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Football News: Do you know the difference between Release Clauses and Buy Out Clauses?

Do you know the difference between Release Clauses and Buy Out Clauses?
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Different countries have different rules and it's no different in football, especially when it comes to contractual agreements between football clubs and their current players. Here Ed002 gives us the lowdown on the differences between release and buy out clauses, something that even the mainstream media have failed to understand on many occasions!

 

{Ed002's Note - Perhaps a reminder about transfer related clauses would be apt. This is a horribly complex area not least because they are written under individual national laws. They cause a great deal of misunderstanding with football supporters and the media alike.

 

The "buy out clause" is legally binding between a club and a player. The "buy out" is effectively what it says - a means for the player to buy himself out of the contract. As an example, if a player wishes to buy himself out of a contract, he pays the applicable FA (on behalf of the club) the amount of the "buy out" clause effectively becoming a free agent. The problem is that in most cases a player would need to obtain that money from the buying club - and this is fraught with issues regarding "tapping up" and, of course, taxation (as it can be seen as income for the player and would therefore be subject to income tax).

 

There was a test case about the taxation issue in Spain about five years ago which is why they have an exception. All players in Spain and Portugal have a release clause that allows the player to buy himself out of his contract without tax implications. This was to address a ruling from around 30 years ago allowing players a way out of their contracts. It works differently in Iberia to elsewhere as the tax implications do not make such clauses viable. All players in Iberia must have a figure set and agreed with the club. So "buy out" clauses are very rare. Related to this is the Webster Ruling but I don't intend to go in to that now.

 

A "release clause" is far more common in that it gives a figure that the club would accept for the sale of a player to another club - but it is not legally binding except where both parties (clubs) are in the same country (for the sake of argument I should say that football Spain and Portugal count as the same country as do England and Wales) for legal purposes.

 

These are normally unreasonably high figures (Messi at Barcelona for example) introduced to act as a deterrent for hostile bids - and even then the club could easily block a move. However, if a club in the same country does agree to match a release clause then the selling club would be obliged to ask the player if he is interested - there is no obligation on the player to make a move. For interested clubs outside of the country, the selling club may use it as a guide but are under obligation to accept a bid and may demand a higher figure.

 

There is then the becoming popular "termination clause" which is binding between the player and the club and if met would see an offer from anywhere accepted and the player given the opportunity to make a call on a move. This overcomes the issues associated with "buy out" clauses as the money would be paid by one club to another and about the legal proximity of the buying side.}

 

Manchester United fans will also be interested to hear a little on Antoinne Griezmann at Manchester United Rumours and of course, to join in the discussion!

Written by Ed055 June 07 2018 13:01:14

 

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