The solidarity contribution in unilateral contractual terminations
São Paulo, Brazil, 11 april 2018.
Last summer, Neymar's transfer to Paris Saint-Germain (PSG) was covered even by media outlets that traditionally do not focus on sports news.
The unprecedented amount paid by PSG and the way Neymar left FC Barcelona contributed to the great repercussion of his transfer, not to mention that he is one of the three best football players in the world and will certainly help French League to reach a higher level.
In terms of business, as soon as the transfer was completed many experts began to calculate the return that Neymar’s brand and performance would bring to PSG and French football, and how the club would benefit from his presence to improve the contracts with its stakeholders.
From a legal perspective, however, the non-consensual transfer provoked numerous debates about its disciplinary consequences and whether or not the solidarity contribution would be due.
In this article, therefore, we analyze Neymar’s transfer under the aspects of FC Barcelona’s consent and the application of FIFA solidarity mechanism.
According to article 21 of FIFA Regulations on the Status and Transfer of the Players (RSTP):
“If a professional is transferred before the expiry of his contract, any club that has contributed to his education and training shall receive a proportion of the compensation paid to his former club (solidarity contribution). The provisions concerning solidarity contributions are set out in Annexe 5 of these regulations”.
The maximum participation due as solidarity contribution is 5%, calculated pro rataand distributed to the clubs that registered the player between the seasons of their 12th and 23rd birthdays.
The Annex 5 of the RSTP also sets that the player’s new club shall calculate and distribute the solidarity contributions to the training clubs in up to 30 days from the transfer date, although some agreements transfer such responsibility to the former club.
Article 21 of the RSTP assigns to the clubs that contributed for the education and training of the player "a proportion of the compensation paid to his former club".
The proportion referred to in the Article 21 of the RSTP is regulated in the Annex 5:
“Annex 5 - Article 1 - If a professional moves during the course of a contract, 5% of any compensation, not including training compensationpaid to his former club, shall be deducted from the total amount of this compensationand distributed by the new club as a solidarity contribution to the club(s) involved in his training and education over the years (…).”
For better comprehension, we divide below the article’s wording:
a) If a professional moves during the course of a contract
The payment of solidarity contribution obviously requires the early termination of the contract between the player and his current club, since only the breach of a contract generates the obligation to pay compensation.
Once RSTP is a principiological statute, having as its main ground the principle of pacta sunt servanda, the first part of Article 1 reflects FIFA’s intention when created the mechanism, i.e., the solidarity contribution is due when the player's movement between clubs produces a payment obligation.
b) any compensation, not including training compensation
It seems very clear that FIFA did not want to restrict the calculation basis of the solidarity contribution to the transfer fee, i.e., the amount of money mutually negotiated and agreed between two clubs as the price of the player’s transfer.
Besides using the expression "any compensation", the wording of Article 1 only rules out the training compensation from the calculation basis of the solidarity contribution.
(c) shall be deducted from the total amount of this compensation
In the final part of the article, it is set forth that the solidarity contribution shall be deducted from the amount of the compensation paid by the new club, which means that in the absence of such deduction - given the way of termination or the lack of regulation in the transfer contract - the new club shall pay the solidarity contribution in addition to the compensation paid to the former club.
That is exactly what the Panel of the case CAS 2015/A/4137 Olympique Lyonnais v. AS Roma, award of 16 November 2015, decided.
Among other understandings, the arbitrators emphasized that FIFA is keen with its rules to make sure that no internal arrangement between transferring club and new club can anyhow complicate the legal position of such other clubs that are entitled to solidarity contribution.
Based on the foregoing, the purposes of the solidarity mechanism let us to conclude that the concept of compensation includes any kind of payment of a sum of money and other forms of valuable consideration, such as the rights over other players as decided in the caseCAS 2012/A/2929 Skeid Fotball v. Toulouse FC, award of 11 April 2013:
“The purpose of the solidarity mechanism is to reward and encourage clubs that invest in the training and education of young players. Therefore, the rules concerning the solidarity mechanism must be interpreted in order to foster their purpose and to avoid that they are circumvented”.
“Any circumvention of the solidarity rules, intended to reduce or avoid the payment of compensation, should be dissuaded, since it contradicts the aim to promote more and better training of young football players. The requirements set out in the FIFA rules on solidarity, therefore, must be interpreted in ways that give effect to the solidarity mechanism and prevent any circumvention thereof”.
As for the disciplinary matter, we are of the opinion that when there is an indemnification clause set forth in the player’s agreement, the former club, by means of such penalty, has already given its prior consent to the player’s unilateral breach and transfer to another club, thus no disciplinary sanction must be applied on him nor on his new club.