A legal guide to solidarity payments in football under the FIFA Regulations
Published 18 December 2015 By: Andrew Smith
Article 21 of the FIFA Regulations on the Status and Transfer of Players (“RSTP”)1 is entitled “Solidarity mechanism” and provides as follows:
“If a professional is transferred before the expiry of his contract, any club that has contributed to his education and training shall receive a proportion of the compensation paid to his former club (solidarity contribution). The provisions concerning solidarity contributions are set out in Annexe 5 of these regulations.”
Solidarity payments will only be payable if:
- Upon the international transfer of a player between professional clubs; and,
- A player is transferred for a fee, between clubs belonging to different national associations, prior to the expiry of his employment contract.
Solidarity payments will be a maximum of 5% of the agreed transfer compensation.
This guide provides answers to following question regarding Solidarity payments:
- What solidarity payment(s) are payable, and to whom?
- What is the process for making the relevant payment(s)?
- What if a player is signed on loan?
- What happens if a player’s training history cannot fully be ascertained?
- Timeframe for making solidarity payments
- Disputes regarding solidarity payments
This article is based on a previous article by the author 'A guide to training compensation and solidarity payments in football'.
What solidarity payment(s) are payable, and to whom?
With regard to calculating the ‘pot’ of money that falls to be distributed amongst ‘qualifying clubs’. Annexe 5, Article 1 RSTP provides as follows:
“If a professional moves during the course of a contract [between clubs belonging to different national football associations], 5% of any compensation, not including training compensation paid to his former club, shall be deducted from the total amount of this compensation and distributed by the new club as a solidarity contribution to the club(s) involved in his training and education over the years…”
As summarised by the CAS in Genoa Cricket and Football Club S.p.A. v. Club Bella Vista2 (paras. 37 – 38):
“…the new club has to retain 5% of the transfer compensation, with the consequence that the amount received by the transferor club is reduced correspondingly.
The ratio legis of this system is that it is easier for the new club to determine the former clubs of the Player. The Player being at the disposal of the new club, he can assist in this task…”
In the Genoa case, the CAS also made it clear that the level of solidarity payments is to be calculated by reference to the full transfer compensation payable by one club to another, in order to acquire the player’s services. In this case, the transfer documentation had been drafted such that EUR 2 million was expressed to be payable as the “price of the definitive transfer”, and EUR 510,000 was expressed to be payable for “all other obligations inherent [to the price of the definitive transfer].” The CAS concluded that both payments should be taken into account when calculating the appropriate level of solidarity payments.3
With regard to the method of distribution, Annexe 5, Article 1 RSTP continues as follows:
“This solidarity contribution reflects the number of years (calculated prorata if less than one year) he was registered with the relevant club(s) between the seasons of his 12th and 23rd birthdays, as follows:
- Season of 12th birthday: 5% (i.e. 0.25% of total compensation);
- Season of 13th birthday: 5% (i.e. 0.25% of total compensation);
- Season of 14th birthday: 5% (i.e. 0.25% of total compensation);
- Season of 15th birthday: 5% (i.e. 0.25% of total compensation);
- Season of 16th birthday: 10% (i.e. 0.5% of total compensation);
- Season of 17th birthday: 10% (i.e. 0.5% of total compensation);
- Season of 18th birthday: 10% (i.e. 0.5% of total compensation);
- Season of 19th birthday: 10% (i.e. 0.5% of total compensation);
- Season of 20th birthday: 10% (i.e. 0.5% of total compensation);
- Season of 21st birthday: 10% (i.e. 0.5% of total compensation);
- Season of 22nd birthday: 10% (i.e. 0.5% of total compensation);
- Season of 23rd birthday: 10% (i.e. 0.5% of total compensation).”
Again, it should be noted that only those clubs which are properly linked / affiliated to a national football association (which itself is a member of FIFA) are authorised to claim a solidarity payment.4
The payment structure set out above means that, in practice, a total of 5% of the transfer compensation will often not be payable. As the FIFA Commentary explains (on page 129):
“If a player who is younger than 23 transfers during the validity of his employment contract and a solidarity contribution is payable to his former training clubs, the total deduction from the transfer compensation will be less than 5%. For every year that the player is younger than 23, 0.5% shall be deducted from 5% (e.g. for a player who is in the season of his 21st birthday, the relevant percentage will be 80% of 5%, i.e. 4% of the compensation paid for the transfer of the player.”
This principle was confirmed by the CAS in Confederação Brasileira de Futbol (CBF) v. Bayer 04 Leverkusen Fussball5 (at para. 6):
“…one cannot possibly accept that the 5% figure was intended as an absolute requirement rather than a ceiling. The inference is overwhelming that it is the latter.”
As outlined above, solidarity payment obligations will be triggered whenever a player is the subject of an international transfer, accompanied by the payment of a fee by the purchasing club to the selling club, prior to the expiry of his employment contract.
In C.A. River Plate v. Hamburger S.V,6 the CAS confirmed that it is permissible for the selling and purchasing to club to reach an agreement as to who bears the financial burden of paying the solidarity payment(s), and/or in what proportions. On an ordinary reading of the Regulations, if the agreed transfer fee is EUR 1 million and the full 5% solidarity payment is payable, the buying will in fact only transfer EUR 950,000 to the selling club, with the remaining EUR 50,000 being distributed (by the new club) in accordance with the solidarity payments regime. It is, however, permissible for the parties to reach an agreement whereby (for example) the agreed transfer fee is EUR 1 million; the full transfer fee is paid by the purchasing club to the selling club (without any deduction); and the purchasing club bears the ‘extra’ financial burden of distributing the appropriate solidarity payment (in this illustrative example, EUR 50,000).
In the River Plate v Hamburger case, the CAS held (at para. 26):
“…the [purchasing club] had to know that it was its duty to retain and to pay the amount of 5% corresponding to the amount of solidarity. In order to avoid the risk of being obliged to pay an additional amount above the [agreed transfer fee], it was clearly its responsibility to make sure that this issue be discussed, negotiated and ruled by the transfer agreement.”
Having regard to the above, it is important that contractual agreements between clubs clearly stipulate who is responsible for bearing the financial cost of any applicable solidarity payments.
On a related point, in the same way that it is possible for clubs to waive their right to receive training compensation (as discussed above), it is also possible for clubs to waive their rights in respect of solidarity payments.7
What is the process for making the relevant payment(s)?
In addition to the requirement set out above (the submission of a completed payment instruction form to The FA Clearing House), the FA website stipulates that:
“When a player is transferred between two clubs in different countries, 5% of the transfer fee paid is due as solidarity to the clubs who trained the player between the ages of 12 and 23. The calculator below can help to determine the amount due to these clubs. A completed version must be submitted whenever a solidarity payment is made via The FA Clearing House.”
Again, although this particular webpage does not in fact contain a link to any such calculator, one may be accessed (in the form on an Excel file) here.8
What if a player is signed on loan?
In addition to Article 10 (1) RSTP (referred to above), the FIFA Commentary explains the position thus (on page 32):
“A loan is subject to the same rules that apply to the transfer of players, including the provisions on … solidarity mechanism. In other words, the club receiving the player on loan shall retain 5% of the loan fee and distribute it to all clubs that contributed to training the player between the ages of 12 and 23. At the same time, the club receiving a player on loan is entitled to claim … a solidarity contribution for the time the player remained with it…”
What happens if a player’s training history cannot fully be ascertained?
Annexe 5, Article 2 (3) RSTP provides as follows:
“An association is entitled to receive the proportion of solidarity contribution which in principle would be due to one of its affiliated clubs, if it can provide evidence that the club in question – which was involved in the professional’s training and education – has in the meantime ceased to participate in organised football and/or no longer exists due to, in particular, bankruptcy, liquidation, dissolution or loss of affiliation. This solidarity contribution shall be reserved for youth football development programmes in the association(s) in question.”
Timeframe for making solidarity payments
The deadline for making solidarity payments is again relatively short, being:
- 30 days after the player’s registration with the new club; or
- In the case of contingent payments, 30 days after the date of such payments (see Annexe 5, Article 2 (1) RSTP).
Disputes regarding solidarity payments
Pursuant to Article 22 (d) and Article 24 RSTP, the DRC has jurisdiction to hear disputes relating to solidarity payments between clubs belonging to different football associations. Disputes between clubs belonging to the same association related to the solidarity mechanism shall be settled in accordance with national regulations.
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- Tags: Court of Arbitration for Sport (CAS) | Employment Law | FIFA | FIFA Dispute Resolution Chamber | FIFA Regulations on the Status and Transfer of Players | FIFA Training Compensation System | FIFA's International Transfer Matching System (TMS) | Football | Governance | Regulation | Training Compensation
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