Letter of release
The letter of release is the document by means of which a football player or any other sportsman is contractually released from his club, i.e. he dissociates himself from this sporting manner at the precise moment in which it is issued. From then on, the football player can sign for any other team without having to pay any financial compensation to the club from which he comes as a result of the transfer.
If the player does not have the letter of release and, therefore, is not released from the termination clause of his contract, he would be obliged to pay compensation in order to carry out the transfer not authorised by his current club.
A letter of release is also used when a club wants players with a low level of performance or a salary that they are not able to afford due to an unfavourable financial situation to leave the club. However, since the club continues to pay the salary of the released player until he has joined another club, it is not equivalent to a dismissal.
One of the most notorious cases in its time related to the use of the letter of release was the one between FC Barcelona and Rivaldo in 2002, a year in which a mismanagement of the FC Barcelona due to the existence of a power vacuum forced the departure of the Brazilian footballer.
Rivaldo obtained that document and managed to sign for Milan. It should be noted that this was perhaps not one of his best decisions. Providing the player with a letter of release meant that the Catalan club saved the more than six million euros net salary he was earning, but it also meant that one of the rival clubs strengthened their position by signing this top player.
Therefore, a club that wants to sign a player with a contract still in force at another club, as well as any player who wants to leave a club before the end of his contract, cannot do so without paying compensation due to the existence of a termination clause that forbids it.
This is a method used by football clubs to protect their stars. A financial amount has to be paid in order to release a player. It is very common to hear such terms during transfer periods, i.e. when the transfer market starts.
Since 1985, football players in the Spanish league have been able to terminate their contracts unilaterally in exchange for a compensation clause, otherwise their clubs will not release them.
It should be borne in mind that before this clause was established, clubs took advantage of the right of retention in force at the time, which meant that footballers lived in a kind of semi-slavery regime on the part of their clubs, as the latter could extend their contracts for as long as they wished, regardless of whether the players agreed or not.
The termination clause can be established at the time the contract is signed or decided by a court. As a rule, the exit price of a player is usually agreed in advance due to the indeterminate length of the agreement process.
When calculating the termination clause in order to obtain a release, it must be taken into account that the amount of money to be paid is not arbitrary, but is in accordance with the salary of the football player. This is decided in the negotiations prior to the signing of the contract, although this amount of money is not always known to the fans.
When Paris Saint-Germain signed Neymar, they had to pay Barcelona a whopping two hundred and twenty-two million euros as a termination clause in order to release the Brazilian player. The official amount negotiated between Messi and FC Barcelona is unknown, but it is believed to be between two hundred and fifty and four hundred million euros.
In Spain, the compensation corresponding to the termination clause has to be paid by the player to the competition, i.e. La Liga, which then transfers the money to his former team. Since 2016, this transaction has been tax-free. The fact that the payment is paid by the player himself marks one of the differences between the Spanish clauses and those of the rest of the world’s leagues.
However, the club that wishes to sign the player is the one that normally pays the required amount of money on his behalf, although it can also happen that the buying club pays the player first so that he can carry out the compensation and receive the letter of release.
It can also happen that a player does not feel comfortable at his club, either because he does not play enough minutes, is always on the bench or for any other reason, but the club does not release him without first paying the termination clause, which obliges him to remain there for the years established in the contract because he cannot afford to pay the money, thus losing the opportunity to sign for another club where he can develop.
In the same case, it may even happen that a club is already interested in the player, but cannot afford to pay the compensation, so the player will remain tied to his club. This is why, when it comes to top players, the termination clauses are usually so high.
When this happens, many football players decide to do everything possible to force their departure. In order to do so, they play at a lower level than usual or simply play with little effort, which often results in the club being forced to grant them a release. In addition, as mentioned above, the club will have to continue to pay his salary until another club signs him.