Football Australia’s (FA) efforts to implement a modern and progressive domestic transfer system in-line with football’s global market within the Australian game has taken a positive step forward after FA ratified the removal of the cap on transfer fees for contracted players.
The removal of the cap on transfer fees for contracted players follows a lengthy consultation period with various stakeholders across the game after the release of FA’s Domestic Transfer System Transformation White Paper in January 2021 and means that clubs outside the A-Leagues will be able to negotiate a fee for the transfer of a player on a contract, with free market forces determining the value of the transfer.
Since 2007, the maximum value of a fee that could be paid for the transfer of a player under a player contract and transferring domestically has been capped to 50 per cent of the total salary owing to the player under their existing player contract.
FA Chief Executive Officer James Johnson identified the development as a solid step forward in FA’s plan to implement a modern and progressive Domestic Transfer System for Australian football, and will provide economic, sporting, and transparency benefits for the sport domestically.
“The Australian football ecosystem has been disconnected and misaligned, both domestically and with global football,” Johnson said.
“Conflicting regulations domestically have also contributed to Australian football’s current player development challenges and the stagnation of the Australian football economy, despite the significant growth of the global football transfer market over the past decade.
“The removal of the transfer fee cap aligns Australian football with global practice where the international transfer market is usually worth $7 to $10 billion and players are transferred regularly during the transfer windows. Globally, it is common practice that a player can be signed by a club for up to five years and if they are transferred before their contract expires, the new club must pay a compensation to the previous club in line with market rates. This is known as a transfer fee.
“What we have seen because of the transfer fee cap being in place domestically in Australia is the opposite to what we see in global football because domestically, clubs have not been incentivised by the prospect of a potential transfer fee to sign players on longer term professional contracts.
“The removal of the transfer fee cap, along with the introduction of aligned domestic transfer windows via our Domestic Match Calendars, now means that fees can be paid for the transfer of a professional player during a transfer window who is under contract. The change ensures clubs outside the A-Leagues have a clearer and better opportunity to be remunerated and recognised for their capacity to develop great players.
“In addition to the sporting benefits and the potential for a greater number of clubs across Australia to focus on developing and training players, we also believe that this change will encourage transparency around player contracting and stimulate the Australian football economy as funds are circulated throughout the football ecosystem.
“We believe this update will also generate positive and forward-thinking conversations in the Australian football market, as clubs consider ways to optimise their operations and take advantage of the new regulation. In parallel, Football Australia must play its role in educating ambitious clubs and the football community of the new regulation, so that clubs of all shapes and sizes understand how to operate effectively in this new landscape.
“We recognise that this change is not a silver bullet, and it should be considered alongside the other initiatives we have introduced into Australian football, such as FIFA-aligned transfer windows in a Domestic Match Calendar and club licensing. This is the latest step in what will be an ongoing journey of transformation of Australian football.
Discussions regarding additional Domestic Transfer System reform within the whole of game are ongoing, with numerous stakeholders within the sport being consulted regarding matters related to the introduction of transfer fees between A-Leagues clubs, loan regulations, training compensation, home grown player rules and other reforms. It is envisaged that these discussions will continue to progress throughout 2022, with further announcements regarding Australia’s Domestic Transfer System to be made in due course.
Note: The removal of the cap on transfer fees for professionally contracted players does not permit A-Leagues clubs to transfer players between one another for a fee. However, it does enable A-Leagues clubs to engage in negotiation with, for example, a National Premier Leagues (NPL) club regarding the transfer of a professionally contracted player. Similarly, NPL clubs may engage with one another regarding the transfer of professionally contracted players within Australia’s transfer and registration windows.