbc.co.uk/sport/football/44489158 (last accessed November 2022)
[9] Reuters, ‘Sporting Lisbon re-sign Bruno Fernandes after he quit following attack by fans’, ESPN, published on 10 July 2018, https://www.espn.co.uk/football/soccer-transfers/story/3561564/sporting-lisbon-re-sign-bruno-fernandes-after-he-had-quit-club-following-attack-by-fans (last accessed November 2022)
[10] Adriana Garcia, ‘Sporting Lisbon file complaint to FIFA seeking compensation for players who quit’, ESPN, published on 2 August 2018, https://www.espn.in/football/sporting-cp/story/3582738/sporting-lisbon-file-complaint-to-fifa-seeking-compensation-for-players-who-quit (last accessed November 2022)
[11] Independent, ‘Wolves transfer news: Rui Patricio compensation finally agreed with Sporting’, Independent, published on 1 November 2018, https://www.independent.co.uk/sport/football/transfers/wolves-transfer-news-rui-patricio-permanent-sporting-cp-fee-compensation-a8612016.html (last accessed November 2022)
[12] Marca, ‘Atletico Madrid and Sporting CP reach agreement over Gelson Martins saga’, Marca, published on 14 May 2019, https://www.marca.com/en/football/spanish-football/2019/05/14/5cdb0a25ca47418b6d8b459a.html (last accessed November 2022)
[13]Reuters Staff, ‘BRIEF-Sporting Reaches An Agreement With Olympiacos FC For Daniel Podence’, Reuters, published on 3 September 2019, https://www.reuters.com/article/idUSL5N25U0GY (last accessed November 2022)
[14] CAS 2020/A/7054 Sporting Club de Portugal v Rafael Alexandre de Conceiçao Leão & FIFA, https://digitalhub.fifa.com/m/2645f60a0e69d9c3/original/CAS-2020-A-7054-Sporting-Clube-de-Portugal-v-Rafael-Alexandre-de-Conceicao-Leao-LOSC-Lille-FIFA.pdf (last accessed November 2022)
[15] Commentary on the Regulations on the Status and Transfer of Players, 2021 Edition, https://digitalhub.fifa.com/m/346c4da8d810fbea/original/Commentary-on-the-FIFA-Regulations-on-the-Status-and-Transfer-of-Players-Edition-2021.pdf (last accessed November 2022)
[16] Note 14, para 223
[17] Note 14
[18] Note 14
[19] Get French Football News, ‘Lille Could Appeal CAS Decision on Rafael Leão Compensation’, Get French Football News, published on 22 February 2022, https://www.getfootballnewsfrance.com/2022/lille-could-appeal-cas-decision-on-rafael-leao-compensation/ (last accessed November 2022)
[20] Get French Football News, ‘Lille Made To Pay Part of €16.5M Leão Fine’, Get French Football News, published on 12 October 2022, https://www.getfootballnewsfrance.com/2022/lille-made-to-pay-part-of-e16-5m-rafael-leao-fine/ (last accessed November 2022)
[21] John Shea, ‘Terminating Without Just Cause: When Is A New Club Jointly Liable For Compensation Under The FIFA Regs? The Latest Mutu Decision’, LawInSport, published on 13 May 2015, https://www.lawinsport.com/blogs/john-shea/item/terminating-without-just-cause-when-is-a-new-club-jointly-liable-for-compensation-under-the-fifa-regs-the-latest-mutu-decision (last accessed November 2022)
[22] CAS 2005/A/876 M. v Chelsea Football Club, https://arbitrationlaw.com/files/free_pdfs/CAS%202005-A-876%20M%20v%20CFC%20Award.pdf (last accessed November 2022)
[23] Note 21
[24] Note 21
[25] CAS2013/A/3365/Juventus Football Club S.p.A, v Chelsea Football Club Ltd & CAS2013/A/3365/66 A.S. Livorno Calcio v Chelsea Football Club Ltd, https://jurisprudence.tas-cas.org/Shared%20Documents/3365,%203366.pdf (last accessed November 2022)
[26] Transfermarkt, Rafael Leão player profile, Transfermarkt, https://www.transfermarkt.co.uk/rafael-leao/profil/spieler/357164 (last accessed on November 2022)
[27] Francesco Finulli, ‘CorSport - Il Milan si gode Leao ma ora va presa una decisione sul rinnovo’ Milan News, published on 10 October 2022, https://www.milannews.it/primo-piano/corsport-il-milan-si-gode-leao-ma-ora-va-presa-una-decisione-sul-rinnovo-465523 (last accessed November 2022)
[28] Susy Campanale, ‘Milan Stall Chelsea and Man City By Helping Rafael Leão with Sporting’, Football Italia, published on 27 September 2022, https://football-italia.net/milan-stall-chelsea-and-man-city-by-helping-rafael-leao-with-sporting/ (last accessed November 2022)