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Soccer clubs (at least in Europe) "own" their players for the duration of the contracts. These players are working for their clubs in a very similar way to employees working for startups. My question, is: How can these clubs legally bind players to work exclusively for them for the duration of contracts which may last for as much as five years?

If this would be possible for startups, then this would greatly reduce the risk of hiring people and giving new employees access to critical inventions or technology, and would therefore solve one of the biggest challenges for innovative startups, including my own.

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Do you really want to hire employees on five year contracts that you can't terminate during that period, even if your company's circumstances change drastically or the employee turns out to be unsuitable? – Mike Scott Sep 29 '11 at 15:31
If I understood how they write these contracts, I might make it possible to terminate the contract earlier under certain circumstances. – David Sep 29 '11 at 22:15
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No offense, but you're going about this all wrong. The way to solve your problem is not contractual, it's motivational. Make people want to work for/with you. Trying to artificially bind them is not the path to success. – Brian Karas Sep 29 '11 at 23:29
Brian, you got it exactly right. – Alain Raynaud Sep 30 '11 at 16:16
@BrianKaras I agree with you under existing business terms, but how often do you see companies financing the education of employees from an early age? The soccer club Ajax is for example famous for their talent development program, which starts from before the kids are even teenagers. They can finance this because they have such contracts, and therefore, know that they will profit in the future if they sell these players. Such contracts would completely change the rules of the game. – David Sep 30 '11 at 17:18

4 Answers

up vote 4 down vote accepted

The clubs "own" players not because of the contracts that they have with the players, but because of the rules of their leagues and associations governing player eligibility.

Essentially, the clubs all agree (contractually) to follow the player eligibility rules as a condition of participation in sanctioned competitions and/or as a condition of membership in a league or association. They also agree not to play against clubs which do not follow these rules.

In the case of soccer, which is the most complicated because it is everywhere, FIFA (the worldwide governing body) has crafted rules, and those rules cascade down through regional and national associations and sanctioned leagues and competitions.

Lionel Messi can't leave Barcelona and go play for Manchester City tomorrow because Manchester City has agreed through FIFA, UEFA, and the English FA not to play him and not to pay him. If they did, they would forfeit any contests he played in and likely have other penalties applied as well.

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up vote 10 down vote

But it's a double-edged sword. The sports team has a contract with the person to pay them no matter what (with very few exceptions). Do you really want to hire someone, commit to pay them $1M over 5 or 8 years, and then find out after 18 months that your startup is going to pivot and this person is suddenly no longer valuable?

I also believe that your startup would have to essentially escrow their salary, or prove in some other way that it was legally able to hold up its end of the contract. Because the typical startup is operating on limited funding, it is more preferable for most cases to be able to pay 8 people for 1 year vs. 1 person for 8 years, for any given amount of capital.

You would be solving one problem with this, and creating 4 or 5 other (IMO, much larger) problems at the same time.

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I am really interested in how they can do this, and not the implications. These could maybe be changed if one knew how they do it. – David Sep 29 '11 at 22:18
up vote 3 down vote

Sports clubs are able to do this because all of the teams in the league agree to play by the same rules. There is a governing body that enforces those rules. Startups aren't part of a league and don't have a mutually agreed upon set of rules.

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up vote 1 down vote

The equivalent in the startup space is a non-compete clause as a condition of employment. The contract typically identifies the consequences should there be a breach of contract (it could be a non-trivial fee or it could be millions). In the US, I've seen people that explicitly breach these terms without any consequences since many courts wouldn't uphold the terms and employees rarely have sizable assets that would make the lawsuit worthwhile.

That said, it is common for vendor/client contracts to include a clause forbidding the hiring of employees, and the vendor and client do have sizable assets to discourage a breach of this contract. I'd expect that any major sporting league would have an agreement with each of the teams in the league binding the owners to similar terms. If they breach those terms, the league may have the right to remove the team from the league or seek significant fines.

Therefore, it may be entirely possible for a player to quit working without notice and go work for some other company. However, no other team in the league would hire that person. They could still work as a coach for a high school or college, or any number of other jobs.

In the startup space, this isn't practical (try identifying every possible place your employee could go to work for next). Even in the few cases where these contracts would prevent one from hiring an employee of a vendor, I've seen employees go independent and operate through a middle man that isolates the client from any lawsuits. And really, no company wants to tarnish their image by trying to sue their employees, clients, or business partners.

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This is the most useful answer, but isn't a technically correct answer. – tomjedrz Sep 30 '11 at 14:41
@tomjedrz, that may be a technically correct comment, but it's not useful. Please explain any issues you see. My thoughts here come from what I've seen in practice, so I'm more than happy to hear about the legal reality. – BMitch Sep 30 '11 at 15:02
BMitch, I repped you up +1 because you came up with an excellent mapping of the practice being discussed, to the technology industry, that can help the OP formulate an approach to this challenge. – user2757 Oct 2 '11 at 0:14

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