At a time when grassroots sport
faces more government cutbacks, it is important that amateur clubs have a sound
understanding of other streams of revenue open to them that can potentially be
used to develop and sustain their organisations.
In 2001, following the famous Bosman ruling, FIFA introduced the
training compensation system which would apply to clubs who were involved in
the training and education of young players. The ideology behind the system was
to encourage increased and better-quality training of young players by awarding
compensation to those clubs who had been involved and invested in their training
and education. At the same time, FIFA also introduced the solidarity mechanism
system which provides for compensation to former clubs who have provided
training and education to a player, each time that player is transferred
between clubs of two different national associations in exchange for a transfer
fee.
Training Compensation
Article 20 of the FIFA Regulations
on the Status and Transfer of Players (“FIFA RSTP”) govern the system of
training compensation and states that:
“Training compensation shall
be paid to a player’s training club(s): (1) when a player signs his first
contract as a professional, and (2) each time a professional is transferred
until the end of the season of his 23rd birthday. The obligation to
pay training compensation arises whether the transfer takes place during or at
the end of the player’s contract.”
Further information as to when
the system is triggered and how compensation is calculated can be found under Annex
4 of FIFA RSTP. The training compensation system applies to the training and
education of players between the ages of 12 and 21, and will only be paid up to
the age of 23 for training incurred up to the age of 21. In certain
circumstances, clubs who are liable to pay such compensation may be able to
establish that a player’s training had already concluded prior to the age of 21
(but this should only be in exceptional cases). The obligation to pay training
compensation is over and above that of the transfer fee, although if two clubs
agree on a transfer fee this is regarded as being inclusive of training
compensation unless stipulated otherwise. Further, it should also be noted that
FIFA has advised, in previous disputes, that only the entitled clubs can
expressly waive their right to training compensation. Therefore, it cannot be
agreed by the two clubs involved in the immediate transfer, that training
compensation will be waived by all former clubs involved in the training and
education of the player. Only you, as the entitled club, can waive that right.
There are two scenarios where
training compensation will apply: -
1.
On registering as a professional player for the
first time.
2.
Any subsequent transfer of a player, between two
clubs of different associations, up until the end of the season of the player’s
23rd birthday.
Upon the registration of a
professional player for the first time, training compensation will be due to
all former clubs of which the player has previously been registered and who has
contributed to his training since the start of his 12th birthday. In
relation to any subsequent transfer of that player, FIFA RSTP allow for only
the immediate former club to receive training compensation.
The calculation of training
compensation is carried out on a pro-rata basis and associations are instructed
to divide their clubs into a maximum of four categories which correspond with
the clubs’ financial investment in training players. There is a set figure
attached to each category and the sum equates to the average training cost
incurred for one player over the course of one year, multiplied by a “player
factor”.
The current categorisation for
UEFA clubs is as follows:
·
Category 1 - €90,000
·
Category 2 - €60,000
·
Category 3 - €30,000
·
Category 4 - €10,000
It should be noted that in the
UK, England has clubs spanning all four categories whilst Scotland has clubs
ranging from categories 2-4 with Northern Ireland and Wales having clubs
identified in categories 3-4.
Under FIFA RSTP, training
compensation only applies to the international transfer of players (a transfer
between clubs of two different national associations, ie. England and Scotland)
however clubs/academies should pay particular attention to their national
association/league rules and regulations as similar compensation schemes may be
due upon a domestic transfer under certain jurisdictions (for example, in Northern
Ireland and Scotland).
The rules regarding training
compensation apply to both the permanent and temporary (loan) transfers of
professional players.
Under FIFA’s rules, the payment
of training compensation is the responsibility of the club which is registering
the player, and payments should be made within 30 days of the registration with
the new association/or the date on which the first professional contract was
signed. However, in reality, this often does not happen and buying clubs may
hold back on the payment until the entitled club makes a request in writing, or
raises a claim with the Dispute Resolution Chamber (an independent dispute
resolution service provided by FIFA).
If you think you may be entitled
to training compensation, you should contact the buying club in the first
instance and if no response is forthcoming, lodge a claim with the Dispute
Resolution Chamber in the event of an international transfer or your national
association in the event of a domestic transfer and a similar scheme is
available to you under domestic rules.
Clubs claiming an entitlement to
training compensation only have two years from the date of the relevant player’s
registration with the new club to lodge a claim with FIFA, and this should be
taken into account by any club considering any claim.
Solidarity Mechanism
Unlike training compensation, solidarity
payments do not cease to apply upon the conclusion of the season of the
player’s 23rd birthday. Instead, the solidarity system continues to apply
upon every international transfer until the player retires. In order to claim a
solidarity mechanism payment, the claimant club requires to have trained and
educated the player between the ages of 12 and 23, and the international
transfer has to have taken place whilst under contract.
Under FIFA RSTP, 5% of the
transfer compensation agreed with the selling club must be held back by the
buying club and distributed to the former clubs involved in training over the time
period discussed above. For seasons of which the player was aged between 12 and
15, former clubs shall receive 0.25% of the total compensation whilst clubs who
trained the player during the seasons of his 16th and 23rd
birthdays shall receive 0.5% of the total compensation. If a player was not
with a former club for an entire season, the compensation will be calculated
pro-rata.
To put this into perspective when
Neymar moved to PSG for a record-breaking transfer fee of €250m, his former
club Santos was reported to have received the equivalent of €9m as part of
their share of the solidarity contribution. Neymar had been previously registered
with Santos for in excess of five seasons, during which time he had been part
of the youth squad as well as the first team. Further, youth amateur clubs have
also made the headlines for their receipt of solidarity contribution. In 2015,
Wallsend Boys Club received a cash boost when they claimed their share of the
5% solidarity contribution from Fraser Forster’s transfer from Celtic to Southampton.
In addition, the club also received a healthy cash injection when Jermain Defoe
transferred from Toronto to Southampton. More recently Dyce Boys Club, in
Scotland, received a six-figure sum following Stuart Armstrong’s move from
Celtic to Southampton.
Under FIFA’s rules, the payment
of solidarity contribution is the responsibility of the buying club and
payments should be made within 30 days of the transfer of the player. However, as
per training compensation, buying clubs may sit on the sums until the claimant
club requests it in writing or files a with the Dispute Resolution Chamber (an
independent dispute resolution service provided by FIFA).
Again, clubs/academies should pay
particular attention to their national association/league rules and regulations
as similar schemes may be due upon a domestic transfer under certain
jurisdictions.
If you think you may be entitled
to solidarity contribution, you should contact the buying club in the first
instance and if no response is forthcoming, lodge a claim with the Dispute
Resolution Chamber in the event of an international transfer or your national
association in the event of a domestic transfer and a similar scheme is
available to you under domestic rules.
As in the case of training
compensation, it should be noted that claimants only have two years from the
date of the relevant player’s registration with the new club to lodge a claim
with FIFA, and this should be taken into account by any club considering a
claim because after which time their claim will become time-barred.
The rules regarding solidarity
mechanism also apply to both permanent and temporary (loan) transfers of
players.
Conclusion
Whilst transfer fees continue to
grow, amateur clubs must take the opportunity to benefit from this significant
revenue stream that is readily open to them. Solidarity contribution, in
particular, has the ability to provide continuous significant funding to
amateur clubs as it continues to trigger upon every transfer, and does not cease
at the end of the season of the player’s 23rd birthday. The
solidarity mechanism is therefore a vital source of revenue that can assist in
ensuring the sustainability of amateur clubs, many of which find it
increasingly difficult to raise the funds required to operate year in, year
out.
It is important therefore that
amateur clubs (1) ensure that they are familiar with the FIFA rules governing
training compensation and solidarity mechanism, (2) understand what payments
they are entitled to and when they become due and (3) keep track of the
movements of their former players.
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