Training compensation

Following the European Court’s judgment in Bosman, an agreement was reached between FIFA, UEFA and the European Commission concerning remodelling the international transfer system for football players. The Bosman judgment confirmed that once a player reached the end of his contract, EU free movement rules prevented a transfer fee being payable by a club in another Member State in order to secure his services. Many clubs and football governing bodies were concerned that this would damage the incentives for clubs to invest in the training young players.

Article 20 of the 2001 regulations provided that “training compensation shall be paid to a player’s training club(s): (1) when a player signs his first contract as a professional and (2) each time a professional is transferred until the end of the season of his 23rd birthday. The obligation to pay training compensation arises whether the transfer takes place during or at the end of the player’s contract”. Whilst this system places potential restrictions on a player’s free movement, the provisions are potentially justified with reference to the need to encourage investment into youth development.

In Bernard, the first post-TFEU sports case of the Court of Justice, Article 165 TFEU was cited to corroborate the Court’s view that the specific characteristics of sport allow football clubs to seek compensation for the training of their young players where those players wish to sign their first professional contract with a club in another Member State. Bernard is notable for the Court’s reference to Article 165 although this does not imply a deviation from the Court’s traditional treatment of sport. In paragraph 41 of the judgment, the Court reiterated its view first expressed in paragraph 108 of Bosman that the prospect of receiving training fees is likely to encourage football clubs to seek new talent and train young players.

The Bernard case is authority for the proposition that training compensation schemes for young players who are not under a contract with their training club can be compatible with EU law as long as the compensation being asked for is capable of achieving the objective of encouraging youth training and relates to the costs incurred in training that player, and others who did not make it as professionals.