Transfer Market Reform
Since 2016, the revamped FIFA has been committed to ensuring the proper functioning of the football ecosystem in general and reforming the international player transfer system in particular. With so many different stakeholders and interests to serve, FIFA set up the Football Stakeholders Committee to oversee both of these central commitments. Here we look at the key achievements in transfer reform since the committee was set up.
Back story
Over several decades, it became clear that the rules governing the transfer market (FIFA’s Regulations on the Status and Transfer of Players) were outdated and allowed for practices that did not fit with football’s general principles of solidarity and healthy competition. As the football industry evolved, the system was becoming increasingly stacked in favour of the rich.
In 2017, FIFA signalled its intention to actively correct this imbalance by establishing a dedicated task force to analyse the transfer landscape and identify the fairest and most proportionate measures for all stakeholders. Some urgent measures were taken right away to address certain undeniable injustices between clubs or between clubs and players, such as overdue payables and abusive conduct.
Following in-depth investigation and thorough consultation of a wide range of interest groups, including clubs, players, agents, leagues, national associations and the confederations, the Task Force Transfer System compiled a white paper, proposing a first set of measures to the FIFA Football Stakeholders Committee in June 2018.
First reform package: The FIFA Clearing House
The proposed measures were endorsed by the Football Stakeholders Committee and the FIFA Council in October 2018, leading to two of the most fundamental developments ever to be introduced in the football ecosystem: the creation of a central clearing house within FIFA to process player transfers and related payments, and a corresponding electronic registration system for all 211 national associations.
By centralising, processing and automating payments between clubs, the FIFA Clearing House aims to protect the integrity of football and avoid fraudulent conduct.
The first stage of operations, planned to begin in January 2021, will involve training compensation and solidarity contribution payments, so called “training rewards”, to training clubs. At a later stage, it will ensure the proper functioning of the system by centralising and simplifying all club-to-club payments associated with transfers, such as agent’s commissions and potentially transfer fees.
Ultimately, the new central authority will make the training reward system fairer and more efficient, ensuring that money is redistributed to the clubs that train young players who become professionals. The amount of money distributed to training clubs is expected to increase by up to four times what they currently receive.
The transparent completion of transfers will be aided by the Electronic Player Passport, which offers a consolidated view of registration information of a player across member associations, created by the FIFA Clearing House from information from each member association’s electronic registration system.
Second reform package: Agents, Loans and Training rewards
As part of the ongoing reform process and through further wide-ranging consultation by the task force, FIFA’s Football Stakeholders Committee endorsed the introduction of a cap on agents’ commissions, a limit on loans of players and the establishment of a fund to help finance training compensation.
Therefore, the new regulations and other measures will set a cap on agents’ commissions and limit representation of multiple parties to a transfer to avoid conflicts of interest. In addition, a mandatory licensing system with qualification and professional development requirements will be reintroduced, all agents’ commissions will be paid via the FIFA Clearing House, and a formal system will be put in place to resolve disputes between agents, players and clubs.
New regulations concerning player loans will ensure that they have a valid sporting purpose for youth development and will set limitations on international loans of players aged 22 and older. The proposed rules will be submitted to the Players’ Status Committee and the FIFA Council for approval in the second half of 2020, after which a transitional period will gradually see the number of international loans per club go down to six by the 2022/2023 season. The regulation of the loan system aims to protect the integrity of competitions and youth development and preventing player hoarding.
Under an overhauled training compensation scheme, all payments will be automated and made via the FIFA Clearing House to ensure that all clubs receive their full entitlement for developing young players. In addition, FIFA will create a fund which will be financed by a 1% levy on all transfer fees. This fund will partially finance the payment of training compensation, while the remaining amount will be paid by the buying clubs. Training compensation will be calculated based on the effective training costs and with a system aimed at redistributing wealth in a better and more balanced way. In effect, the fund will pay out more to smaller clubs and less to big clubs.
What’s next?
The Task Force Transfer System is currently drawing up measures to address a number of further topics, including the transfer of minors, transfer windows, financial regulations, and squad size limits. They will be put forward as part of a third reform package for discussion and approval later this year.
All of these measures represent the biggest ever reform of the transfer system, and are the result of constructive dialogue and debate between FIFA and the football stakeholders. They bring “fair play” principles back into the transfer market, with a renewed focus upon solidarity rather than speculation. They also display recognition of an important truth: that the system should serve football and not the other way around.
