MLS to Seek Training Compensation, Solidarity Payments for Outgoing Talent

MLS is taking another step toward integrating itself with the rest of the football world, in large part to avoid being taking advantage of by it.

MLS is taking another step toward integrating itself with the rest of the football world, in large part to avoid being taking advantage of by it.

The league’s academies, which started out as little more than a cost center or marketing vehicle, have started to bear fruit a bit more regularly. And with that production comes interest from abroad, and with that interest come offers from foreign teams that appeal to ambitious players.

On a few occasions, MLS outfits have been the victim of that modest developmental success. Everywhere else, clubs grooming and training young players are compensated when the athlete goes pro. But U.S. and Canadian soccer are new to this developmental game and need to catch up in more ways than one. And so Weston McKennie left FC Dallas for nothing. So did Haji Wright and Alex Mendez (LA Galaxy), Andrew Gutman (Chicago Fire), Matthew Olosunde (New York Red Bulls), and others.

MLS isn’t a charity, and so Thursday evening the league announced that its teams finally will start observing FIFA’s Regulations on the Status and Transfer of Players, thus participating more meaningfully in the global transfer market. Those regulations apply only to international moves—there is still no mechanism for compensation within the USA or Canada (that’s up to the respective national federations, not FIFA). But from Thursday on, when a player who spent time in an MLS academy signs his first pro contract with a foreign club, or when a former academy player is transferred, the MLS team will pursue the compensation to which it is legally entitled.

Why now? Because of that growing list of academy products spurning MLS contracts for offers from foreign clubs. A problem that wasn’t contemplated before could mushroom into a disincentive for MLS owners to continue funding academies.

“Training compensation and solidarity payments received by the league and its clubs will fund enhancements to MLS player development and provide even more opportunities for young athletes with professional aspirations,” MLS said in a fact sheet accompanying Thursday’s announcement, adding elsewhere that 100 percent of any payment due will be kept by the club.

The statement references the two payment mechanisms: training compensation and solidarity. Training compensation is due when a player signs his first pro contract with a team in a foreign country. That team then must pay every club that trained the player from age 12 to 21 (pro clubs can seek compensation as well if the player transfers again during his 23-year-old season). The amount of training compensation is predetermined by FIFA and is connected to the size of the buying club and its location. A top-tier club in Europe, for example, would owe €90,000 ($101,101) per year of training. The top teams in Concacaf, when buying a player from abroad, would owe $40,000 per year of training.

Those funds won’t do much damage to accounts of a European juggernaut, but they may give other foreign teams reason to pause before taking a flier on an American kid with potential. There’s now a bit more risk involved. In the opinion of the MLS Players Union—the staunchest opponent of the league’s participation in RSTP—that risk will become another barrier to movement and an additional cost that suppresses wages.

MLS sees the move as simply bringing itself in line with the global market. Clubs are accustomed to paying these fees when signing players from every other country, and since a transfer fee is negotiable, the bottom-line price is never set in stone. These costs typically are baked into the total when an MLS team signs a foreign player.

The second mechanism, solidarity, calls for five percent of any international transfer fee—regardless of the player’s age—to be paid to the clubs involved in training that player between the ages of 12 and 23. The sum is doled out proportionally. FIFA allows the two clubs involved in the transfer to determine who bears responsibility for the payment, and MLS now expects all but two of its clubs to seek whatever percentage they’re due.

The two exceptions are D.C. United and Minnesota United, whose academies aren’t fully-funded. Once they are, they’ll be permitted to participate in the RSTP.

Several U.S. youth clubs, most notably Seattle’s Crossfire Premier, have appealed to FIFA seeking solidarity payments (DeAndre Yedlin is a former Crossfire player). This issue doesn’t apply to MLS’s decision, which covers only the time players spent in its own academies. It also doesn’t mean that MLS clubs will pay solidarity or training compensation to other U.S. and Canadian organizations. FIFA’s RSTP doesn’t cover intra-federation transfers. It would be up to the U.S. Soccer Federation and Canadian Soccer Association to change those rules.