Training compensation regime in South African football: time for clear and effective regulations that properly incentivise and compensate training clubs.

Nomfundo Khumalo and Farai Razano

Introduction

Whenever there is a discussion on the success (or failure) of South African national football teams, the issue of the need for proper youth development structures and programmes always takes centre stage. It is often argued that South African football lacks youth training and development structures necessary for the systematic flow through of football players from youth teams into senior teams. This is a persistent issue that one would expect the football authorities or regulators, primarily the South African Football Association (“SAFA”), to pay attention to and ensure that youth development is encouraged through a training and development compensation regime that incentivises and properly compensates clubs and academies. This article considers the training compensation regime in South African football. It will be argued that SAFA does not have a valid and proper training compensation regime, and there is need for the adoption and implementation of a clear and comprehensive training compensation regime that will ensure that clubs and academies are easily and properly are compensated for their youth training and development efforts.

FIFA training compensation regime and enabling provisions

Training compensation in football is regulated by the Federation of International Football Associations (“FIFA”) Regulations on the Status and Transfer of Players (“FIFA RSTP”). The FIFA RSTP lays down global and binding rules concerning the status of players, their eligibility to participate in organised football, and their transfer between clubs belonging to different associations. Additionally, the FIFA RSTP provides for the regulation of transfers of players between clubs belonging to the same association in terms specific regulations issued by the association concerned which must be approved by FIFA. The regulations must prescribe rules for the settlement of disputes between clubs and players, in compliance with the principles stipulated in the FIFA RSTP and must provide for a system to reward clubs affiliated to the relevant association investing in the training and education of young players. The purpose of the concept of training compensation is to encourage the training of young and upcoming footballers whilst reasonably rewarding the training clubs that invest in the training of young footballers.

A comprehensive discussion or analysis of the FIFA RSTP training compensation regime is beyond the scope of this article. However, in summary, training compensation is provided for in article 20 of the FIFA RSTP and details of the training compensation regime are set out in Annexe 4 to the FIFA RSTP. The FIFA RSTP training compensation regime entails the following:

• training compensation is payable (i) when a player is registered for the first time as professional; or (ii) when a professional player is transferred between clubs of two different national associations, before the end of the season of the player’s 23^rd birthday.

• the FIFA RSTP categorises clubs in accordance with the club’s financial investment in training the player from category 1 to 4. Category 1 is the highest and category 4 is the lowest. Every year FIFA publishes the categorisation of clubs and the training costs for each category for international transfers. The current categorisation was published on 1 July 2021 in terms of FIFA Circular 1763.

• The amount of  training compensation is calculated in terms of the published training costs referred to Annexe 4 of the FIFA RSTP multiplied by the number of years that a player spent with the training club(s). Where a player has been registered as a professional for the first time, the training costs are calculated by multiplying the number of seasons (from the age of 12 years) that the player spent at each qualifying club by the applicable training costs in terms of the published training costs. However, in terms of article 5(3) of Annexe 4 to the FIFA RSTP, to "ensure that training compensation for very young players is not set at unreasonably high levels, the training costs for players for the calendar years of their 12th to 15th birthdays (i.e. four calendar years) shall be based on the training and education costs of category 4 clubs." For subsequent international transfers that occur before the end of the season of the player's 23rd birthday, the number of years the player spent with the former club is multiplied by the training costs of the new club.

• There are separate (exception) rules regarding the calculation of training compensation for transfers of players between associations in the European Union (EU) / European Economic Area (EEA). These are beyond the scope of this article and will not be discussed here.

• The FIFA RSTP prescribes that each member association must divide clubs into four categories in accordance with the clubs’ financial investment in training players and must keep the data regarding the training categories of their clubs inserted in TMS up to date at all times.

Training compensation regime in South African football

SAFA is required (in terms of the FIFA RSTP) to have valid and clear regulations on the status and transfer of players which deals with several matters including a system to reward clubs for investing in the training and education of young players (training compensation regime).

Article 5.1 of the SAFA Statutes gives effect to article 1(2) of the FIFA RSTP. It empowers the SAFA NEC to regulate the status and transfer of players “… in accordance with the current FIFA Regulations on the Status and Transfer of Players.” The SAFA NEC purportedly issued the SAFA Regulations on the Status and Transfer of Players (“SAFA RSTP”) pursuant to the SAFA Constitution in 2012. The SAFA RSTP has not been updated for many years despite the provisions of article 5.1 of the SAFA Statutes which prescribes that the SAFA NEC must regulate the status and transfer of players in accordance with the current FIFA RSTP. 

The SAFA Regulations on the Status and Transfer of Players

It is not clear when the SAFA RSTP was approved the SAFA NEC and came into force. there are suggestions that the SAFA RSTP was approved and came to force sometime in 2012, alternatively in May 2016. However, article 29(2) of the SAFA RSTP provides that the SAFA RSTP was “… approved by the SAFA Executive Committee on and came into force on. (sic) Article 1 paragraph 3a); Article 5 paragraph 3 and 4; article 1 paragraph 4 d) and e); annexure 1 article 3 paragraph 2; paragraph 2 were supplemented or amended by the FIFA executive committee on 29 October 2007. These amendments come into force on 1 January 2008.”

It is also not clear when the SAFA RSTP was approved by FIFA in terms of article 1(3) of the FIFA RSTP. It is doubtful that the SAFA RSTP (that was approved on an unspecified dated as shown above) was approved by FIFA and would have been “supplemented or amended by the FIFA executive committee on 29 October 2007” and the amendments came “into force on 1 January 2008.”

The SAFA RSTP is largely a replica of the FIFA RSTP with minor amendments, for example, the word “FIFA” was substituted with “SAFA”. Like article 20 of the FIFA RSTP, article 20 of the SAFA RSTP introduces training compensation in terms that are identical to the FIFA RSTP and the details of the SAFA training compensation regime are also set out in Annexure 4 to the SAFA RSTP.  

The validity and enforceability of the SAFA RSTP

The SAFA RSTP that is purported to be currently in force is in our view neither valid nor enforceable for the following reasons:

• As mentioned above, the SAFA RSTP is largely an imitation of the FIFA RSTP with minor amendments. Most of the substantive matters or provisions were not altered, rendering the SAFA RSTP full of provisions that are not clear, do not make sense and makes application very difficult  - if not impossible. This in our view renders the SAFA RSTP, particularly the training compensation regime, void for vagueness.

• The date on which the SAFA RSTP was approved by the SAFA NEC is not clear. Article 29(2) of the SAFA RSTP suggests that the SAFA RSTP (implemented in 2012 or 2016) was supplemented and amended by FIFA (not by SAFA) a few years before the SAFA RSTP was approved by the SAFA NEC and came into force. Given the obvious errors and provisions of the SAFA RSTP  that purport to regulate international matters such as transfers of players belonging to different associations and eligibility of players to play for national teams, it is doubtful that FIFA approved the SAFA RSTP in its current form.

• There is repeated reference to “different associations” in the SAFA RSTP. There was an attempt to define association in the SAFA RSTP. However, the definition of association in the SAFA RSTP is at odds with the SAFA Statutes which defined "member" (not association) as "a Regional Member, the Special Member or Associate Member." Reference to movement of players between clubs belonging to “different associations” does not make sense because none of the clubs in South Africa belong to different associations. This is more so when one considers Annexure 1 of the SAFA RSTP which deals with the release of players to association teams (national teams) of Annexure 2 which deals with eligibility to play for association teams.

Categorisation of clubs and training costs

Even if the SAFA RSTP were held to be valid, SAFA has not published the categorisation of clubs as prescribed in article 4 of Annexure 4 to the SAFA RSTP for many years and currently there is no  table of training costs payable to clubs that have trained players. This is a failure by SAFA to comply with its obligations in terms of the FIFA RSTP. This also renders Annexure 4 to the SAFA RSTP unenforceable and training compensation regime effectively non-existent in South African football.

The absence of the categorisation of clubs and schedule of the training costs, makes it difficult for clubs to calculate the training compensation due to, or payable by, them. South African clubs that may be entitled to training compensation are forced to follow a litigious, rather than an administrative process – at great cost and time – to recover training compensation from other South African clubs. In some cases, clubs claim (or offer) unrealistic amounts as training compensation resulting in long and costly litigation.

The SAFA Dispute Resolution Committee (or Chamber)

Where there are disputes on the amount payable, article 5 of Annexure 4 to the SAFA RSTP appears to provide a mechanism to resolve such disputes. It provides, inter alia, that “The Dispute Resolution Chamber may review disputes concerning the amount of training compensation payable and shall have discretion to adjust this amount if it is clearly disproportionate to the case under review.” (emphasis added)

Article 5 of Annexure 4 must be read with article 22 of the SAFA RSTP which provides that “… SAFA is competent to hear…(d) Disputes relating to training compensation (Article 20) and the solidarity mechanism (Article 21) between clubs belonging to different associations…(f) Disputes between clubs belongings (sic) to different associations that do not fall within the cases provided for in a, d and e.” (emphasis added)

Article 24 of the SAFA RSTP deals with the composition of the SAFA DRC and its powers. It provides:

“Article 24: Dispute Resolution Committee

 

1.  The DRC shall adjudicate on any of the cases described under article 22(a), (b), (d) and (e) with the exception of disputes concerning the issue of an TC (sic).

 

2.  The DRC shall adjudicate in the presence of at least three members, including the chairman or the deputy chairman, unless the case is of a nature that may be settled by a DRC Judge. The members of the DRC shall designated a DRC Judge for the clubs and one for the players from among its members. The DRC Judge may adjudicate in the following cases:

 

    (i)    all disputes up to litigious value of

   (ii)   disputes relating to the calculation of training compensation;

  (iii)   disputes relating to the calculation of solidarity contributions,

The DRC judge s (sic) obliged to refer cases concerning fundamental issues to the chamber. The chamber shall consist of equal numbers of clubs and players’ representatives, except in those cases that may be settled by a DRC Judge. Each party shall be heard once during the proceeding. Decisions reached by the Dispute Resolution Committee. or the DRC Judge may be appealed before the Court of Arbitration for Sport (CAS).” (emphasis added)

Article 25 of the SAFA RSTP provides for procedural guidelines for the tribunals contemplated in the SAFA RSTP. Article 25(7) states that “The detailed procedure for the resolution of disputes arising from the application of these regulations shall be further outlined in the FIFA general procedural rules.”

Previously, the SAFA Players’ Status Committee (“SAFA PSC”) and/or the SAFA Dispute Resolution Committee have awarded certain amounts at their discretion as training compensation, despite SAFA not having a categorisation of clubs and a schedule of training costs as prescribed in the SAFA RSTP. This was a usurpation of the powers of the SAFA NEC by the SAFA DRC or SAFA PSC. In terms of article 5 of the SAFA Statutes, it is the SAFA NEC that is empowered to regulate (including categorising clubs and setting the training costs) not the SAFA DRC. Moreover, matters not provided for (including the categorisation of clubs and the training costs) shall be decided by the SAFA NEC, not the SAFA DRC or SAFA PSC as they purported to do in the previous cases. 

However, recently the competence (jurisdiction and composition) of the SAFA DRC was challenged. The bases of the challenges were that the SAFA DRC is either a dispute resolution committee constituted in terms of article 57 of the SAFA Statutes or a dispute resolution chamber constituted in terms of article 24(2) of the SAFA RSTP. The powers of the SAFA DRC constituted in terms of article 57 of the SAFA Statutes do not include dealing with training compensation claims. On the other hand, the powers of the SAFA DRC in terms of the SAFA RSTP are, inter alia, to determine training compensation disputes between clubs belonging to different associations. Additionally, the SAFA DRC does not comply with article 24(2) which requires the SAFA DRC to comprise of members chosen by clubs and members chosen by players, and it does not comply with the FIFA National Dispute Resolution Chambers (Standard Regulations) and principles such as parity and equal representation set out in FIFA Circular 1010. Thus, the current SAFA DRC cannot deal with training compensation disputes between South African clubs.

The SAFA DRC has now acknowledged that it is not properly constituted in terms of the SAFA RSTP and cannot not deal will training compensation claims. The SAFA DRC indicated that SAFA is, or has been, working on amendments to the SAFA Statutes and a new SAFA RSTP which will address the challenges to the SAFA DRC’s competence to deal with training compensation claims. It is not clear how that new SAFA RSTP has been compiled and whether there has been any consultation with the relevant stakeholders (all members of SAFA, football clubs, experts in youth development, economists, players’ unions among others) for calculation of reasonable and sustainable training costs in terms of the training compensation schedule of training costs. Consultation is important in the circumstances considering that SAFA exercises public power when it regulates football in South Africa as held by the court (Unterhalter J) in the matter Ndoro and another v South African Football Association and others.

Concluding remarks

Youth development is pivotal to the success of South African football. Clubs that are involved in the training and developing young players must be properly or adequately compensated. We submit that the current SAFA RSTP is neither valid nor enforceable. To the extent that it is valid, the SAFA RSTP does not properly address the issue of training compensation in South African football. It is replete with errors and provisions that are not clear. This makes it difficult (if not impossible) for those affected by the SAFA RSTP to understand the nature and extent of their training and development rights and obligations. This state of affairs is not desirable. The training costs  must be clearly set out upfront so that all clubs know the training costs they are entitled to and their liability in terms of the training and development compensation regime. Regulators cannot simply make up rules or amounts as they go as the SAFA DRC and/or SAFA PSC have done in the past. Rules (and training costs) must be clear, understood by all affected by the rules and must not be a result of some obscure accretion. As succinctly put by the Court of Arbitration for Sport (CAS) in the matter United States Olympic Committee (USOC) v International Olympic Committee (IOC) & International Association of Athletics Federation (IAAF), “… clarity and predictability are required so that the entire sport community are informed of the normative system in which they live, work and compete, which requires at the very least that they be able to understand the meaning of rules and the circumstances in which those rules apply.” Moreover, as emphasised by the CAS in the matter USA Shooting & Q / Union Internationale de Tir (UIT), participants in sport “… should not be confronted with a thicket of mutually qualifying or even contradictory rules that can be understood only on the basis of the de facto practice over the course of many years of a small group of insiders.”

Therefore, there is need for a comprehensive and clear training compensation regime in South African football that is accessible to all stakeholders and members of the public. SAFA is encouraged to conduct appropriate consultations with all the relevant stakeholders, including the ones we have mentioned above. This will ensure that there is contribution by those affected by the SAFA training compensation regime. The applicable training compensation principles or regulations must be clear, rather than arbitrary.

The implementation of the training compensation regime must be in strict compliance with the principles of the rule of law. A clear set of rules and effective implementation will save the clubs time and money that is spent litigating training compensation claims that (if the training compensation regime was clear) should be simple administrative processes by clubs and SAFA. Where disputes arise, such disputes must be determined by competent or properly constituted tribunals that respect the principles of parity and equal representation, among others.