clock menu more-arrow no yes

Filed under:

Why Carlos Salcedo's camp might not be recognizing his contract option, and what that could mean

New, 15 comments
Russ Isabella-USA TODAY Sports

According to a report from one of our own, Charles Barnard, Carlos Salcedo and his representation may be seeking to declare that Salcedo is actually out of contract, and that the MLS unilateral contract extension option taken is invalid.

It's the same approach Camilo took in his departure from MLS to Liga MX's Queretaro, but that case ended without any further indication of the validity of unilateral options - rather, it ended with the Mexican side paying a significant transfer fee. Reports at the time indicated it was a $2 million fee, and it was paid after Camilo had already violated his contract and signed with Queretaro. The similarities between the two cases are, of course, striking.

Salcedo and his representation have publicly stated that they've been negotiating with Chivas with regards to a contract that would begin immediately. Craig Waibel, technical director at Real Salt Lake, has said that Salcedo is under contract, and we've confirmed that the club has two unilateral option years, and they'd taken the first one prior to the MLS Re-Entry Draft. This was contrary to Salcedo's desire, as he stated in a public message on Nov. 24.

"I have, together with my closest family decided not stay with RSL for 2015 season and asked the team not to pick up my option," Salcedo said in his message. Real Salt Lake's taking of his option was permissible because it is a unilateral option, as is standard not only in MLS but across the world. But what makes that option permissible? To get to the truth of the matter, we have to start with MLS contracts as it concerns FIFA regulation.

Many have posited that the structure of a typical Major League Soccer contract, the details of which we are not privy to, and of the league in general comprise a third-party ownership structure. The particularly American single-entity structure may fall afoul of impending third-party ownership restrictions from FIFA, which are scheduled to come into place on May 1. However, the restrictions will only affect agreements signed from Jan. 1 to May 1 (with a one-year window allowing third-party ownership) and all deals signed after such date, with no transitional period affecting those.

But it's worth noting that even that might not bar the MLS single-entity structure: Third-party ownership of economic rights are the things being banned, and it's unclear at this time whether MLS does indeed meet that. However, that's an argument and discussion to be had at another time, and it's not particularly relevant to the discussion of Salcedo's contract, given it's already set in place.

Instead, we should be thinking about the validity of unilateral options both as it concerns Carlos Salcedo and the general MLS population. Commonly called ‘option years' in MLS nomenclature, they allow one party (in this case and most cases, the club in question) the option to extend the player's contract by a predetermined amount of time. In Salcedo's case, there are two options, each one year in length. Options include a pre-determined increase in salary, in addition to other considerations.

When we're looking at whether option years are valid, we should turn toward FIFA's dispute resolution committee (DRC) and the Court of Arbitration for Sport (CAS) as our governing bodies. Those both operate in respect to laws of the nation in which the contract was signed, but may make additional regulations in regard to organized football under FIFA. If Salcedo and his representation are genuinely attempting to claim that there is no contract at current because the option year is invalid, let us make our claims in contraposition to that, but if we find support for the claim, let's include that as well.

In an Oct. 2006 ruling, the CAS provides some guidance on unilateral options in a case involving Panathinaikos Football Club. From that document: "No jurisprudence declares unilateral options as absolutely void under all circumstances. In each case, the individual situation between the club and the player has to be scrutinised in order to decide whether the unilateral option provided in the contract can be enforced or not." (Arbitration CAS 2005/A/973 Panathinaikos Football Club v. S.)

In that case, a player ("S." in the case) signed a contract with Greek club Panathinaikos, which included two unilateral options that would allow the club to retain the player, first for an additional two years, then for an additional one year. The club took the option to renew the player, who desired to leave for Rangers FC. Rangers submitted a bid for the player but weren't willing to pay the full transfer fee Panathinaikos requested, citing injury concerns. Instead of returning to the Panathinaikos to resume training and playing ahead of the new season, the player refused, in violation of his contract. He claimed that the option year was invalid. The CAS ruled that the player breached his contract without just cause, and that he was liable for damages.

The second point in summary from the CAS focuses on the player being explicitly aware of the commitment and permissible contractual period. While we cannot properly assume whether Salcedo was explicitly aware of the contract and its option years, it is probably a safe assumption. The claim from Salcedo and his representation is not that he didn't understand the contract, but rather that the option year is invalid. (The first point is noted above, and it's that unilateral options are not absolutely void.)

The third point in summary: The terms and conditions of the unilateral option are fair and reasonable if the other party (Salcedo) is rewarded with a predetermined substantial increase in remuneration (by Real Salt Lake) and no additional conditions are imposed. Again, without specific knowledge of the contract, we cannot say with certainty, but other MLS contract options have included an increase in remuneration, and it's led to some options not being taken, despite the club desiring to retain the player. We can make a fair assumption in this matter.

The court's fourth and final point in summary: One party cannot express acceptance of the other's to unilaterally extend the contract (and this happened by signing the contract in the first place) then try to escape obligation by claiming the unilateral option is, in fact, invalid. This is specifically relevant to the claim apparently coming from Salcedo and his representation.

Although in some cases the CAS has cast doubt on unilateral options as it concerns the movement of workers under Swiss law (which FIFA, based in Switzerland, is beholden to), the definitive case does seem to be this one involving Panathinaikos.

In an earlier ruling than the Panathinaikos case - this one in Feb. 2006 - involving a Romanian player against a Greek club, the FIFA Dispute Resolution Chamber seems to indicated that unilateral options for clubs are generally invalid or at least wrong, but the case at hand deals more with unilateral options without substantial increases in remuneration, and in this specific case, the termination of a contract with just case due to nonpayment.

While FIFPro, who are billed as the world players' union, rejects unilateral options on the basis of the freedom of movement of workers, their case citations revolve around contracts that do not meet the tests laid out in the Panathinaikos case.

To conclude, Salcedo's camp may be disputing the validity of an option year, and they may believe they have proper basis for that. We are not in a good position to dispute that, except to assume that a significant salary increase was involved. The Panathinaikos case specifically cited a 25 percent salary increase as substantial in that case, and while we have no way of knowing what increase Salcedo would have seen, we can definitively state that he received more than a 25 percent increase in base salary from 2013 to 2014.

With that in mind, this case meets the requirements laid out in the second, third and fourth points of the Panathinaikos case, given our assumptions made in the preceding paragraph. If this is the case, and Salcedo has already negotiated a deal with Chivas as reported, Real Salt Lake and MLS have firm footing in their defense in the matter. We don't know for certain what the state of all this is, or if it would ever reach the FIFA dispute resolution committee. We can say, however, that unilateral options are indeed valid, and that it certainly appears the unilateral option exercised in Salcedo's contract was valid as well.