Football player contracts - waiving training compensation

Published 27 October 2014 | Authored by: John Shea

In accordance with Article 20 of FIFA’s Regulations on the Status and Transfer of Players, clubs who have trained a player between the ages of 12 and 21 are, as a general rule, entitled to training compensation when a player signs his first professional contract and each time a professional is transferred until the end of the season of the player’s 23rd birthday.

However, it is possible during negotiations for a club to waive their right to training compensation and it is vitally important for clubs who seek to rely on training compensation being waived to fully understand the legal requirements to ensure that a waiver is fully enforceable. It is also equally important for clubs who do not intend to waive their right to training compensation to ensure that they do not inadvertently do so.  

According to jurisprudence of FIFA’s Dispute Resolution Chamber (“DRC”) a waiver can only be applied if it is “unmistakeable that the renouncing club had indeed intended to waive its right to training compensation"and there have been a number of cases involving disputes between clubs of different associations3 where the DRC has had to determine whether a club has indeed waived its right to training compensation.

 

Wording Should Be Specific

In DRC decision 67516, a club claimed that it was exempt from paying training compensation because the training club signed an internal document used by its football association which answered no under the heading “the club seeks compensation. The DRC had doubts whether the training club had renounced its right to training compensation as the document was not an agreement between the two clubs, was drafted in very general terms and there was no mention of the transfer or FIFA’s regulations relating to training compensation. Training compensation was, therefore, payable.

A declaration from the training club that no more transfer fees are payable has also been deemed not to be a waiver by the DRC and also by The Court of Arbitration for Sport (“CAS”). In DRC decision 114461, Galatasaray claimed it did not have to pay training compensation because the player’s training club, MSV Duisburg, signed a document addressed to the player confirming “that the contract of … (the player) expires on 30 June 2002 and that no more transfer fees exist.” MSV Duisburg maintained that it did not waive its right to training compensation but only confirmed that no transfer fee was payable as the player’s contract had expired. The DRC agreed and held that the document was not a waiver because no specific reference was made to training compensation. The case was subsequently appealed to the CAS (see CAS 2005/A/811 Galatasaray SK v. MSV Duisburg) who upheld the DRC decision. The CAS held that all the circumstances of the case led to training compensation being due and that Galatasaray should have understood that the document only related to transfer fees or at least should have clarified this point with MSV Duisburg, particularly as the document was not addressed to the player and not them. 

Similarly, a declaration by a club to the effect that a player has been granted a free transfer is also not sufficient to waive the right to claim training compensation. In DRC decision 115377, a club relied upon a letter addressed to the player’s agent from the training club’s vice president which, inter alia, said “the player will be free and out of contract.”  The club understood this to mean that they would not have to pay any training compensation. The DRC unanimously rejected this argument and concluded that the letter cannot in any sense abolish the Claimant’s entitlement to receive training compensation.4 In DRC decision 9112744, a club opposed a claim for training compensation on the basis that the training club orally waived its right to receive training compensationduring the transfer negotiations. In support of its position, the club also relied upon a letter sent from the training club to the player confirming that the player was granted a free transfer. The DRC noted that the general topic of the letter was to inform the player that he was free to move on and to join another cluband unanimously concluded that no element of the letter could possibly lead to understand that the Claimant was renouncing to any other right(s) related to the player.6

The CAS was also called to determine this issue in CAS 2009/A/1919 Club Salernitana Calcio 1919 S.p.A. v. Club Atlético River Plate & Brian Cesar Costa where Salernitana argued that River Plate waived its right to training compensation in a letter addressed to the player which stating the following:

Dear Sir,

We write to you in order to inform you that this Entity has decided to give you the Free Agent Status in order for you to sign for the club of your choice. […]”.

The Panel rejected Salernitana’s argument as the letter contained no reference to the topic of training compensation.

 

Beware Of Generic Terms

However, whilst DRC and CAS jurisprudence suggests that a waiver will not be enforceable unless there is a specific reference to training compensation being waived, clubs who do not intend to waive their entitlement to training compensation should be very careful of entering into agreements or signing documents with general and wide ranging clauses or declarations as they could amount to a waiver.

In DRC decision 25528a, a club rejected a claim for training compensation because the training club declared in a document that it will have no claims against the player and the player’s new club. The DRC held that this document must be considered a waiver and so the claim failed. Also, in DRC decision 106574, a club claimed that the training club had waived its right to training compensation by confirming in a document signed by the club’s president that “it does not require any financial compensation for the footballer [A]”. In determining whether the term financial compensationreferred to the training club’s right to receive training compensation, the DRC stressed that the term “encompassed any kind of monetary compensationthus also training compensation. An important factor in the decision was that a transfer fee was not payable because the player’s contract had expired and so the document must have referred to training compensation.  

Clubs should also be careful in ensuring that any forms required by national associations when completing transfers are completed correctly. In DRC decision 9101245, a club claimed that the training club had waived its right to training compensation because it circled the answer no” on a clearance form to the question as to whether the club wanted to receive a refund for expenses invested in the player’s development. In contrast to decision 67516, the DRC held that the training club had renounced its right to training compensation because the wording of the document was clear.

Often, clubs who claim training compensation are small clubs with limited resources and so this issue is particularly important for such clubs who rely heavily on recovering training compensation for their players.   

 

Can Another Party Waive?

The general position is that only the club with the entitlement to training compensation can waive the right. For instance, in DRC decision 86130b, the player entered into an agreement with his new club confirming that neither the player nor the training club were entitled to demand payment for transfer fees or training compensation from the new club and that no legal action would be taken. The new club denied any responsibility for paying training compensation as a result. The DRC held that the club was liable for training compensation because the agreement was not binding on the training club given that it was not a party to the agreement and it was not signed by them. Similarly, in DRC decision 68836a, the DRC held that a verbal declaration made by a player which confirmed that no training compensation claim would be made, cannot and does not affect any entitlement of [the club] to training compensation8 as it is not binding on the training club. In DRC decision 510425, the player’s agent guaranteed to the new club that the training club’s expenses (including training compensation) will not exceed EUR 20,000 and undertook to pay this sum to the training club. The new club claimed that it fulfilled its obligation by paying the amount of EUR 20,000 to the player’s agent and that it was the player’s agent’s obligation to pay the training compensation to the training club. The DRC held that the payment to the player’s agent could not discharge the club’s obligation to pay training compensation when the training club was not a party to the agreement.

However, clubs should be careful that their employees do not send out any documentation which could inadvertently waive their entitlement to training compensation. In DRC decision 412107, an individual, who was supposedly responsible for the training club’s team, sent a letter bearing the club’s letterhead to the player’s new club declaring that the player was a free agent and, therefore, free to sign a contract with the new club, free of payment. The new club claimed that the training club waived its entitlement to training compensation in this letter whilst the training club claimed that the individual who sent the letter did not have authority to represent the club or make such a statement on its behalf. The DRC concluded that the training club had waived its right to claim training compensation. The DRC emphasised the fact that the individual who signed the letter, which bore the training club’s letterhead, was an employee of the club and so the training club was vicariously liable for his actions. Also, according to the DRC, the wording of the letter was clear and unambiguous9 and it could be assumed in good faith that, based on such wording, no payment whatsoever would have to be made for the transfer of the respective player, i.e. neither a payment of a transfer sum, nor of any other compensation, such as training compensation.10

 

Restricted To Training Compensation?

In a wider sense, it is important to point out that it is not only training compensation that can be waived. Clubs who are entitled to solidarity contributions can also waive this right 11 and it is also possible for parties to waive contractual entitlements such as outstanding salaries. For instance, in DRC decision 16695, a player signed a termination agreement confirming that he had received all his financial dues and that he had no further claims against the club when in fact he was still owed an outstanding payment of USD 30,000. The DRC concluded that this must be considered a waiver and so the player was prevented from claiming the outstanding sum owed to him. Also, in DRC decision 97708 the player was entitled to the benefit of various insurance policies pursuant to the terms of his contract and sought to enforce this right after sustaining a serious injury. However, in the termination agreement, the player accepted three months pay as a final settlementand also agreed not to make any claim”. The DRC found that the player had waived all rights he had as a result of singing this document.

 

Conclusion

It is important for clubs who intend to rely upon training compensation being waived to ensure that the document purporting to be a waiver is drafted very precisely with a specific reference to the entitlement to training compensation under Article 20 of FIFA’s RSTP being waived. It is also clear that only the training club can waive the right to training compensation and ideally the waiver should form part of an agreement between the two clubs. Parties should always seek legal advice before entering into any agreements or signing any documents of this nature to ensure that any purported waiver is enforceable and, equally, to avoid any compensation rights being inadvertently waived.  

 

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About the Author

John Shea

John Shea

John is a senior associate in the Sports Business Group at Lewis Silkin specialising in contentious, regulatory and disciplinary issues for clubs, agencies, governing bodies and athletes

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