MLS players' union: Solidarity payments 'unfair'
The MLS Players Association has reiterated its opposition to FIFA's system of training compensation and solidarity payments for international transfers, releasing a detailed document that calls the system "unfair" and "bad for players."
The MLSPA released its document in response to recent developments as it pertains to the enforcement of FIFA's Regulations on the Status and Transfer of Players (RSTP) in the United States. MLS announced in April that going forward, it would begin collecting training compensation and solidarity payments, particularly as it related to its academy products, some of whom have eschewed signing with MLS and opted to sign with foreign clubs instead. A recent decision from FIFA's Dispute Resolution Chamber (DRC) involving Redmond, Washington-based youth club Crossfire Premier, and its attempt to seek solidarity payments from the transfer of DeAndre Yedlin from Seattle Sounders FC to Tottenham back in 2014, appeared to open the door for youth clubs outside of MLS to begin collecting solidarity payments and training compensation.
RSTP mandates that whenever a player is transferred to another club prior to the end of their contract, and that transfer involved moving to another country -- a "change of association" in FIFA parlance -- 5 percent of the transfer fee is paid to the youth clubs responsible for the player's development in what is called a solidarity payment. The rules also stipulate that when a player signs his first professional contract, and that contract involves a change of association, the pro club is obligated to pay training and development compensation to the youth clubs that developed the player between the ages of 12 and 21. Training compensation is also due when a player is transferred to a club in another country up until the season of his 23rd birthday.
The MLSPA's opposition is based on several factors. One is that enforcement of RSTP will add to the cost of potential deals -- as much as $650,000 of training compensation for one player -- and will thus reduce the number of opportunities for players.
"At the most basic level, both solidarity payments and training compensation are transactional taxes," the MLSPA statement read. "Since taxes increase costs, the transactions involved become more difficult to close because the taxes reduce the amounts available to the parties to the transactions."
Youth clubs can agree to waive the fees, and negotiate other forms of compensation with the buying club. But in the eyes of the MLSPA, this effect on possible player signings results in a restraint of trade, and thus violates U.S. antitrust law.
The MLSPA also contends that players in MLS academies are being coerced into agreeing to the terms contained in RSTP.
"Training compensation claims begin to accrue when players are 12 years old," the statement read. "Even if these players are informed of this tax on their future career earnings [which they typically are not] they are far too young to give legal consent. We have learned that players in MLS youth academies are being told that they will be cut from their teams if they don't sign a document agreeing to these schemes. In one case shared with us, academy players were put in a room and told not to come out until they signed the form. In other cases, players who refused to sign were immediately cut from their teams, leaving them with nowhere to train or play in the middle of their season. In that atmosphere, any consent granted is very clearly coerced. As a result, the enforceability of MLS's 'consent' forms is questionable at best."
The MLSPA added that training compensation and solidarity payments are ineffective in terms of subsidizing youth development, and would do little to eliminate the "pay-to-play" system that currently exists in the U.S., whereby parents pay clubs in order for their children to be on a team. According to the MLSPA, $120 million in training compensation was collected worldwide in 2018 with another $20m being disputed. To the youth clubs involved, this is better than nothing, but the MLSPA is convinced there is a better way.
"It would take a multiple of that [$120 million] amount each year to eliminate pay for play in the U.S. and Canada," the MLSPA said.
The fact that only international transfers trigger payments is also a negative for the MLSPA. A club that produces 25 professionals will receive no funds if those players stay in one country during their careers. Transfer fees also tend to be much higher for attacking players. Witness the $73.1m fee for Christian Pulisic's transfer from Borussia Dortmund to Chelsea. A club that produces goalkeepers and defenders will likely not gain much in the way of funds mandated by RSTP.
"In short, these schemes involve no qualitative analysis of the youth clubs and academies that they reward," the statement read. "Due to demand for different positions, the number of potential transfers for a player over the course of his career, and the fact that they only apply to international transfers, these schemes fail to correlate the money being distributed with the quality of the development system.
One line of reasoning as to why RSTP should be enforced is that the USSF is obligated to follow FIFA rules since it is a FIFA member. The MLSPA is of the opinion that this is not a compelling reason to participate in a system that in its view is flawed.
"These systems were not built with the North American system in mind, nor were they implemented in order to help players," the statement read. "Plenty of well-intentioned people work hard and do good work within its orbit, but at the end of the day, FIFA is concerned with generating as much money as possible for itself and its individual national associations. It hasn't been about the game and it certainly isn't about the players.
"Players at every level are forced to scratch and claw for everything they get. It should be clear to all at this point, especially given the events of the last few years, that an argument in favor of anything 'because FIFA does it' should be viewed with enormous skepticism."
Until recently, the U.S. Soccer Federation has resisted the implementation of RSTP. Among the reasons cited are fears that RSTP violates child labor laws or would result in litigation on anti-trust grounds. The USSF has also contended at times that a consent decree contained in the case Fraser vs. MLS -- which stipulated that MLS would not require a transfer fee to be paid for out of contract players -- prevented it from enforcing RSTP, though it was no longer using that argument. The USSF now maintains a position of neutrality on the issue given the conflicting positions of various stakeholders, including the MLSPA.