The solidarity mechanism is a procedure established in the FIFA Regulations on the Status and Transfer of Players (RSTP), with the objective that clubs, which train players, receive a financial compensation in the event of an international transfer before the end of their contract. This compensation should amount to “5% of any compensation, not including training compensation paid to the former club” (a concept to be addressed in later articles), which “shall be deducted from the total amount of this compensation and distributed by the new club as a solidarity contribution to the club(s) involved in training and education over the years” between the seasons corresponding to the players 12th and 23rd birthdays.
This mechanism comes into play, on occasions, with features, such as “sell-on clauses”. This type of clauses are those which, in the event of the transfer of a player, allow the vendor club to receive a percentage of a future transfer (please see GRAPPLING WITH THE CONCEPT OF “TRANSFER” AND “TERMINATION CLAUSES” IN THE FOOTBALL LEAGUE).
The FIFA Dispute Resolution Chamber (DRC) made a ruling based upon these two legal figures regarding an interesting case in which a training club proposed that given that two payment obligations had been generated (two compensations) under the transfer of the player (8M€), a solidarity contribution should be received for each of the payment obligations:
i) the full amount of the transfer (8M. €) and,
ii) the full amount of the “sell-on clause” (3M. €).
According to the wording of Annex 5 of the RSTP, as transcribed above, 5% must be deducted of the total of “any compensation” associated with the transfer of a player during his contract.
It seems that the soundest reasoning must be that the claims of the training club are impaired, since we are dealing with a transfer with a single determined price (8M. €), of which two parties would be beneficiaries: the vendor club (5M. €) and the club holding the financial right pursuant to the “sell-on clause” (3M. €). As a consequence, a solidarity contribution for the value of 5% of the 8M. €. must be payable.
However, the court of the DRC finally ruled on the basis of the text of the RSTP of FIFA, and a solidarity contribution must be payable for each of the compensations generated under the transfer, this being the total price of the transfer and the “sell-on clause”.
This brings us to a scenario, which, to all effects, may be considered a double imposition by the solidarity contribution, thus the amount corresponding to the “sell-on clause” is indisputably, part of the 8 million Euro figure.
Paradoxically, it was ruled that the solidarity contribution must be payed to the training clubs for the value of 5% of the 8M. € plus 5% of the 3M. €, that is to say, 6,87% of the 8M. € of the transfer amount.
This resolution moves away from the spirit of the regulations, given that the referred to text does not seek anything more than making clear the pretension of the solidarity mechanism for those payments for the transfer of players which are carried out in a deferred manner and/or which are subject to conditions which establish a variable, setting an interesting precedent regarding any future claims filed before the DRC.
Andreas Terán
Vilá Abogados
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22nd November 2019
