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.
E Cooke
Guest
I'm not sure you understand one of the main advantage to the clubs of transfer fees and why they have always spiralled upwards. It is a form of tax avoidance. If all of your profits subject to corporations tax are wiped out by paying transfer fees, you don't pay any tax. So if a Club A have a £10m profit and buy a player off Club B for £10m and Club B by a replacement for say £9m, Club A are even a d Club B are £1m up, but if they sign the replacement a year later when prices have gone up, say he then costs £10m. So long as the prices keep going up it works and the profits are passed eventually from the clubs making a profit to the ones making a loss. As with all accounting it is not that simple, a player may sign in year 1 but the money may change hands at any point during his contract and the buying and selling clubs can adjust when the payments are due in the contracts and therefore in turn when they appear in their accounts for tax purposes. The big clubs in the modern game have ridden rough shod over this, but it still goes on. You also have to remember that all transfer fees are routed through the FA, and the FA levy a 5% fee on every one. There are also signing on fees for players (originally 10%) and agents. I can't see why all of these groups benefiting would want it to change? If the players are pushing for change, it is probably because they want all transfers to effectively be Bosmans and so their wages will rise.
Themis
Guest
Good article and I agree with most of what you wrote BUT there is one thing: Taking PSG's recent example and how they "grabbed" Neymar from Barcelona by buying his buy out release clause of 222 million Euros, with your suggestion any team that can splash the cash could sign much easier the best players available. PSG has spent only this summer 222m for Neymar and 180m for Mbape (considering their salaries and bonuses this number could go up to almost 800 million Euros). They are using a country's money and they can simply buy whoever they like and give salaries that none else can give. Now imagine what could happen if any player could leave his club as long as his total salaries x2 are paid to his club. The top clubs will grab anyone they like anytime as long as they offer a huge salary. We will not see probably big transfer fees like now but salaries will go up 2 and 3 times.
FootOverHand
Guest
Players would still have the right to say no, If a Man City has 40 players on the books unless you are a great talent, you won't be likely to play, it's not a big incentive to sign for them.
FootOverHand
Guest
Wow, I wasn't expecting that, I thought it might be all full of fluff. I find myself agreeing with everything though, it's a great idea.
Nemesis
Roar Guru
"Surely though if players are now negotiating much larger contracts, they will still require agents, who will still need to be paid." I need to define what I mean by Agents. Agents I'm referring to are people who act as a broker to put a player in touch with a potential club. No different to a headhunter in the corporate world, or a stock broker, etc. Agents match buyers & sellers. I've no issue with them getting paid for their work. It's up to the player how much they want to pay for the service. A player will also have a Business Manager who looks after his affairs (accountant, or lawyer, etc.). The club could just approach the Business Manager, rather than negotiate via an Agent. Regardless, of how the player structures his off-field affairs, he will be in control of how much he wants to pay the Agent, or Business Manager.
Nemesis
Roar Guru
@aladin sane Mandating that a % of the Transfer Fee goes to Junior Clubs is another model that could work. However, this will significantly reduce the quantum of funds and the spread of the funds. I'd need to check but, from my observations of the football market since the Bosman Ruling, I'd say the majority of players move clubs WITHOUT a transfer fee being paid. Either the move is by mutual consent with the contract being mutually torn up; or the player moves when he is off contract. It's really on the small percentage of players in high demand, who are under contract, who will generate significant Transfer Fees. By attaching the Levy to wages, every pro footballer will contribute to his junior clubs. Everyone says "I want to give back to the game".... well, this is perfect. Note: I've said 5% Levy. Perhaps this is too high? I'd be ok with 2.5%. Even a 1% Levy on wages would inject huge funds back into grassroots - and the cash will have the biggest impact in the poorest football nations who are producing top quality players but not seeing the rewards.
aladdin sane
Guest
Fuss, could FIFA not also just require a nominal percentage (let's say 5%) of every transfer fee go to the player's jnr clubs over the same period?
Nemesis
Roar Guru
"many of the problems I have outlined above are observed in the A-League" The Buy Out Clause System I've outlined will have minimal impact on the ALeague. Just like Transfer Fees currently have minimal impact on the ALeague. Of the players who move overseas from an ALeague club, I'd be surprised if even 5% of them attract a Transfer Fee. Most players move as Free Agents when their contract expires. The major impact my System will have in Australia is rewarding Development Clubs. You clearly don't want Development Clubs to get reward. Fair enough. I do & I know the NPL & State League clubs want some reward for developing pro-footballers.
Mark
Guest
I also appreciate you taking the time to respond to each point, but most of your responses are so non-sensical and demonstrate such a clear lack of understanding of how your model will change the incentives facing clubs (both those developing 13-17 year olds and professional clubs) that it is near impossible (and pointless) to respond in detail to each point. The only thing I will emphasise is that many of the problems I have outlined above are observed in the A-League, which of course has no transfer fees. Your proposal to require players to pay out substantial buy-out clauses to terminate contracts would make problems of players being stuck at clubs worse compared to current arrangements if they could not mutually agree with the club to terminate the contract, which they can now. It's notable that you use Paul Pogba as an example, because players of his ilk may be the only players to benefit from your model. The vast majority of professional footballers around the world will get no benefit if they are lucky, and may well end up worse off. And your model will do nothing to stop agents profiteering from the game because they will recoup the money elsewhere (ie. signing on fees).
Slane
Guest
I really like this idea. Surely it will lead to better players in the A-league but even more importantly better players in our national team.
Boz
Guest
Thanks for your time.
Nemesis
Roar Guru
Thanks for your input, Brian. When you say "Terrible idea. You want to allow Barca, Real, Bayern and Man City to just take any player worldwide as they see fit with an automatic buy out clause" it demonstrates to me you haven't understood the article. Nor, it seems, do you have any idea what happens in football. Barca, Real, Bayern, Man City ... yeah they don't already do as they please? "Clubs worldwide would only sign short-term contracts because if Player A flourishes he goes for double his wage." Goodness me. How far off the mark can you be? If it's a short-term contract Player A will go for $0. Clubs are more likely to sign long-term contracts because the only way they'll get money on a player is if the player is under contract. And clubs will have to ensure they're not underpaying players because, if they are, a rival will Buy Out the underpaying contract. Have a nice day.
Nemesis
Roar Guru
Boz For sure it could work in NRL, AFL. In fact, if the AFL & NRL were serious they'd implement the Development Levy tomorrow. Both these organisations have the cash so there would be no additional cost to clubs, Head Office could pay it directly. In fact, even without Fifa approval, the FFA could probably set this up & start paying a Development Levy tomorrow. With the ALeague Salary Cap set at around $26 million for the 10 clubs, it would only cost the FFA only $1.3m per year (excluding the marquee wages) to implement this in Australia right now but, if the FFA is paying, I'd only want the Levy paid to Australian development clubs - not foreign clubs; not even New Zealand clubs For sure there's a chance the stronger junior clubs will start poaching promising youngsters from other clubs, but this probably happens already. In Football, the NPL path is the best path to professional success in Australia, so I'm sure the best kids at 13-17 are already being poached by NPL clubs right now.
Brian
Guest
Terrible idea. You want to allow Barca, Real, Bayern and Man City to just take any player worldwide as they see fit with an automatic buy out clause. Clubs worldwide would only sign short-term contracts because if Player A flourishes he goes for double his wage. For all those footballers at the lower end you making it much harder for them to have a career in the game
Nemesis
Roar Guru
Thanks for the feedback. I don't expect (nor want) everyone to agree with this article. We need robust discussion to solve problems. However, just saying "too hard" or making up issues that aren't there is disappointing.
Nemesis
Roar Guru
Mark, appreciate you input, but you clearly don't (or don't want to) understand what I've written and you're assuming things I haven't written. I fully take your point about the administration of the system. You think it's insurmountable & will cost a lot. I disagree. Fine. We'll move on from that. 1) I've clearly outlined the problem a) Development clubs (mostly amateur or semi-pro clubs) not being rewarded for producing Trent Sainsbury, Aaron Mooy, Tom Rogic, etc. and b) Transfer fees ending up in the pockets of agents, professional clubs (shareholders & owners) and other hangers on; rather than ending up in the pockets of the workers (players). I'll address your points "encourages clubs to hoard 13-17 year olds" Rubbish. The system rewards every club for every 13-17 year old who ends up as a pro. You can be sign your first contract as a 28 year old a decade after leaving your junior club but the junior club will get reward for the time & money they invested in your "does not provide any incentive to keep those players once they turn 18 years" So what? That's life. We want development clubs (esp NPL clubs) promoting & playing Aussie youth; rather than paying foreign backpackers who are on holiday in Australia. "incentivises clubs to recycle older players rather than develop young players" Huh? What are you on about? You've just contradicted your 1st 2 points "will likely only improve wages for players at the very top of the football pyramid" Nonsense. Nothing will change, other than more money ending as Player Wages rather than Transfer Fees. So, Paul Pogba gets the full value of what the market thinks his labour is worth "will reduce wages for young players as accepting lower wages will be the only way they could get a club to offer them a contract" And, if clubs do this, they'll undervalue the player & lose him when he shows his potential when playing for that club and a rival will Buy Out his contract within months. "incentivises clubs to offer more short-term contracts, reducing job security for players" You're making stuff up. If clubs offer short-term contracts they'll risk losing their player for $0. "will likely make it more difficult for players to move on in situations where it is not working out (they are likely to be benched/parked in the reserves for longer)" This shows you don't understand a word that I've written. The predetermined Buy Out Clause makes it easier for players to move on. They can Buy Out their contract at any time during the Transfer Windows. As I said, I appreciate your input, but you clearly don't understand this system.
aladdin sane
Guest
Great article Fuss. I don't happen to agree with the approach for many of the same reasons Mark has already outlined, but enjoyable to read something fresh on here and appreciate these kind of discussions.
Boz
Guest
Nice Article. I was wondering if you think such a system could work in other sports - such as the NRL? Also, does having a Salary cap effectively hinder the development of football in Australia, and hence grass roots development too? Players earning larger wages here, would also mean more money going back to their junior clubs too. Lastly, is there a chance that the system you have proposed, could lead to junior clubs trying to poach promising youngsters from other clubs, and perhaps even pay them, in the hope for a future windfall? Once again, very interesting article.
aladdin sane
Guest
Surely though if players are now negotiating much larger contracts, they will still require agents, who will still need to be paid. So agents will still be taking money out of the game, potentially at a higher percentage seeing as they no longer have the capacity to earn via transfer fees. To be honest I don't think you can stop agents making money from the industry. The players themselves should have the right to pay someone to negotiate on their behalf if they choose to do so.
Nemesis
Roar Guru
Thanks, Fadida.. however, this Fuss character seems to be getting a lot of credit for someone whom, as the screenshot evidences, never wrote a single article on The Roar! Having said that, Robert Galbraith was never as prolific, nor successful, as JK Rowling https://goo.gl/photos/5BwNRc6Uvb1Wwzad6