Buy-out Clauses and Solidarity Contribution

Buy-out Clauses and Solidarity Contribution

The inclusion of buy-out clauses in employment contracts has become common place in professional football. What years ago was a particularity of certain countries has now spread across the globe. Logically, alongside with this proliferation, its execution by the players has also become more usual, generally with the financial assistance of a new contracting club. This scenario generates multiple legal questions (fiscal consequences and legal nature of the clause among others). This article deals with the application of the solidarity mechanism to these cases, analyzing the jurisprudence of FIFA and Court of Arbitration for Sport (CAS).

The rules to be considered for the analysis that follows are Article 21 of the FIFA Regulation on the Status and Transfer of Players (RSTP) and Article 1 of its Annex 5. The relevant texts establish:

“Article 21: Solidarity mechanism If a professional is transferred before the expiry of his contract, any club that has contributed to his education and training shall receive a proportion of the compensation paid to his former club (solidarity contribution). The provisions concerning solidarity contributions are set out in Annexe 5 of these regulations.

Annexe 5 art. 1 Solidarity contribution If a professional moves during the course of a contract, 5% of any compensation, not including training compensation paid to his former club, shall be deducted from the total amount of this compensation and distributed by the new club as a solidarity contribution to the club(s) involved in his training and education over the years...

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