Solidarity mechanisms

Written by

Pablo Bruera

lawyer

Updated to RETJ 2020

Last edition: 02/17/2020

Introduction

Annex 5.1 of the Regulations for the Player Transfer Statute establishes that the Solidarity Mechanism corresponds when a professional player transfers during the term of a contract.

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The contribution is 5% of any compensation, excluding compensation for training rights.

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That percentage is deducted to distribute proportionally between the clubs or the club (depending on the case), which formed the player from 12 to 23 years old.

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Article 21 of the RETJ, says that it corresponds to apply this Mechanism when the professional player transfers before the expiration of his contract.

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In these cases, the club or clubs that contributed to the education and training of the player must collect compensation.

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FIFA recognition is granted from the age of 12 for the resources invested in a player.

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In 2001 FIFA carried out a reform of the regulations on the status and transfer of players. Until that date, the clubs had the right of retention, which allowed the institutions to retain the athlete registered in their national federation, even if they did not have a current contract.

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The case that changes history in the retention rights is that of Jean Marc Bosman, player of R FC Liege of Belgium, who ended his contract with the club and tried to pass to Dunkirk of France. The Belgians did not authorize the pass because the French did not pay compensation. Then the player appears in court and after several years he achieves freedom of action and FIFA abides by the sentence.

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The 2001 reform abolishes the right of retention and incorporates training compensation and the solidarity mechanism.

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The solidarity mechanism operates when a footballer is transferred or loaned when he still has a current contract, the player's new club must distribute 5 percent of the pass amount among those clubs that have participated in the athlete's training between the seasons included between 12 and 23 years old.

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From 12 to 15 years old, 0.25 percent of the total pass is received (per year in the training club) and between 16 and 23 years, 0.5 percent.

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In other words, the solidarity mechanism assumes the distribution of 5 percent of the price of each international transfer to be distributed among all the training clubs between the ages of 12 and 23.

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The acquiring club must pay this percentage, although withholding it from the amount agreed upon by the transfer with the selling club.

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In this institute there is no time limit for the collection of compensation, the contribution must be paid with each of the player's transfer, throughout the player's sports life.

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Who is obliged to pay is the new club that must indemnify the training club or clubs. The new club is responsible for distributing and calculating the amount with the training club or clubs as it appears in the player's passport.

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To calculate the compensation is made based on the transfer price, excluding the training compensation.

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According to the jurisprudence that has been applied for more than 10 years, this compensation must be paid only in international transfers. An indemnity is only applicable by the solidarity mechanism between teams of the same association, when there is a regulation that so provides.

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Reforms to RETJ 2020

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The new RETJ 2020, which in this case will come into effect on July 1 of the aforementioned year, extends the accrual of the solidarity contribution to domestic transfers (whether temporary or permanent), provided that the training club belongs to a different association. .

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"Annex 5 RETJ 2020:

1 Solidarity Mechanisms

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Training clubs are entitled to receive (a proportional part) 5% of the solidarity contribution in the following cases: i. the definitive transfer or as a loan of a professional player is made between clubs affiliated to different associations; ii. the definitive transfer or as a loan of a professional player is made between clubs affiliated to the same association, provided that the training club is affiliated with a different association ".

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For a long time it was discussed whether the termination clause also allowed the payment of the solidarity mechanism.

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This conflict was first resolved by the Dispute Resolution Chamber, and then by the TAS / CAS award that ratified it in the case "SS Lazio vs CAVelez Sarsfield and FIFA, condemning the Italian club to pay Vélez the corresponding solidarity contribution on the amount of the termination clause (20 million Euros) that Mauro Zarate had agreed with the Al Saad club in Qatar.

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In its award, the TAS / CAS considered that a freely agreed termination clause between a club and the player was comparable to a kind of advance consent by the club to allow the player to leave, in the same way as in a transfer.

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The solidarity mechanism does not apply to free players, something that clearly appears unfair to training clubs, since both were formed with the same infrastructure and the same expenses.

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The solidarity mechanism must be paid no later than 30 days after the player's registration or, in the case of partial payments, 30 days after the date of said payments (Art. 2.1 of Annex 5).

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The sum of 5 percent to be distributed by this mechanism must be calculated on the entire value of the transaction, not only on the amount actually paid. That is, it is the total value of the transfer, if for example a player was loaned as part of The transaction must also be valued at the economic value of the player.

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The payment of this compensation also corresponds when the exchange is not for money but for players, the Dispute Resolution Chamber interprets that indirectly it is a financial agreement, since the sports qualities of a player have economic value.

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In this case, the CRD takes as an economic amount to compensate the value of the previous transfer of the footballer that the plaintiff now exchanges with the defendant club.

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In other resolutions, take the average value of the two players to make the calculation.

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In the particular case that there is a domestic transfer, between clubs of the same association, but the player has been trained in a club of another association, the jurisprudence has mostly said that the solidarity mechanism is not applicable (TAS / CAS Aso, A, Argentinos Juniors vs Villarreal CFSAD. 4-12-07)

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COMPETITION

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Article 22 of the RETJ establishes that it is FIFA that has the competence to deal with disputes in relation to the solidarity mechanism.

 

PROCEDURE TO CLAIM THE SOLIDARITY MECHANISM

 

It is processed through the TMS.

If the club lacks TMS, it is claimed through the respective Association.

The process is governed by the procedural regulations of the player statute commission and the Conflict Resolution Chamber.

The TMS has a tab called "claim" that clubs are required to look at periodically.

Who decides the claim is the subcommittee appointed by the Dispute Resolution Chamber, with judges that are generally unique.

The mandatory documentation to claim is on the list that we attach in the corresponding annex, point 6: initiation of the procedure.

Compliance with documentation, advance payment, language, etc., is important so that the claim can be dealt with by the subcommittee.

In addition, the complainant may add other documents as evidence, and the subcommittee may request other documents, even if they are not on the aforementioned list.

The defendant has 20 days to respond, also through TMS, and has access to all the evidence presented.

Exceptionally, there will be a second exchange of correspondence and the response must be within 20 days. If nothing is answered, the decision is made with the evidence contained in the file.

The decision of the Subcommittee is uploaded to the TMS, and is considered notified and legally binding.

Only the operative part of the decision is notified, if the grounds are needed, you have 10 days to request them. After the deadline, the decision is final.

THE INCONSISTENCIES OF THE SOLIDARITY MECHANISM

 

It is not consistent that the obligation to indemnify the new club is imposed when in reality it is totally unrelated to the termination of the contract between the old club and the player, as established in Annex 5 of the RETJ.

As the events unfold, and after several years of applying the solidarity mechanism, we can see that it is a fragile institute with easy vulnerability.

We take into account here that the clubs that train the players are totally oblivious to the operations that are carried out with their trained players and it is practically impossible to avoid simulations such as free transfer contracts in collusion with the previous club.

In practice, it has also been too cumbersome to litigate in FIFA to obtain this compensation, and in many cases it has been impossible to exercise this right, because among other problems the advance of expenses is requested to start the claim. It seems that there is a manifest will to close the paths to exercise this right. Let's think that many of the training clubs are small institutions, with few resources, but that carry out an important activity in the activity of this sport.

The advance of procedural costs should be avoided to be able to appeal without limit, when the solidarity mechanism is not complied with, otherwise the spirit of FIFA itself is violated, which aims to reward those who make the effort to train young players .

On the other hand, the clubs begin to train their players well before the age of 12, so it is not understood why the right to claim compensation from that age is recognized.

In general, the training clubs prepare their structures before the age of 12, so it would be important that this age be modified.

In the case of Argentina, National Law 27211 in its sixth article recognizes the formation from the athlete's ninth birthday

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The MLS (Major League Soccer) of the United States conforms to the norms of the so-called "FIFA regime"
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This league will collect and pay the solidarity mechanism.

The measure is implemented as a defense for the flight of its young players.

Resonant cases happened in which young promises of North American football signed their first contract in Europe, thus being disadvantaged by MLS clubs that have been increasing their investments in infrastructure and in the training of new soccer players.

According to the league, the reasons the move is being taken have to do with the compensation that will be given for players who trained in the MLS and signed contracts outside of the United States and Canada.

Many wonder why now and not before. The clubs affiliated with the MLS answer that they have invested more money in the training academies (more than 75 million in 2018 and that amount continues to increase) and also the interest in players with a US matrix grows.

However, this measure does not have the support of the players' association, as they maintain that this measure may restrict the player's freedom in the future and limit him job opportunities.

Remember that MLS is not a FIFA affiliate; The one that is affiliated is the US Soccer (National Federation).

MLS is a private league that has decided, through its member clubs, to join the FIFA regulations.

The solidarity mechanism is at the center of controversy in the United States, as the Crossfire Premier, a club based in Redmond, Washington, wants to achieve a percentage of the transfer fee between the Seattle Sounders and Tottenham clubs when the player DeAndre Yedlin went abroad. The case is currently in FIFA.

The new MLS stance could help the Pennsylvania Classics claim for Christian Pulisic. This twenty-year-old player was bought by Chelsea from Borussia Dortmund for 64 million euros, a record price for an American player.

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APPLICABLE LEGISLATION

 

Regulation on the status and transfer of players (year 2020)

 

 

Article 21 Mechanism of solidarity:

 

If a professional player is transferred before the expiration of his contract, the club or clubs that contributed to his education and training will receive a part of the compensation paid to the previous club (solidarity contribution). The provisions on the solidarity contribution are set out in Annex 5 to these regulations.

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Article 22 FIFA Competition

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Without prejudice to the right of any player or club to raise a case before an ordinary tribunal for labor disputes, FIFA has the competence to deal with:

  1. disputes related to training compensation (art. 20) and the solidarity mechanism (art. 21) between clubs that belong to different associations;

  2. disputes related to the solidarity mechanism (art. 21) between clubs that belong to the same association, provided that the transfer of the player that causes the dispute has occurred between clubs that belong to different associations;

 

ANNEX 5 RETJ 2020

Solidarity Mechanism 1

Solidarity contribution 1.

If a professional player is transferred during the term of a contract, 5% of any compensation paid to the previous club within the framework of this transfer, except for the training compensation, will be deducted from the total amount of this compensation and will be distributed for the new club as a contribution of solidarity between the club or clubs that over the years have formed and educated the player.

This solidarity contribution will be made proportionally, depending on the number of years that the player has been enrolled in each club during the seasons between the ages of 12 and 23, as follows:

- Season of the 12th birthday: 5% of 5% of any compensation

–Season 13th birthday: 5% of 5% of any compensation

- Season of the 14th birthday: 5% of 5% of any compensation

- Season of the 15th birthday: 5% of 5% of any compensation

- Season of 16th birthday: 10% of 5% of any compensation

- Season 17th birthday: 10% of 5% of any compensation

- Season of the 18th birthday: 10% of 5% of any compensation

- Season of 19th birthday: 10% of 5% of any compensation

- Season of 20th birthday: 10% of 5% of any compensation

- Season of the 21st birthday: 10% of 5% of any compensation

- Season of the 22nd birthday: 10% of 5% of any compensation

- Season of the 23rd birthday: 10% of 5% of any compensation

2. Training clubs are entitled to receive (a proportional part) 5% of the solidarity contribution in the following cases:

i. the definitive transfer or as a loan of a professional player is made between clubs affiliated to different associations;

ii. the definitive transfer or as a loan of a professional player is made between clubs affiliated to the same association, provided that the training club is affiliated with a different association.

Annex 5 77 2 Payment procedure

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1. The new club must pay the training club or clubs the solidarity contribution in accordance with the preceding provisions, no later than 30 days after the player's registration or, in the case of partial payments, 30 days after the date of such payments.

2. It is the responsibility of the new club to calculate the amount of the solidarity contribution and distribute it according to the player's career history, as it appears in the player's passport. If necessary, the player will assist the new club to fulfill this obligation.

3. An association will be entitled to receive the percentage of the solidarity contribution, which in principle would be due to one of its affiliated clubs, if it manages to provide irrefutable proof that the club in which the professional was formed and educated no longer participates in organized soccer and / or it no longer exists; in particular, due to bankruptcy, liquidation, dissolution or loss of affiliation. This compensation will go to youth soccer development programs of the association or associations in question.

4. The Disciplinary Commission may impose disciplinary measures on clubs that do not fulfill the obligations stipulated in this annex.

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Annex 5 Annex 5 78 Procedure that governs training compensation claims (art. 20) and the solidarity mechanism (art. 21)

1 Principles

1. All claims related to training compensation, based on article 20, and the solidarity mechanism, based on article 21, will be presented and processed through the TMS. It will be up to the club that has an account in the TMS to enter the claim in the system. In case the club does not have an account in the TMS, this task will fall to the corresponding association.

2. Unless the provisions detailed below establish otherwise, the claim process will be governed by the Rules of Procedure of the Player Statute Commission and the Dispute Resolution Chamber, subject to slight discrepancies that may arise when dealing of a computerized process.

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2 Obligations of member clubs and associations

1. All member clubs and associations will check the TMS 'Claims' tab regularly, at least every third day, and pay special attention to requests or requests for disclosure.

2. Professional clubs and member associations shall be entirely responsible for any procedural disadvantages that may arise from non-compliance with section 1 above.

3 Composition of the subcommittee The subcommittee appointed by the Dispute Resolution Chamber is made up of members of the Dispute Resolution Chamber and, as a general rule, all members of the subcommittee will issue resolutions as sole judges.

Annex 6 79 4 Conduct during the process

1. All parties involved in the procedure will act in accordance with the principle of good faith.

2. All parties involved in the process are required to tell the truth to the subcommittee. Sanctions may be imposed on any association or club that provides inaccurate or false data to the subcommittee or abuses the TMS for illegitimate purposes. In accordance with the FIFA Disciplinary Code, the FIFA Disciplinary Commission will impose sanctions in case of infringements, such as falsification of documents.

3. The subcommittee may resort to all the means at its disposal to guarantee compliance with these principles.

4. The corresponding TMS department will investigate cases related to the obligations of the parties established in this annex. All parties agree to collaborate in clarifying the facts. Specifically, within a reasonable time, they must respond to any request for documentation, information or any other material of any nature that is in their possession. Likewise, the parties must comply with the obtaining and provision of documentation, information or any other material of any nature that is not in their possession but is within their reach. If these requests are not followed, the FIFA Disciplinary Committee may impose sanctions.

5 Initiation of the procedure, presentation of documents related to the claim for training compensation 1. In accordance with article 1.1. of this annex, the corresponding party will enter the application for compensation for training into the TMS (see art. 20 and annex 4). Requests made by other means will not be honored.

Annex 6 Annex 6 80 2. Depending on the particularities of the claim in question, the claimant will enter the TMS either personally or, in case he does not have a TMS account, through his association, the mandatory documents of the following list:

- the identity of the parties;

- a detailed presentation of the facts, as well as the reasons for the claim;

- the amount claimed;

- the category of the defendant (I, II, III or IV);

- the official confirmation of the member association of the complainant regarding the start and end dates of the sports season (eg from July 1 to June 30 of the following year) during the period in which the player was registered in the demanding club;

- the complete history of the sports career (all the sports passports of the player [v. Art. 7] of the associations involved), including the player's date of birth, all the clubs in which he has been registered since the season of his 12th birthday until the date of registration with the requested club, taking into account possible interruptions, as well as the indication of the player's status (amateur or professional) in all the clubs;

- information about the exact date (day / month / year) of the player's first registration as a professional (if applicable);

- information about the exact date (day / month / year) of the base transfer of the claim (if it is based on a subsequent transfer by a professional player);

- proof that the advance of legal costs has been paid or that it is not necessary to pay it;

- official confirmation from the complainant member association regarding the category of the complaining club (if the player moves within the territory of the EU / EEA, see annex 4, article 6);

Annex 6 81

- documentary evidence related to Annex 4, Article 6, paragraph 3 (if the player moves within the territory of the EU / EEA, see Annex 4, Article 6);

- documentary evidence related to Annex 4, Article 3, paragraph 3 (if the complainant is an association);

- power of representation (if applicable).

3. In the event that a mandatory document is missing, or if a translation is not submitted pursuant to article 8 of this annex, the applicant will receive the corresponding notification through the TMS. The claim will only be processed if all the mandatory documents have been submitted, or if all the translations have been correctly entered in accordance with article 8 of this annex.

4. Likewise, the plaintiff may attach to the claim any other document he deems necessary. The subcommittee may request more documents from the complainant at any time.

5. The claims of amateur clubs that do not have access to the TMS will be presented by the corresponding association.

6 Initiation of the procedure, presentation of documents related to the claim of the solidarity mechanism

1. In accordance with article 1.1. of this annex, it will be the corresponding party who enters the application for the solidarity contribution in the TMS (see art. 21 and annex 5). Requests made by other means will not be honored.

2. Depending on the particularities of the claim in question, the applicant will enter the TMS either personally or, in case he does not have a TMS account, through his association, the mandatory documents from the following list: - the identity of the parties; - a detailed presentation of the facts, as well as the reasons for the claim;

Annex 6 Annex 6 82

- information about the exact date (day / month / year) of the base transfer of the claim;

- information about the clubs involved in the transfer of the claim;

- the percentage of the solidarity contribution requested;

- the official confirmation of the member association of the complainant regarding the start and end dates of the sports season (eg from July 1 to June 30 of the following year) during the period in which the player was registered in the demanding club;

- the written confirmation of the corresponding association regarding the exact dates of the player's registration in the demanding club, that is, from what date (day / month / year) to what date (day / month / year), taking into account possible interruptions, as well as the date of birth of the player and the indication of the status of the player (amateur or professional) in the demanding club;

- the amount for which the player was allegedly transferred to his new club, if known, or a statement that the amount is unknown to date;

- proof that the advance of legal costs has been paid or that it is not necessary to pay it;

- documentary evidence related to Annex 5, Article 2, paragraph 3 (if the complainant is an association);

- power of representation (if applicable).

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Annex 6 RETJ 2020

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5. The claims of amateur clubs that do not have access to the TMS will be presented by the corresponding association.

7 Notification of the claim to the defendant

1. Once all the mandatory documents have been filed (see Articles 5 and 6 of this annex) and as long as there are no reasons to dismiss the claim, it (including all documents) will be sent to the defendant through TMS. The defendant will have 20 days from the date the claim is submitted through TMS to upload their response statement (including evidence, if applicable). Likewise, the defendant will have access to all the documentation that appears in the TMS file. The documentation and its content will be treated confidentially and will only be used within the framework of this procedure.

The subcommittee may request additional documents from the defendant at any time.

2. Only a second exchange of correspondence will be maintained in exceptional cases. If so, this second exchange of correspondence will be processed through the TMS. 3. If you do not receive the response statement within 20 days, a decision will be made based on the documents that appear in the file. 8 Language of documents All documents will be sent in their original version and, if necessary, duly translated into one of the four official languages ​​of FIFA. If this is not done, the subcommittee shall have the right to reject the document in question.

Annex 6 Annex 6 84

9 Deadlines

1. The deadlines set through the TMS will be legally valid.

2. The introduction of writings in the TMS must be made, at the latest, the last day of the fixed term corresponding to the time zone of the place where the respective association is located. 10 Notification of resolutions, legal recourse

1. The subcommittee will legally notify all parties involved of its decision, either directly or through its association, through TMS. At the time it is uploaded to the TMS, the notification will be considered effective and legally binding.

2. The parties in question will be notified of the operative part of the decision, either directly or through their association. At the same time, they will be informed that, within 10 days after notification, they may request in writing through TMS the full basis of the decision; otherwise, the decision will be considered firm and binding and it will be assumed that the parties have waived their right to appeal. If one of the parties requests the full rationale, the decision will be based in writing and the parties will be fully notified through the TMS, either directly or through the association. The period for filing an appeal begins after notification of the reasoned decision.

In this work we analyze the institute of the solidarity mechanism established by FIFA in articles 21 and 22 of the Regulations for the Player Transfer Statute and in annexes 5 and 6 of the same. Likewise, we analyze the assumptions in which it operates, the requirements, some resonant cases of jurisprudence and how it is claimed in practice. We also talked about the characteristics of this institute, which has often become cumbersome, expensive and difficult to apply by the clubs that educate players who later become professionals. To finish, we include the adaptation of the MLS (Major League Soccer) of the United States to the regulations of the so-called "FIFA regime" and an annex, where the regulations in force by FIFA, updated to 2020, are detailed.

When it is appropriate to apply the Solidarity Mechanism

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