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Grassroots clubs should receive compensation for developing professional footballers, however the compensation should not be in the form of transfer fees.
Right now, FIFPro, the organisation that represents all the world’s professional footballers (over 65,000 men and women), has a legal action filed with the European Commission, alleging that “the global transfer market system governed by FIFA’s regulations [is] anti-competitive, unjustified and illegal”.
The people most affected by the current transfer system, professional footballers, want change.
I propose the following alternatives to the transfer system:
Development levy
To compensate grassroots football clubs, a development levy should be imposed.
This would require every professional football contract to be registered with FIFA, with the contract to include a levy of, say, five per cent applied to the registered wage to compensate clubs who helped develop the player.
The levy would be collected by FIFA for the duration of a player’s career, with the annual amount equally divided across the clubs where a player was registered between the ages of 13 to 17 (inclusive).
Trent Sainsbury is reportedly earning A$5.2 million this year. Applying the levy, the junior clubs where Trent played between the ages of 13-17 would divide $260,000 for their role in helping Trent on his journey to professional football.
These clubs will continue to receive money every year Trent has a pro-football career.
Let’s assume an average Aussie pro-footballer will earn an average of $150,000 per year and the average career for a professional player is 12 years. This equates to $1.8m over a 12-year career, so the total development levy would be $90,000 distributed to the clubs who developed the player.
How’s that for a return on development?
This is not hit and miss, hoping for one big payday. It provides certainty and consistency for development clubs.
Buy-out clause
Besides compensating development clubs, transfer fees also compensate professional clubs – usually from lower leagues – when a contracted player gets a bigger wage offer and wants to terminate his contract and move on.
Transfer fees keep rising, with the highest football transfer on record occurring in 2016, when Manchester United paid Juventus $AUD140 million to sign Paul Pogba.
Since the Bosman ruling, we know that a player’s transfer fee has a time value. As a player’s contract approaches expiration, the transfer fee approaches $0.
I’d like to see FIFA introduce a uniform buy-out clause to compensate clubs and players who want to terminate a contract prior to expiration.
Currently, some contracts do contain buy-out clauses, however, these tend to be punitive (to stop a player moving) and don’t reflect the true time value of the remaining portion of a contract. Lionel Messi’s contract contains a buy-out clause of $AUD350 million.
I would like FIFA to adopt a simple buy-out formula, whereby the buy-out amount is double the net present value of registered wages remaining.
So, on the day a player is signed, his buy-out amount is double the total wages he will earn under the terms of the contract.
If a player wants to break his contract and move, the club will not be out of pocket. They’ll receive double the amount they would have to play the player had he remained at the club.
It works both ways. If a club terminates a player’s contract because he’s no longer needed, the player will receive double the remaining wages he would’ve received under the contract, plus he can move to a new club and keep earning.
This system is much fairer than the current method.
The development levy will provide constant annual cash injections for grassroots clubs that developed even one professional footballer, while the uniform buy-out clause ends the outrageous fees being paid to buy players who are under contract, while ensuring wage security for players who fall out of favour.
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