House of Commons - Education and Employment

Select Committee on Education and Employment Fifth Report

FIFTH REPORT

The Education and Employment Committee has agreed to the following Report:—

WORK PERMITS FOR OVERSEAS FOOTBALLERS

1. The Government announced the introduction of new arrangements for the issue of work permits to overseas footballers on 2 July 1999, a few weeks before the beginning of the 1999-2000 football season. Announcing the move, the Minister for Employment and Equal Opportunities said:

"The new criteria will help to ensure that only nonEuropean international players of the highest calibre will be playing for British clubs. By adopting a straightforward, open, and transparent system we have removed the bureaucratic red tape to ensure a faster and fairer application process. The clear and consistent criteria will be welcomed by clubs, players and fans."[

The Minister for Sport described the new system as "a sensible balance between allowing clubs to recruit the best available international talent and the need to provide opportunities for home-grown young players".[2]

2. The new arrangements represent a major departure from those used in previous years. We discuss the difference between this year's criteria and previous years' in paragraphs 17 and 18. Despite a consultation process leading up to the introduction of the new arrangements which was both longer and wider-ranging than in previous years,[3] there was some dissatisfaction with the criteria when they were eventually introduced. Some of the football authorities feel that their views have not been fully taken on board.[4] We decided to conduct a short inquiry into the new arrangements. During the course of the inquiry, we discovered that there was also some dissatisfaction with the way the work permit arrangements operated for other sports.[5]

3. The arrangements whereby a footballer who is not a European Economic Area ( EEA) national comes to play in one of the British leagues are complicated, consisting of a number of interrelated requirements concerning his nationality, status as an international player and ability. Until recently, the player's salary and the view of the Football Association (FA) or the Scottish Football Association (SFA) was also a consideration. In this Report, we consider individually each different aspect of the work permit regime. Because of the interdependent nature of those different aspects, we have confined our conclusions and recommendations to the end of the Report (paragraphs 44 to 56), where we present three options for change. Which of these options is adopted will depend in part on the outcome of negotiations which are currently being held at a European level (see paragraph 15).

4. Professional football players are, of course, not the only workers who require work permits. Certain categories of workers, such as doctors and dentists in training, ministers of religion and employees of overseas governments, are exempt. People of certain nationalities are also exempt, including EEA nationals and Commonwealth citizens who have a grandparent who was born here. Most other people require a work permit to do work of any kind in the UK. In 1998-99, the Overseas Labour Service (OLS), the branch of the Department for Education and Employment (DfEE) which deals with work permits, received a total of 78,044 applications, of which applications for footballers constituted less than one per cent.[6] Although they account for such a small proportion of work permit applications, footballers—and sportspeople in general—are a special case. Not only are the skills of the individual more prominent and more distinctive than they are in other occupations, but there is one unique consideration: the need to protect and promote the development of the domestic players who make up the national teams.

The Impact of Overseas Players on the British Game

5. There is no doubt that the influx, during the past thirty years or so, of high-quality foreign players has been beneficial for the development of football in Great Britain. The League Managers Association (LMA) told us that the introduction to this country of a small number of high quality overseas players has enhanced and strengthened the appeal of football in the eyes of spectators and helped improve standards of play.[7] Some of the World's top players can now be seen in the Premier and Football Leagues. They act as role models for young players and make the game more attractive to spectators. Our witnesses cited numerous examples of players who had made a significant contribution to the development of the game at all levels from League Division Three upwards.[8] Garth Crooks of the Institute of Professional Football told us that one of the considerations that had been influential in his decision, as a player, to transfer to Tottenham Hotspur Football Club had been the presence at the Club of two world-class Argentinian players, Osvaldo Ardiles and Ricardo Villa.[9]

6. Witnesses were concerned that the presence of so many overseas players would have a detrimental effect on the development of the young British players from whom the national sides will be eventually be chosen. The Football Association told us that it was working to ensure that a balance was maintained between the top-level clubs who wanted to recruit overseas players and the need to provide top-level playing opportunities for young, home-grown talent.[10] Gordon Taylor of the Professional Footballers Association, the players' union, put it more strongly: "I really do believe our first priority as a country should be to try to create jobs and opportunity for our own youngsters".[11] Craig Brown, the Scotland International Team Manager and Technical Director, suggested that in Scotland "with a restricted source of talent even on a population basis", it was extremely important that young players obtain early exposure to competition at the highest level, something which had not always been possible because of the increasing number of non-Scottish players.[12]

7. Another problem is that lower division clubs have historically relied on the sale of players to higher division clubs as a source of revenue. Andy Williamson of the Football League told us that, over the last four years, the number of transfers from lower divisions to the Premiership had fallen by 42 per cent.[13]

Nationality Clauses and the "3+2" Rule

8. From the 1960s onwards, as international transfers of football players became more common, many national football governing bodies introduced rules known as "nationality clauses" restricting the extent to which foreign players could be recruited to play for clubs in their national leagues or fielded to play in any one match. Nationality, in this case, usually meant a player's eligibility to play for a national team, rather than his legal nationality or citizenship. Part of the purpose of nationality clauses was to protect the development of promising young domestic players who would sooner or later form the pool of talent from which national coaches could select their squads.

9. In 1978 the Union des Associations Européennes de Football (UEFA), the European governing body, gave an undertaking to the European Commission that it would remove limitations on the number of players from other Member States employed by each club and set the limit for the number of such players who may participate in any one match at two, with an exception for players who had been established for over five years in the Member State in question. In 1991, following further discussions with the Commission, UEFA adopted a system known as the "3+2 rule". Each national association was permitted to limit to three the number of foreign players who could be fielded in a top division match, plus two players who had played in the country of the relevant national association for an uninterrupted period of five years, including three years as a junior (known as "assimilated foreigners"). This is the situation which obtained until the European Court of Justice's 1995 ruling in the case of Union Royale Belge des Sociétés de Football Association ASBL and Others v JeanMarc Bosman and Others.

The Bosman Ruling and the Free Movement of European Players

10. Jean-Marc Bosman, a professional footballer of Belgian nationality, was employed in 1988 by the Belgian club RC Liège. His contract, which expired on 30 June 1990, assured him an average monthly salary of BFr 120,000. In April 1990, the Club offered him a new contract, but paying only the minimum salary permitted by the Union Royale Belge des Sociétés de Football Association (URBSFA), BFr 30,000. He rejected the contract and was put on the transfer list. The club was asking for a BFr 11,743,000 fee, described as a "compensation fee for training", which was also set in accordance with URBSFA rules.

11. No club offered to sign Bosman at that price, so he made contact with the French second division side, US Dunkerque, and was signed for a monthly salary in the region of BFr 100,000 plus a BFr 900,000 signingon fee. Dunkerque then completed a contract with Liège to sign Bosman, but for considerably less than the first club's asking price. Both contracts—the one between the two clubs and the one between Dunkerque and Bosman—were subject to the condition that his transfer certificate be sent by the URBSFA to the Fédération Française de Football (FFF) in time for the first match of the season, on 2 August 1990. Liège, which had doubts about Dunkerque's solvency, did not ask URBSFA to send the certificate, so neither contract took effect. The Club also suspended Bosman, preventing him from playing for the remainder of the season.

12. After five years in the Belgian courts, Bosman's case finally reached the Court of Justice of the European Communities (ECJ). The ECJ ruled that Article 48 of the Treaty of Rome (which establishes the free movement of workers within the Community) applied to rules laid down by sporting associations such as URBSFA and UEFA.[14] This followed a trend already evident from previous rulings which had established that sporting activity, in so far as it was also economic activity, fell within the provisions of Article 48.[15] The ruling meant that:

(a) restrictions by football's governing bodies on the employment of players from other Member States were unlawful;

(b) restrictions on the number of such players who could be fielded in a match, such as the 3+2 rule, were also unlawful since "in so far as participation in such matches is an essential purpose of a player's professional activity, a rule which restricts that participation also restricts the chances of employment of the player concerned"; and

(c) rules which prevented a player, on the expiry of his contract with a club, from being employed by a club in another Member State unless the latter club had paid the former club a transfer, training or development fee, were unlawful (that is, a player is a free agent once his contract expires).

Although the Bosman decision applied only to EEA Member States,[16] UEFA was obliged to abandon nationality clauses completely in order to retain a consistent set of rules for all its member countries.[17]

13. Following Bosman, there is no restriction on the number of players from other EEA states which a club may recruit, nor on the number which it may play in any one match. The Minister told us that, on the opening weekend of the 1999-2000 football season, 37 per cent of players starting matches in the FA Premier League were not from the UK.[18] According to the Football Association (FA), 155 of the 866 players in the Premier League are non-UK players from within the EEA—nearly 18 per cent of the total.[19] In the Scottish Premier League during the 1998-99 season, 25 per cent of the 407 players were non-Scottish EEA nationals.[20] Witnesses told us that some African and South American players were able to play without work permits because they also held a passport from one of the EEA countries.[21]

14. A recent ruling by the French Court of Appeal in Nancy, in the case of the Polish basketball player Lilia Malaja, raises the possibility of the free movement provisions of Bosman being extended to a number of countries which are outside the EEA but which have association agreements with the European Union.[22] The Government's opinion is that if the judgement were to be challenged in the European Court of Justice, it would be unlikely to be upheld.[23]

15. The European Commission itself has recognised the problems for the development of young players which the Bosman judgement presents. In the Helsinki Report on Sport it suggested that the Bosman judgement "recognised as legitimate the objectives designed to maintain a balance between clubs, while preserving a degree of equality of opportunity and the uncertainty of the result, and to encourage the recruitment and training of young players. Consequently, it is likely that agreements between professional clubs or decisions by their associations that are really designed to achieve these two objectives would be exempted" from the competition provisions of the Treaty of Rome.[24] The Commission proposes that the EU institutions, Member States and the sporting authorities enter into talks to try to clarify the legal status of sport in the light of Bosman. As a startingpoint, FIFA has proposed that at least six members of a team should be available for selection in the country in which they are playing.[25] Most recently, representatives of the sport, including Gordon Taylor of the PFA and Sir Alex Ferguson, Manager of Manchester United Football Club, held discussions at the European Parliament on 12 April 2000.

The Work Permit Arrangements

16. Players who are not EEA nationals require a work permit.[26] It is the football club or its representative, and not the player, which must apply for a work permit. Although work permits are issued by the Overseas Labour Service (OLS), which is part of the DfEE, it is the Home Office's Immigration and Nationality Directorate which gives advice on whether or not a work permit is required in the first place.

17. Work permits are issued only for "players of the highest calibre who are able to make a contribution to the development of the British game at its highest level", and for this purpose, the "highest level" of the British game is deemed to be the Premier and Football Leagues in England and Scotland.[27] In order to establish that a player fits this description, he must meet two criteria:

(a) he must have played for his country in at least 75 per cent of its competitive 'A' team matches for which he was available for selection during the two years preceding the work permit application; and

(b) the FIFA ranking of his country must be at or above 70th place in the official rankings list when averaged over the two years preceding the date of the application.

For the purpose of the first criterion, a competitive 'A' team match means a World Cup final game, a World Cup qualifying group game or a football association confederation tournament game such as the European Championship or the African Cup of Nations.[28] Matches for which the player was a non-playing substitute or only a squad member do not count; only those in which he took the field of play.[29]

18. These criteria, which were introduced at the beginning of the 1999-2000 season, differ markedly from those used in previous years. In the 1998-99 season, the international requirement was for a player to have played in approximately 75 per cent of international matches for a team which "regularly engaged in competitive matches at the top levels of world football", meaning the World Cup and the continental confederation tournaments.[30] Clubs had to provide evidence that they had made genuine efforts to recruit players from the UK and EEA labour market. The salary which was offered had to "reflect the current market rates", and the club had to indicate the position that the overseas player would take in its salary structure. Permits were issued for the duration of a season and had to be renewed annually. Permits would normally be issued for the Premier League and League Division One in England and Wales, and for the Premier League in Scotland.[31]

19. Although the number of non-EEA nationals playing in this country ("work permit players") is small, it has risen significantly in recent years. There were only two work permit players playing in England in the 1980-81 season. There were 28 in the 1994-95 season—the season immediately before the Bosman ruling—and 36 the following season.[32] At the beginning of the 1999-2000 season, the DfEE told us that there were 56 work permit players in Britain, 12 of whom had been issued with new permits and 44 of whom had had their permits from a previous season renewed. There was also one new application under consideration.[33]

20. In addition to the work permit requirements, the football governing bodies have retained nationality clauses for work permit players. In England, a team may not play more than three work permit players in any Premier League match.[34] The Scottish Football Association has a self-imposed policy of supporting the issue of a maximum of ten work permits at any one time.[35]

The FIFA Rankings

21. At the heart of the work permit system are the FIFA world rankings. Extracts from the rankings for February 2000 are shown in Table 1.

Table 1: Extracts from the FIFA World Rankings, February 2000
Rank	Team	Points Feb 00	Rank Dec 99
1	Brazil	836	1
2	Czech Republic	772	2
3	France	762	3
4	Spain	751	4
5	Germany	742	5
6	Argentina	718	6
7	Norway	717	7
8	Romania	713	8
9	Croatia	710	9
10	Mexico	704	10
11	England	698	12
—
20	Scotland	636	20
—
67	Latvia	487	62
68	Equador	475	65
68	Zimbabwe	475	67
70	FYR Macedonia	467	68
70	Algeria	467	86
72	Estonia	461	70
73	Guatemala	458	73
—
88	Northern Ireland	425	84
—
98	Wales	388	98
—
201	Montserrat	4	200
202	Anguilla	3	202

Source: FIFA web site: http://www.fifa.com/index.html, retrieved on 14 March 2000.

22. A national side's FIFA ranking is based on its performance over an eightyear period in World Cup, continental championship, FIFA Confederations Cup and friendly matches. A team is assigned a number of points for the outcome of each match, based on: whether the team wins, loses or draws; the number of goals scored and conceded; the strength of the opposing team (based on the FIFA rankings current at the time of the match); a bonus for away matches; the status of the match (e.g. the points from a continental championship final are multiplied by 1.75 but for a friendly match, by 1.00); and the status of the continent.[36]

23. The use of the FIFA world rankings to determine work permit applications is controversial. The Football League told us that the rankings were too volatile to be used in this way, although they acknowledged that the Government's use of a two-year average helped to dampen down the volatility.[37] They pointed to the example of Estonia, which was ranked 129th in December 1995 and climbed to 86th place by July 1999. Between July and September, it climbed another twelve places, to 74th.[38] The Institute of Professional Sport did not question the use of the rankings as such, but argued that the cut-off point of 70th place was too low.[39] All but four of the 21 national sides in the EEA are ranked above 70th place in the March 2000 FIFA rankings.[40]

24. The most persuasive objection to the use of the FIFA rankings is the fact that the standing of a player's national side has no bearing on his qualities as an individual player. Witnesses from the FA and the FA Premier League told us that countries which had a low standing in the rankings could still produce top-quality players.[41] Gordon Taylor of the Professional Footballers Association (PFA) suggested that the system also discriminated against talented players from higher-ranking nations who faced stiffer competition to get into their national teams.[42]

25. Defending the use of the FIFA rankings, the Minister said:

26. A number of different criteria are in use in other countries. In Germany, the player must be endorsed by the local football association. In Holland, the player must have been playing at a standard the same as, or higher than, that which he is seeking to play in Holland or have competed in the World Cup. In Belgium, a player must be over the age of 18 and be offered more than the minimum wage. In Sweden, work permits are issued only for clubs in the top three divisions and a player's salary must be above an agreed monthly level. In Norway, a player will only be permitted to play in the top two divisions and must have played at an equivalent level abroad in recent years. In Spain, there is a quota for clubs in the first and second division: they may have no more than six non-EEA players on their books and no more than four playing in the first team at any time.[44]

The Review Panel

27. Where an application does not meet the criteria a club may seek a review against the decision not to issue a work permit. In these cases, the OLS refers the club's evidence to an independent review panel consisting of representatives of the relevant football governing bodies together with up to three independent experts.[45] Once an appeal has been made, a meeting of the Review Panel is organised, usually within 10-14 days.

28. There seems to be general satisfaction with the way the Review Panel operates. The DfEE gave us summaries of the Panel's decisions in the first 18 appeals considered during the 1999-2000 season. Of these, only three were rejected.[46]

29. Satisfaction with the Review Panel was not universal, however. Blackpool Football Club and the Football League felt that the rejection of an application for an Estonian player, Indrek Zelinski, had been unfair.[47] The Panel concluded that he was playing against lower level opposition at an international level, no other Club had shown an interest in him and the fee involved was very low.[48] Andy Williamson of the Football League argued that the fact that the composition of the Panel was different for each meeting meant that its decisions were not necessarily consistent.[49]

The salary criterion

30. Until the 1999-2000 season, an additional criterion was in use—that the salary which the player was offered should "reflect the current market rates". Clubs were expected to provide the OLS with a list of their first team salary structure showing how the overseas player's salary compared with other players'.[50] The DfEE told us that this was because "evidence revealed that footballers' salaries varied significantly in many cases and it was not thought appropriate for the Government to stipulate conditions which might be a contributory factor to wage inflation within the sport".[51] In oral evidence, the Minister argued that the salary criterion encouraged clubs to offer a higher salary than they might otherwise have done, just to obtain a permit.[52]

31. Opinion on the salary criterion is divided. Witnesses from the Football League and the Premier League thought that it might contribute to wage-inflation, with clubs offering higher salaries than they otherwise would do in order to obtain permits.[53] Witnesses from the PFA and the IPS, on the other hand, thought that the salary which a club was prepared to offer a player was a good indication of his quality.[54] The IPS suggested that there was "a strong suspicion" that clubs were using overseas players as "cheap labour". They thought the removal of the salary criterion would only reinforce this view.[55] The Scottish Professional Football Association took a similar view.[56]