Transfers in Soccer – A Quick Primer

After Edi Horvat’s first game with the Legion last weekend, it turned out that his absence from the squad for the first two games was not because of an injury or general match fitness or any of the usual reasons a player isn’t available. The problem was that the club had not yet received his International Transfer Certificate. That in itself was a bit surprising considering how long ago the club had signed him, but it highlighted yet another wrinkle in the convoluted process that is the acquisition of professional soccer players.

With that in mind, we at the Forge thought it was probably time for a brief (or not so brief) explainer on how the whole concept of transfers  operates. And because it involves multiple bureaucracies and legal systems, it is of course really, really stupid. Anyway, here goes.

The first thing is of course that transfers are unlike trades in US sports. The latter usually include various non-monetary considerations such as swapping players, future draft picks and the like. Similar mechanisms even exist for player trades within MLS. But soccer transfers, by and large, involve just money. Very large amounts of money. That wasn’t always the case. It wasn’t until 1961 that the first transfer over £100,000 was made (Luis Suarez from Barcelona to Inter Milan). It took another 14 years to pass £1 million (Giuseppe Savoldi from Bologna to Napoli). In 1985 Barcelona paid Boca Juniors a mere £3 million for Diego Maradona. And sold him 2 years later for a new record £5 million to Napoli. This century it has gotten nuts though, largely thanks to Real Madrid, who set 5 consecutive record fees for Luis Figo, Zinedine Zidane, Kaká, Cristiano Ronaldo and Gareth Bale between 2000 and 2013. In 2016 Manchester United handed over £89 million to Juventus for Paul Pogba. And then Paris Saint-Germain made everyone else look like skinflints, coughing up a ridiculous £198 million for Neymar in 2017. At current exchange rates, that’s $260 million. Insanity abounds.

Of course, when we talk about paying for a player, that is linguistic shorthand. Obviously, FIFA does not sanction the buying and selling of people (well, it’s FIFA, so that’s probably not obvious). Instead, what is being paid for is the right to register a player. This has its origins in the English Football Association which at one time required clubs to register every player on their roster every year. After a while, those registrations became marketable, and the transfer market was born. Note also that a player’s registration is not the same thing as his contract (which is what is being traded in US sports). It is rather the official recognition of that contract by the relevant authorities.

So how does a transfer get started? Well, since there are three parties involved – the player, the current club and a potential future club – any one of the three can initiate the process. It is not usually the player, although it does sometimes happen. The transfer market is primarily between buying and selling clubs. But whoever initiates the process, it creates two parallel negotiations: one between the two clubs, and one between the buying club and the player. The second occurs because the player has to agree to a new contract (since the old one is not being sold). This in fact gives the player (and, of course, his agent) quite some bargaining power, since if he cannot agree to terms for a new contract, the whole deal can get nixed.

However, the player’s contract can be the simpler of the two negotiations. The deal between the clubs will often involve not just the basic transfer fee, but also potential future considerations such as performance bonuses whereby the selling club gets additional payments if the player hits certain goals.

Another wrinkle is that the transfer fee is not always paid in its entirety to the selling club. Depending on league rules, the league may get a share. In some cases the player himself will get a share (even more bargaining power). If the player was previously bought by the selling club from another club, it is not uncommon for the previous transfer agreement to include a sell-on clause whereby the original club gets a cut of any future sale. In South America this is almost standard and is known as “el pase”. This is not the same thing as “solidarity payments” which can also get withheld from the seller’s fee and is paid to clubs involved in the player’s training (usually prior to him becoming professional). So there are a lot of people with a financial interest in soccer transfers.

Of course, most of this gets short-circuited if the player is a free agent. That is, if he is out of contract with his current club, he can agree to a new contract with whoever he wants. This seems normal to us, but in European soccer free agency didn’t exist until the 1995 so-called “Bosman ruling”, named for Jean-Marc Bosman the player who sued to get free agency (it took him 5 years). This had an obvious effect on the transfer market, and leads clubs to be much more careful about the timing of potential transfers, not to mention the exercise of contract options (such the Legion did with Junior Flemmings).

Anyway, once all terms are agreed on, the lawyers are called in, the paperwork is signed and the old player contract is torn up. But that’s not the end of it. If a player is transferring from one club to another in the same country, the deal still has to be approved not only by the league or leagues involved but also by the national governing body (called either the association or, as in the US, the federation). You may have noticed that when the Legion announces the signing of a new player it is always “pending league and federation approval”. In most cases, that’s a simple rubber stamp, but it still takes time and if there is anything unusual or (as sometimes happens) suspect about the deal it will take longer.

Also, in such cases, if the player is not a native of the country he is playing in, it is possible that his visa may need to get reapproved if it is tied to working for just one specific club. Which means the government now gets involved. That’s never good. The government is of course also involved of the transfer is from one country to another. In the US, we have a specific visa type for athletes, the P1A, for which there are stringent requirements to be met. There have been numerous instances lately of athlete visas, whether short or long term, getting held up in red tape. Atlanta United’s Thiago Almada missed the start of the season waiting on his visa, and an entire Haitian team, AS Cavaly, had to forfeit a CONCACAF Champions League match against the New England Revolution because they couldn’t get their visa application processed. Quite a headache, and of course another point in the process for lawyers to get involved.

And that brings us all the way back to International Transfer Certificates. And FIFA again. Because transfers are the sale of a player’s registration rights, those rights also have to be transferred from one national association to another if the deal is an international one. Since FIFA oversees all player registration worldwide, it therefore has to approve the transfer of the registration.

While waiting on all the approvals to get settled, a player is permitted to train and also to play in friendlies and other non-competitive matches with his new club. That is why Edi was able to play against Atlanta United in the preseason before suddenly disappearing.

If you ask me, it’s all a get-rich-quick scheme dreamt up by agents and lawyers. But we’re stuck with it.