08 July 2022 – In October 2018, the FIFA Council quietly endorsed a major reform in the football transfer system. The FIFA Clearing House (FCH) will centralize, process, and automate payments between clubs following an international transfer or first registration of a professional player.

When a player is registered as a professional for the first time, and each time the player is transferred before his 23rd birthday, clubs that participated in his professional development (i.e. “training clubs”) are entitled to training compensation. Likewise, when any professional player transfers between clubs for a fee, training clubs are entitled to compensation in the form of solidarity payments. This is especially true in either case if there exists what FIFA terms an “international dimension” – e.g. a South African player signs his first professional contract in Portugal. In these cases, the FCH will enforce FIFA’s regulations as defined by the FIFA Regulations on the Status and Transfer of Players (RSTP). 

Members of Tiki Taka Sports Academy’s MYSAFA-registered development squad in action

Purely domestic cases are governed by the football controlling body in South Africa, SAFA.

However, legal experts argue that SAFA must ratify a legally-viable RSTP that guarantees compensation for clubs that develop domestic pros and recently some progress has been made. This is the discussion SAFA, NSL and various stakeholders are already undertaking and would set SAFA in elite company. Few if any MAs on the continent have managed to put in place so-called “domestic solidarity” regulations for the benefit of their grassroots training clubs.

Today, even when an international dimension does exist, less than 20% of training rewards are paid out internationally – likely far less in Africa. FIFA, SAFA, and SAFA’s technology partner Inqaku are working together to change this.

The FCH is designed to close the gap between training rewards due and those that are actually paid. For it to work though, FIFA Member Associations (MAs) have to meet certain electronic player registration requirements. SAFA, as one of the leading FAs on the continent, will play a key role in this process.

Because SAFA recognised the significance of the FCH initiative early on, with the launch of MYSAFA in 2017, about 2% of all FIFA IDs issued worldwide now come from South Africa. That’s over 500k registered players – the most of any African MA. These electronic player registrations form the player’s Electronic Player Passport (EPP) that will be used exclusively by the FCH to pay training rewards to qualifying clubs. FIFA projects that by 2023, all payments in international transfers and training rewards will be handled through the FCH.

FIFA estimates that around about R6,4B (USD 400M) will be distributed yearly by the FCH to more than 10,000 clubs. If just 1% of that figure (R64M) is directed to South African clubs, it will create massive incentives for investment in player development.

According to the FIFA Transfer Report 2021-22, South African football ranked 54th in the world (7th in Africa) with R580M (USD 34.7M) in transfer fees received by SA clubs. The lion’s share would have of course been paid to NSL clubs, and while the figure hints at the scale of the player development industry, it does not include training compensation or solidarity claims for SA players transferring between foreign clubs. 

It is thus evident that the FCH system will uplift many football academies and clubs in SA that often struggle with access to funds. South African clubs need not only to be aware of FCH benefits but also the ramifications of non-compliance.

There will be no more club-to-club payments on transfers where the FCH is competent to act. This means that, per FIFA, unregistered clubs will have no access to funds generated by the international transfer of a former player. FIFA may allow for a grace period to comply with FCH regulations and/or a transitional period, but it is unclear if importing historical registration records from the past will be allowed.

PSL and some SAFA LFAs (e.g. those under SAFA Cape Town) still use their own proprietary systems for player registration, disconnected from both MYSAFA and the FCH.

The FCH will literally be a game-changer, ensuring clubs are compensated to letter of FIFA’s regulations. It also creates the potential for compliant MAs to gain an advantage over rival nations in player development investment. SAFA is in a better position than most, if not all, CAF MAs to profit from these reforms. That advantage will be multiplied by greater adoption of MYSAFA and by strengthening SAFA’s RSTP and enshrining domestic solidarity as the law of the land.

by Dhirshan Gobind