FIFA’s solidarity mechanism and the impact on South American football

The newly released European Club Association (ECA) study on the transfer system¹ suggests that the solidarity mechanism, a tool that helps strengthen the economic redistributive power of the system, is not working properly.

The conclusions reached in the report are relevant for South America and Argentina in particular, because the said contribution represents an important source of income for our clubs. South America is the region that receives the biggest share of the solidarity contribution paid by European clubs (94%)².

Briefly, for those not familiar with the mechanism, the solidarity contribution set by FIFA in its regulations (article 20 and Annex 5 of the Regulation on the Status and Transfer of Players (RSTP) rewards the clubs involved in a player´s training and education between the seasons of his 12th and 23rd birthdays with 5% (distributed on a pro rata basis) of any compensation paid by the new club to his former club in case such player is transferred internationally (from one national Association to another) during the course of his contract.

The ECA report shows that, while the total solidarity contribution payments for the seasons 2011/12 and 2012/13 amounted to $258m only $57.9m was actually paid out. So, instead of the total 5% provided for in the regulations, clubs only paid an equivalent of 1.15% of the total transfer expenditure incurred over the period. The study further analyzes the effects a potential increase in the mechanism up to 8% would have.

“The analysis has highlighted the existence of flaws in both the monitoring and collection mechanisms of the contribution” the ECA states. Therefore the conclusion of the study is that “Enhancing the effectiveness of the current system is of greater importance than increasing the payment rate as any such increase would not only penalize those who are, and continue to be compliant with the regulations, but could also further deter those who do not contribute as required.”

In my opinion, the flaws of the system are only part of the explanation, and there are other reasons for such a low collection percentage.