Training Compensation By MLS?

In a previous blog, we explained what "Training Compensation" is as per the FIFA regulations. Most simply, Training Compensation is designed to compensate clubs who developed players after that player signs their first professional contract with another club. The scheme is designed to help training clubs function so that when one of their players sign a professional contract, they receive money to help them with their business. 

The FIFA rules for Training Compensation only apply when a player is transferred to another club belong to a different national association...meaning that it only applies to international transfers. The FIFA regulations specifically provide that national associations should provide a system to reward clubs affiliated to the same national association in the investment, training and education of young players. In other words, FIFA recommends that national associations provide a training compensation mechanism for its member clubs.

A few days ago, MLS and MLS NEXT announced the MLS NEXT Development Grant program, which is described as an initiative to recognize the contributions of MLS NEXT Elite Academies (non-MLS Academy programs) in the professional pathway by reinvesting in the youth development ecosystem.

Under this Development Grant Program, compensation is paid to MLS NEXT Elite Academies for certain players that progress through the professional player pathway - from the MLS NEXT Elite Academy to a MLS Club Academy to an MLS first team as a Homegrown Player.

MLS NEXT Elite Academies can only receive this grant in certain situations:

1. The Elite Academy club must currently be playing in MLS NEXT.

2. The Elite Academy club must have registered the player in MLS NEXT immediately before the player moves to an MLS Academy, MLS Next Pro or MLS First Team. If a player has played for multiple MLS Next Elite Academies, only the immediate former MLS Next Elite Academy will be eligible for the Development Grant.

3. The club must satisfy all MLS NEXT regulations and policies when a player moves and registers with an MLS Academy.

There are 3 different mechanisms to receive Development Grant funds:

1. When a player signs a professional contract as a Homegrown Player with the MLS club he moved to from the Elite Academy, the Elite Academy is eligible for a 1 time payment.

2. When the player appears in his 1st, 17th and 34th MLS regular season or postseason match, the Elite Academy will receive funds for each of these 3 appearance milestones.

3. When the player is transferred for a fee from a MLS club to a non-MLS club outside of the USA and Canada, the Elite Academy will receive a percentage of the solidarity payment which MLS would be entitled to receive under FIFA regulations (see our prior Blog explaining what a Solidarity Payment is). The percentage amount is based on the years of development of the player spent with the Elite Academy from the U13-U17 age groups.

While this mechanism is new, we have a few initial thoughts:

1. The Grants only may be provided to MLS Elite Academies. There are many clubs around the country who are not MLS Elite Academies and it's possible that many of the top players from these clubs may now seek to be registered with the Elite Academies instead.

2. The Grants only may be provided to the last Elite Academy the player is registered with prior to being signed by the MLS Academy. Thus, Elite Academies will have a heightened interest in keeping their best players and doing what they can to keep them from signing with other Elite Academies (or allowing them to leave for MLS Academies only) because, if their best player signs with another Elite Academy, they can no longer receive a Development Grant from MLS.

3. The Grants are only provided in limited circumstances relating to certain players. This may not be enough to foster relationships between MLS clubs and non-MLS clubs in the same region. Non-MLS clubs who consistently lose players to MLS clubs may never be compensated for many of the players that leave for MLS clubs. To build better relationships with clubs in their area, MLS may need to consider expanding this program to provide more support for grassroots clubs.

This is a very interesting development and perhaps a step in the right direction. Only time will tell, though.