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The little known Professional Football Compensation Committee (“PFCC”) was in the headlines this week with its decision that Liverpool FC should pay Burnley FC an initial compensation fee of £6.5m for striker Danny Ings who joined the Reds in summer 2015. The fee, plus add ons and a sell on percentage, is the highest set so far by the PFCC.
In a nutshell it’s a body set up jointly by the Football League and the Premier League, chaired by a lawyer who is assisted by appointees of the Leagues, the Professional Footballers Association (“PFA”) and the League Managers Association (“LMA”).
Its’ job is to decide the level of compensation payable to a club when two clubs cannot agree on a fee for a player who’s contract has expired but is under the age of 24. In that case the “selling” club is entitled to receive compensation for their role in the player’s development if they have offered the player a new contract that matches the terms of the expired one.
In most cases the two clubs will agree the level of compensation without the matter being referred to the PFCC. Part of the reason for this reluctance to use the PFCC appears to be that there is no certainly over the level of compensation that will be set by them. This uncertainty, along with the length of the process (it took over 9 months for the Danny Ings case to be resolved) means that it’s difficult for small clubs particularly, to set or adjust budgets quickly.
When setting the compensation figure, the regulations of the PFCC provide for a number of criteria to be taken into account including the age of the player, the length of time they’ve been with the club, his playing record and evidence of interest in him from other clubs. In the Ings case for example, Burnley asked for a figure of £12m and put forward evidence of interest from Tottenham Hostpur in coming to that figure.
It is rare for the PNCC to set a fixed level of compensation, more often it sets an initial fee with additional payments due after the players reaches a certain number of appearances or plays for his country. As with Danny Ings, sell on clauses are also often part of the overall package.
So while there is still an element of uncertainty over the level of compensation the PNCC will set, the Ings case and others are increasingly giving useful guidance to clubs who cannot agree a transfer fee for players under 24.
If you need advice please contact Gareth Dando who is Head of Ramsdens Sport Department and has over 15 years’ experience of acting for sporting organisations on a wide variety of commercial and employment issues.