Training compensation when signing an amateur player in the EU and EEA
Preamble
In the aftermath of the Bosman ruling[1], issued by the European Court of Justice in 1995, where Belgian football player Jean-Marc Bosman successfully claimed that his club could not demand a transfer fee following the expiration of his contract, many football clubs feared that the Bosman ruling could threaten the development of football. The incentives to train and develop players to a large degree collapsed, as it would be more sustainable to employ football players who had already been trained and developed by other football clubs, than for clubs to train and develop football players themselves. FIFA’s answer to this problem was to establish a system that secured football clubs compensation for developing football players that become good enough to sign professional contracts. Developing football clubs were given two opportunities to secure compensation for developing football players, solidarity contribution and training compensation. Solidarity contribution and training compensation have become important sources of income for many football clubs. FIFA’s global transfer market report for 2019 revealed that football clubs received a total of USD 63.3 million in solidarity contribution and USD 12.2 million in training compensation from international transfers in 2019. However, there are certain obstacles that in practice prevents developing football clubs from being able to claim training compensation, in particular within the European Union (EU) and the European Economic Area (EEA).
Training compensation in a nutshell
The obligation to pay training compensation is regulated in FIFA’s transfer regulations, the Regulations on the Status and Transfer of Players (RSTP). Training compensation shall be paid by the football club that signs a new player to the clubs where the player has been registered between the ages 12 and 21. The obligation to pay training compensation arises when a football player signs his first professional contract and every time a professional football player transfers internationally until the end of the season he turns 23 years old. The new club is obliged to pay training compensation regardless of whether the football player’s contract has already expired or not. Certain exceptions apply. For example, no compensation shall be paid if the player’s contract has been terminated by the club without just cause, if the player is transferred to a category 4 club, or if the player resumes his amateur status.
For further about training compensation, please read this article.
Restrictions for claiming training compensation within the EU/EEA
To what extent European clubs are entitled to receive training compensation following the transfer of a player from one association to another within the European Union / European Economic Area depends on specific conditions that are set forth in the FIFA RSTP. Art. 6.3 of Annexe 4 of the FIFA RSTP rules that:
“If the former club does not offer the player a contract, no training compensation is payable unless the former club can justify that it is entitled to such compensation. The former club must offer the player a contract in writing via registered post at least 60 days before the expiry of his current contract. Such an offer shall furthermore be at least of an equivalent value to the current contract. This provision is without prejudice to the right to training compensation of the player’s previous club(s).”
It is worth noting that FIFA does not recognize amateur contracts, with the consequence that a developing club cannot claim training compensation if it has offered the player in question an amateur contract.
The provision covers two situations. Firstly, in order to be entitled to training compensation for a professional football player, the developing club must offer the player a contract that matches the conditions in his current contract at least 60 days before the expiry of the current contract. Secondly, the provision covers amateur players, i.e. football players that has not yet signed their first professional contract but are due to sign their first professional contract with a new club.
This EU/EEA exception is a direct consequence of the Bosman ruling, as the European Court of Justice concluded a football club’s entitlement to transfer compensation for a player whose contract is expired did in fact represent a violation of the EU principle of free movement of workers. The EU/EEA exception with regards to training compensation is the result of a compromise between FIFA and EU, where EU recognise that a football club should be remunerated for developing a football player who signs a professional contract with a new club. However, if the player is no longer a part of the former club’s future plans, the burden of the training compensation should not prevent the football player from finding a new club as his employer.
Justification of entitlement to compensation
Even if the developing club has not offered the player a new contract, it can still claim training compensation if it can “justify why it should still be entitled to compensation”.
The question of entitlement to training compensation of European clubs following the transfer of an amateur player from one association to another within the EU/EEA has been addressed by the Court of Arbitration for Sport (CAS) on several occasions. In many of these cases the player has never been offered a contract by his old club, and the central question is then if the old club can justify why it should still be entitled to compensation.
A decision from 2007, Den Haag vs. Newcastle United FC (CAS 2006/A/1152), was the first case that dealt with the issue of entitlement to training compensation following the transfer of a player between European clubs. The panel stated that “if a club wants to retain the right to training compensation in respect of one of its amateur players, it must “justify” it under Article 6 para. 3 by taking a proactive attitude vis-à-vis that individual player so as to clearly show that the club still counts on him for the future season(s). Accordingly, the training club must either offer the concerned player a professional contract or, short of that, it must show a bona fide and genuine interest in retaining him for the future. In other words, a training club not immediately offering a professional contract to one of its trainees can still justify its entitlement to training compensation if it proves that it desires to keep the player on the club’s roster or in its youth academy, with a view to keeping alive the option of granting him a professional contract at a later stage.” The Panel concluded that Den Haag was entitled to receive such training compensation, because it had “submitted evidence that in May 2005 it began negotiating with the Player for a professional contract. Although, no written offer was ever put forward by Den Haag to the Player, the negotiation is still evidence of Den Haag's interest in retaining the Player on its roster”.
The approach from CAS in the case between Den Haag and Newcastle United has been adopted by numerous CAS panels, and the club that claims training compensation will need to prove its “bona fide interest” in retaining the player if it should preserve its claim for compensation. In a recent case between Racing Club Genk and Manchester United (CAS 2018/A/5733) the panel concluded that Genk was not entitled to training compensation despite the fact that Belgian law prohibited employment contracts with such young players, as the national prohibition did not exempt them from the obligation to prove that they had a bona fide and genuine interest in retaining the player.
Regardless of whether the last club the player has been registered with is entitled to compensation, all former club’s that the player has been registered with is entitled to training compensation, as these clubs’ right to training compensation should not be influence the last club’s wish to retain the player.
Case law from CAS shows that if the developing club is a pure amateur club, the requirement that the club must prove that they have a genuine bona fide interest in retaining the player is not equally strictly applied. CAS has raised this issue on some occasions, see e.g. CAS 2019/A/6639 with further references to CAS 2009/A/1757, where the panel states as follows:
“In this respect, the Panel observes that, in certain previous decisions of CAS (notably, CAS 2006/A/1152) training compensation has been awarded in the CAS 2006/A/1152 case of the international transfer of an amateur player in circumstances where the training club did not offer a professional contract to the player in question. So, for example, in the case, the CAS held that, to justify entitlement to training compensation, the training club should show a bona fide interest in retaining the services of the player for the future (paragraph 8.16). In that particular case, the CAS stated that it would have been “contrary to common sense” to conclude that the club was not at all interested in keeping the player any longer (paragraph 8.22). At the same time, the CAS observed that:
“it would also be unreasonable to require a club to offer a professional contract to all of its young amateur players in order to avoid the risk of forfeiting all rights to training compensation. It would be too costly and it would contravene the spirit and purpose of the FIFA transfer rules, which are set out in order to grant to clubs the necessary financial and sportive incentives to invest in training and education of young players”.
A similar principle was expressed in CAS 2008/A/1521, where the CAS stated as follows: “As correctly mentioned in CAS 2006/A/1152 one cannot expect a club, notably an amateur club, to focus on all its amateur players for whom training compensation might be paid by a third football club and consequently to make formal offers to all those players”.
Summary
Although a developing club is initially entitled to training and education compensation, it is important that the club shows a genuine interest in keeping the player in the future if they are to keep their claim. For professional players, an offer must be made to extend the contract. For amateur players, it is more complicated. Jurisprudence from CAS shows that clubs that want to keep their claim for training compensation will have to meet strict requirements, and it is in practice the developing club that has the burden of proving that they actually have a genuine interest in keeping the player in question. On the other hand, this requirement is somewhat lowered if the club in question is a pure amateur club.
[1] http://curia.europa.eu/juris/showPdf.jsf?text=&docid=99445&doclang=EN
