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An Intermediary’s role in a player getting paid up in order to join another club

There are many complexities involved in the transfer of a football player from one club to another. Sidekick Management co-founder Alex Levack talks us through this process in his latest blog.

For this reason, there can be some potentially serious implications for a player that does not have an Intermediary who is well versed with the rules. In today’s world, it is not enough to be educated solely on the FA, Premier League and English Football League rules alone (many of which overlap and often contradict themselves) but one must also be familiar with the FIFA rulings. One area that we shall focus on here, is when a player receives a “pay up” from one club to join another and the processes involved.

There are times when a player is no longer wanted by a football club. This could be due to the player falling out of favour with the manager or perhaps owing to a new manager coming in and not rating them. Maybe it is because of a disciplinary matter. Whatever the case, rather than the player staying at their current club, taking up a place in the squad and continuing to be a financial burden without contributing a great deal, the club could look to move him on.

In certain instances, the club looking to sign the player might only have a limited budget remaining (not enough to cover off the full wages of that player). In this situation, it may be that the only way for the deal to happen is if the club looking to move the player on makes a payment to the player (known as a ‘pay up’ or ‘settlement’) to make up the shortfall in his wages.

Compromise agreements – what are they?

In the scenario described above, a ‘compromise agreement’ would need to be negotiated and signed. Compromise agreements are usually drafted by the selling club’s legal team and then passed to the player’s legal representative to review before advising the player if he should sign it. The legal representative is a different person to his Intermediary (unless that Intermediary also happens to be a qualified lawyer!).

It is common practice that a clause is inserted into the compromise agreement stating that the player’s current club will contribute towards the player’s legal costs in this matter. In our experience, this is figure is usually between £250 to £500.

What is a good ‘pay up’?

Now this is the million dollar question! (excuse the pun!) No exact figure can be placed on this as it is very much dependent on each individual’s situation.

It is important to note that the first £30,000 of any settlement made by a club can be paid as an ex-gratia payment and therefore is tax-free.

However, suffice to say that on the whole, an indication of a good pay up would be one that, at the very least, meant the player was not out of pocket when leaving his existing club. A very good pay up may be one where he is earning more than he would have previously earned had he stayed at his current club.

That said, much depends on the motives of the player – if his main driver is to get out and get more game time at a club where he feels better valued, then perhaps the money is not as important as the ability to leave and go somewhere where he will enjoy his football more.

It is important to note that the first £30,000 of any settlement made by a club can be paid as an ex-gratia payment and therefore is tax-free. All intermediaries should be aware of this fact and if they aren’t then I would seriously question their ability to negotiate a pay-up.

Timing is crucial

Since the abolition of the ‘emergency loan window’ in the UK (for more information on this topic, please read Matt Kleinman’s blog – The abolition of the emergency loan window: How this affects the opportunities for players) , all transfers (including loans) within the English Football League must take place within the two transfer windows. The two windows being 1st July – 1st September and 1st January – 31 January in each season. This clearly restricts the opportunities of players today from playing regular first team football, hence the inevitable increase in settlement packages being agreed and players moving on. I must stress at this point, that if a player makes himself ‘out of contract’ by agreeing a settlement package with his club and signing a compromise agreement outside of these dates then he would only be eligible to sign for a team at the National Conference level. However, should he sign the compromise agreement and receive a ‘pay up’ during either transfer window then there would be no restriction as to what level that player can move to (even after the window has closed).

If the Intermediary was not aware of this rule and agreed for their client to accept a “pay up” outside of these transfer windows, then they are likely to end up with a very angry player who will be frustrated at the fact he cannot play at his natural level until the next transfer window opens. This rule applies regardless of how big or small the player – or agent for that matter – may be. So, let’s say for example, that an Intermediary who is representing an EFL Championship level player makes the mistake of agreeing his or her client’s settlement package outside of the transfer windows, then the player is only able to play National Conference level for the foreseeable months.

Some Intermediaries and players also try to be ‘too clever’ and seek a pay-off from the player’s current club with another one waiting in the wings with similar or more wages than he is currently earning. Again, the timing on this is everything and chasing the extra money may prove detrimental if the club that the player is looking to move to have other possible targets and the settlement takes too long. They may simply move on themselves and the player could find himself stuck at his original club and not playing for the remainder of the season.

Another thing for a player to be mindful of when considering a “pay up” would be that, should he not have alternative employment all but agreed (and a written undertaking to this affect) from the club he is due to move to, then the club looking to sign him could take advantage of the situation. By this, I mean that they could either completely renege on the deal or simply look to offer the player a lesser financial package in the knowledge that he has few, if any, alternatives.

The 3-2-1 Rule

To make matters that much more complicated, and as shown in the recent and unfortunate situation involving Bondz N’Gala, FIFA rules that players can register and sign for 3 football clubs but only PLAY for 2 clubs per season.

Defender Bondz N’Gala’s move to Gillingham has fallen through because Fifa regulations say he has played for too many clubs this season.

I can tell you now that in nearly every case a football club is not going to register, sign and pay that player if he cannot add immediate value to the team and squad. Had the player not been advised of this by their Intermediary then they could find themselves in a very precarious position as no club is likely to sign them. The upshot of this being: no club, no income, zero security and, as the weeks pass, continuously losing match fitness. Consequently, when it comes to the next window, it will be that much harder to find a new club on the money they were previously earning.

So, contrary to what many now believe, it is not just as simple as paying the FA £500 and filling out an online form (plus having a CRB check should you wish to work with minors) to become an Intermediary. Any Intermediary who is worth their value should, and will, know all the pitfalls involved in transfers and every eventuality involved with them. This education cannot be gained by simply reading literature; first-hand experience will always trump that approach.

Within the Sidekick Management team we have over 50 years of industry experience between us, and have a wide knowledge base of all areas within the football management industry.

If you’d like any further information on the above topic or wish to ask us any question that you may need answering about then feel free to contact us.

The abolition of the emergency loan window: How this affects the opportunities for players

Sidekick Management founder Matt Kleinman takes a closer look at the abolition of the emergency loan window in this insightful blog post.

What has changed?

This season has seen a marked change in the English transfer system where loan moves are concerned.  It is the first time that the English FA has adhered to the FIFA regulation calling for an end to the transfer of registration of a player to another club outside of the transfer windows (January and summer).  Up until the start of the 2016-17 season, the English Championship as well as Leagues 1 and 2 were permitted to loan players freely outside of the transfer window. This was known as an ‘emergency loan’. An emergency loan was a loan that involved a player moving from one club to another for a period of between 28 and 93 days. It allowed clubs outside of the Premier League to remain competitive during the course of the season (or at least in between transfer windows) should they either encounter an injury crisis, a number of suspensions at the same time, or a run of poor form that clubs believed new personnel could help thwart.

In order to limit the damaging effect of the new regulations the FA have put some transitionary measures in place:

  • Clubs can sign a goalkeeper on a 7 day ‘emergency loan’ basis if they don’t have a senior keeper available for selection. A ‘senior keeper’ being defined as ‘one that has made 5 first team appearances already’.
  • Clubs are permitted to recall a goalkeeper at 24 hours notice from loan at another club if unable to field 2 fit goalkeepers in their 18 man squad.
  • A loan player registered as a standard loan can still play for his parent club but only in non-first team fixtures while he is out on loan.

Why the emergency loan system only applied in England

The transfer window system as we know it today was introduced by FIFA at the start of the 2002-03 season. Prior to that, transfers were applicable throughout the course of the season.  Why the transfer window even exists and why the window doesn’t close prior to the start of the season are topics in themselves that could be discussed at great length.  However, let’s just focus on the main point at hand right now – the emergency loan system.  The emergency loan system was incepted when the transfer windows were first introduced into the English game and in line with the rest of world football.  It was believed by the English FA that, while they were prepared to work within the confines of FIFA’s new regulations, such an extreme transition from the previous transfer system would cause total chaos. Thus, the emergency loan system was born (and supposed to be a temporary measure which essentially lasted 14 years!) – the FA being typically consistent in their inconsistency.

So why has this change taken place?

FIFA has gradually applied more and more pressure on the English FA to fall into line with the rest of the world when it comes to adhering to the strict transfer windows that are in place, and the FA has finally buckled. FIFA’s argument for abolishing the emergency loan system is that it stops the opportunity for clubs to bring into question ‘the sporting integrity of competitions’ by helping to improve the chances of promotion/ staving off relegation with one or two important loan signings.  They do have a point.  In their defence, they could draw on the example of when Norwich (during the 2003-04 season) signed Darren Huckerby and Peter Crouch on loan.  These two loan signings arguably won them promotion to the Premier League – today seen by many as the ‘golden prize’ in English football.

How is this likely to affect players in England?

The real issue here is what effect the stripping away of the emergency loan system will have on the English game. Will the negatives outweigh the positive implications or vice versa? I guess, as with any kind of reform only time will tell.  I can only surmise at this moment but my belief is that the short-term effects will be quite harmful to many players who are on the periphery at their club as well as those young players at top flight teams who desperately require exposure to first team football within the top three divisions of the national game.

Those players who may have fallen out of favour or who are coming back from a spell out through injury and require another club at which to re-establish themselves or increase their fitness and return to their previous levels of performance are certainly inhibited by this new ruling.  As too are those young Premier League Academy players who seek involvement in a competitive first team football environment to aid in their development. The previous regime helped serve as a key barometer for judging whether a player is good enough to make the step-up to his host club’s first team.

Harry Kane on loan at Millwall
Harry Kane learning his craft at Millwall before becoming one of the worlds best.

The likes of Harry Kane, Seamus Coleman, Andros Townsend or Patrick Bamford, to name a few, may not have developed into the players they are today without that exposure to first team football when they were presented with the chance.  In fact, some may argue with good reason that one or two players who have progressed and flourished, because of successful loan moves may still be stuck playing U-21 football at their respective clubs today. That is the real and genuine concern for players in a similar position as the afore mentioned who today don’t have the same loan opportunities as they did.

I am a strong advocate of players who have spent at least one season (and definitely by the end of their second) in the Under-21 team for going on loan to a club where they will have a chance to gain some invaluable first team experience.  It is obviously down to the player himself to get into the starting line-up and hold down a regular place. I’m not one for players ‘having’ to start just because they are on loan from a higher league club.  In my opinion, the player must take responsibility for the way he trains and plays in games to justify his position in the team, otherwise it leaves room for complacency and under-performance.

How is the new system likely to affect clubs(both negatively and positively)?

The Football League clubs have benefitted hugely from having many top players involved on loan from higher level teams. It will undoubtedly be a disappointing side-effect of the new regulations for fans up and down the country that they will no longer gain the same exposure to these promising young players anymore.  In addition, for the clubs themselves, they lose adding enhanced quality to their teams and, in some cases, this makes for an uneven playing field (metaphorically speaking), as the Queens Park Rangers Manager, Ian Holloway eludes to in his own inimitable way.  Holloway provided a unique, if not humorous analogy to describe the abolition of the emergency loan system.

“If my washing machine breaks, I shouldn’t have to wait until the end of the year to fix it. It’s madness. What if I haven’t got enough money to have two washing machines? Newcastle will have two or three, so they’ll be more efficient and I’ll be walking around in dirty clothes looking like a tramp.” – Ian Holloway

This now means that those clubs with the financial power to do so can afford to stockpile players to stave off the threat of losing key personnel to injury or suspension. Again, this can have a detrimental effect on those players considered peripheral to the main matchday squad once the transfer window has closed.

But it is not all doom and gloom for young players trying to break into first team football.  The new system is arguably favourable for those lads involved at clubs with the foresight to recognise the consequences of the reform. Clubs like Colchester United in League 2 and Huddersfield in the Championship League are just two such clubs now investing heavily in their youth academies to bring those boys up to the required standard for first team football.  The latter able to boast three academy graduates –  Phil Billing, Kyle Dempsey and Flo Bojaj all featuring for their first team this season.  It can hardly be claimed that this new ruling has jeopardised their season (with Huddersfield currently lying in 3rd position in the Championship League at the time of writing).

Currently the positives don’t appear to outweigh the negative repercussions of this rule change.  However, as with most reform, it will probably take 2-3 seasons with the new regulations in place to see what longer-term effects may occur as a result of the change.

What Sidekick Management does to deal with the regulation change

At Sidekick we have embraced this regulation change and have put in preventative measures to ensure that our players get the correct opportunities required to play regular first team football.  We aim to find the correct fit for the player (i.e. the type of club that suits his style of play and even personality type). We don’t just aim to find any old club for one of our players. We view that kind of strategy as like putting a square peg into a round hole. Also, young players signed to the company are constantly being monitored to assess whether they are ready for the chance to experience involvement in a first team environment.  Aligned with their respective clubs and working together, we seek out and secure the most suitable opportunities for the player’s career development.

For further information on how Sidekick Management will deal with this new regulation change, please contact us