Toronto FC breaks new ground, but MLS still has player development issue

Toronto FC has found a unique way -- at least in the world of Major League Soccer -- to compensate local area youth clubs for developing players.

On May 25, TFC, in conjunction with Ontario Soccer, held what it called a scholarship night at its training facility. The event honored 15 area youth clubs that had seen a combined 27 players move to TFC's academy program. During the event, those clubs received an unexpected gift: For every player sent TFC's way, the club received $2,500 (CAN). One club walked away that night with $12,500 in its pocket, with TFC's total outlay on the evening reaching $67,500.

"We didn't know anything about [receiving money] in advance," said one attendee, who asked not to be identified. "This happened out of the blue."

When contacted by ESPN FC, Toronto FC president Bill Manning didn't dispute what took place. In his eyes, the event -- and the money -- is a way to forge deeper connections with local youth clubs that might otherwise resent TFC for "poaching" their players. It also rewards those clubs for their success in player development. He plans to hold a similar event next year.

"Rather be viewed as an enemy of youth soccer, we want the clubs to view us as the next step in the pathway," Manning said via telephone.

"We've been trying to strengthen those relationships, so we took part of our marketing budget and part of our academy budget and we wanted to make some investments back into the soccer community. So we did a partnership with Ontario Soccer, where we became one of their largest sponsors and this next one was, 'Hey, let's recognize those clubs that had players that moved on to our academy teams this past year.' So we had 15 clubs and we wrote checks to them that we ask be put back into their club for scholarships."

But whether Manning realized it or not, TFC's decision to give youth clubs cash may very well end up in the "no good deed goes unpunished" file. Without question, the desire to compensate youth clubs for their work is commendable. But the payout has become the latest salvo in the long-simmering issue of whether FIFA's Regulations on the Status and Transfer of Players (RSTP) are enforceable in North America.

To recap, RSTP stipulates that when a soccer player signs his first professional contract, the pro club is obligated to pay training and development costs to every club that developed that player between the ages of 12 and 21. Training compensation is also due when the player moves to a club in a different country prior to his 23rd birthday.

Additionally, when a player transfers to a club in another country before the expiration of his contract, five percent of the transfer fee is to be allocated to the club (or clubs) that developed the player with what is called a "solidarity payment". This is spelled out in Articles 20 and 21 in RSTP, as well as Annexe 4 of that document.

However, the U.S. Soccer Federation, fearing a violation of antitrust law, has prevented RSTP from being enforced. An additional wrinkle involves the case Fraser vs. MLS, which challenged the league's single-entity structure but also involved the payment of transfer fees for out-of-contract players. MLS stated it wasn't requiring a fee for such players anyway and promised not to do so in the future.

More critically, the USSF went one step further and entered into an agreement with the court -- a copy of which has been obtained by ESPN FC -- that also said it wouldn't enforce out-of-contract transfer fees, and included training and development compensation in that definition. The USSF ultimately interpreted that agreement to mean that it couldn't require the payment of training compensation and solidarity payments under any circumstances.

The Canadian Soccer Association has taken a more relaxed view of RSTP but one that has some similarities to the USSF's stance. According to Earl Cochrane, the CSA's deputy general secretary, the CSA enforces RSTP for international deals only.

"Domestically, we don't have a training compensation policy or program in place," Cochrane said via telephone. "The international [approach] as it relates to those FIFA guidelines and regulations, we're OK with. If clubs are willing to pay that training compensation back to local clubs for developing those players, it's not an issue with us. But domestically we don't have any guidelines."

So if TFC signs a player to his first pro deal, the CSA will not require training compensation. If say, Bayern Munich were to come calling, it would have to pay, but even then there is some wiggle room.

"It's then an issue between Bayern Munich and that youth club," Cochrane said. "We'll help them broker something if it needs to happen."

The CSA has its own antitrust concerns as well. It has been argued that training compensation and solidarity payments could result in a restraint of trade that could prevent a player from signing a contract. Section 48 of Canada's Competition Act reads in part, "to limit unreasonably the opportunity for any other person to negotiate with and, if agreement is reached, to play for the team or club of his choice in a professional league ... is guilty of an indictable offence."

To be clear, RSTP applies to professional players only, which means at present, it doesn't have any bearing on the players honored at TFC's scholarship night. Those players aren't under contract and there is no promise of a professional deal down the road.

"We didn't follow any training compensation formula," Manning said. "Had we had six clubs, it might have been more [money per player]. Had we had 30 clubs it might have been less. That's just how we came up with it."

Cochrane said the CSA knew about what TFC was doing and had no problem with it.

"It's literally an acknowledgment in our eyes, a tip of the hat to the community who are developing these players and then graduating them into the Toronto academy," he said.

But the fact that TFC gave money to youth clubs has the look and feel of an ersatz form of training compensation, albeit one that pays far less than what is stipulated by RSTP, which can in certain cases reach six figures. That's certainly the view of Lance Reich, an attorney who is representing Redmond, Washington, youth club Crossfire Premier in its attempt to recoup solidarity payments from the 2014 transfer of then-Seattle Sounders defender DeAndre Yedlin to Tottenham Hotspur.

Crossfire has taken its case to FIFA's Dispute Resolution Chamber and a decision is expected to be rendered in the next few months. If FIFA rules in favor of Crossfire, the result could see hundreds of thousands of dollars suddenly flowing into the coffers of youth clubs nationwide from transfers involving players from MLS clubs.

"How is what Toronto doing not considered training compensation?" Reich said.

"They're paying youth clubs for their [academy] players. Of course we're supportive of it."

Major League Soccer's exact feelings on what TFC is doing are unknown. ESPN FC requested comment but none was provided. What seems likely is that no other MLS club is paying cash to youth teams for players who join their academies.

ESPN FC also reached out to each of the other 21 MLS teams to see if or how they might compensate youth clubs for players. Of the 17 teams that responded, none of them said they paid cash, with most simply announcing the name of the club on their website when a player joins. A handful of MLS teams said they have affiliate programs with local area clubs that involve allowing the youth clubs to wear the MLS team's logo on their uniforms, as well as providing coaching education. In some cases equipment is provided.

Among the teams with affiliate programs is the Portland Timbers. Their GM, Gavin Wilkinson, is of the belief that MLS wouldn't allow him to do what Toronto is doing in terms of giving cash to youth clubs.

"I would love to reward clubs that help develop players for the Portland Timbers," he said. "When the rules allow it, we will."

For now, it looks like Toronto FC is breaking new ground. At minimum, it opened up another front in how player development is funded in North America, though more needs to be done. The coming months will determine if it stays that way.