Fifa ruling shakes up compensation, development structures in US player market

How American youth soccer players are developed for professional play could be significantly altered following a ruling earlier this year regarding solidarity payments by Fifa’s Dispute Resolution Committee.

The Fifa panel, hearing a case from Seattle-area youth club Crossfire Premier regarding current Newcastle United star DeAndre Yedlin (pictured), ruled in June that Major League Soccer was not obligated to pay Crossfire Premier from fees stemming from Yedlin’s 2014 transfer from MLS’ Seattle Sounders to the Premier League’s Tottenham United.

The transfer could have netted Crossfire up to $100,000, but MLS instead collected the entire transfer fee. As a result, the Fifa ruling was originally thought to be a defeat for proponents of solidarity payments and training compensation in American soccer. But the decision could also ultimately lead toward an entirely new structure for youth talent development in which top European professional clubs and American youth clubs work more directly with each other.

“All US youth clubs, MLS or not, are incentivized to invest money in players they feel can make it to the professional levels, and to send those players to higher levels of soccer as soon as possible so that they can get on the radar of the larger clubs that will increase the value of the player,” said Lance Reich, a Seattle-based intellectual property attorney representing Crossfire.

Legal complexities

Solidarity payments and training compensation for players aged between 12 and 23 are Fifa-mandated elements under Statutes 19 and 20 of its bylaws of the game, and are in place to incentivize youth academies to develop professional players. The rules were implemented in 2003, and currently all of the major pro teams and leagues in Europe participate in this system.

The mandate, however, has never been enforced by US Soccer, which along with MLS has historically argued the solidarity payments and training compensation violate US child labor laws and antitrust regulations.

In April, after years of rejecting the structure, MLS announced it would be seek such payments for players developed in its team academies. Despite embracing the concept of player compensation, MLS will not play solidarity fees or training compensation to domestic US clubs that develop players later passing through MLS clubs or academies on their way to European clubs.

Such was the flashpoint with the Yedlin case, which centered in part on a debate of how much time he actually spent with the independent academy Crossfire before moving on to the Sounders’ academy and the Sounders themselves.

London-based Tottenham Hotspur argued they could not determine how much time Yedlin spent with Crossfire due to poor record-keepings. Spurs also claimed that as a pay-to-play academy, Crossfire was not entitled to compensation. But Crossfire was able to prove Yedlin spent a substantial period with them before moving on to the Sounders’ academy in 2010.

The Fifa panel rejected the Tottenham Hotspur argument regarding Crossfire’s business model. But the panel ultimately ruled that Spurs’ reported $2.96 million payment to MLS was sufficient and did not warrant additional payments to Crossfire.

“The Chamber was of the opinion that the respondent [Tottenham Hotspur] relied on the representations of the above-mentioned bodies [US Soccer and MLS] and could assume therefore, in good faith, that it would not be obliged to pay any amount on top of the full transfer fee,” the ruling read in part.

Seismic impact

The ruling now leaves people questioning what will happen now regarding the development of American soccer talent.

European clubs have shown increasing interest in the US player market, and the number of players eligible for the US men’s national team moving to European clubs as teenagers has also increased in recent years.

These developments have paralleled the rise of international friendlies and competitions such as the International Champions Cup being held on US soil. The ICC has weakened MLS’ grip on the domestic market for high-level soccer, while the same clubs participating regularly in the annual event have begun to take the US player market more seriously.

The ruling could also pave the way for European clubs working around MLS entirely in their US scouting, and working directly with American independent youth clubs, including the development of more formal partnerships between those youth clubs and the European giants of the sport.

Reich, while not prevailing in obtaining fees for his client Crossfire, still saw significant benefit in Fifa rejecting the argument of a pay-to-play academy business model being a disqualifying factor for gaining future payments. He said he was also encouraged by MLS team academies looking for compensation when players go to Europe and shun a MLS contract.

“Given the [training compensation/solidarity fee] model is successful all over the world, there is no reason to think it wouldn’t be successful here as well,” Reich says.

Crossfire’s persistence in forcing the issue and elevating American discussion around the solidarity fee issue was also noticed around the sport, and could help ensure broader Fifa bylaw compliance by the US, which has historically picked and chosen which Fifa mandates to follow or ignore.

“I truly believe that this is the first step toward Fifa bylaw compliance for soccer in the United States,” says Chris Kessell, president of a West Virginia-based youth soccer association and a highly vocal advocate for promotion and relegation in US soccer who earlier this year delivered a letter on the topic to Fifa signed by more than 300 US clubs. “Thankfully, Crossfire saw this through to the end for the good of soccer in this country.”

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