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.
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.