Under FIFA rules, if a professional footballer transfers to another club during the course of a contract, 5% of any transfer fee, not including training compensation paid to his former club, shall be deducted from the total amount of his transfer fee and distributed by the new club as a solidarity contribution to the club(s) involved in his training and education over the years.
This solidarity contribution reflects the number of years he was registered with the relevant club(s) between the seasons of his 12th and 23rd birthdays, as follows:
|Season of birthday||% of compensation||% of total transfer fee|
According to my financial expert Andrew Muhimbise, passive income is money earned without the direct involvement of the income earner.
Passive income does not mean earning money by doing nothing.
It means generating revenue without having to exchange time for it (beyond the initial time invested in creating a passive income stream).
For instance, owning real estate or company shares, you actually don’t have to physically be there to earn but, to earn passive income, you need an initial effort.
Paul Pogba’s move from Juventus to Manchester United for £89,300,000 helped Le Havre AC to earn £893,000 as passive income.
He joined the club aged 12 for four years. Since they contributed to his development and education as a football player, they earned passive income for their efforts.
Racqui San Isidro who ply their trade in Spain’s fifth division were saved from running out of football business by the solidarity mechanism payment.
Pedro’s £27,000,000 transfer from Barcelona to Chelsea ensured that they earned a lifesaving £320,000 which not only helped them stay in football but ensured they invested the money to increase income to help run the club.
The same cannot be said of football clubs in Uganda.
FUFA SHOULD IMPLEMENT A DOMESTIC SOLIDARITY MECHANISM PAYMENT SYSTEM THAT DEVELOPS UGANDAN FOOTBALL
The solidarity mechanism payment system only applies to international transfers (involves moving from one federation to another federation), Federation Of Uganda Football Associations (FUFA) can implement a domestic version that would STRICTLY apply to DOMESTIC transfers.
In the past years we have seen how Ibrahim Sekagya’s transfer from Arsenal de Serandi to Red Bull Salzburg caused more fist fights than celebrations, with the Austrian club required to pay 5% of the transfer fee, all of Sekagya’s former teams were demanding for payment, reason: they heard that there was payment but, in reality they didn’t know which club qualified for payment.
With a domestic solidarity mechanism payment,
- Clubs will be organized and maintain records because they will expect payment from transfers. Handling “small” transfer fees will help prepare clubs for the huge amounts and avoid the issue of Victor Wanyama’s transfer from Celtic to Southampton.
- Clubs will work very hard to train and maintain quality players because they will know that it pays to train a “Pogba”. At the moment, we have young players moving every transfer window, the lack of stability denies players a chance to get proper football education and to develop talent.
- Clubs will appreciate the value of having full-time standard academies and attaching value to talented footballers. With more transfers and funds being paid to clubs, more money will get to grassroots which helps clubs acquire equipment.
- Clubs will work very hard to stay in business by adopting modern business methods. Having the hope that there’s payment because of a good product on the market would keep any club afloat.
- The problem of age cheating will be solved because clubs would need to register players from the age of twelve and keep tracking them to avoid missing out on a huge payday.
The most expensive Ugandan footballer has got to be Farouk Miya after Standard Liege paid $400,000 to Vipers.
On applying the solidarity mechanism payment formula, Standard Liege should be paying Friends Of Football (FOF) about $6,000.
Do they have the paperwork to prove he was groomed at their academy?
Do they have the knowledge that they are due $6,000 from Standard Liege?
Why is it that a law that was introduced to develop football at grass root level is not serving its intended purpose?
The biggest move of the 2016-17 Ugandan transfer window was of Musa Esenu joining Vipers SC from Soana FC for a reported 25,000,000 Uganda Shillings.
The 21-year-old striker was groomed by Future Stars in Soroti.
Below is an illustration of how a domestically applied solidarity mechanism payment would benefit Future Stars.
|Registering Club||Vipers SC|
|95% due to Selling Club||23,750,000|
|Season of Birthday||Club||% due||Amount|
|Season of 12th Birthday||Future Stars||5.00%||62,500|
|Season of 13th Birthday||Future Stars||5.00%||62,500|
|Season of 14th Birthday||Future Stars||5.00%||62,500|
|Season of 15th Birthday||Future Stars||5.00%||62,500|
|Season of 16th Birthday||Future Stars||10.00%||125,000|
|Season of 17th Birthday||Future Stars||10.00%||125,000|
|Season of 18th Birthday||Future Stars||10.00%||125,000|
|Season of 19th Birthday||Future Stars||10.00%||125,000|
|Season of 20th Birthday||Soana||10.00%||125,000|
|Season of 21st Birthday||N/A||10.00%||125,000|
|Season of 22nd Birthday||N/A||10.00%||125,000|
|Season of 23rd Birthday||N/A||10.00%||125,000|
As illustrated above, Future Stars would pocket 750,000 Uganda shillings of passive income from Esenu’s move for their initial effort in grooming him. It sounds like very little money but it’s enough to buy basic football equipment to keep them running.
It would prepare Future Stars to receive bigger amounts should Esenu move from Vipers for a higher transfer fee and most importantly, its better than nothing at all.
The ball is in FUFA’s half to be creative and come up with a domestic solidarity mechanism payment system to help clubs to develop through being able to get funds to the grass root structures that groom football players.
Amending domestic player transfer regulations would do the trick.