There is sometimes quite a lot in common between the world of professional sports and the investment and wealth management industries. When a talented individual leaves a bank or a football team, it can cause a lot of news and chatter in the industry, prompting fans or clients to change their bank or fret over whether their club has a shot at winning games. I have worked in the financial sector long enough to know that there is also a similar sort of pecking order with banking and sports: there are “league tables” of fund managers, for example. Getting a top ranking as a fund manager with an investment record for beating the S&P 500 can be like the equivalent of winning the Player of the Year award, scoring the most goals in a season, etc.
Which nicely brings me to the subject of a certain Mr Cristiano Ronaldo, the Manchester United forward who has made a very public, and much criticised, effort to leave for the warmer climes of Real Madrid, the famous Spanish team that has won the European Cup (now the European Champions League trophy), more times than any other club: 9 times. He is blessed with wondrous dribbling skills, is brave, fast, good with both feet, can head the ball, can float around the front of the pitch and has the ability to turn a game in a flash. He scored a hatfull of goals last season, and is undoubtedly one of the best players in the world.
He is also very well paid for his efforts. No argument from me on that: he is in a free market for talent and I do not begrude him a penny of his wages. But – and this is a rather big but – he has four years left to run on his contract at Old Trafford. Naturally, his manager, Sir Alex Ferguson, is very unhappy at the prospect of losing him, although a monstrous transfer fee would ease the pain and enable the club to buy in some new players. United has not been exactly a saint either in nabbing players from rivals before their contracts fall due.
But the recent comments that Ronaldo’s contract amounts to a form of slavery is stretching the use of language to breaking point, contrary to what Mick Hume, a self-described “red” both in political and sporting terms, says. If a person signs a contract to work for a bank or football team for a minimum of say, four years, he must serve that contract out, unless there was any clear proof that he signed under conditions of duress. A footballer who signs terms with a club binding him into a four-year contract is not selling himself into slavery. It is not as if Mr Ronaldo was kidnapped, frogmarched into the club and forced to play. It is not even as though he was starving, and so desperate for a job that he was prepared to do anything to get a job. Marxists of old like Mr Hume used to argue that workers, who had no reserves of cash to live off, were “coerced” into signing work contracts and hence exploited, an argument that might have just about held water in the early 19th century when thousands of people were living on the edge of starvation, but hardly applies now.
With bankers, it is quite common for executives to sign contracts stipulating that if they give notice to leave, they have to serve out at least six months “gardening leave” and a further period of not soliciting new clients before they can start at a new job. This sounds harsh, but banks have to protect their interests, since if there is an exodus of talent from Bank A to Bank B, the latter bank can grab some of the clients of the former bank who wish to stick with their old managers. For all I know, the same sort of things can apply in other industries.
It seems to me that the only way such terms can be likened to slavery is if there is some clear form of coercion involved in signing the contract, and some clear sign of violence or threats being employed to sustain such contracts. I see not examples in the case of the Portugese footballer.
I’m holding out my wrists, waiting for Sir Alex and the Glazers to apply the chains. I want to wear number three.
Johnathan, well said.
I suppose the key difference in a footballers contract is that a footballer cannot unilaterally decide to resign and serve out such a period of gardening leave. The current employer must agree and often needs to be paid to agree to release the employee. However, these contracts are freely entered into and give benefits of security of income to the footballer as well.
In addition the fixed contract runs both ways in a footballers case. If a footballer is injured or simply has an extreme drop in form which means he no longer plays the club cannot sack the player without paying out a substantial amount of the remaining contract.
In Ronaldo’s case we should remember that he recently extended his contract by 5 years. He could have signed a shorter contract but would probably would not have been offered the same salary.
When David Beckham was in a similar situation he signed a 3 year contact that was backdated by almost a year, giving in effect a 2 year contact. Given this fact no one was surprised when he left Man U as he had indicated is lack of committment to the club by signing a short contract.
The case of Christian Ronaldo is that he earns good money, actually no one forces him to play and he could probably just stop playing for Manchester United if he pleased and still have enough money to live a comfortable life. He just can’t play for Real Madrid unless there is an agreement between Real and ManUtd.
I have no problem saying that there is debt slavery in South Asia, a situation where people sign contracts and are forced to work so that they can pay their debt. These people have no choice, they have to work to eat. Cristian Ronaldo can choose not to show up at Old Trafford if he pleases. There will be some financial remedies, and his career as a footballer will be seriously hurt. But he will still have enough mone to make i through the day for the rest of his life.
Thus its certainly NOT slavery.
JP,
It does apply in other industries. In translation for example agents are in a position to take both their clients and the translators who work for them with them if they jump ship or set-up on their own. Their are rules though they are probably less formal than in finance.
My wife is a translator.
Funny, the idea of an argument that just about holds water.
I wonder if ideas like Mick Hume’s would be nearly as popular if people appreciated the fundamental difference between right and just about right.
Come on. The point I was making is that there was some justification – only some – in saying that the capitalist system was exploitative when workers, who had nothing whatever in the way of material goods or wealth, signed onerous work contracts. Although they had the freedom not to sign, on any reasonable view, they were acting under conditions of great pressure, if not outright coercion. For that reason, it becomes much easier to sell the idea of honouring free contracts when the signatories to these are both not acting under pressure in the first place.
I’d always found the British sports writing term “selling a player” to be unsettling . . . I doubt that American football players or Canadian hockey players have contracts that differ all that much from those of British or European soccer players, but the term used on this side of the pond is usually “traded” rather than “sold”. It may be a mere difference in term, but it sounds rather more dignified.
The only thing that can stop Ronaldo from leaving ManU and playing for Real Madrid would be some kind of monetary penalty, as specified in his contract, that he would be reluctant to pay. As Rothbard points out in his book, The Ethics of Liberty (http://mises.org/rothbard/ethics/nineteen.asp), mere promises cannot be legally binding when someone changes their mind, even if those promises were made in a contract.
My guess is that, in addition, professional football negotiations would tend to favor players (because of their high demand), and heavy fines for leaving early would not make it into most agreements. Or we might see shorter agreements, etc.
A long-term contract can bear with it financial penalties for withdrawing; however, that is the only thing that can be backed with force against the quitter: some parting with property. Absent these considerations, it would be slavery to force Ronaldo to continue playing there against his will: that which is inalienably his.
Reading this tempted me to write one of my meandering essays, but since I have a habit of writing a great deal which says very little, in an attempt to be concise I’ll pose a question-
Since the concept of “employment” is an historical holdover from old unequal power relationships (master and slave, became lord and serf, became employer and employee (literally “user and used”)) and since the concept of “employment” creates an artificial distinction between trading one service, labour, and other goods ands services, and since this tends to perpetuate unequal power relationships, leading to expectations on contractual parties beyond those which are necessary (employer duties of patronage, employment “rights” etc) and discourages the entrepreneurial spirit by creating an expectation that the majority will by default seek a master’s patronage (“get a job, son”) rather than trade as an individual and creates an environment in which it is presumed that the market for one service, labour, should be managed on behalf of those attempting to sell it, regardless of whether there are others prepared to purchase it from them, should a libertarian government abolish employment?
There was a case in Israel where a businessman “bought” a child player, aged 13. That is, he gambled by signinga contract with both the child’s parents (as custodians). He gave them some 30k $ in cash, and in return they promised to pay him 50% of the child’s future earnings (or transfer fees) as a footballer.
That child, now 20, is maybe the best and most highly valued player in Israel, and has a promising international creer ahead of him. Naturaly, the parents reneged, and the case is now under arbitration.
I am not sure i follow. You are saying that a contract is a contract unless someone decides it isn’t.
?
Jacob, the problem with your example is that the deal was struck when the kid was so young that I am not sure he had much say in the matter. Now that sounds like the sort of deal that could and perhaps should be struck down as not involving the consent of the young footballer at the outset. Actually, it stinks.
The originator of the ‘slave’ remark was Sepp Blatter.
For those who don’t follow the sport, Herr Blatter is the president of FIFA, the world governing body of football.
He has a, (deserved), reputation for being an arrogant despot who makes up the rules off the top of his head, and then bullies and bribes his fellow delegates into adopting them. The paranoid amongst followers of the Premiership are convinced that has has it in for them especially.
The only thing one can say in his favour is that when the predictable outcry arose over his comparing highly paid footballers trying to break their freely signed contracts to the slaves of the past and present, Herr Blatter has so far disdained any apology, or even the typical politician’s non-apology. You know, the one that goes; “I apologise that you are so thin skinned and thick headed that you are offended by my perfectly innocuous remarks.”
Ian B
Such a system began evolving in England in the seventies and eighties. In the electronics and IT industries ‘contracting’ was the way to go. Companies who wanted things built or tested contracted with small, (one or two person) companies, who would do the work for them. (I did the books for my then wife’s company and she did the books for mine)
Government, (and the unions), did not take too kindly to this development as it made things much more difficult to tax and regulate, so they acted quickly to ‘close the loopholes’. Once the financial benefits were whittled away, it made sense for most people to take the benefits, (paid leave, sick pay etc.), that employment had to offer over the freedom of contracting, and the practice has died out. (Except in the building industry.)
So yes, when you’re Prime Minister, by all means restore the benefits of contracting between consenting parties.
If the EU will let you.
Couple of things:
1. What is more common in the UK and US than long contracts are significant “cool off periods” especially in sales jobs. These do end up unenforceable especially in selling where people are effectively barred from working in the same industry sector for periods of 12-18 months. Typically there isn’t the financial recompense that you see in Football or Banking and the reality is these can’t really be held to.
2. The problem with contracting was purely tax related. I know lots of people who still contract through their own business in IT, but they do actually run their own business, have multiple clients and arrangements. What was clamped down on was people who were actually “employed” while claiming they were taking risks and running their own business.
It was a nice tax dodge while it lasted though and my household had been known to take advantage of it for a while.
“I am not sure i follow. You are saying that a contract is a contract unless someone decides it isn’t.”
Johnathan, I’m saying that you can only transfer ownership of property, not of yourself. Self-ownership is quite literally inalienable.
Suppose Ronaldo simply leaves Man U, right in the middle of his contract. Presumably there are penalties to be paid, etc. But should Ronaldo be thrown in jail if he’s simply not willing to play for Man U anymore? (Take a wild example: what if he was leaving football altogether and was leaving to become a priest?)
Man U has every right to pursue their contractual losses if Ronaldo wants to leave. However, I don’t think they could justifiably use force to keep Ronaldo there or prevent him from playing for Real Madrid. He’s within his rights to leave his job, provided he pays for whatever damages were agreed to beforehand (if any).
Johnathan,
Concerning the contract signed with the parents of the 13 years old player (he himself probably signed too, though he was under age). The businessman consulted the best lawyer in Israel, and was advised that the contract was legal and enforceable. It didn’t make the child a slave – he is free to do as he pleases, as long as he paid the agreed share. It was more like a venture capital investment, where a startup gives some of it’s (currently) worthless shares to some investor, in exchange for cash, used in the developement process. If we deem such investment in child players unacceptable, we deprive the talented children of poor families of needed income. It seems to me that the law was changed after the case, and such contracts were rendered invalid. I don’t know if it’s a good thing – It’s a complicated issue.
Besides other issues of decency, etc, I fail to grasp how, since a parent’s rights over a child end when they legally come of age, a contract which extends beyond that point can have any legal validity. If we take the analogy of a child being the parent’s property- well it makes no more sense than if I had a lease on a theatre until January 2009, and I then booked in a show for July 2010. I can’t do that. I don’t have the property rights. The parents likewise don’t have rights over their child beyond his legal coming of age to sign away!
Daniel Coleman:
So I guess selling kidneys is out?
“However, I don’t think they could justifiably use force to keep Ronaldo there or prevent him from playing for Real Madrid. He’s within his rights to leave his job, provided he pays for whatever damages were agreed to beforehand (if any).”
right. Why cant ronaldo leave, go to Real Madrid and pay damages for an unfufilled contract ( maybe real will pay). these monetary damages to be decided in court. Also why do players get sold to the highest bidder, why is there any sale at all? If two clubs are fighting for a player and he wants to go to the club which makes lesser offer why cant he? It is clear the player is being sold, the club, not the player gets the money ( wages are decided separately) and the player has to follow the money, not his own choice. The “they earn lots” is orthogonal to the argument of servitude, though I think this serfdom not slavery.
It would only be slavery if he were prevented from leaving no matter what else he wished to do.
He was paid handsomely to play ball exclusively for the current club for a set period. Nothing prevents him from leaving or not playing ball for the club – he just can’t play ball for any other club.
He could go become a bartender or shop worker or car park or to do nothing at all any time he wants.
It would only be slavery if he were prevented from leaving no matter what else he wished to do.
He was paid handsomely to play ball exclusively for the current club for a set period. Nothing prevents him from leaving or not playing ball for the club – he just can’t play ball for any other club.
He could go become a bartender or shop worker or car park or to do nothing at all any time he wants.
These fiendish capitalists! First they invent wage-slavery, now contract slavery! Will it never end!?
As for self-ownership, I suppose you could sell yourself, but your new owner would instantly be able to reclaim the money back, since they own you, and therefore anything attached to you, so it would be money well-spent by the buyer, especially if they promise to pay by cheque!
It also follows that you can sell your kidneys, though stem cell research seems to point to a better way to have kidneys- grow your own back.
But if I have property in my own person – to use the formulation of John Locke and other classical liberal theorists – and I agree with say, a football team or a bank to give that property to them for a specified period and for a specified sum, subject to certain conditions being met, then I must honour this. If the terms of the contract are changed unilaterally by the bank or club, say, then I may have the right to back out. A lot of long-term contracts will contain such “get-out” clauses to avoid the case where a person discovers that his terms have changed against his will, or whatever.
But the basic point of honouring a contract must stand. Suppose I agree to work for you for a single day and you make plans for that, and I suddenly do not bother to turn up. This happens with the likes of builders all the time who let their clients down. There is no philosophical difference between ratting on a day-long term of employment and a contract of say, four years.
I do not think the inaliability of one’s person has much relevance. Someone like Ronaldo, for example, is expressing his freedom as a choice-making person by signing, or not signing, a contract. Without trust and a sense of mutual obligation, such contracts are not worth the paper they are written on.
This is quite appropriate.
“Suppose I agree to work for you for a single day and you make plans for that, and I suddenly do not bother to turn up. This happens with the likes of builders all the time who let their clients down. T”
Well then I wont pay you for not turning up. There may also be punitive damages, but that is rare and would be subject to a court hearing ( you would have to prove that not turning up on that day cost the prospective employer than the pay forgone by the no-show).
The contract that Ronaldo agreed was not pre-paid. He is paid on a weekly, or monthly basis. There are performance bonuses – i.e. money for scoring. The penalty that Ronaldo should forgo for not turning up is to not get paid in future. He can then go do something else like work for Real Madrid.
There should be no pre-paid contract system between employers, a signing bonus for the player makes sense, but allowing companies to trade workers for money, regardless of the employees wishes is chattel.
“He was paid handsomely to play ball exclusively for the current club for a set period. Nothing prevents him from leaving or not playing ball for the club – he just can’t play ball for any other club.”
He is getting paid handsomely, and so can forgo that future payment for breaking the employment contract. Which means he loses money naturally pro-rated to the end of the contract. So he can leave.
And fuck that nonsense about not playing football, he was not trained to play football at United, he is a natural. No employment law can stop you from working for a similar company ( despite what they say). An IT company may try and protect it’s intellectual property but they dont own your brain. The idea that an IT company could stop it’s employees – trained in IT, or self trained before that employment in most cases – from further employment in IT is preposterous.
Ronaldo has a clear case here, and how obviously anti-freedom you “libertarians” are when property rights come into play.
What about the vast signing fees that are paid for a player, then? If a club buys a player who then turns around and tells his new club, “Pay me for every match but I might leave after a couple of weeks if I miss the sunshine”, I very much doubt the club would give him the time of day. Your argument is bizarre: a player is signed to play for a season or part of a season, not just on a match-by-match basis.
No, because the employee gets to choose if he wants to sign for a club in the first place. If Ronaldo only wanted to sign for say, one year, he could have done so. He was happy to sign a much longer contract than that. Similarly, if a banker signs contracts with JPMorgan or Merrill Lynch which includes a “gardening leave” clause, then he has no complaints since he can choose to sign for a bank imposing less onerous condtions if he wants.
So long as none of this involves coercion, the terms on which employees sign with their employers is no reason for the state to intervene or for anyone to get upset about. What does upset me is to see a highly paid sportsman crying like a spoiled baby over something he freely entered into.
eion, that’s nonsense. Ronoldo sold something (his football-playing skills) for future delivery. If he fails to deliver, he must pay damages. The measure of those damages (i.e., whether simple loss of his salary is sufficient, or something more is needed) is for the courts to decide.
And employment contracts routinely contain non-compete clauses, and they are routinely enforced (at least, in the US) as long as they are not over-broad. Whether the restriction is “overbroad” is, again, an issue for the courts, but the presumption is in favor of enforcement under a “freedom of contract” theory. The only justification for holding it unenforceable is on a “public policy” basis that it’s unconscienable to unreasonably prevent a man from earning a living in his trade. Thus, what the court looks as is the relative bargaining power of the two parties, how narrowly drawn is the scope of the prohibited activities, and the temporal and geographic reach of the restriction. A guy who works as an electronic salesman at Best Buy couldn’t legally be prohibited from working as a electronics salesman anywhere in the country, or in any retail position in his town, but probably he could be prohibited from working in another electronics store in the same town for a period of one year. Senior corporate executives are frequently prohibited from going to work for their companies’ competitors (for example, some years ago Volkswagen tried to hire a senior executive [chief purchasing agent?] of Chrylser, but was ultimately forced to fire him.
Contrary to your assertion, freedom of contract and the enforcement of contracts are core libertarian principles. Ronaldo is free to play football for ManU, and he is free to do something else or not play at all (at the cost of his future salary). What he is not free to do is sell his services to ManU’s competition, and the reason for this is that he has sold that freedom to ManU. Nothing wrong with that.
The curious thing about the Blatters of the footballing world (or at least their organisations) is that they both don’t want conditions – in this case a negotiated contract – and yet want to impose conditions on the movement of players.
Thus we in the UK have to abide by the ludicrous idea of a “transfer window” where players can only move their (agreed and contracted) skills at certain times of the year.
If bodies like FIFA and UEFA and anyone else want to see an end to this abject slavery of the likes of Ronaldo then they can’t limit the time frame either. A free-for-all of no contracts and no restraint of movement at any time should then ensue.
I quite like the idea of my team signing a superstar for the last match of the season in order to avoid relegation, or indeed two superstars to beat our dearest rivals in the middle of October, say, on a play-and-pay basis.
“What about the vast signing fees that are paid for a player, then? If a club buys a player who then turns around and tells his new club, “Pay me for every match but I might leave after a couple of weeks if I miss the sunshine”, I very much doubt the club would give him the time of day. Your argument is bizarre: a player is signed to play for a season or part of a season, not just on a match-by-match basis.”
No signing fees would exist under my system ( except signing bonuses to the player) – which is the system for all other workers, including bankers.
it is not true that a player gets to choose contracts. If his club is offered five million by club A, and ten million by club B, well then he goes to B regardless of his own wishes.
Larid. We would have to stick to UK law. Which is much less restrictive on the employees rights. Non-compete clauses are generally ignored, and considered – rightly – to be anti-competitive.
YOur description is false anyway. The US is more restrictive that you claim : cf
http://en.wikipedia.org/wiki/Non-compete_clause
The EU is even more sceptical, and that is what is relevent here.
Maybe not. But your system does not exist. Unless you can show me that the system coerces people to go along with it, you have not made the case that it is wrong.
I suppose you could have a contract system where players are paid per match, but that would cause chaos, since there would be no way for a manager to know if he had a squad of the same players from one week to the next. Without some lock-in provisions in contracts, the game would be impossible. And that is where the parallels with other industries come in; a bank like JPMorgan cannot allow itself, for example, to have a load of advisors leave in a heartbeat and take all their clients with them.
Well, I’m impressed; you’re doing legal research on Wikipedia. That settles everything. I guess I wasted all those years in law school.
Anyway, on a brief scan of that article (which is all it merits), with the exception of the oddball (and not finally adjudicated) prohibition on out-of-state non-competes in the PR of California, the rest of it pretty much echoes what I said: they will be enforced unless they’re seen as over-broad and unreasonable.
But you’re right about one thing: in this case UK law controls, and I don’t know much about that. I do know enough, however, to say that the off-the-wall idea you’re advancing is no more UK law than is California’s. And that it certainly has no libertarian grounding.
Eoin:on the example of a builder who doesn’t show up for work as promised, you commented: Well then I wont pay you for not turning up. I hate to break it to you, but contracts, as the rest of human interaction, are not only about money. It is also about trust and commitment. I am glad I will never have to do business with you.
There is a little controversey over the alleged statements made above, which have been attributed to Cristiano Ronaldo but were in fact not made by him. The source of the comment regarding modern slavery is taken from FIFA president Sep Blatter who said “I think in football there is too much modern slavery, transferring players or buying players here and there, and putting them somewhere,”
Cristiano never said that he thinks he is or ever was a slave, only that he agreed with any statement made by FIFA. This was another example of irresponsible journalism who’s only desire was to sensationalize an already explosive issue in order to sell newspapers.
My personal view is that any contract that restricts you from freedom of movement is a form of modern slavery. Regardless of what state of mind the athlete was in when he signed it. It is up to the player’s manager and lawyers to relay the details of the contract to the athlete, but often that doesn’t always happen correctly. Does that mean that you are a slave? of course not, but the draconian methods used by some clubs to purposely end athletes careers that whom they have deemed expendable is a fact of today’s sports contracts. And an example of freedom that many athletes must endure.