Professional footballers receive meaningful support in collecting outstanding wages
FIFPro and FIFA have launched a guarantee fund securing the payment of salaries to players unable to enforce judgments against their football clubs. This approach would also be helpful in other sports, as there are growing calls for support for professionals in their dealings with teams and sports federations.
In June 2019 I wrote about how some sports clubs and federations avoid paying wages owed to players through the practice known as “phoenixing.” This consists of liquidating a sport organisation with debts to players and other creditors and then shifting the organisation’s assets to new entities, which de facto continue the activity of their economic predecessors but reject liability for the predecessors’ outstanding debts.
As I explained, in the traditional economy practices of this type are regarded as wrongful and are prosecuted by the injured parties and law enforcement authorities. In the world of sport, such actions are practically the order of the day and are not effectively combatted. I suggested that this is primarily due to the difficulties encountered by players in enforcing their rights.
Contrary to what the public might guess from the fortunes of the biggest sports stars, salaries for most players are relatively low, and enforcing payment one by one is generally not feasible because the process is costly and time-consuming, and the clubs and their federations hold a dominant position. They can take various forms of retaliation against players asserting their rights and effectively discourage them from pursuing what they are owed.
Moreover, in Poland players most often perform not on the basis of an employment contract, but as part of their own business as service providers. This strips them of the privileges and protections provided to employees under the traditional meaning of this word (such as reduced court fees and various presumptions and exemptions in litigation procedure). Despite certain precedents, such as the Constitutional Tribunal judgment of 2 June 2015 (case no. K 1/13), courts and other authorities remain deaf to the calls to provide comparable protection to players, due to their status as independent, self-employed professionals.
In my previous article, I suggested that the only way to change this is for professional athletes to unionise. Through unions, they could take joint action to protect their rights by exerting positive pressure on federations and other regulators of the sports market and by pursuing collective litigation.
One of the organisations displaying the greatest initiative in this area is the international football players’ union FIFPro. This organisation has just announced that together with FIFA, it has launched the FIFA Fund for Football Players, worth USD 16 million, to secure the payment of wages to players who have obtained judgments upholding their claims but have been unable to collect them. In its justification for the decision to establish the fund, a number of reports were cited disclosing the scale of wage theft in the world of sport. The fund has set up an email account players can contact if they cannot collect salary owed to them (email@example.com).
The FIFPro initiative is a major step toward ensuring respect for the fundamental rights of players. Similar ventures could be pursued in other sports as well. The fund will not help players clear the hurdles they face in proving that they are owed wages (a condition for drawing on the fund is to obtain a legally final ruling awarding the player overdue wages), but it will increase the odds for ultimately obtaining practical success. Thus it may indirectly make it easier for players to take advantage of other solutions for pursuing their claims, such as obtaining financing for litigation from private third-party funders, who front litigation costs in exchange for a share in the proceeds ultimately awarded to the claimant.
It might prove easier if at the same time there were procedures in place facilitating players’ collective pursuit of claims, such as class actions in sports arbitration. Such solutions could be modelled on the recently adopted Hague Rules on Business and Human Rights Arbitration, especially tailored to disputes involving infringement of human rights by multinational corporations. Professional clubs and the leagues and federations of which they are members are powerful and largely autonomous international commercial creatures, and there are increasingly louder calls for protection of the fundamental rights of players in dealing with such entities.
Stanisław Drozd, adwokat, Sports Law practice, Dispute Resolution & Arbitration practice, Wardyński & Partners