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In any other year, Lionel Messi, one of the greatest ever footballers, leaving Barcelona, one of the biggest clubs in the world, would have been the biggest sports story of the year. Of course, in 2020, the sporting world has already seen the shocking and tragic passing of Kobe Bryant and his young daughter, massive social justice protest movements by athletes across all sports and unprecedented upheaval in the wake of the COVID-19 pandemic.

Messi’s departure is still monumental, coming off what appears to be significant unrest in the club after a humiliating exit from the UEFA Champions League, making 2019-2020 the first season without a title for Barcelona since 2007-2008, leading to a change of manager as well.

There were some rumours surrounding Messi’s future this year, with the superstar apparently holding a right to obtain a release from his deal with Barcelona to depart the club without a buyout fee, provided he gave notice to the club on or before 10 June 2020. Messi gave notice on around 25 August 2020.

What’s the big deal?

Messi’s contract with Barcelona reportedly contains a buyout clause allowing the club to demand a buyout of about AUD$1.2 billion should Messi seek to leave the club before the end of his contract, unless he gave notice of his intention to do so prior to the 10 June 2020 deadline above.

A buyout clause nominates a transfer fee that, if met, requires a club to release a player. For example, if Manchester City wishes to sign Messi, they could offer to pay Barcelona the AUD$1.2 billion, and Barcelona would be unable to refuse the transfer. There are, as always, more nuanced commercial considerations to be made which could lead to a club accepting a lower transfer fee, but the upshot is that any potential Messi suitor could hand Barcelona a world record transfer fee and start selling Messi jerseys as fast as their merchandise store can print them.

While Messi is obviously an attractive target, if his legal team can successfully argue that Messi has triggered his release option in accordance with the terms of the contract, there will obviously be an increased interest in the player if a side can avoid the transfer fee (which, surely, increases the amount left in the budget for Messi’s salary).

For Barcelona, obviously losing the best player in the world without any compensation would be more salt in the wound.

Knowing where you stand contractually

At the outset, it is important to note that Barcelona and Messi are operating under a system of law that is fundamentally different to Australia and other current and former members of the British Empire, and no one, beside the parties involved, knows the specific contract wording at the heart of this dispute, so there is little utility in trying to predict how this matter might be determined in Court. It is also far more likely that there will be some resolution where Barcelona accept a lower transfer fee and we see Messi in action in the Premier League, or the French Ligue 1 next season.

But there are some lessons to be learned in what each party is currently saying about the clause. On the face of it, Messi has missed the 10 June 2020 deadline by a long way, so why would his lawyers be arguing now that they have given effective notice?

The Spanish football season, like many others in the world, was extended as a result of Spain’s lockdowns during the early stages of the COVID-19 pandemic. Usually, the season would have finished on 24 May 2020. Messi’s lawyers will no doubt argue that the intention of the parties at the time Messi’s contract was signed was that Messi would have a few weeks after the end of the season to contemplate his future before entering the last season of his contract, and would be in a position by 10 June 2020 to decide whether he would stay or go. It follows that, given the season was extended, the deadline should also be extended.

Barcelona, for their part, say that 10 June 2020 was a firm deadline, and that it wasn’t intended to be extended for any reason.

What could the parties have done to avoid this fight?

Aside from the obvious (Messi playing his last year of his deal and walking away as a free agent), it seems that Messi has made the decision to leave since 10 June 2020, in response to what he sees as an unfair proportion of blame being levelled at players for their poor performances this season and a poor club culture.

The express terms of a contract trump all in cases such as these. If, at the time of signing his agreement in 2017, Messi intended to make a decision at the end of the Spanish football season, the contract should have reflected that position, rather than nominating a fixed date – ”End of the season” has a plainly different meaning than “10 June 2020”.

Another option available to Messi (though one not likely to have been agreed) would have been to seek a written variation to his contract based on the impacts of COVID-19, when the pandemic started. While Barcelona would have likely been alarmed and not executed any variation, Messi would have known their position early and might have been in a position to serve the notice by the deadline.

Finally, Messi could have simply served the notice. Media reports seem to suggest the effect of the clause was that the notice was one of intention to leave, and not an actual termination. Since the notice was issued, Barcelona have gone on the record to say they intend to keep Messi, so it seems likely that that position may not have changed had he issued the notice on time. In fact, Messi’s position may well have been strengthened had he done this, as it seems more certain that the player could have left with no fee had he served the notice on time.

Takeaway

The important takeaway from this developing story between Messi and Barcelona is that you can’t possibly know the future when signing a contract, but you should take care and consider the possible circumstances that would force you to reconsider your commitment to the contractual terms in the future. The formation of a contract usually happens in rosy times and by the time the relationship breaks down, it is too late to reconsider whether you still want to be legally bound to their terms. Always assume that a contract is legally binding completely according to exact terms as drafted, and be sure to clarify any possible ambiguity or confusion. Where possible, negotiate by disclosing your actual intended outcome so everyone is on the same page.

Once your ability or desire to perform your obligations under a contract evaporates, it is important to consider the costs or performing, or the possibility of varying the terms. It’s important you consider your position carefully and commercially, and seek advice on the possible worst alternative to a negotiated settlement.

While you may never find yourself in a $1 billion dispute like Barcelona and Lionel Messi, a few difficult conversations at the beginning of a contract could save you significant legal and emotional costs in the future.

 

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