INTRODUCTION

Covid-19 virus, which affected the whole world and disrupted many sectors, had great effects in the sports sector and caused a break in team sports which has lots of contact. In this context, it was also a matter of curiosity about what should be done about the status of sports clubs, payments, players’ salaries, camp fees, transfer payments. As a matter of fact, in this context, the world’s leading international sports federations have published some suggestions on how to proceed in Covid-19.

Effects of Covid-19 on Professional Football Player Contract

As mentioned above, all team sports and leagues with high contact has been stopped due to Covid-19. As a matter of fact, Fédération Internationale de Football Association (“FIFA”), which is in the regulatory position of football and its rules, was obliged to take some measures and at the beginning of April, FIFA published a Memorandum titled Covid-19: Football Regulatory Issues (v.1) and announced that Covid-19 is also a force majeure in the football industry.

Within the scope of this declaration, 3 main issues have been discussed:

  • Contracts that will end at the end of the season (expiring agreements) and contracts already concluded for the new season,
  • Failure to fulfill the obligations stipulated in the contract as a result of Covid-19,
  • Transfer period.
  1. Contracts Ends on 2019-2020 Football Season and Status of Contracts Concluded Regarding 2020-2021 Football Season

As you know, due to Covid-19, it was decided to postpone leagues in many countries. Due to the increase of the disease day by day, countries have increased the measures they have taken, and it is not possible to say anything definite about how long this period will continue. This undoubtedly creates an uncertainty about what the start and end dates of the season will be. As a result of this uncertainty, the question arises that when the contracts will expire.

In accordance with the article 19/3 of TFF Professional Football Players’ Status and Transfers Regulation; “In any case, the end date of the contracts must be determined as 31 May. If the official competitions continue after the contract end date, the contract duration is deemed extended until the end of the competitions.”

As can be clearly seen from the article, although the end date of the contracts must be determined as 31 May, it is accepted that the contract will end on that date if the season ends after 31 May.

As a matter of fact, the declaration published by FIFA has been prepared within this scope and in accordance with the said declaration:

  • In case the professional football player contract ends on the original expiry date of the relevant football season contract (for Turkey on May 31), the relevant season’s termination date will be extended until the new end date.
  • In case the start date of the upcoming season will be postponed, the starting dates of the contracts concluded for the upcoming season will also be postponed until this date.
  • In case the seasons and / or registration periods coincide, FIFA stated that unless the parties arrange otherwise, the priority will be given to old team in order to complete the season with the original staff and to maintain competition.

FIFA has stated that such matters will also be applied in terms of international transfers (permanent or temporary) and all the fees to be paid according to the contract can be postponed until the new start date of the next season or until the first registration period.

  1. Failure to Fulfill the Obligations Regulated in the Contract

Due to the situation created by Covid-19, all sports activities have been suspended as we have mentioned above; In this context, football players, coaches and club employees have become unable to work. As a matter of fact, this situation also affected the financial status of the clubs and the clubs lost almost all of their income.

This above-mentioned loss of income has undoubtedly affected the fulfillment of contractual obligations and raised many questions, especially regarding payments.

FIFA has suggested that financial measures be taken to prevent any possible dispute regarding salaries of the football player and coaches and to prevent clubs from going bankrupt:

  • First of all, it has been proposed that clubs and football players / coaches should compromise mutually, and all the fees should be determined in this way.
  • The local legal legislation should examine, if any, it’s provisions should be applied.
  • In case the clubs and football players / coaches cannot mutually agree, and the local legal legislation does not regulate these issues; the clubs can make unilateral decision if it is well-intentioned, proportionate and reasonable. While evaluating whether this decision is reasonable or not, the below-mentioned issues will take into consideration:
    • Whether the club tried to reach a mutual agreement with the football players / coaches or not,
    • The economic situation of the club,
    • The proportionality,
    • The net income of the relevant football player / coach after the contract alteration,
    • Whether the decision applied to the entire squad or only to certain people.
  • Alternatively, in case the leagues will be suspended; and if the relevant football player / coach has an insurance or an income which can secure him/her, in this case his/her contract can be suspended.

 

  1. Transfer Period

According to article 6/1 of the FIFA Regulations on the Status and Transfer of Players, football players can only be registered within the two transfer periods each year, which are announced in advance by the relevant federation. Article 5/1 of the same regulation, the member federation is obliged to notify these transfer periods to the TMS system in 12 months at the latest.

However, under the same article, it is regulated that this requirement can be revised under exceptional conditions, and it is stated that Covid-19 is accepted under these exceptional conditions.

In this context, FIFA stated that the mentioned transfer periods can be extended and changed up to 16 weeks, in case approved by FIFA.

  1. Situation in Turkey

The Executive Committee of Turkish Football Federation (TFF) decided on the following recommendations regarding the contracts at its meeting dated 06.05.2020 and numbered 31 in line with the FIFA recommendations:

“1- Before all else, it is recommended that clubs and players/coaches mutually redetermine the contract terms for the time period where the competition has been suspended, in accordance with the Turkish law and also considering the economic conditions caused by the Covid-19 outbreak.”

In this context it is suggested that mutual agreements should be made regarding the contract terms as we mentioned above.

“2- In cases where the parties cannot reach a mutual agreement, if clubs decide to vary terms and conditions of contracts unilaterally in accordance with the general legislation, Legal Committees of TFF shall consider the clubs’ compliance with the following conditions:

  1. a) Whether the respective club had attempted to reach a mutual agreement with players and coaches;
  2. b) The current economic situation of the club due to the Covid-19 outbreak (whether the outbreak disrupted the club’s economy), the calculation of the damages to the club caused by the Covid-19 outbreak, (including but not limited to; sponsorship and matchday revenue loss, cost increase in contracts executed in foreign currency due to exchange rates, club’s store sales loss, etc.);
  3. c) The extent of the amendment made to the contract, whether this amendment is reasonable and proportionate;
  4. d) Whether the net income of the player or coach was determined after the amendment to the contract;
  5. e) Whether the contract amendment and deduction rates applied to the entire squad including the player and technical staff or only to a specific player and coach.

In this context, while evaluating the unilateral changes/discounts made by the clubs, it is stated that all these issues will be evaluated and, the decision will be made according to whether it is fair or not.

“3- Alternatively, in cases where clubs decide to suspend agreements in accordance with the general legislation and for the time period covering the suspension of competitions due to the Covid-19 outbreak, Legal Committees of TFF shall consider clubs’ compliance with the following conditions:

  1. a) Whether proper insurance conditions were ensured for players and coaches during this period;
  2. b) Whether adequate alternative income support / opportunities were provided during this period;
  3. c) Whether contracts between clubs and employees were suspended during this period;
  4. d) Whether the respective party was duly informed via a written notification about the suspension of agreements.”

Under the scope of this article, the suspension of contracts has been regulated, and it is stated that if the suspension is not carried out in accordance with these issues, the legal responsibility of the clubs will arise.

In this context, while TFF made its advisory decisions, it has made arrangements within the scope of FIFA’s suggestions mentioned above, and therefore it is possible to decide within the scope of the related proposal letter of FIFA regarding the issues that are not regulated.

Effects of Covid-19 on Professional Basketball Player Contract

A guide dated 20.04.2020 has been published by Basketball Arbitral Tribunal (“BAT”) regarding the ways to be followed due to the effects of Covid-19. As a matter of fact, it was underlined that the guide will be valid on temporary basis within the scope of Covid-19 and it published for the purpose of stating the results of the postponement and termination of local championships.

First of all, we would like to state that the term “Lockdown Period” stated in the guide and this newsletter is the period between the suspension/expiration date of 2019/2020 season and the date when the season is continued or terminated.

Within the scope of the above-mentioned guideline, BAT suggested that it should be given primarily to amicable solutions. In this context, BAT made 4 suggestions:

  • The parties should renegotiate the contractual disputes in good faith firstly.
  • Any breach of this duty may be taken into account by the arbitrator when deciding the merits of the case and when deciding on arbitration costs, legal fees and other expenses.
  • In the absence of any justification for invalidity, the arbitrators will act in accordance with these amicable settlements, whether they are against the relevant guideline or not.
  • Amicable Settlements entered into after the beginning of the Lockdown Period will be rebuttably presumed to have been executed by the parties with a view to addressing the consequences of the COVID-19 crisis.

We would like to state that BAT will assume that the issues published in the guide will not include the contracts concluded or extended mutually or unilaterally after the start of the Lockdown Period, since these contracts have been concluded by considering Covid-19.

  1. Allocation of Risk

In accordance with the said guideline, it is stated that clauses simply providing for a “fully guaranteed” or “no-cut” contract do not allocate economic risks associated with the COVID-19 crisis to any of the parties to the contract. Regarding other contracts:

If there is no clarity in the contract, the effects of Covid-19 cannot be applied only to one of the parties. In this context, negative results will be divided equally between the parties. If these situations are clearly stated in the contract, but the implementation of the risks causes inequality between the parties, then the arbitrator may take decisions incompatible with the contract in accordance with the established BAT jurisprudence.

  1. Termination of Contracts

BAT stated that, due to the outbreak, professional basketball player contracts cannot be terminated automatically, and Covid-19 does not grant any party a one-sided termination right.

However, if the professional basketball player contract was terminated by either party before the Lockdown Period, then the provisions of Covid-19 will not apply, and the general provisions of the BAT legislation will apply. As a matter of fact, When calculating damages for any unlawful termination not related to the COVID-19 crisis, the arbitrators will, in principle, not take into account the hypothetical impact that the COVID-19 crisis would potentially have had on the contract had it run its normal course. In such a case, especially the nature, the motive and the gravity of the contractual breach committed, the vicinity of the breach to the Lockdown Period and the behavior of the parties subsequent to the breach will be taken into account and, if deemed appropriate, the effect of Covid-19 can be taken into account when calculating losses for clubs.

We would like to underline that in case the 2019-2020 season is extended, the contracts between the clubs and the basketball player / coaches are deemed extended until the end of the 2019-2020 season, unless it is clear from the contract that the parties had intended for the contract to expire before the end of the (original) 2019/2020 season, or unless it would otherwise be grossly inequitable.

Before the Lockdown Period, in case a basketball player / coach has signed a contract with another team for the 2020/21 season and the contract for the 2019/20 season has been extended as stated above; the basketball player / coach, the old club and the new club will try to find an amicable solution to solve the dispute, taking account of the interests involved in a proportionate and equitable manner.

  1. Obligations of Clubs

It is stated that the following issues will be applied regarding the contractual obligations of the clubs during the Lockdown Period:

  • Amenities (such as car, housing, meals, health insurance): The Club shall continue to provide any amenities as provided for under the contract, provided that the player is making use of them in good faith, is dependent on them and to the extent they are proportionate.
  • Bonuses: Bonuses that fell due before the Lockdown Period continue to be owed, but their maturity shall be deferred to the beginning of the 2020/21 season in the relevant domestic championship. No bonuses shall accrue during the Lockdown Period. No bonuses shall accrue based on the placement of the club in its domestic and international championships for the 2019/20 season unless the relevant championship is completed after the Lockdown Period.
  • Salaries: It is clear that during the Lockdown Period, the services provided by the basketball players and the coaches to the club have been suspended, and this has changed the financial situations taken into account when concluding contracts. Therefore, the below-mentioned issues will be taken into consideration at the payments:
    • The size of the salary reduction will depend on the player’s/coach’s monthly salary. In this context, discount between 0% -20% in monthly fees up to 2500-Euro; around 50% in monthly fees above 2500-Euro will be applied. These discounts will be decided by the arbitrators and while determining the discount rates:
      • In principle, the total salary amount (considering that lower salaries should be subjected to a lower discount than higher salaries),
      • The club’s financial situation as a result of the Covid-19 crisis,
      • Individual conditions of the basketball player / coach, especially reasonable living costs,
      • Whether the parties are acting in good faith,
      • The principle of proportionality and reasonableness (in particular how the club will use any liquidity saved through the salary reduction) will be taken into consideration.
    • It is the duty of the parties to substantiate and provide the necessary evidence to determine the appropriate salary reduction in an individual case.
    • If the relevant domestic championship resumes its 2019/20 season after the Lockdown Period, the monthly salaries due under the contract for the remainder of that season shall be reduced adequately to account for the fact that the club’s income will usually be lower than in a normal season despite the season being resumed. However, such reduction shall be lower than the reduction applied during the Lockdown Period and shall not exceed 50%.
    • For the avoidance of doubt, salaries that became due before the Lockdown Period are not subject to the above reduction. However, the maturity of up to 50% of any such outstanding salaries may be deferred to the beginning of the 2020/21 season in the respective domestic championship, provided that the club substantiates and proves that such deferral is necessary to avoid insolvency.
  • We would like to underline that in the guideline is has been stated that, the Clubs should apply to any financial help declared in their country in order to ease any consequences arising for its player/coaches because of COVID-19-related pay cuts under their duty of care towards their players and coaches.
  1. Obligations of Basketball Players

Within the scope of the said guideline, the obligation of basketball players to provide sports services has been suspended throughout the Lockdown Period to the extent permitted by public health guidelines, and it is stated that the contractual obligations related to non-sports services continue as long as they do not comply with valid public health guidelines. In this context, basketball players will not be able to act as their contracts are completely suspended during this period.

In addition, we would like to state that basketball players are obliged to participate in team activities permitted by judicial bodies in order to keep fit and healthy as much as possible.

  1. Agent Agreements

No special arrangements have been made with respect to agent agreements and it has been stated that the relevant guideline provisions will be used for possible disputes.

CONCLUSION

As we mentioned above, Covid-19 has raised many questions in the field of sports law, as in all areas, and international judicial authorities have issued a number of suggestive guidelines on these issues.

We would like to state that Turkish Basketball Federation has not make any explanation/announcement regarding local disputes and payments. However, undoubtedly, decision makers will consider the above-mentioned explanations in their possible decisions.

In the field of volleyball, no explanation has been made in the national or international fields and general provisions will continue to be applied.