Agent Mike Wheeler continues here with Part 3 of his four-part interview with LE Eisenmenger about player contracts and this time he explains FIFA rules on training compensation in deals. Player development compensation is new to the United States, but not so overseas. With the advent of MLS academies, early training compensation will be a big issue going forward and a good incentive for youth clubs to develop players, as opposed to winning at all cost, to keep their clubs afloat financially. Read Part 1 here, Part 2 here and Part 4 here.
Wheeler is an attorney and founder and president of MAE Agency.
LE: How does FIFA’s transfer matching system (TMS) account for development clubs?
Wheeler: The purpose of TMS was to ensure that teams that are well-funded like Manchester United can’t go down to Nigeria and raid some little team’s players. Because once they put in the pass at the FA, the Federation will put it on the system that will immediately notify that Nigeria federation that x player has been signed in England and he’s only 17-18 years old, is this okay with the Nigerian federation? The Nigerian federation will then contact the club where the player was playing and find out from solidarity mechanisms, has that been accounted for? Has training compensation been provided for? It’s basically clear disclosure.
LE: Is there a scheduled fee for training compensation?
Wheeler: It’s a complicated system in the FIFA rules in the Status and Transfer of Players. It all depends what training level the team is. They break it down into four different levels and it’s also broken down into the different regions. A team that trained in the U.S. or the CONCACAF region, the training that goes into producing a professional player is less than the training cost that goes into a professional player in Europe.
LE: Is there a rate for North America yet?
Wheeler: Yeah. In CONCACAF region, for a team that’s in its lowest tier, it’s $2,000 per year. So every time that kid trained at a club as an amateur and another club wants to sign him to a pro contract, for every year that kid was an amateur training at that pro club in Category 4 - that’s here in the U.S. – it would be $2,000. And it goes up to $10,000, then it goes up to $30,000 and then up to $60,000.
LE: What age groups does this pertain to?
Wheeler: When I’m speaking about training compensation it begins when a player is 12. It has to be done with a professional team that has an academy and the professional team is registered with FIFA, accredited within the federation and they’ll have a youth team they’re affiliated with. Now with players who play here on the youth teams, if the Orlando team had a kid who they moved over to Stoke City and they trained that kid since he was 15 and they gave him his first pro contract at 18. Well, for that training period between 15-18 they should be compensated with training compensation.
LE: I haven’t heard of training compensation being applied yet. However, Bob Lenarduzzi, president of Vancouver Whitecaps, told me he would advocate training compensation if a club was turning out players regularly.
“It comes down to the quality of the program that you’re running,” said Lenarduzzi of transfer fees. “If you’re running a program and you happen to have a good kid there that gets signed by a pro club, should you really benefit from that? Probably not. But if you’re a club that’s invested in player development and you’re turning out player after player, then I have no problem working out an arrangement with a club like that.”
Then again, Greg Vanney, the director of the Real Salt residential academy, told me RSL is considering the prospect of being a selling club and that would indicate they’ll expect compensation.
"We’re looking into that, what that process is," said Vanney, "and what that means from an American soccer standpoint because of child labor laws and a number of issues in the U.S. FIFA has a limited governing role over MLS. We do things in MLS that aren’t necessarily under FIFA guidelines. So we’re continuing to size that up. We will be when we can."
Wheeler: I was at the USL conference and there were some guys in from England giving a lecture to all these USL franchise owners explaining this training compensation, how they could profit from training players that become pros. Every time there’s a transfer of a player under 23 or 24 there’s a solidarity mechanism that gets split up for all the teams that went into developing that young player up to that time. They all take a profit of that as well and there’s a formula for the solidarity mechanism.
LE: That would encourage small clubs to develop younger players, but I understand U.S. laws may conflict with those fees.
Wheeler: Well, you have the NCAA and the MLS have always been careful in terms of their stance on amateur and professional. We do have this 800-pound gorilla in the room, which is the NCAA. It’ a part of our culture and encourages kids to take college scholarships and makes sure these kids don’t jeopardize their college amateur eligibility.
All this is in the Transfer and Status of Players, the rules and regulations on the status and transfer of players and that’s FIFA. That’s where training compensation solidarity mechanism are all broken down in the annexes. When you take the FIFA exam that’s what you study and master those rules. It doesn’t happen often. These clubs aren’t getting training compensation for their players because one, there’s just not a lot of youth players making the jump to the pros.
LE: Boston College coach Ed Kelly witnessed the club compensation conflict emerge around Charlie Davies when he was transferred to Hammarby and it may have set a precedent in the United States.
“Charlie Davis left Boston College to go to Hammarby, and Hammarby sent to papers to me and to [the club] to sign releases," said Kelly, "but the Bolts would not sign the release and they demanded that they get compensation, and Charlie had to give them $10,000 of his [own] money so he would sign the release. Tri-Valley and Delco signed off, but the Bolts did not sign off . . . their view on it was that he was a scholarship player, that they funded him when he was playing for them for a year or two.”
Wheeler: On his transfer certificate it says [a player] played club ball for this team, club ball for that team, club ball for another team. Then probably when the ITC was requested from Sweden over to the US Soccer Federation they had to approve it. He shouldn’t have had to pay that out of his own money, the club in Sweden should have paid that, which they might have done later on.
LE: What other US laws might have affected that?
Wheeler: The NCAA, you’ve got the Uniform Sports Agent Act as well, which over 40 states have passed. It’s all about making sure that no benefits whatsoever are given to the player, family, or anyone who can influence the player. But the purpose of the training compensation is to ensure that a club that’s producing professional players is not going to be raided by some other team that comes in and takes a player. It happens all the time in Europe. Here, it’s not the same. Maybe if you had more Mexican teams coming over and signing our kids from our youth club teams, maybe start stealing them Real Salt or FC Dallas, maybe that’ll happen and they’ll demand training compensation.
But training compensation really prevents a team from raiding the youth ranks of another team. That’s a lot of money for them - the buying team has to pay the selling team at the rate of the player in the buying team’s home country. So that’s why if you have a Euro club that comes down and raids CONCACAF or AFC they have to pay that team that’s in the CONCACAF of AFC as if they had trained that player up in Manchester United. It can be costly.
Continue reading Part 4 of LE EIsenmenger's interview with Mike Wheeler here.
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