FIFA CLEARING HOUSE- What you need to Know
By: Eddie Iseri Ogbemudia
Managing Partner- Myron Topclass Sports Outfits
Contact: email@example.com Twitter: @donfiazo
On 16 November 2022 FIFA officially launch the FIFA Clearing House to go live, effective all transfer from that date that triggers training rewards will be made through the FIFA Clearing House. Following the approval of the regulations by the FIFA Council in October 2022, the FIFA Clearing House began its operations on 16 November, with an initial focus on the centralisation, processing and automation of payments between clubs relating to training rewards (training compensation and solidarity contribution), as well as on the promotion of financial transparency and integrity within the international transfer system. All training rewards triggered by transfers or first professional registrations that occur from the launch date onwards will be automatically calculated by FIFA systems and then processed by the FIFA Clearing House, an independent entity established in Paris which has been granted a licence to operate as a payment institution by the French Prudential Supervision and Resolution Authority
Excerpts from the FIFA.com states
The FIFA Clearing House (FCH) is an integral part of FIFA’s ongoing commitment to introducing fundamental changes to the football transfer system. The idea of establishing a clearing house came from the FIFA Football Stakeholders Committee and was then endorsed by the FIFA Council back in October 2018, as part of the first reform package of the transfer system. There is still a significant imbalance in world football and insufficient rewards for training clubs. To help remedy this, the FCH will ensure that training rewards (training compensation and solidarity contribution) are paid to the clubs that deserve them. It is estimated that close to USD 400 million will be distributed each year to training clubs, which currently only receive approximately USD 70-80 million per year.
What are training rewards?
Training rewards: the mechanisms which compensate training clubs for their role in the training and education of young players (Basically according to FIFA, they are Training Compensation and Solidarity Mechanism).
In line with the FIFA Regulations on the Status and Transfer of Players (RSTP)
Annexe 4 Training Compensation: A player’s training and education takes place between the ages of 12 and 23. Training compensation shall be payable, as a general rule, up to the age of 23 for training incurred up to the age of 21, unless it is evident that a player has already terminated his training period before the age of 21. In the latter case, training compensation shall be payable until the end of the calendar year in which the player reaches the age of 23, but the calculation of the amount payable shall be based on the years between the age of 12 and the age when it is established that the player actually completed his training
Article 20: Training compensation Training compensation shall be paid to a player’s training club(s): (1) when a player is registered for the first time as a professional, and (2) each time a professional is transferred until the end of the calendar year of his 23rd birthday. The obligation to pay training compensation arises whether the transfer takes place during or at the end of the player’s contract.
Annexe 5: Solidarity contribution – If a professional moves (is transferred) during the course of a contract, 5% of any compensation paid within the scope of this transfer, not including training compensation paid to his former club, shall be deducted from the total amount of this compensation and distributed by the new club as a solidarity contribution to the club(s) involved in his training and education over the years. This solidarity contribution reflects the number of years (calculated pro rata if less than one year) he was registered with the relevant club(s) between the calendar years of his 12th and 23rd birthday
Article 21: Solidarity mechanism 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).
It is expected that training clubs demand or lodge claims for these rewards within 2years and 30 days of registration/due payment of the associated transfer of the professional player from the new club, after the deadline the claim becomes statute barred and the training clubs forfeits the reward.
Why do we need a FIFA Clearing House?
To cover the current gap between training rewards due and actually paid (only one fifth of those). With the FCH, FIFA will shift from a claims system to automatic entitlement.
It is interesting to note that in most instances some of these training clubs are not aware when their former players are transferred and the financial terms of such transfer to lodge claim for the rewards due to them.
FIFA Clearing House process:
The FIFA Clearing House will be relying on existing FIFA Registration platform FIFA Connect and FIFA TMS to automate Training reward triggers.
The FIFA Connect platform is an electronic registration platform provided by FIFA for free to all Member Association like NFF to be used to register all football players from age 12
The FIFA Transfer Matching System TMS is used to conclude all international and domestic transfers of players.
Using both platform assigned unique identifiers (FIFA ID) to a footballer which is integrated in both platform for ease of identification of each player.
1- Training rewards triggers
International and Domestic transfers, as well as first professional registrations are declared by MAs and processed by FIFA for identification of potential entitlement due to the training clubs using the Electronic player Passport.
2- Electronic player passport (EPP)
Electronic Player Passport (EPP): an electronic document containing consolidated registration information of a player throughout their career, including the relevant member association, their status (amateur or professional), the type of registration (permanent or loan), and the club(s) (including training category) with which they have been registered since the calendar year of their 12th birthday stored in FIFA TMS.
An EPP is generated after identification of a training rewards trigger: (i) international transfer, (ii) domestic transfer with international dimension, or (iii) first professional registration. TMS will query all MA’s domestic systems to feed the EPP with registration information for a relevant FIFA ID of a player. The EPP provides a consolidated view of a player’s career, creating transparency and facilitating the calculation of training rewards.
According to FIFA.com
There are processes for generating the EPP
i – Provisional EPP
EPP generated automatically from training reward triggers
Inspection of EPP by MAs and clubs for ten days. MAs may request to be added to the EPP review process
Assessment by FIFA and release for review (after inspection)
A club can only be part of this review process if it’s on the FIFA TMS platform which the FCH will use for the assessment or there are sufficient information of the player being registered with the club at some point for the MAs to contact same for review (Don’t take for granted record keeping for all your players at any time, these evidence can come handy in this process)
ii – Review by MAs and clubs
Review process opened by FIFA for ten days
MAs review and request amendments to registration information
New, former and training clubs provide relevant documentation
iii – Validation by FIFA
Evaluation of requests and determination by the FIFA general secretariat
Possible request by FIFA to clubs and MAs on additional information/ documentation
Referral of complex cases to DRC for decision
iv – Final EPP and allocation statement
Final EPP and allocation statement communicated to participating parties
Training rewards claim process v. electronic player passport (EPP) process.
Claims of training rewards (Old Process)
Training club(s) become aware of the trigger of training rewards when they monitor former players transfer.
Training club(s) lodge(s) claim in TMS within two years and 30 days of registration/due payment(s)
Payment of solidarity contribution triggered from registration with the new club and instalment dates
Claim managed by the FIFA general secretariat
Proposal by the FIFA general secretariat or decision by the DRC
Electronic player passport process (New Process)
Training rewards trigger is automatically identified by FIFA (TMS/domestic electronic systems)
Creation of EPP and review process executed immediately after training rewards trigger is declared – no claim needed
Payments of solidarity contribution triggered from upload of proof of payment of transfer compensation
EPP review process managed by the FIFA general secretariat
Determination by FIFA general secretariat, decision by the DRC in cases of factual or legal complexity
Payment through the FIFA Clearing House
3- Distribution of training rewards through FIFA Clearing House
The FIFA Clearing House entity will conduct a compliance assessment on all parties and, once accepted, it will process the payments from the new club to the training clubs.
1) Communication of allocation statement
The allocation statement contains all the training clubs, their contact and banking information and the amounts of training rewards to be paid. This document is generated automatically based on the EPP for each payment of training rewards. For training compensation, the amounts will be calculated in EUR or USD. For solidarity contribution, the amounts will be in EUR, USD and GBP; all other currencies will be converted to EUR.
2) Compliance assessment of all parties involved
This period it is expected that training clubs will provide their account details, its very important to state that FIFA Clearing House will only make payment to account details bearing the name of the training clubs only and not proxy (Agencies, Law firms etc). So it is very important for clubs to perfect their formal incorporation document and open account to participate fully.
3) New club payment to the FIFA Clearing House
4) Training club receives payment from the FIFA Clearing House without any interface with the new club.
5) Reporting to FIFA: general data and statistics; compliance and payment failures
All the process until the payment is made will be done in less than 120days