The Regulation on the Status and Transfer of Players issued by FIFA (“FIFA Regulations”) deals with (i) the status of the players, i.e. if they are amateur or professional, and the rules and regulations relating to the same; (ii) their eligibility of players to participate in football competitions (both professional and amateur); and (iii) transfer of players between clubs belonging to different national associations. Articles 20 and 21 of the FIFA Regulations deal with training compensation and solidarity payments respectively.
AIFF Regulations on Status and Transfer of Player
On 8 July, 2020, the All India Football Federation released the amended version of the AIFF Regulations on the Status and Transfer of Players (“AIFF Regulations”), to bring it in line with the latest amendments made to the FIFA Regulations. The AIFF Regulations shall come into force on 1 August, 2020. However, it has been clarified that Article 3.1 (Registration of professional players on Central Registration System) and Article 6 (Obligation of professional player to register on the system) of Annexure 2 and Article 1(i) of Annexure 3 (Registration of an amateur player on the system) shall come into force from 1 January, 2021 only.
The key change brought about by the AIFF Regulations are the introduction of training compensation and solidarity payment mechanism. The subsequent section of this article shall provide an introduction to the processes and procedures that stakeholders need to be aware of, in dealing with transfers which involve training compensation and/or solidarity payment.
Articles 26 and 27 of the AIFF Regulations deal with training compensation and solidarity mechanism respectively. Articles 26 and 27 of the AIFF Regulations are verbatim to Articles 20 and 21 of the FIFA Regulations.
Under the AIFF Regulations, training compensation is paid to a player’s ‘training clubs’ when (a) the player signs his first professional contract; and/or (b) each time a player is transferred from one club to another, up to the player’s 23rdbirthday. On the other hand, solidarity payments are a percentage of transfer fee that is paid to a player’s old club, every time he gets transferred to a new club before the expiry of their professional contract. The player’s old club must be deemed to have contributed to the education and training of a player, to receive a proportion of the transfer fees. It has to be note that training compensation does not apply to women’s football.
The rationale behind payment of training compensation is that most players gain their education and training between the ages of 12 and 23. Further, the new club which signs a player would have invested a significant amount of money to train the player by itself.
The training compensation is paid to the clubs that were involved in training the player up to the age of 21 (unless it can be proved that the training period of the player had ended before he turned 21) either (i) when the player is registered as a professional for the first time; or (ii) a professional’s registration is transferred between 2 clubs in India (either during the term of his contract, or upon expiry of his contract). However, the training compensation will only be paid till the end of the season in which the player’s 23rd birthday falls.
The new club is required to pay the clubs that have contributed to the training and education of the player within 30 days of his registration as a player for the new club on the central registration system maintained by AIFF. This includes uploading proof of such payment. The identification of the beneficiary clubs shall be made on the basis of their registrations appearing on the player passport. In order to encourage the transfer of minors between the ages of 12 and 15, Rule 5(3) of Annexure 4 provides that the training costs shall always be assumed to be that which is incurred by a Category 4 club only.
The factors that are taken into account while determining if the training period of the player had ended before he turned 21 include (a) the level of talent of the player; (b) if the player is a regular on the first team of the club; or (c) the value of the player.
A club need not pay training compensation while registering a player, if the last club that the player was registered with had terminated his contract without just cause; the player is transferred to a Category 4 club (discussed later); or the player loses his professional status on being transferred.
Categories of Training Compensation:
The training compensation is payable on a pro rata basis. This is calculated on the basis of the time spent at each club where the player effectively received training from the season in which he turned 12, to the season in which he turned 23. AIFF has determined the training costs as below:
Clubs participating in the Hero Indian Super League
Clubs participating in the Hero I-League
Clubs participating in the Hero 2nd Division League
All Other Clubs which are participating in Competitions/ Leagues registered on AIFF Competition Management System
AIFF shall publish the list of competitions/leagues in which Category IV clubs take part, and it also retains the right to update the categorization from time to time.
The first time a player signs a professional contract, and is registered on the system, the compensation payable is calculated in the following manner:
Training Cost of new club – X
Number of years in training between the ages of 12 and 21 – n
Training Compensation payable – Xn
However, for every subsequent transfer, the compensation shall be the training cost of the new club multiplied by the years that the player has been trained at the former club.
In the event, a professional is transferred from one club to another, during the term of his contract, i.e., when a transfer fee is involved, 5% of such transfer fee (excluding training compensation payable) shall be distributed to the clubs that have been involved in the education and training of the player by the new club.
Similar to training compensation, solidarity payments shall be made within 30 days of the registration of the player on the AIFF system.
The introduction of training compensation and solidarity mechanism is definitely a step in the right direction. This mechanism also incentivizes grassroots clubs and other football clubs that do not operate at the top tier to participate in identifying and developing football talent. The training compensation and the solidarity contribution that these clubs will receive upon the relevant transfers happening, will also be a lasting contribution that the player will make for the sustenance and development of the smaller clubs that they come from.
With the mechanism commencing with the 2019/20 season as a base, there are going to be a lot of questions that arise including those that have been answered by international regulatory/judicial bodies. We will follow up with some of the landmark judgments on the training compensation and solidarity mechanism in Part 2 of this post.
 Bradford City Football Club v. Falkirk Football Club available at https://jurisprudence.tas-cas.org/Shared%20Documents/3303.pdf