At its meeting in London on 24 September, the FIFA Football Stakeholders Committee gave its backing to a ground-breaking reform package for the transfer system.
International transfers are regulated by FIFA in its regulations on the status and transfer of players.
A transfer occurs when a player moves from one club to another – either during a player's contract (in which case there may be a fee paid to the releasing club as compensation for the early termination of the contract) or at the end of a player's contract (in which case no fee is permitted).
The current FIFA transfer rules provide that training and/or solidarity contributions are payable whenever an international transfer occurs.
These rules are based on a historic agreement reached with the European Commission in 2001 following the Bosman ruling of the European Court of Justice.
The main objectives of the transfer rules, as set out in this agreement, are to encourage the training of young players through solidarity schemes and to protect contractual stability between players and clubs so that competitions are run fairly.
However, the current rules were designed in another era and the global landscape of football has changed dramatically over the past 20 years.
According to the last edition of FIFA's Global Transfer Market Report, the number of international transfers has increased significantly, with a new record being set in 2017 with 15,624 international transfers, 6.8 percent more than in 2016.
Total spending on transfers also reached a new high in 2017: $6.37bn (€5.5bn), 32.7 percent more than in the previous year.
A task force of specialists set up by the FIFA football stakeholders committee found that the original objectives of the transfer system remain valid but are at risk of no longer being achieved unless profound reforms are put in place.
The sums being spent on transfers risk transforming the transfer system into a speculative market, in particular for agents who now have a powerful influence over the system as the gatekeepers to players.
Agents generated over $447m in 2017 alone. By contrast, the task force found that solidarity contributions constituted just $64m or 1 percent of the total spent on transfers in 2017 (far below the anticipated 5 percent set out in the rules).
FIFA and the football community have not been alone in raising questions about the efficacy of the current transfer rules. A recent report for the European Commission found that "more transfers mean higher revenues for intermediaries, and [is] heavily affecting the contractual stability of players".
It considered that the "lack of transparency on the transfer system has direct impacts on the enforcement of the training compensation and solidarity mechanisms".
The European Parliament, in its 2017 resolution on sport, called on the football community "to take measures that guarantee compensation to training clubs with a view to encouraging the recruitment and training of young players".\n \nIt is against this background that representatives of clubs, leagues, players, member associations, confederations as well as FIFA agreed at football stakeholders committee meetings to increase transparency, improve solidarity and reinforce contractual stability in the transfer system.
"The transfer market, including the significant revenues which it generates, should serve football and not the other way around," says Vittorio Montagliani, chairman of the FIFA football stakeholders committee.
"Our aim was therefore to suggest measures that place an emphasis on putting 'fair play' principles back into the transfer market, with a renewed focus upon solidarity rather than speculation. We are not just looking for a legal change but a cultural shift in the behaviour of all those involved in transfers in order to protect the legitimate interests of players, clubs and all other football stakeholders."
Many of the reforms are designed to improve the infrastructure of the transfer system. A key reform is the establishment of a clearing house to process transfers.
This will ensure the good functioning of the system by centralising and simplifying the payments associated with transfers such as solidarity, training compensation, agents' commissions and, potentially, transfer fees. It will also protect the integrity of football by preventing fraudulent conduct.
Similarly, the mandatory requirement that national associations set up electronic transfer records will assist the efficacy of the system.
These reforms will enable FIFA to ensure that recipients of solidarity payments are correctly identified and actually paid after each transfer – turning the 5 percent in solidarity from a notional concept into real money for training.
These changes to the infrastructure of the transfer system are to be complemented by new rules to bolster solidarity.
The football stakeholders committee has agreed to extend solidarity contributions to domestic transfers with an "international dimension".
Currently, training clubs only receive solidarity contributions for training a player after an international transfer to another country – but not when the player then conducts a domestic transfer within the same country.
For example, a player moving from a Belgian club to an English club is an international transfer that triggers a solidarity payment to former training clubs of the player, but a subsequent domestic transfer within England does not.
The reform, which is to apply in a non-discriminatory manner, will correct this discrepancy by providing for fair compensation to training clubs when domestic transfers with an international dimension occur.
Other changes relate to the functioning of the transfer system and the need to stamp out abusive practices.
For example, the loan of players is to be regulated to ensure that such loans are used for the purpose of youth development as opposed to commercial exploitation.
The number of loans per season shall be limited to prevent player hoarding.
In addition, the loans between two clubs is to be restricted to protect competitive balance (so one club in a league does not benefit unduly from loans by a major club).
Opaque practices such as sub-loans and bridge transfers (where a player transfers to one club but is then immediately moved to another club) are to be prohibited due to concerns relating to the integrity of such transactions.
Another landmark reform is the alignment of the role of agents with the underlying principles of the transfer system, as is already the case with clubs and players.
A new accreditation, registration and disclosure system is to be put in place to ensure that agents are regulated to the highest standards.
Greater transparency relating to fees is to be introduced, with the payment of agents' commissions to go through the clearing house.
The football stakeholders committee has agreed in principle to reforming agents' commissions in a manner that prevents the transfer system being turned into a speculative market. The proposals are the subject of an on-going consultation process with a representative group of agents.
Speaking after the decision of the football stakeholders committee, FIFA president Gianni Infantino said: "We have brought everyone to the table and all key actors of the industry have understood that we need to take action, leading to this reform proposal.
"This is a significant first step towards achieving greater transparency, the effective enforcement of rules that will deliver millions in solidarity payments to clubs, and developing a consensus on how to tackle the issue of agents, loans and other key aspects of the transfer system."
The points agreed by the football stakeholders committee will now come before the FIFA council for approval in late October.
FIFA is also liaising closely with the EU institutions to ensure that the reforms are in line with the values and principles of the European Union.
In the meantime, the pace of reform continues with the football stakeholders committee mandating the specialist task force to look into a range of other matters to improve the functioning of the transfer system.
A reformed transfer system – based on solidarity not speculation – will further enhance the power of the beautiful game to change lives.
FIFA is the international governing body of football.
FIFA is the international governing body of football.