Training Compensation; the Category 4 loophole?

In the latest of a series of articles discussing training compensation, we take a look at a potential solution that players and their advisers might consider where (a) they can not sign for a new club without the former club being due training compensation and (b) whether due to the cost of that compensation, the merits of the player or the attitude of other clubs (or a combination thereof) the player is struggling to find a new club willing to sign him.

Annexe 4 of Article 2(2) of the FIFA Regulations on the Status and Transfer of Players – which governs the compensation system as then enforced by the English authorities – provides that where a player is transferred to a “Category 4” club, no compensation is due even if in the circumstances it would otherwise be due. Compensation is only payable by clubs in Category 3 or above.

The FA has categorized all of its member clubs into one of 4 categories (as FIFA require them to do) and whilst historically those clubs tended to be of an amateur, part-time status (and thus perhaps not attractive to players who clearly have ability given that the issue of training compensation has even arisen) some of the clubs have risen to a level of the game whereby they might present an attractive option. Until such time as categorization is updated (so that only the part-time amateur clubs are included, as was intended to be the case) an opportunity may be there for players, clubs and their advisers.

Examples of Category 4 clubs that perhaps raise a few eyebrows include Halifax, Chester, Dover, Eastleigh, Guiseley, Woking and Welling United – all National League (formerly the Conference Premier) clubs. Many other clubs from that same division are classed much higher – for example, Torquay, Cheltenham and Grimsby are all Category 2 clubs by comparison.

With an increasing number of players in limbo due to training compensation disputes – which are now arising at an ever younger age since the advent of EPPP – might we see more quality players seeking out a Category 4 club? Those clubs who are in Category 4 might do well to exploit the unique recruitment opportunity they may have, in order to attract a player of the highest quality and re-sale value?

For more detailed advice on this issue or any matter concerning training compensation, please contact Dan Chapman, a sports lawyer and FA Registered Intermediary. This article is extremely generic and the position is complex and will differ hugely depending on the age of the player and what compensation and Tribunal systems are in play.