Release clauses: what price a football manager?

From the moment that Chelsea FC decided to part company with their former Head Coach Thomas Tuchel, it became clear that Graham Potter, latterly the Head Coach at Brighton & Hove Albion FC, was at the top of their list to replace the departed German.

Reports suggest that Chelsea sought permission from Brighton to approach Potter, and permission appears to have been granted fairly quickly. Since Potter was contracted to Brighton, reportedly under a fixed-term contact not due to expire until June 2025, any attempt by Chelsea to employ him with immediate effect would have resulted in a breach of contract, leaving Chelsea potentially liable for inducing that breach. As a result, Chelsea needed Brighton’s permission to approach Potter and, in the world of professional football, such permission is only typically granted once the two clubs concerned agree an appropriate level of compensation for the release of the individual from his existing contract.

In this particular case, one might have expected Brighton to resist Chelsea’s approach, given the relative success that Potter brought to Brighton, and the personal acclaim that he himself received as a result. Of course, Brighton’s decision to allow Potter to speak with Chelsea could have just been a personal and/or professional courtesy, a recognition that Potter would inevitably be interested in the job likely to be offered to him by Chelsea, a “bigger” football club by most metrics. However, Tony Bloom, Brighton’s Owner and Chairman, has shown himself to be an astute negotiator, who, in recent years, has extracted substantial transfer fees for Brighton players that have moved to bigger clubs; indeed, just this past summer, Chelsea are said to have had to pay in the region of £60 million to secure the transfer of former Brighton left-back Marc Cucurella – some £10 million more than the only other reported suitor (Manchester City) were said to be willing to pay for the player. So, given that Potter’s appointment as the new Chelsea Head Coach took less than 48 hours to finalise, how is it that negotiations over compensation for his release were concluded so swiftly?

The answer could lie in reports that Potter’s Brighton contract contained a “release clause” – that is, a clause stipulating a pre-agreed sum which, if paid, would secure Potter’s release from his contract. If Chelsea agreed to pay Brighton the £16 million release fee that was supposedly referenced in Potter’s contract, there was, in effect, nothing more to discuss, and Brighton were powerless to prevent Potter’s departure.

Release clauses are more typically found in the contracts of football players, but it seems as if they are starting to become more widely used in the case of managers and coaches (albeit that the existence and content of such terms tend to be the subject of strict confidentiality). Their legal validity has never been tested in the English courts (these types of clauses could conceivably be unlawful on restraint of trade grounds, or as penalty clauses), but elite football seems to accept them as a practical commercial reality.

The “pros and cons” of such clauses are clear: for the “buying” club, they set the upper price limit on negotiations over a release fee or, if the “selling” club is in a position to resist being negotiated down from that figure, at least they offer certainty over the fee that will need to be paid. Moreover, as seems to have been in the case of Potter, activating a release clause allows for speedy, rather than long and drawn-out, negotiations. For those reasons, the selling club will want to set the fee in a release clause as high as it can, so that it can maximise its return. Brighton probably felt that they achieved this if Potter’s release clause really did call for a £16 million fee; the highest compensation fee paid for a manager/head coach to date is rumoured to have been the £13.3 million that Chelsea were said to have paid to Porto FC to secure the release of Andre Villas-Boas in 2011 (albeit that there is some suggestion that Bayern Munich FC paid an even larger compensation sum to Red Bull Leipzig FC in 2021 to secure the release of current Head Coach Julian Nagelsmann). Either way, it seems as if the release fee that Brighton will have received for Potter will be at the upper end of the managerial compensation scale.

However, what is interesting is how much lower the release fees of managers and coaches still are, as compared to those commanded by players. Just last year, Manchester City triggered the £100m release clause in the contract of Jack Grealish, then of Aston Villa FC, whilst a number of FC Barcelona players who recently extended their contracts with that club are reputed to have “buyout” clauses (a close cousin of the release clause) of 1 billion euros. There is no expectation that any club will trigger a release clause of that amount – indeed, there is no football club that could afford to – but it does show how the use of release/buyout clauses has evolved. In Spanish football, every player contract must include a buyout clause, so a practice has evolved to provide for a completely unrealistic buyout fee, so that the selling club can protect itself from losing a player against its wishes, or at the very least maintain the upper hand in compensation negotiations.

One can debate whether players or managers/head coaches are more important to football clubs, and to what degree, but there seems no logical justification for the vast disparity that exists in the value of the release/buyout clauses that currently exist in the contracts of these two groups. Indeed, it is arguable that managers/head coaches are significantly undervalued when it comes to the fees that are paid for them when they move between clubs. For that reason, it is likely that, going forward, the compensation paid by clubs to secure the release of managers from their existing contracts will rise rapidly, and the use of release clauses (of ever-increasing values) will become more prevalent in manager/head coach contracts. How long, then, will it be before we see the first £50 million manager?