Christian Pulisic: A Case Study in Solidarity

Earlier today, German soccer publication, Kicker, reported that Tottenham Hotspur has made a $58 million transfer offer for Borussia Dortmund’s 19-year-old winger, Christian Pulisic. As Pulisic is American, this presents an interesting case study in FIFA’s solidarity mechanism. The most pertinent issue is whether Pulisic’s youth club — Harrisburg, Pennsylvania-based, PA Classics — could obtain solidarity from the transfer. To date, this is a feat no US youth club has accomplished.

Background

According to FIFA’s Regulations on the Status and Transfer of Players, when a player is transferred, 5% of the fee must be carved out and paid to his “training clubs.” Any club that registers a player between his 12th and 23rd birthdays qualifies as his “training club.” The obligation to kick solidarity back to these clubs falls on the party paying the transfer fee.

The RSTP provides a detailed formula for calculating how much solidarity each club gets. At the outset, the 5% carve-out is divided between the training clubs according to the time each trained the player. Each year corresponds with a specific percentage of the carve-out. (See Annex 6, Par. 5). For example, registering the player for his age 12 season is worth 5% of the carve-out (or .25% of the total fee). Ages 13, 14 and 15 are each worth 5% as well. So a club that registered a player for all four of those seasons would get 20% of the carve out (or 1% of the total fee). At age 16, each season’s percentage jumps to 10% (.5% of the total fee). FIFA prorates clubs’ percentages on a monthly basis. This means that, if has a player was registered with a club for three months of a given season, the club only gets credit for a quarter of that season, rather than the whole year.

The US Soccer Federation has refused to enforce solidarity. Further, Major League Soccer has refused to participate in the solidarity process. While the legal basis for their stances is questionable, the net effect has been that no US youth club has received a solidarity payment.

The USSF’s refusal to get involved can impact solidarity requests in two ways. The first happens when an MLS team pays a transfer fee for an American player. An example would be Clint Dempsey’s transfer from (oddly enough) Spurs to MLS’ Seattle Sounders. Seattle paid the transfer fee, meaning that it had to carve out 5% for Dempsey’s training clubs. When Seattle did not do this, the Dallas Texans, one of Dempsey’s training clubs, complained. The USSF could have intervened and instructed Seattle to pay the fee. But it did not, which forced the Texans to take their case to FIFA (where, reportedly, it is still pending).

The second scenario arises when MLS transfers a player to a foreign club. An example would be when Seattle transferred DeAndre Yedlin to Spurs (I know, the same teams keep coming up). Spurs wrote one of Yedlin’s training clubs, Crossfire Premier, informing Crossfire that it was entitled to solidarity. But under circumstances that are not completely clear, Yedlin’s entire transfer fee went to Seattle instead. In turn, Seattle refused to give Crossfire its solidarity portion. The USSF did not intervene. So Crossfire appealed to FIFA (reportedly, this case is also still pending).

Solidarity for Pulisic

Currently, Pulisic’s transfer fee is hypothetical. But the reported $58 million offer is close enough to Pulisic’s actual value to serve as a good model for calculating solidarity. So using that number, the 5% carve-out for Pulisic’s transfer would be $2.9 million.

Officially, Pulisic was registered with PA Classics from ages 12 to 16. If these were entire seasons, Classics would be entitled to 30% of the $2.9 million carve-out.

But two factors could whittle down the club’s portion. First, Pulisic signed with Dortmund on February 10, 2015 — less than five months into his age 16 season. So at most, Classics would only get 5/12 of the percentage allocated to that season. If my math is correct, this would drop Classics’ share of the season from 10% to 4.17%, and its total portion of the carve-out from 30% to 24.17%. Second, FIFA has yet to confront an instance where a player spent time at the USSF’s academy in Bradenton, Florida. Until last year, most of the country’s best under-17 players lived and trained at the academy for the entire school year. During that time, some, like Pulisic, were also registered with their original clubs. While, technically, this would not deprive these clubs of solidarity for those years, FIFA is known to favor substance over form. So it is possible FIFA would discount the year-plus Pulisic spent in Bradenton because, in reality, he was not with Classics at the time. If FIFA did this, Classics would probably lose all of Pulisic’s age 15 season and the 5 months from his age 16 season. As such, its portion of the carve-out would drop to 15%.

So taken together, Classics would get between 15 and 24.17% of the $2.9 million carve-out. This would yield a total solidarity payment between $435,000 and $700,930.

Obtaining Solidarity

At the moment, US youth clubs’ pursuit of solidarity, and its sister payment, training compensation, is a battle. The USSF, the MLS Players Union and, possibly, MLS are fighting them hard. For this reason, no one should assume Classics will get solidarity for Pulisic.

That said, Classics have an advantage previous clubs lacked: Pulisic’s case would not involve the USSF or MLS. Rather, the transfer would be between two non-US clubs — in the present hypothetical, Spurs (England) and Dortmund (Germany). Thus, Spurs could extract Classics’ solidarity payment and send it to the club, without communicating with the USSF or MLS. For this reason, it is possible Classics could avoid the headaches previous solidarity claims have generated by simply avoiding the USSF.

In addition, the chances either Spurs or Dortmund would fight Classics are minimal because solidarity is a standard element of an international transfer. That is, unless a dispute arises, clubs set aside the funds as a matter of course. Spurs and Dortmund would be likely to accept this reality in Pulisic’s case. And even if either party did complain, its argument against solidarity would be based on US law, not FIFA statutes. This would make for a tricky claim before FIFA’s Dispute Resolution Chamber.

Bottom Line

On paper, PA Classics has a strong case for solidarity. Still, this issue’s history suggests its road would be tough. So if the club tried to obtain payment, expect legal challenges of some kind and a time-consuming fight.

Random Observations Unleashed

  1. At least one Dortmund fan site believes the Pulisic-to-Spurs rumor is fake news. According to Fear the Wall, the Kicker article relies on a report that cannot be found.
  2. Unlike training compensation, which is a one-time payment, solidarity arises each time a player is transferred for a fee. This means that future transfers can earn training clubs additional payments.
  3. Beyond FIFA rules, clubs can reach private agreements to kick-back portions of future transfer fees. Dortmund has it own experience with this. Two years ago, it acquired winger (Dortmund has a lot of these) Ousmane Dembele from French club, Stade Rennais, for approximately $18 million. The transfer agreement included a “sell-on” clause, which entitled Rennais to a percentage of any future transfer fee Dortmund earned for Dembele. The next season, Dortmund sold Dembele to Barcelona for almost $125 million. Pursuant to the sell-on clause, Rennais got a reported $35–45 million.

Founder of Terry Brennan Law (terrybrennanlawyer.com). Ex-college athlete (well, runner). Here, I write about soccer: law, market and data. Try my website too.