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Emiliano Sala – Nantes turn spotlight to legal matters amid human tragedy

Emiliano Sala – Nantes turn spotlight to legal matters amid human tragedy

Neeraj Thomas and Roddy Cairns

Much has already been written about the tragic circumstances which led to the death of the Argentine footballer Emiliano Sala in a plane crash over the English Channel.

However, it is perhaps emblematic of modern-day football that not even two weeks after the tragedy, attention has already turned to legal and financial matters in connection with Mr Sala’s transfer from FC Nantes to Cardiff City FC.

As has been well documented, at the time of the crash Sala had just completed a £15 million transfer from Nantes to Cardiff City and became the Welsh club’s record signing in the process. The fee was reportedly due to be paid in instalments over a three year period.

It has recently been reported that Nantes have issued an invoice to Cardiff City for the first transfer fee instalment of £5.27 million. In a further escalation, it is understood they have also threatened legal action if payment is not made within 10 days. Cardiff City have responded by saying that they intend to honour the contract but wish to clarify all of the facts before they take action, with their chairman calling for respect for the families of the accident’s victims.

While many will no doubt consider Nantes’ actions to be callous and grossly unsympathetic, when all emotion is stripped away, this is a business transaction and Nantes are legally entitled to recover the transfer fee in full (even if the alleged threatening of legal action was a serious PR faux pas). In a situation where human beings have become such valuable and tradable assets in the world of sport, it is perhaps not surprising that multi-million pound companies require to take steps to protect their financial position in these circumstances. So what happens next in a (thankfully rare) situation such as this?

The first thing to note is that the obligations between Cardiff City and Nantes regarding the transfer of the player will be predominantly governed by a contract between them (known as a transfer agreement), which of course is not in the public domain (although aspects of it have been quoted in the press). Whilst fans focus on the headline transfer fee, in truth it is standard practice for any transfer fee of this level  to be paid in instalments, with clear provisions setting out when each payment must be made.

We do not know whether the contract, including its interpretation and enforcement, is subject to English or French law and jurisdiction (although ultimately any dispute may be determined by the Court of Arbitration for Sport in Lausanne, Switzerland).  It is likely this will have been negotiated by the parties, and may well depend on their respective bargaining power.

The legal reality is that despite the tragic circumstances, a legally binding contract was entered into between Nantes and Cardiff and Cardiff will likely have pay (at least the basic transfer value) in full. There is also the added complication that Sala’s former club, FC Girondins Bordeaux, were due a portion of the transfer fee under a sell on clause from Sala’s move to Nantes in 2015. Once Nantes are paid, one would expect that the club would then have to make the relevant payment to Bordeaux. 

Where there may be less certainty, though, is in ‘performance related’ payments – for example, additional payment obligations might have been triggered if Cardiff finished outwith the relegation zone, if Sala scored a certain number of goals or if he played a certain number of games. In these circumstances, where those performances have not been realised (through tragic circumstances) it is likely those payments will never require to be made. 

Insurance may prove to be the key factor. Any business would be expected to insure its prize assets, and football clubs are no different. It would be safe to assume that Cardiff had insured their star signing, but even recouping any sums paid to Nantes from their insurers is unlikely to be straight-forward. That is particularly pertinent where there are external parties who insurers may need to speak to before authorising any pay-out (for example the company which chartered the plane).

The tragedy certainly raises a myriad of complicated legal issues. And while the outside world and media continue to mourn the loss of the talented footballer and his pilot, David Ibbotson, the level of finance involved means that the wheels of football business continue to turn notwithstanding the heart-breaking circumstances.

by Neeraj Thomas
Senior Associate

by Neeraj Thomas and Roddy Cairns

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ChrisA