Imagine signing a six-month contract with a club. It sounds simple: you play for six months and then decide what to do next. However, the agreement contains an “innocent” unilateral contract extension clause. At first glance, it seems like a minor regulation, but it could completely alter your professional future.

Football clubs, seeking to maintain control over their future, commonly use such clauses. They allow them to decide whether a player’s contract will continue beyond the end of their initial contract. This is a valuable tool for clubs, as it allows them to assess a player’s fitness and suitability before committing to a longer-term contract. For players, however, it means uncertainty, a lack of flexibility, and limited freedom of choice. In extreme cases, a player may become “trapped” in a contract they don’t wish to continue.

What is a unilateral contract extension clause?

A unilateral contract extension clause grants one party the exclusive right to automatically extend the contract, without requiring the consent of the other party. In practice, this means that the club can automatically expand a player’s contract, without the need to negotiate with the player, all in accordance with the contract’s terms.

The history of such regulations dates back to the Bosman ruling (1995), which allowed players to transfer freely after their contracts expired. To prevent players from leaving for free, clubs started using unilateral contract extensions to keep players.

Why are these clauses problematic?

The primary issue with such clauses is their unilateral nature, which grants the club complete control. This increases the risk for players, as contracts can automatically renew, preventing transfers or negotiations for better terms, and leaving players uncertain until the very last moment. In many situations, the problem lies in unclear terms or a lack of precise rules regarding salaries or terms.

Although unilateral contract extensions are potentially unfair to players, there are no regulations prohibiting them. Therefore, FIFA and CAS carefully scrutinize such rules to ensure they are proportionate and consistent with the rights of players. Unilateral contract extension clauses must not violate the player’s freedom of movement or personal liberty.

CAS and FIFA case law

FIFA and CAS review unilateral contract extension clauses to assess their compliance with fairness and balance between club and player. If they find these clauses unfair or “trapping,” they can invalidate them. The tribunals stress that such clauses, which allow a club to unilaterally extend a contract without a corresponding increase in pay or in a way that is disproportionate, are against FIFA rules.

At the same time, they try to balance interests; clubs cannot impose overly restrictive regulations, and players must understand that, in cases of clear and proportionate conditions, the contract can be extended automatically, even without a new signature.

CAS has developed a set of criteria to assess whether a unilateral contract extension clause is fair:

1. The potential maximum duration of the employment relationship, including any extension period, should not be excessive; in accordance with Article 18 of the FIFA Regulations for the Status and Transfer of Players (RSTP), it should not exceed 5 years;
2. The right to unilaterally extend a contract should be exercised within a reasonable period of time before the expiry of the current contract so that the extension can effectively take effect, or the player has sufficient time to find a new club;
3. The remuneration resulting from the extension option should be specified in the initial contract. Tribunals have repeatedly emphasized that this remuneration should be more favorable to the player;
4. Neither party should be entirely dependent on the other regarding the terms of their employment contract. This means that the player cannot be left entirely at the mercy of the club regarding key terms of employment;
5. The terms of the extension clause should be clearly established and clearly indicated in the original contract so that the player is fully aware of its existence at the time of signing the contract;
6. The extension period should be proportional to the main contract period;
7. It is advisable to limit the number of possible extensions to one.

Meeting these conditions typically results in the clause being deemed effective. Failure to do so exposes the club to the risk of losing the dispute.

What should you pay attention to when signing a contract?

• check whether the extension conditions are clear and specific,
• make sure that the salary for the next period is specified,
• pay attention to whether the clause works automatically or depends solely on the club’s decision,
• Please note that FIFA does not accept extensions that exceed 5 years in total.

In conclusion

A unilateral contract extension clause can be an effective tool if it’s transparent, proportionate, and predictable. Otherwise, it becomes a trap, and the consequences can affect the player, which is why legal assistance is crucial during contract negotiations.

For a footballer, a poorly drafted clause can threaten their entire professional future. You might miss a transfer window, be stuck at a club you don’t want to play for, or mistakenly believe your contract will automatically extend. Conversely, for a club, a poorly drafted clause can result in legal disputes and the need to pay compensation.

At our law firm, we specialize in sports law and the analysis of football contracts. We represent players and clubs before FIFA and CAS, advising on contract renewal clauses. If you have any questions regarding your contract, please do not hesitate to contact us. We will review the contract, assess the risks, and advise on the best solution.

Sources:

1. Union Royale Belge des Sociétés de Football Association ASBL v. Bosman (C-415/93), the Judgment of the Court of Justice of the European Union of 15 December 1995.
2. Court of Arbitration for Sport (CAS), Grêmio Football Porto Alegrense v. Maximiliano Gastón López, CAS 2013/A/3260, award of March 4, 2014.
3. Court of Arbitration for Sport (CAS), KSC Lokeren v. Omer Golan & Maccabi Petach Tikva FC and Omer Golan & Maccabi Petach Tikva FC v. KSC Lokeren, CAS 2013/A/3375 and CAS 2013/A/3376, award of August 22, 2014.
4. Court of Arbitration for Sport (CAS), Ascoli Calcio 1898 SpA v. Papa Waigo N’diaye & Al Wahda Sports and Cultural Club, CAS 2014/A/3852, award of January 11, 2016.