The Relegation Clause from the Perspective of FIFA and CAS

In this article, the authors will discuss the so-called relegation clause. All the relevant published jurisprudence of the FIFA Dispute Resolution Chamber and the Court of Arbitration for Sport will be analysed. After the case-law is discussed, an analysis will follow by the authors. More specifically, the principles that derive from the football jurisprudence and the legal pitfalls will be highlighted.

Introduction

Players and clubs sometimes insert a provision in employment contracts with regards to potential relegations (or promotions) of the club in the future; the so-called, “relegation clause”. For example, in the event the club will be relegated in the future from a higher to a lower division, the employment contract will be terminated, either automatically or by any legal action by one of the parties.

Especially among clubs regularly operating in the lower regions of the league, the relegation clause is an effective tool to protect themselves from very high salary burdens as a result of relegation. The inclusion of a relegation clause in a player contract, however, can also be to the benefit of the player. By including a relegation clause in the contract, the player can protect his sports career by not being contractually obliged to play in a lower league. In fact, by playing in a lower division, employment opportunities and the...

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