Penalty clauses and performance bonus in football loans agreements

Pubblicazione legale: In football loan agreements, it is quite common to find clauses aimed at encouraging (or influencing?) the loaning club to field the player in a minimum number of matches throughout the season. 📈 Indeed, the loan system is designed to foster the development of players—especially young ones—and these clauses are often intended to preserve (or enhance) the player’s market value But are such clauses valid from the perspective of the FIFA Regulations? According to FIFA's judicial bodies, the answer is not straightforward. ✋🏻 Clubs must bear in mind that the parent club is not entitled to impose measures or conditions on the loaning club to secure the player's development. In other words, the loaning club must have full independence in "employment and transfer-related matters" and the player’s playing conditions must be entirely at their discretion. But what happens in practice? The FIFA Disciplinary Committee has held that it is prohibited—under Article 18bis of the FIFA RSTP—to include a penalty clause in a loan agreement that obliges the loaning club to financially compensate the parent club if the player fails to appear in a minimum number of matches. Such a clause effectively compels the loaning club to field the player regardless of sporting rationale thus undermining its autonomy. 💰Conversely, clauses providing for a performance bonus—to be paid by the parent club to the loaning club—if the player appears in a certain number of matches are considered compliant with Article 18bis. An interesting case in this regard is Arsenal FC v Cork City FC (FIFA Disciplinary Committee, 23 July 2020), where the parties agreed on both a fixed loan fee and a variable performance fee, calculated based on the number of appearances. The Committee ruled that the prospect of a reduced fee in the event of fewer appearances constitued an incentive, rather than undue influence. So, the question remains: where is the line between a legitimate incentive and prohibited influence? If a penalty clause infringes Article 18bis by constraining the loaning club's decision-making, why wouldn't a bonus clause have the same effect, especially if the club is facing financial difficulties? Can we always assume that such decisions will be made solely on sporting grounds? From my personal experience, I would say that we cannot...

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