Commentary

Is compensation from pros to U.S. youth clubs on the horizon? Attorney Lance Reich provides an update on the quest

One of the unresolved issues during these tumultuous times in American soccer is the quest by U.S. youth clubs to get compensated for their former players who go pro, as is common throughout the world.

When, for example, Germany’s Bastian Schweinsteiger moved from Bayern Munich to Manchester United in 2015, the village club he played for 17 years earlier, at ages 12 and 13, received $42,000.

Compensation to youth clubs, stipulated by FIFA’s Regulations on the Status and Transfer of Players (RSTP), but not implemented in the USA, comes in two forms:

Training compensation: a fee from the first professional club that signs a player to the youth club(s) the player played for after his 12th birthday.

Solidarity contribution: a percentage of a player’s transfer fee that goes to any club that has contributed to the player's “education and training” from the player’s 12th to 23rd birthday, as in the Schweinsteiger example.

U.S. youth clubs’ quest for compensation, which they say will help combat the pay-to-play problem, has ramped up, notably when Crossfire Premier filed a complaint with FIFA's Dispute Resolution Chamber in 2015 after Crossfire did not receive a portion of the transfer fee when its former player, DeAndre Yedlin, moved from the Seattle Sounders to Tottenham Hotspur for a transfer fee reported to be about $3.7 million.

Crossfire would be entitled to a solidarity payment of about $60,000, according to FIFA's RSTP. Tottenham agreed to pay Crossfire but the English club was directed by U.S. Soccer to send the funds to MLS, according to Crossfire. (U.S. Soccer has said that U.S. anti-trust laws prohibit it from enforcing FIFA’s RSTP and that "aspects of the RSTP system … are of questionable legal validity in this country.") 

A leading advocate for U.S. youth clubs is attorney Lance Reich, who represents Crossfire and more than 20 U.S. and Canadian youth clubs, including Dallas Texans SC, Sockers FC Chicago and Real Colorado.

SOCCER AMERICA: Can you update us on the state of U.S. youth clubs' quest to get solidarity payments? It was reported in August that the Crossfire/Yedlin case was on FIFA's Dispute Resolution Chamber (DRC) docket?

LANCE REICH: The Yedlin case, in particular, is waiting to be decided by a three-judge panel. Normally one judge decides fee disputes, but I am told that because it involves the United States in a novel award situation, the decision will be precedential in nature and consequently needs the larger number of judges.

That it’s "on the docket" means that it is in the active queue of cases to be decided. I suspect that it will be the first case decided, but I know that other clubs in the United States have also filed DRC complaints in addition to the clubs that I represent. I suspect there are at least 10 to 15 cases currently pending involving U.S. player international transfers. We are awaiting a decision any day in the Yedlin case.


Lance Reich

SOCCER AMERICA: How close do you think U.S. youth clubs are to receiving solidarity payments or training compensation?

LANCE REICH: One has to remember that we are speaking about solidarity fees and training compensation in two different circumstances: (1) where the U.S. player leaves or returns to the United States; and (2) for potential domestic U.S. player sales and signings.

FIFA rules govern player transfer between national associations; so that also includes player transfers between the United States, Canada, and Mexico. I think it is very likely FIFA will soon award solidarity fees for the international transfers, such as with Yedlin, Michael Bradley, and Clint Dempsey, and training compensation claims for players like Rubio Rubin and Christian Pulisic, who signed their first pro contracts abroad.

Whether or not the USSF [U.S. Soccer] helps with U.S. youth clubs in collecting the fees remains to be seen. In the past, the USSF has outright blocked the payment of the fees, such as in the Yedlin case, and threatened youth clubs with sanctions if they have sought to obtain the fees or go to the DRC.

But the dialog has certainly been changing, and recent events may change it more. With respect to the domestic issue, we have to come to an agreement with USSF and the other actors in our soccer federation, like MLS and NASL, on some type of domestic system as we don’t have one in place in our rules. The FIFA rules do request that national associations implement a version of the FIFA solidarity system to encourage their youth soccer systems to produce quality players.

SA: There was a meeting in October 2015, hosted by U.S. Soccer, that included representatives from MLS, the MLS Players Union, NASL, USL, youth clubs and the U.S. Soccer Development Academy. Has there been any progress since that meeting regarding any kind of agreement on how the professional leagues may give financial support to youth clubs?

LANCE REICH: There were two meetings actually, one in October 2015, and one in May of 2016. The conversations had been productive, but things unfortunately broke down when threats of antitrust lawsuits were made for either enforcing the international FIFA system or creating a domestic system.

Now, with clarification from a district court, the U.S. youth clubs no longer fear a lawsuit and do intend to move forward.

Another important thing to note is that at the meetings, we discussed (1) international transfers and the current rules; (2) the creation of a domestic solidarity system, and (3) compensation from the USSF to U.S. youth clubs that send players to the national teams, both men’s and women’s. (Note that the FIFA rules on this don’t apply to female players).

While antitrust concerns -- valid or not -- could apply to the first two issues, the USSF directly compensating U.S. youth clubs has no such concerns.

SA: Youth clubs would receive payment from the U.S. Soccer Federation when their former player gets called up to the national team?

LANCE REICH: In particular, we were discussing a “USSF youth discovery program” that would be similar to training compensation for men and women’s first signing to the national teams. At the signing to the teams, the youth clubs for the player from age 12 to 23 (before that player signed a first pro contract) would get a one-time payment of a scholarship donation that could only be used for scholarships or other soccer-related items, with a set fee for each year the male or female player was at the youth club.

We didn’t agree on a specific amount, but used as an example $2,500 per year the player was with the club. And that fee would double with the next player (male or female) who signs to the national team.

This would reward clubs who consistently send players to the national teams. For example, Yedlin signing with the national team would cause a one-time donation of $7,500 to Crossfire, for example, three years. The next player Crossfire has who signs would cause $5,000 per year for that player’s years at the club. The system could start with the signings to main national teams, and then be expanded if successful to U-23 on down.

I bring this potential national youth discovery system up as it’s something the USSF can do immediately with no antitrust concerns, treating male and female players equally, and the USSF certainly has the money available to allocate to the program. It would be a very good start towards both reforming pay-to-play and rewarding the producers of talent to our national teams.

SA: How far would solidarity payments and/or training compensation go to helping youth clubs alleviate the "pay-to-play" problem in American youth soccer?"

LANCE REICH: It definitely is a piece of the puzzle to help alleviate the financial burden, but it is not the answer by itself. I do know that my clubs all intend to use any money they win expressly for more player fee scholarships, and despite some commonly held opinions I hear, my clubs try to give economic need-based fee scholarships out first before the player merit fee scholarships. …

I will give you a true story. I have family in rural Montana that I was visiting over the summer and I was in a very small town (population: 1,645) eating dinner in their largest restaurant. The manager of the restaurant is also the manager of their town soccer team and had been following Crossfire’s case and the youth clubs seeking solidarity fees and training compensation.

He knew who I was and asked me if I thought my clubs could win our case in the next few years as he has stellar girl player who is a freshman and he is sure she will ultimately go pro.

His club doesn’t charge fees and the parents donate money and pitch in for tournament costs, travel, etc., and he can only dream about what his club could do with solidarity/training compensation. I bring up this example when people ask me if I think implementing solidarity/training compensation will make a difference in U.S. youth soccer.

10 comments about "Is compensation from pros to U.S. youth clubs on the horizon? Attorney Lance Reich provides an update on the quest".
  1. Scott Johnson, October 15, 2017 at 9:24 p.m.

    Speaking as a parent (from a club which is quite financially responsible), my main concern is this:  we would go from pay-to-play clubs that don't collect compensation payments, to pay-to-play clubs that do.  Some local clubs here in town have multiple staffers making six-figure salaries, and aren't known for their soccer prowess.

    A key metric ought to be how much subsidized training clubs provide--costs (staff, equipment, fields, travel) minus parental expenses (club dues, team fees, club profit on branded gear and uniforms, if any).  Clubs who cover their costs with fees... probably have less of a (moral) claim on a player's future salary than clubs who provide extensive subsidies to players. 

    One area in which I'm ignorant is how things work overseas--do "pay-to-play" clubs that hire professional coaches, travel to tournaments, and cost a lot of money in fees exist overseas?  Or is it more of a two-tier system, with most kids playing in what is called "rec" in the US (volunteer coaches and referees, no or minimal travel, low cost), albeit at a much higher level of play due to a more robust soccer culture, and elite kids receiving subsidized training in highly competitive youth academies, often attached to the many professional adult clubs at various levels of the soccer pyramid? 

    One reason pay-to-play exists at such a high level in the US, I suspect, is that in many places recreational soccer is often regarded as poor.  (I don't wish to insult rec leagues, which are a vital part of the soccer pyramid, but certainly the quality is highly variable, especially at the younger ages).  Some of that is due, I suspect, to the forced-parity rules rec operates under (no tryouts, teams formed at random or by neighborhood), but a lot is due to the relative lack of soccer culture; in many parts of the country you're much more likely to find a skilled parent-coach in Little League or YMCA hoops than you are in AYSO or USYSA recreational soccer.

    Of course, a lot of this may have to do as well as parents (and players) who put winning over development, and who get annoyed when coaches give That Kid playing time, or mix up the positions, or insist on playing out of the back, or do any number of other things that are valuabe for development but put a team at a short-term competitive disadvantage; a lot of pay-to-play clubs and teams do focus on winning and trophies. 

  2. R2 Dad replied, October 16, 2017 at 12:26 a.m.

    Scott, I read this a lot: "multiple staffers making six-figure salaries", but the only people I know that make that kind of money are a couple club owners and they are still coaching mulitple teams and work 7 days per week for months on end. Is this really the case? There is this idea that so much money is washing around in youth soccer, but if that is the case that is primarily due to the number of volunteer personnel (team managers, field marshals, etc) that don't draw a salary but would otherwise require one. I think compensation would allow some of these volunteers to be paid a stipend to mitigate costs incurred/time spent, along with scholarships for the families that can't afford to pay.

  3. Scott Johnson replied, October 16, 2017 at 1:30 a.m.

    All the local clubs in our state are nominally non-profit (only non-profit entities may register teams).  The vast majority are true nonprofits--they are community-focused organizations with reasonably-independent boards that make nobody rich.  If someone is working sixty hours a week to organize, coach, drive the van, etc.; I don't begrudge them a decent salary.  If someone isn't...  I cannot comment on specifics (what the persons involved do) concerning the clubs I have in mind because I'm not in said clubs; but they do exist.

    There is one prominent youth club in town that is actually for-profit; it's a club started by a personal trainer which is an outgrowth of his training business.  (A nonprofit entity exists to register with the state association; I don't know how independent the board of that is--I suspect not very).  That said, this club and coach are highly regarded and very effective, albeit a fair bit more expensive that most of the nonprofit classic clubs.

    To repeat (or rephrase) a question posed above:  What do second-tier players in Germany do?  By "second-tier" I mean youth players who are very good (good enough to play HS varsity, and possibly collegiately in the US), and who may seek out a competitive environment and advanced levels of training, but who are but not good enough to play professionally, at least not in the first or second divisions, and might not be viewed by pro academies as a good invstment.  A big part of pay-to-play here caters to such players.

    When discussing the merits of the US youth system, it's good to know what the youth system in other countries looks like--especially in other wealthy democracies like much of Western Europe.

  4. cony konstin, October 16, 2017 at 12:02 p.m.

    Radical change is coming for youth soccer in the US. We to are waiting for FIFA's decision for our club. Lance's and others who have been fighting to make this right for our youth soccer clubs throughout the US will succeed. 
     "The only thing necessary for the triumph of evil is for good men to do nothing". Edmund Burke 1790

  5. Jay Wall, October 16, 2017 at 1:36 p.m.

    In Germany the DBF has taught school PE teachers to teach invasion games in PE (soccer, basketball, handball, hockey) sports that invade an opponents territory. All these sports use the same basic tactics and concepts. 2,100,000 boys and 33,000 girls play soccer on boys teams in Germany. Cost is $4 a month per player year round for 2 1.5 hour practices a week and a game. The currilicum for youth as setup when Jurgen was the DBF's national team coach and responsible for the youth program is standardized so all players learn and are evaluated teh same way by all 25,500 local clubs.

    The DBF has 1,000 paid coaches who scout youth players and track their progress. Players, almost 15,000 of them, ages 11 to 15 are promoted and have one extra practice a week for 1.5 hours at their nearest of 366 DBF training facilities for promoted players. They still only pay the same $4 a month. These players are taught by 1,000 DBF coaches who all teach the same standard DBF currilicum.

    Between ages 16 and 19 those elite players are promoted to be in the 54 professional club player development programs where the coachiung staffs of the 54 clubs teach the DBF currilicum for developing professional players. Still only $4 a month until the player signs with the club and is paid by the club. 

    A recent document posted on the Internet deals with trying to keep from losing late developers who come into their own in their late teens. The document covers development according to chronological age and developemental age, with late developers spending some time playing with their developmental age group and not just training with their chronological age group.

    Overall almost 20,000 players our of the 2,100,000 registered youth players are promoted to learn at a higher level. Development not only includes a standard age appropriate course of study but physcial training, vision making training, phscholoigical profiling, personality profiling and more. The mental and visual training also reduces injury because players with better vision can make faster decisions and avoid a lot of the contact than can cause injuries.

    In the United States the Sports Marketing Manufacturers suggest they sell enough youth size product to outfit 6,900,000 youthg players, US Soccer only claims 3,900,000, so we may have a lot of players in ethinc and unregistered leagues.

  6. Scott Johnson replied, October 16, 2017 at 2:17 p.m.

    Thanks for the explaination!

    Given that the training certainly costs more than $48 (about €40) per year per child--who is footing the bill?  The DFB (Deutscher Fußball-Bund, or German Footbal Association)?  The various pro teams?  The state?  How much does providing this training cost?

    If you look at the sports the US is traditionally good at (the Big Three--American football, basketball, and baseball), for all of them high school sports are a key part of the how and where young athletes are trained, especially for the first two.  Baseball is a bit of a unique case, with an extensive minor-league system for training prospects (and the expectation that most young players won't be ready for the big leagues for several years out of school), but the other two depend extensively on both high school and collegiate programs for developing and identifying talent.  And HS sports, despite its downsides, is mostly free to play.  OTOH, HS  soccer is widely considered to be second-rate, for a large number of reasons, and it seems that lots of people in the club community consider it to be a lost cause.  Which is perhaps unfortunate.

  7. Jay Wall replied, October 17, 2017 at 10:27 a.m.

    Scott,

    The problem in comparing nations is the dollar to Euro exchange rate doesn't work well. If you take annual disposable household income, what a Germany family pays $4 a month for a family in the United State would pay $9 to $10 for depending on where you live, so the cost of playing soccer for a year for one child would be a little over $100.

    The DBF, in contrast to U.S. Soccer, has no adversion to spending money to keep soccer the #1 sport in Germany with 92% of professional sports revenue.

    Soccer is small money in the United States with $90 million in TV revenue for 2015 to 2022. https://en.wikipedia.org/wiki/Major_League_Soccer_on_television

    Soccer is very big money in Germany where just the 36 Bundesliga and Bundesliga 2 clubs share 4.62 Billion Euros in domestic TV money plus 1 Billion Euros in foreign TV money. See http://www.bundesliga.com/en/news/Bundesliga/agmd12-dfl-media-income-distribution-424720.jsp

    The DBF player development program goes through the 54 professional club academies, 366 Development Training Centers and the 25,500 local soccer clubs, sponsorships, donations, partnerships with schools, etc. Saw one reference to the player development program being a $1 billion dollar long term investment, but can't find that bookmark now.

    For information on the Talent Developement Program see:
    https://www.dfb.de/en/projects/talent-development-programme/

    http://www.kthi.is/skrar/file/AEFCA_Warsaw%202010_presentation_daniel_en.pdf

    For the 121 page document that credits Jugen with implementing the national transitition plan that led to Germany being the power it is today, what he sought to implement in the U.S. See pages 10 to 14:
    http://internshipinaustralia.com/research/ISBS_Issue_7_We_Are_The_National_Team.pdf 

  8. Ben Myers, October 17, 2017 at 10:11 p.m.

    I have to be a bit cynical about this proposal, because I have seen many clubs doing a money grab by fielding teams full of kids who are very unlikely even to develop into respectable club players, let alone college-level, professional, or elite internationals.  We also need some serious education of soccer parents in this country, because they often get conned into spending thousands in club fees, travel, and soccer gear for their little Neymar or little Marta in waiting.  So this could simply be another money grab for some, with little going back to benefit the kids.  On the other hand, I have seen one club owner buy land and put in a pair of turf fields to train his players, all done with fees paid by parents earlier.  Just like elsewhere, there are all kinds of folks in youth soccer.  I'll root for the ones who do a good job developing their players, and hope they'll rise to the top.

  9. M S, October 19, 2017 at 10:17 a.m.

    Simple. Training Compensation encourages much better scouting and training and promoted the clubs that are better at developing. Wether you think they will lpwer their costs is besides the point. Even if they didnt, its still much better thsn ehat we currently have.
    What we currebtly have is zero incentive to develop the best players possible.
    I dont understand why some like to believe that wishing for clubs to do the "right thing" is a better strategy than actually incentivising them.
    Also, we need to regulate Parl Districts and their fees which are getting out of hand. Many wont allow you to even scrimmage on their fields without a fee but have no issues with people organizing scrimmages on basketball courts?

  10. Fanfor soccer, October 21, 2017 at 1:22 p.m.

    The secret to getting anything done is to use the resources available.  We have coaching who have the knowledge and the ability to help change this program.  You have a coach with Dallas who has had outstanding results with developing outstanding youth talent.  You have a coach in Maryland who has had tremendous results (sorry can't remember the names) you have Hugo Perez on the west coast with his club and DeAnza on the west coast who recently hired the former director of FC Barcelona Youth Academy.  Are we too proud to seek the input from these people?  In reference to Reynas comments earlier.  Use the resources we have.

Next story loading loading..