The Diarra ruling: how the transfer market and the balance of power between clubs and players are changing

Why a flexible and dynamic release clause may become a tool for a new contractual balance.

Thirty years after the Bosman ruling, another decision of the Court of Justice of the European Union (CJEU) is set to reshape the balance of power between clubs and players, with significant repercussions on contractual stability and, inevitably, on the transfer market.

In its decision of 4 October 2024 in the Diarra case (C-650/22), the CJEU held that certain provisions of the FIFA Regulations on the Status and Transfer of Players (RSTP) infringe European Union law, in particular the principles on the free movement of workers (Article 45 TFEU) and competition (Article 101 TFEU).

FIFA promptly amended its regulations, redefining the rules governing the consequences of termination of a contract without just cause, as set out in Article 17 RSTP. Subsequently, FIFA opened a dialogue with stakeholders with a view to introducing new rules and parameters for the quantification of damages, in order to promote a degree of uniformity in the determination of compensation payable by players following unjustified termination of their contracts.

The new FIFA parameters, which are expected to be issued shortly, will make the consequences of walking away from a contract less uncertain and less onerous. In essence, it is likely that it will become possible to predict, within a certain margin, the range of the ‘price’ at which a player may free himself from his contractual obligations and move to another club.

How ‘contractual stability’ is changing

Previously, from a purely compensatory perspective, clubs were in a more favourable position than players. Where a club unlawfully terminated a contract, the compensation payable to the player generally consisted of the residual value of the contract, offset by any salary earned by the player under a new employment contract with another club.

For players, however, the financial consequences of termination without just cause were significantly more severe and impossible to determine in advance, effectively acting as a strong deterrent against unilateral termination. The calculation was based on a number of criteria, including the elusive ‘specificity of sport’, the salary – typically much higher – provided for under the new contract, and the costs incurred by the ‘abandoned’ club to secure the player’s services, without any mitigating factors. In Diarra’s case, for example, FIFA ordered the player to pay compensation amounting to €10.5 million.

In addition:

• the new club was automatically held jointly and severally liable for the payment of compensation; and
• the former club’s national association could refuse to issue the International Transfer Certificate (ITC), thereby preventing, or significantly delaying, the player’s registration with the new club.
  

The CJEU decision, which focused on Article 17 (paragraphs 1, 2 and 4), Article 9.1 and Annex 3 RSTP, changed this framework and prompted FIFA to amend the rules governing the consequences of termination without just cause by a player:

• compensation payable in the event of a player’s breach of contract must now be based on the principle of positive interest (aimed at restoring the non-breaching party to the position it would have been in had the breach not occurred) and on the law of the relevant country;
• joint and several liability of the new club applies only if the former club proves that the new club actively induced the player to breach the contract; and
• the issuance of the ITC, and therefore the registration with the new club, must in any event take place within 72 hours of the request.

As noted, FIFA will shortly also issue guidelines on the quantification of compensation. As a result, any penalty clauses included in employment contracts will need to be adjusted to comply with the requirement of proportionality.

The new release clauses

In this new scenario, risks will continue to affect both parties: clubs and players. To reduce uncertainty, one tool worth considering – capable of rebalancing interests and preventing disputes with unpredictable outcomes – is a flexible release clause calibrated to the player’s actual current and prospective value.

The release clause of the future, which is already being widely discussed across Europe, should be dynamic, with amounts adjustable according to the player’s sporting performance and the competitive and economic standing of the club interested in acquiring him. In practical terms, the consideration payable to the ‘abandoned’ club could be supplemented by a performance-related amount (appearances, goals, assists) achieved with the new club, as well as by a percentage of any future transfer fee.

Why release clauses will be increasingly used

Clearly defining the respective positions of clubs and players from the outset of the relationship helps align interests and reduce the risk of disputes. Achieving this objective requires a release clause capable of moving beyond traditional approaches: no longer a fixed amount designed to attract or deter rival clubs, but a mechanism based on transparent and universal parameters, capable of providing both a current and predictive assessment of the player’s true sporting and market value, adapting to the specific circumstances and ensuring greater balance.

Contractual stability remains a cornerstone of the relationship between clubs and players. The introduction of a modulated clause, potentially combined with lock-in periods and precise trigger windows, can provide clubs with the certainty of not losing a player either too early or too late, enabling them to plan timely replacements and secure an economic return also linked to the player’s future performances.

At the same time, this mechanism allows players to choose a new club aligned with their career development objectives. In practice, the clause should provide for a fixed consideration that increases in proportion to the level of the acquiring club: the lower the fixed amount, the greater the performance-related add-ons and the higher the share of any subsequent transfer to a top-tier club.

In this sense, the release clause does not mark the end of contractual stability, but rather its evolution: an intelligent tool which, if properly structured, can strike a fair balance between clubs and players both at the time of the initial contract and in subsequent renewals.

Article published by  Calcio e Finanza on 2 January 2026.