Explained: Understanding and Applying FIFA Training Compensation & the Solidarity Mechanism
With the nearing of the first sitting of the new FIFA Football Agent Exam, there are many points of discussion and learning within the key FIFA documents and materials that need to be fully understood. Training compensation and the solidarity mechanism are likely to be addressed in some manner within the exam and hence, they are a major area for agents to not only develop an in-depth understanding of, but also gain the ability to apply it to a real life scenario.
Training compensation and the solidarity payments are mechanisms that are used to ensure that the club which has trained the player during their youth development is adequately benefiting financially from their future success. This blog will begin by outlining exactly what ‘training compensation’ and the ‘solidarity mechanism’ is. We will then go on to give individual examples of how these areas may be examined by FIFA and give detailed step-by-step guidance through interpreting the question, calculating correctly and ultimately, reaching the correct answer.
Article 20 of the FIFA Regulations of the Status and Transfer of Players (RSTP) 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 calendar year 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. The provisions concerning training compensation are set out in Annexe 4 of these regulations.” (FIFA)
When is Training Compensation Due?
In simple terms, training compensation is due to the player’s training club(s) when they sign their first professional contract or each time they are transferred until the end of the calendar year of their 23rd birthday. For agents, training compensation is something that you must understand as it is relevant when discussing transfer fees and will need to be accounted for in negotiations every time your client transfers up until the age of 23. For the calendar years of the ages between the player’s 12th birthday and 15th birthday, the training club will be owed a sum per year at the rate of a category 4 club. However, for the calendar years of their 16th birthday until the calendar year of their 21st, the training compensation owed depends upon the category of the club where he is signing his first professional contract or is transferred to. You need to learn and understanding the categorisation of training compensation clubs as outlined below:
|Confederation||Category I||Category II||Category III||Category IV|
The training compensation is due to the clubs within 30 days after the player is registered. If the club has folded due to bankruptcy or otherwise and therefore no longer exists, the training compensation can be paid to the national association instead on the condition that it is solely for reinvestment into youth football in the country.
NOTE: Article 20 of the FIFA RSTP regarding training compensation does not apply to women’s football.
Is Training Compensation ever not Due?
There are also three instances where training compensation is not due which you may need to be aware of:
- If the contract with the selling club has been terminated without a just cause
- If the player is moving to a category 4 club from a higher category
- If they reacquire amateur status as a result of the transfer
These scenarios nullify the payable transfer compensation.
Provisions within the EU and the EEA
Additionally, there are special provisions given for training compensation when the transaction occurs within the European Union (EU) or/and the European Economic Area (EEA). These provisions are as follows:
- If a transfer occurs between a lower category club to a higher category club, the calculation is based upon the average compensation that would be due to both clubs.
- If the transfer is from a higher category club to a lower category, the calculation is made according to the compensation due to the lower category club.
- Training compensation will not be due if the player has not received an offer in writing 60 days prior to the expiration of their contract and if they have received an offer they have received it must be at least the same value as their contract with their current club.
NOTE: The EEA is the 27 European Union members and also includes the countries of Norway, Liechtenstein and Iceland from the European Free Trade Association. Be careful as to your knowledge of which countries are not a part of this even if you might expect them to be, such as Switzerland.
PRACTICE EXAM QUESTION
PLAYER X is a professional football player born on the 17th January 2004. He is due to sign his first professional contract with TipTop Town on his 20th birthday, 17th January 2024. He has the following football CV:
1st July 2013 – 31st December 2017: Brasilia City CF (Brazil – Category 3)
1st January 2018 – 31st December 2023: Istanbul United (Turkey – Category 3) – it was approved that his parents moved for work and not footballing reasons
1st January 2024: TipTop Town (England – Category 2)
How much training compensation will be due to his previous clubs?
STEP 1: Work out the ages at which he was at each club:
Brasilia City: ages 9 to 14
Istanbul United: ages 14-19
STEP 2: Work out the relevant training compensation as per the correct category:
Brasilia City: 2 relevant years from the age of his 12th birthday until the beginning of the calendar year of his 14th birthday. Calculated as a category 4 UEFA club (Istanbul United is part of UEFA) as this is between the ages of 12 and 15. Hence 2 x €10,000 = €20,000
Istanbul United: 2 full relevant years of the calendar year of his 14th and 15th birthday as a category 4 club: 2 x €10,000 = €20,000. Then the calendar year of his 16th birthday until the calendar year of his 19th, at Istanbul United before transferring to a category 2 club. Hence, 4 x €60,000 = €240,000. Total €240,000 + €20,000 = €260,000
Make sure the total years = 8
STEP 3: Select the correct answer. The exam will present four options such as the below:
a) Brasilia: €20,000 & Istanbul: €160,000
b) Brasilia: €20,000 & Istanbul: €240,000
c) Brasilia: €20,000 & Istanbul: €260,000
d) Brasilia: €30,000 & Istanbul: €260,000
As we have calculated in steps 1 and 2, the correct answer will be c.
Practice Question Explained:
PLAYER X signing his first professional contract with TipTop Town requires the payment of training compensation as per article 20 of the FIFA RSTP. The level of compensation due to Brasilia City is €20,000 and €260,000 to Istanbul United calculated using the training costs relevant to TipTop Town as a category 2 club multiplied by the number of years that PLAYER X was registered with these clubs during his training years. PLAYER X was with Brasilia City for 2 years between the calendar year of his 12th birthday and 13th birthday. This is multiplied by €10,000 (as per a category 4 UEFA club) totalling €20,000. Then he was at Istanbul United the calendar year of his 14th birthday and his 15th birthday which are calculated using the category 4 cost. Then for the calendar years of his 16th birthday through to his 19th birthday he was also at Istanbul United. Therefore, training compensation is owed as per a category 2 club in UEFA (€60,000 per year) multiplied by 4 years. It is calculated as a category 2 club as the new club (TipTop Town) he is going to is category 2, it does not use the category of Istanbul United. This calculation adds €20,000 and €240,000 to equal €260,000 owed to Istanbul United.
Article 21 of the FIFA Regulations of the Status and Transfer of Players (RSTP) states that:
“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.” (FIFA)
Whilst solidarity payments are required to serve a similar purpose, there are distinct differences with training compensation. Firstly, solidarity contributions are calculated for the ages of the calendar year of their 12th birthday to the calendar year of their 23rd rather than 21st birthday. The solidarity payment is also only relevant if a transfer fee has been paid. In other words, a free agent that is signed will not entail a solidarity contribution. However, if a transfer fee is paid, 5% of the overall fee will be due in proportion to the club or clubs for which the player played during their 12-23 ‘youth development’ stage.
It is likely that in the new agent exam, FIFA could ask a question which gives a scenario of a player moving between a few clubs during these years and hence will require you to calculate how the 5% is distributed and the sum of money that each club is owed.
The key points to note for solidarity contributions is that between the ages of 12 and 15, the club(s) will be owed 5% of 5% of the overall transfer fee per year (0.25% of the total fee per year). From thereafter, for the eight years up until the calendar year of the player’s 23rd birthday, the club(s) will be owed 10% of 5% of the overall transfer fee for each year the player was with them (0.5% of the total fee per year).
NOTE: A solidarity contribution is due to their training club(s) every time the player transfers, regardless of their age. Whether the player transfers before the expiry of their contract aged 20, 25, or even 30, their training clubs up until the age of 23 will receive this payment.
PRACTICE EXAM QUESTION
PLAYER Y has just turned 21. His player passport is as follows:
Calendar years of his 10th – 15th birthday: Ghana Juniors (Ghana)
Calendar years of his 16th – 20th birthday: Accra FC (Ghana)
He has been transferred from Accra FC to Beverly Hills FC in the USA for a transfer fee of $100,000 on the 1st January in the calendar year of his 21st birthday. What is the amount of solidarity contribution due to Accra FC and Ghana Juniors FC from PLAYER Y’s transfer?
STEP 1: Work out what 5% of the overall transfer fee will be. 5% of $100,000 = $5,000.
STEP 2: Calculate the amount per year due to the club between the calendar years of his 12th and 15th birthday. Ghana Juniors will be owed 5% of $5,000 ($250) for each year. 4 x $250 = $1,000.
STEP 3: Calculate the amount due for the calendar year of his 16th birthday up to and including the calendar year of his 20th birthday. 10% of $5,000 ($500) is owed per year for five years to Accra FC. 5 x $500 = $2,500.
STEP 4: Select the right option below:
a) Ghana Juniors: $2,000 & Accra FC: $2,000
b) Ghana Juniors: $1,000 & Accra FC: $2,500
c) Ghana Juniors: $1,000 & Accra FC: $2,000
d) Ghana Juniors: $2,000 & Accra FC: $2,500
As calculated in steps 1 to 3, we know that the correct answer in this case is b.
Let’s imagine that after 2 seasons at Beverly Hills FC, PLAYER Y then permanently transfers to San Francisco United, another club in the US for $5,000,000. The clubs in Ghana (Accra FC and Ghana Juniors) will receive their solidarity contribution. However, despite being at Beverly Hills for two seasons before the calendar year of their 23rd birthday, the club will not receive any solidarity contribution. This is because of the provisions given in annexe 5 of the FIFA RSTP regarding the solidarity mechanism.
A solidarity contribution is due when either:
- The player is transferred or loaned between clubs belonging to different national associations or;
- Between two clubs in the same national association as long as the training club(s) to which the contribution is due belongs to a different association.
Hence, a solidarity contribution is not due to training clubs belonging to the same national association of the new club. In this case, Beverly Hills will not receive a solidarity contribution.
Learning the different components and key factors accounted for in calculating the training compensation or solidarity payments due to a player’s training clubs is a non-negotiable for passing the FIFA Agent Exam but also for ensuring that you can adequately adjust negotiations for a client’s transfer. Get used to practicing calculations and percentage accuracy to ensure you feel comfortable in approaching large figures.