Player Solidarity Payments: a hidden goldmine?

After advising a lower league football club this week that they were owed substantial sums of money in respect of a player solidarity payment, it has occurred to me that many clubs – in these difficult economic times for most clubs outside of the elite – could be losing out on a small fortune.

The club in question were able to recover more money from one solidarity payment due to them, than their first team sponsor has paid to them this season: and as we took the matter on agreeing not to charge a professional fee if there was not a successful outcome, one is left wondering if a lot more clubs need to be looking more closely at the issue.

When is a solidarity payment due?

Under FIFA rules that were introduced in 2001, any club involved in the education of a player aged between the ages of 12 to 23 is entitled to these payments whenever that player is involved in a cross-border transfer that involves a fee. Importantly, and often not appreciated by clubs, the rules remain in place throughout the entirety of the player’s professional career – so even if the player is transferred to an overseas club well in to the twilight of their career, a club involved in the education of that player even twenty years earlier would (subject to the 2001 implementation date) be owed money.

How is the payment calculated?

5% of the transfer fee is to be divided between every club, on a pro-rata basis, involved in that player’s education between the ages of 12 and 23.

So surely this is simple – the authorities will just divide the 5% levy that they take and pass on the payments due to each club entitled?

Not quite. For three principal reasons. Firstly, any club who had a player on loan before they turned 24 is entitled to recompense, even if they had that player for a very small period. The case we recently dealt with related to a series of loans, which totalled almost two years, giving rise to a significant entitlement. It would seem that the obligation to make payments to clubs that loaned players is often disregarded.

Secondly, whilst there have many considerable steps taken recently to improve the data and record keeping, the reality is that the registration of a player some years ago is not always identifiable. There is no universal and accurate database that clubs or other parties can access.

Thirdly, without doubt most crucially, the responsibility to make the solidarity payments to all clubs entitled to it rests with the player’s new club (not as many think to be the case, the authorities). Take this example: an English Championship club have a Portuguese youngster in their squad between the ages of 14 and 21. That player is released and returns to Portugal at 21, and aged 25 as a free agent the player signs for club in Brazil. One year later, a club in Russia buys him for 5 million Euros. The championship club are due the majority of the 5% solidarity payment – in the region of 145,000 Euros – for a player that they released and left them some six or so years earlier. But it is the Russian club who paid 5 million Euros for the player that need to make that payment and often, quite simply, either through ignorance, deliberate design or a lack of knowledge of the player’s history they will not do so.

Are clubs in the UK really owed any money?

Some very rough research would suggest that in every transfer window clubs in League 2 and the Football Conference might be due, in total, up to £400,000 in solidarity payments. Access to data is all but impossible, but I would be fairly sure that clubs in those leagues did not receive in the last window that sum of money. As you might expect to be the case, the clubs higher up the leagues are more likely to have the resources and systems in place to ensure their receipt of solidarity payments (although I am aware of one Premier League that have not received a payment due to them in the region of £300,000 and to the best of my knowledge they are completely oblivious as to it), but as I discovered recently, it may be that a club in League 2 or the Conference Premier is in fact owed £25,000 – an awful lot of money at that level. I also have reason to believe that clubs in Scotland, in particular, are losing out substantially

What can a club that believes it is owed a solidarity payment do?

A club has only 18 months in which to claim a solidarity payment from another club, so it is important that clubs consider (a) how they will monitor the movements of their former players and (b) how they will go about seeking recovery of unpaid solidarity payments.

We at Leathes Prior are able to assist clubs with both the monitoring and recovery.

For advice or more information discussed in this article please contact Dan Chapman. Alternatively you can contact us by email info@leathesprior.co.uk or call us on 01603 610911.