Major League Soccer clubs will be compensated for the costs of developing players from its youth academies who opt to sign their first professional contract with foreign clubs after the league announced on Thursday it will begin complying with FIFA regulations relating to training compensation and solidarity payments.
The decision means MLS clubs will now receive compensation for players they develop, which could reach well into six figures. They will also receive a cut of transfer fees when those players are transferred to clubs in a different country. Conversely, MLS clubs will have to pay these fees to foreign clubs when it pays a transfer fee for incoming players.
"We have been making increasing investments in youth development, and that investment has accelerated over the past few years," said MLS executive vice-president of player relations and competition Todd Durbin of the announcement. "We intend on continuing to make that investment and we want to grow that investment. But in the event that a player that we developed decides to sign overseas, we believe that we should be able to recoup the value of that investment."
Solidarity payments are paid 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, according to world soccer's governing body.
Five percent of the transfer fee is paid to the youth clubs responsible for the player's development between the ages of 12 and 23. The rules also stipulate that when a player signs their first professional contract with a club in a foreign country, or is transferred to a club in a different association, the professional club is obligated to pay training 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.
Not everyone is happy with the move by MLS, however. The MLS Players Association, as well as the players' agents, view training compensation and solidarity payments as a glorified tax whose amounts have the potential to kill deals.
In a statement provided to ESPN FC, the MLS Players Association said the league's announcement was "a step backward for the development of soccer in the United States and Canada" and called it an effort by MLS to inhibit player choice.
"Despite claims to the contrary, this move is not about improving youth development," the MLSPA said. "Rather, it is simply about trying to force players to sign with MLS by limiting opportunities abroad."
The MLSPA added: "The fact that training compensation and solidarity payments are paid elsewhere in the world under applicable FIFA regulations is an indefensible justification for MLS's change in position on these issues. The league routinely ignores regulations that protect players under contract with MLS -- like those requiring guaranteed contracts, prohibiting unilateral options and limiting the length of contracts -- yet is now attempting to rely upon these same regulations to limit opportunities for players in youth academies.
"We will review these changes, including the Consent Decree entered into by the U.S. Federation on this subject, and will explore all of our options with other stakeholders."
The United States Soccer Federation (USSF) had forbidden the implementation of training compensation and solidarity payments, which FIFA introduced within its Regulations on the Status and Transfer of Players (RSTP) in the aftermath of the 1995 Bosman decision that granted free agency to players at the end of their contracts.
Among their reasons were fears that RSTP violated child labor laws or would result in litigation on anti-trust grounds by various stakeholders, including the MLS Players Association. The USSF had also in the past contended that a consent decree contained in the court 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.
The USSF contends that at a meeting of stakeholders in 2015, opposing viewpoints among youth clubs, professional leagues, and players' unions left the organization caught in the middle.
"Since that time, U.S. Soccer has maintained a position of neutrality on the issue of training compensation and solidarity payments and, accordingly, will not be a party to enforcement of those regulations," a USSF spokesperson told ESPN FC.
The spokesperson added, "We will, however, continue to pass through any claims made by clubs as required by FIFA regulations. This position remains the same regardless of the affiliation of the club making the claim."
The decision is a philosophical shift for MLS and could amount to a considerable financial benefit for its clubs. MLS has never paid or received training compensation and solidarity payments. But as the league's clubs began developing their own youth academies -- investing tens of millions of dollars annually -- it ran into situations where academy products were signing their first professional contracts with foreign clubs. Elsewhere in the world, the academy would have been compensated, but because RSTP was not adhered to in the U.S., the MLS clubs received nothing in return.
One example came in 2016 when current U.S. international Weston McKennie spurned his youth club, FC Dallas, to sign with Bundesliga side Schalke 04. The money invested in McKennie's development was never recovered and the deal removed some incentives for Dallas to make investments in youth development, leaving some clubs questioning MLS's overall commitment to youth development.
Deals like McKennie's will not be reexamined by MLS, but if McKennie is transferred to a team outside of Germany, Dallas -- and not MLS -- would be eligible to receive the entire solidarity payment as a return on player development.
But while MLS is set move forward in the area of training compensation and solidarity payments, the future is less certain for U.S. youth clubs that operate outside of MLS.
In recent years, some clubs had taken the matter of solidarity payments to FIFA's Dispute Resolution Chamber (DRC). A case involving the 2014 transfer of U.S. international DeAndre Yedlin from the Seattle Sounders to Tottenham Hotspur sparked a filing from one of Yedlin's youth clubs, Crossfire Premier. A decision on the case is expected in the coming days.
Two other cases -- one filed by the Dallas Texans regarding Clint Dempsey's 2013 transfer from Tottenham to the Seattle Sounders, and another from Sockers FC Chicago regarding Michael Bradley's transfer from Roma to Toronto FC in 2014 -- were denied by FIFA's DRC last month, for reasons that weren't made public.