Will world football change after the EU Supreme Court issues its important ruling in the Lassana Diarra case?

The global soccer transfer market, worth more than $10 billion each season, is facing a revolutionary overhaul or differential evolution following last week’s European Court of Justice ruling in the Lassana Diarra case.

By ruling that some FIFA regulations on player transfers were contrary to EU competition and freedom of movement legislation, the bloc’s top court paved the way for sweeping changes to the sports economy.

Here’s a look at the key elements of the case and the possible impact of the landmark ruling.

Who is Lassana Diarra?

Lassana Diarra is a well-travelled former footballer whose career included playing for prestigious clubs such as Chelsea, Paris Saint-Germain and Real Madrid. He represented France 34 times. At some point in his career, Diarra moved to the Russian league. It was the dispute with Lokomotiv Moscow that gave rise to the case considered by the European Court of Justice (ECJ).

How did we get there?

Diarra signed a four-year contract with Lokomotiv in 2013. A year later, the contract was terminated after he was unhappy with alleged pay cuts. Lokomotiv asked the FIFA Dispute Settlement Chamber for compensation, and the player filed a counterclaim seeking compensation for unpaid wages. The Court of Arbitration for Sport found that the Russian club terminated the contract “for just cause” and the player had to pay 10.5 million euros ($11.2 million). Diarra said the search for a new team was hampered by FIFA rules stipulating that any new club would share responsibility for paying compensation to Lokomotiv.

Why does the Court think FIFA’s rules infringe EU law?

Free movement is a fundamental right of workers in the European Union within the single market. On this basis, the EU’s highest court found that FIFA’s rules, including the one that resulted in Diara being refused an International Transfer Certificate (ITC) for his move to Charleroi, restricted his freedom of movement.

The tribunal also found that FIFA’s regulations violate the bloc’s competition law because they aim to restrict and prevent “cross-border competition that could be engaged in by all clubs based in the European Union.”

What is the next legal step?

The ECJ ruling will now be sent back to the Court of Appeal in Mons, Belgium, which will hear the Diarra case. This may take years, not months. Although FIFA said it was satisfied with “confirmation of the legality of key principles of the transfer system”, Diarra’s lawyers declared a “complete victory”.

Judges in Luxembourg acknowledged that stability of squads and regularity in competitions are legitimate goals of FIFA, but that these rules must be applied proportionally.

Is Diarra’s ruling comparable to the Bosman ruling?

Some analysts compare it to the ECJ’s 1995 decision in the case of the Belgian Jean-Marc Bosman. The ruling lifted restrictions on foreign EU players in domestic leagues and allowed players from the bloc to move to another club for free when their contracts expired. These principles, of course, had a broader focus than Diarra’s narrower scope of terminating a contract for cause.

For now, the decision in the Diarra case does not change the functioning of the transfer market. Many legal experts, however, believe the ruling will ultimately have a major impact on the sports economy.

“The decision essentially says that the current system is too restrictive and will therefore have to be changed,” said Ian Giles, a partner at law firm Norton Rose Fulbright. “It is quite possible that this means players will feel they can now break their contracts and sign for new clubs, with the selling club unable to retain them or demand significant transfer fees. This is likely to lead to lower transfer fees and greater economic power for players, but over time the situation will need to stabilize for clubs to remain viable.”

It took more than five years after the Bosman judgment for FIFA’s updated transfer rules to be published in 2001. Some of the debates at the time will now be revisited.

Impact on the European football industry

A major reset in the value of transfer fees could seriously impact many smaller market clubs. Bosman has already widened the wealth gap and competitive balance in European football, which is increasingly dominated by a small group of clubs. They can lure free agents with higher signing bonuses and salaries – money that was previously distributed more widely in the form of transfer fees.

The spending of super-rich clubs can continue to reward smaller ones that excel at investing time and expertise in spotting and developing local and global talent: Ajax, Brighton, Genk in Belgium, which have produced Kevin De Bruyne, Thibaut Courtois and Leandro Trossard.

The influential Association of European Clubs, which represents over 700 teams, sees potential threats to the health of the industry in the consequences of the Diarra disaster. Transfer fees and payments to clubs from former players sold later in their careers “are an effective and efficient way of distributing wealth from larger clubs to smaller ones,” the Court noted.

Lawfare against FIFA

The football industry is increasingly becoming a game played by lawyers in courts and government offices.

FIFA is being challenged on several legal fronts, in part because it works (Diarra, Super League, agent regulations). There is also a growing perception that FIFA is not listening before launching projects and that the transparency reforms that were demanded and passed a decade ago are fading.

Within hours of Diarra’s ruling on Friday, a group of national leagues and players’ associations announced a press conference in Brussels on October 14 to explain its submission to the European Commission. In a complaint based on competition law, FIFA alleges that FIFA is adding new and larger tournaments to its overbooked calendar without proper consultation.

The European Leagues and FIFPRO once sat on FIFA’s Football Stakeholders Committee, which was a key forum for debate, including on the transfer market. FIFA suspended the panel’s work in 2021, and soon its president Gianni Infantino insisted that the World Cup be played every two years. The idea met with widespread opposition. A group of leagues say the Diarra ruling shows how representation in FIFA is “becoming legally necessary.”

FIFA said before Friday it would hold a broad consultation on transfer market reforms, which it said could focus on specific issues raised by Diarra rather than a blanket overhaul.

Diarra’s lawyer, Jean-Louis Dupont, who also represented Bosman 30 years ago, sees a broader perspective. He appeared to be calling for a broader lawsuit against FIFA, claiming that “all professional players have been affected by these illegal rules” and he can now seek compensation.