Commentary
The nuclear scenario explained
- by Ahmet Guvener @guvenersoccer, Dec 20, 2018
Recently through Crossfire FC vs. Tottenham Hotspur, DeAndre Yedlin’s solidarity payment case, which is under discussion at FIFA’s Dispute Resolution Chamber (DRC), the Training Compensation and Solidarity Payment (TC&SP) discussion has be reignited.
In one of my earlier articles, “If I were the President of US Soccer …” my second advice to the president to be elected was: “I will ask my legal counselors to find a solution to the compensation fee and solidarity payment problem. Reading a lot of articles about this dispute, I am inclined to think that such a solution exists in our legal system. This is a critical step in removing the pressure of pay-to-play system on our player development system.” My first advice was for the president to be transparent -- which I happily see that President Carlos Cordeiro is following -- since I find the issue of rewarding youth clubs for their “products’ extremely important we should look at this subject once again.
Before we go any further let us define what Training Compensation and Solidarity Payment is:
Article 20: Training compensation: Training compensation shall be paid to a player’s training club(s): (1) when a player signs his first contract as a professional and (2) each time a professional is transferred until the end of the season of his 23rd birthday. The obligation to pay training compensation arises whether the transfer takes place during or at the end of the player’s contract. The provisions concerning training compensation are set out in Annexe 4 of these regulations.
Article 21: Solidarity mechanism: If a professional is transferred before the expiry of his contract, any club that has contributed to his education and training shall receive a proportion of the compensation paid to his former club (solidarity contribution). The provisions concerning solidarity contribution are set out in Annexe 5 of these regulations.
This is what FIFA’s Regulations on the Status and Transfer of Players say. To make it easy for the reader to understand, Crossfire FC was entitled to a Training Compensation when Yedlin signed his professional contract with the Seattle Sounders and Crossfire FC was also entitled to solidarity payment since Yedlin was later transferred in 2015 to Tottenham Hotspur before the expiry of his contract. Why and if Crosssfire FC ever claimed Training Compensation from the Sounders is a question whose answer I do not have.
DRC still has not reached a verdict yet on Yedlin’s case. They are reviewing Tottenham’s defense. DRC could find that Tottenham shouldn’t have to pay anything simply because U.S. Soccer was out of compliance with FIFA statutes. If that is the case, the attorney of Crossfire FC Lance Reich says: “That means they were in non-compliance with FIFA player registration rules, transfer of minors across borders, youth records, ITCs (International Transfer Certificates).It opens a huge can of worms.” Reich says this can eventually lead to a “Nuclear scenario."
I disagree. First of all, even if DRC reaches such a decision, nothing will happen. Forget about the nuclear scenario Mr. Reich is trying to portray:
- FIFA knows that U.S. Soccer is not abiding with some of its statues; they do not need the decision of the DRC to know that.
- FIFA enforces its statues when it is of interest to it. This is of interest to U.S. Soccer and players developed in the USA and does not in any meaningful way interfere the way FIFA functions.
- In “Animal Farm’ George Orwell says: "All animals are equal but some animals are equal than others.” Do not expect FIFA to treat U.S. Soccer like it did to Kuwait FA or Greek FA. It will not impose any sanctions on U.S. Soccer for ANY non-compliance issues.
- Politically, FIFA wouldn’t like to be at odds with the USA because of the serious allegations towards some of its former Executive Committee members initiated by the USA judiciary system.
- IF FIFA has thought the U.S. Soccer’s non-compliance to the FIFA’s Regulations on the Status and Transfer of Players was serious, they would have put that as a pre-requisite for the 2026 World Cup bid like they did with a prerequisite of an establishment of a Pro League before the 1994 World Cup was awarded to the USA. Now that the 2026 World Cup will be in the USA (along with Canada and Mexico), it is too late.
- Last but not the least the NOC -- based on a dispute between a club and U.S. Soccer -- will do nothing to challenge the status of U.S. Soccer as the Governing Body of soccer according to Ted Stevens Act.
I have talked to various people and read numerous articles about why TC&SP are not implemented in the USA. Of all the articles I read, Miki Turner’s article is the most fulfilling. Anyway I came to the following two conclusions:
- The issue is not a legal issue is but rather a political issue. If you can for a moment forget about the American exceptionalism and imagine that the countries -- with as good and even better legal systems -- that apply the TC&SP do not have child labor or anti-trust laws or do not have strong players unions, then you must be naïve.
- Unfortunately, our country is the most litigious society on the planet. Hence, U.S. Soccer does not want to mandate anything that might cause litigations; it prefers to sit aside and see how the sequence of events unfolds. As Miki Turner says, U.S. Soccer wants to play a mediator role.
There are three parties -- other than U.S. Soccer -- involved in this dispute: Pro Leagues -- namely MLS and the USL -- youth leagues and MLSPU. The first two are important constituents in the National Council.
MLS until recently was not supporting the idea of implementing TC&SP. MLS initially thought that the possibility of TC might increase the contract value of the players and MLS never thought that MLS might be entitled to SP through their DA “products.” Now MLS has changed its stance. Don Garber recently said: “We are not, as a country, participants in solidarity and training competition. I think that probably has to change. We have to find a way that if that's going to happen, how do we at least get compensated for it. I don't know how we can justify making the kind of investments we've been making." What is interesting is that he referred to players as “products.” “I think the product that we're developing has become some of the most important assets that we need to start figuring out ways that we're either protecting or we're finding ways to get compensated for if we can't protect them or sign them." This approach is in line with the rest of the world but it is in a collision course with the youth leagues which view players (or their parents) as customers.
The youth leagues (USYSA, US Club Soccer, AYSO etc.) view players as customers in the pay-to-play model. Although some youth clubs like Crossfire FC can benefit from the application of TC&SP, those are few and far between. A great majority of the clubs are happy with the current system based on pay-to-play. They might be very reluctant to the implementation of TC&SP since it might challenge their status with the argument that a specific player cannot be compensated for its development through TC&SP since the parents or other parents paid for the cost of the development of the player. Right now, all Youth Leagues are concerned about the quantity of players in their leagues and they are competing against each other for a dropping number of registered players. The quality of the players is not their main concern since the system does not reward them for the quality. This is the dilemma U.S. Soccer is facing. So in implementing the TC&SP system, U.S. Soccer will not get their irrevocable and strong support.
The great majority of the adult teams do not have youth teams, unlike the rest of the world. So the adult leagues have no interest in any way with TC&SP.
The interesting and most challenging case is the stand of MLSPU. What is interesting is that in Europe -- especially in Western Europe -- where the labor union movement is very strong and where there is a strong player’s union -- FIFPro -- which is recognized by UEFA, arguments that MLSPU is raising against TC&SP are not vocal. Also some of the players currently involved in various disputes are not even currently MLS players. I am not a legal expert to challenge their legal positioning, but I know the following: One of the reasons that MLSPU is challenging the implementation of the TC&SP system is the low average salary of the MLS players compared to their European counterparts. The other one: MLSPU may not be looking too much ahead and see the benefits of the TC&SP down the road. TC&SP will help clubs to develop better products, better products mean a more competitive market and a more competitive market means better salaries for the MLS players.
U.S. Soccer has now one ally – MLS – one other party to convince – youth leagues – and one party to wrestle – MLSPU – to implement TC&SP. At this point. U.S. Soccer has chosen to wait for the developments. Unfortunately, unless a system –- whether it be TC&SP or other -- is defined to reward clubs for quality player development, the progress of the quality of soccer in the international scene will be slow and unpredictable.
This is a synopsis of where we stand with relation to TC&SP. I might offer some solutions next year on rewarding quality in the development of soccer players in and around TC&SP. Until then Happy Holidays!
Ahmet Guvener (ahmet@ahmetguvener.com) is the former Secretary General and the Technical Director of Turkish FA. He was also the Head of Refereeing for the Turkish FA. He served as Panel member for the FIFA Panel of Referee Instructors and UEFA Referee Convention. He now lives and works as a soccer consultant in Austin, TX.
Well done, AG, a compelling read.
"U.S. Soccer has now one ally – MLS – one other party to convince – youth leagues – "
As far as youth leagues/clubs go with TC&SP, if these payments are just icing on the cake I'm sure youth leagues/clubs (with a large number of USSF voters) wouldn't mind. However, if USSF wants to then insist ID'd players should then go to regional training centers to assist with their own development, I'm not sure youth coaches are good with sharing "their" players. Youth clubs are very possessive, there is a huge amount of poaching that goes on as it is, and all the disruption due to club changes really hurts teen development. Knowing what I know about local clubs, TC&SP might just turbocharge the poaching unless USSF lays down very strict laws (ha HA!) about coaches speaking to players in any language. Like real laws, with real consequences. Like losing-your-license-for-a-year consequences. Leagues are famously, pathetically, filled with ethically-challenged, self-serviing coaches who have never played professionally. How do you overcome that?
Glad that MLS's hand is being forced and that this issue appears to be heading toward a resolution...
Pertaining specifically to Yedlins's case:
a) Did he pay Crossfire a fee when he was playing there? (The article hints at how the pay-to-play model complicates things relating to the restitution of training compensation fees.)
b) Why wouldn't Akron be entitled to training compensation and solidarity fees? They provided great facilities, coaching, education, room and board, competition, gear, etc. for two years all when Yedlin was still an amatuer at costs that were likely significantly higher than Crossfire's.
Goodness Don, don’t bring the NCAA into this. Besides, that relationship is tit-for-tat.
If we're going to talk about compensating entitities that train amatuer players and help them on their path to becoming pro free of charge, why exclude NCAA teams where the team not only allows them to play for free but also provides much more than just training? Is the club scenario not also tit-for-tat?
I, futuristic looking, don’t want to see college as a soccer training entity. For the time being, the women will benefit and their game will probably always need universities. The men’s side needs to move away from the traditional sports and their path. It’s too late at that age to develop what’s needed professionally. I coached in college, not enough time, too many restrictions and diversions.
That might be great for the future, but that is not the current reality -- especially regarding Crossfire's claim and how it relates to DeAndre Yedlin's path to a professional contract.
There are three main problems with solidarity payments. First, they don't apply to non-affiliated clubs. Second, they don't apply to training prior to age 12.
The third problem is the biggest. Pay to play clubs don't pay for the player's training; the parents pay for the training. If the pay-to-play clubs receive compensation for the player's training, they would be subject to lawsuits by parents seeking restitution of the money the club recovered.
The MLS clubs who would actually be entitled to solidarity payments are already covered by MLS. So the extension of solidarity payments will have little if any effect on development of current players at pay to play clubs.
That is pretty weak sauce, Bob. The leagues already have insurance against claims for coaches touching players, and insurance against concussion claims. It's a very small step to have a rider against parent lawsuits for restitution. Especially since so few clubs would actually see any money. Leagues can certainly wait and see on any potential restitution claims. Odds are good that if that money does start rolling in, leagues/clubs can cut back on player fees as a result, in order to mitigate such claims.
R2 Dad you are entitled to your opinion, but I suspect it is uninformed. I don't believe outside of LLoyds of London maybe, that this is an insurable risk. For one thing, there is no property to insure and no loss to be had. Insurance companies would end up charging prohibitive rates. Restitution has elements of both tort and contract law, but these suits would be based on principles of equity, not law. Our system does not allow someone to unjustly keep a windfall profit at someone else's expense. In this area the courts have a lot of power to do justice.
Bob, I guess we're going to see over the next few years how many millions in legal fees Garber/MLS is willing to throw at this situation. As it sits right now, the crown jewels of youth soccer are running away from MLS to anywhere else that where clubs develop players. Either MLS is able to carve out an exception to current law, or their development academies collapse because club management cannot sustain the negative cash flow.
BTW, I think you underestimate the creativity of those in the insurance industry--where there is a potential annuity to be had, insurance products appear to address the need.
Bob, I guess we're going to see over the next few years how many millions in legal fees Garber/MLS is willing to throw at this situation. As it sits right now, the crown jewels of youth soccer are running away from MLS to anywhere else that where clubs develop players. Either MLS is able to carve out an exception to current law, or their development academies collapse because club management cannot sustain the negative cash flow.
BTW, I think you underestimate the creativity of those in the insurance industry--where there is a potential annuity to be had, insurance products appear to address the need.
R2 Dad, do you see the problem as 18 year old MLS players being out of contract and available for free transfer?
Because if you do, our legal and political system will not force employment contracts on people. The closest thing to it would be granting local monopolies to businesses for utilites or cable tv, but that is not the same as forcing someone become a servant of a corporation. This is the wrong century for something like that, short of dealing with criminals.
I think Garber sees this as a 2-4 year investment in youth soccer players that cannot be sealed with a contract until the player is 18 who then has options to flee without a way to recover that investment. This is similar to Spain trying to keep hold of their young players being lured to England like Fabregas et al at 16. I believe English clubs do pay something when they sign youth players, even at 16. Arsenal paid 2.9M lbs for Fabregas at 16, but don't know if that's TC or what.
One way MLS could turn these lemons into lemonade would be to negotiate a buy-back clause with the European club getting these players for free. A clause like that might not cost the buying Euro club anything, but could be relevant later in the player's career. Not sure, I would like to hear an agent's perspective on US vs Euro contract law specifics. I suspect Don Garber will soon be well-versed in all the negotiating minutae, in order to find a hole that will lead to a profitable solution. On-field sporting issues, Garber is useless. But this sort of esquirey talky-talk is in his wheel-house.
This is a non-issue. While the applicable substantive law is state law, generally speaking, parents or guardians can sign the player contracts. MLS does not have a legal problem.
The problem is that MLS doesn't offer enough money to minors to get them to commit past age 18. So they rather change the law to force commitment at a price that MLS wants to pay. In other words they want a law to strip the players of all bargaining power. And believe me if laws are changed like that, the player compensation will shrink to a token payment reflecting that the players have zero bargaining power.
Ahmet, I think you are underestimating the difficulty with changing the existing law related to children working. Right now every state and local government in the country can pass laws on the subject. To change that would require a federal law carving out an exception for children playing soccer. Legislators and the public are very sensitive about child welfare and don't want businesses exploiting children.
This entire debate sounds like the youth soccer industry wants to exploit children to obtain solidarity payments. The don't want a change for one or two exceptional players. They will want wide spread changes for literally millions of youth players.
Even legislators who never even watched a soccer match, much less played one, have heard the story of Freddie Adu. He turned professional at 14 and how did that work out for him?
Like I said, I think you are understimating the difficulty in changing the law regulating employement of children.
Bob, I defer to you on most matters and your points are on point. A couple things come to mind after reading your comments. Kids today go to charter and specialized schools with the end goal of breaking into those fields. I would imagine many of them go into positions that are different or at lower levels of their aspirations. For most aspiring males in the U.S. wanting to be pro athletes the dream is eventually reconciled. Freddy lived and is still living his dream. Is it a CP dream, no, but it’s his.
Has not the pay to play model exploited kids and parents for awhile now? It too is money driven by the clubs. The number of players trying to move on in college or the pros is endless and 98% just aren’t quality. Their resumes are padded with look at all the games and showcases we won. If not training compensation where is the incentive for developmental change. I’ll try to ask a few more questions after I take my shift with the great granddaughter. As always, SA crew, the back in forth is rewarding.
WS, I think training compensation was intended to encourage professional clubs to run development academies. Otherwise the club holding the contract would reap all the benefit of the prior clubs in developing the player. The league apprearance problem is that the academies seem like they would development more players for opponents than for their own club. It is a rare club that actually develops a significant number of its senior team members. So many players are acquired. Our situation in the US is different because we don't have major cities saturated with professional soccer clubs.
As for my view of the politics, I don't like the situation. If we were just looking at creating a sport exception relaxing limits for professional players in MLS soccer at say age 16 that would not be so difficult. This was not my area, but I recall reading an idea something like that for MLB (many years ago so the recall is nonexistent about the details). But all these pay to play clubs want to be involved. They think they are playing the lottery. When you include 12 year olds, you have to cast a huge net in order to have a chance to "catch" a future pro. What are the odds? 1 in 10,000? More? And nobody can really predict which individual 12 year old will make it, although we can be certain someone will make it. It is difficult enough picking future first team pros from 16 year olds.
The classic example is parents shelling out $100k chasing the dream of a college scholarship. For girls especially, the number of full scholarships is very few. My understanding is that schools frequently split the money up into partial scholarships because they don't get enough to do much recruitment by that means.