FAQs: Football Australia remove cap for professional player transfers

Following today’s announcement

that Football Australia has ratified the removal of the cap on transfer fees for contracted players, Football Australia has published the following insights for interested stakeholders of the Australian game.

What is a transfer fee?

In professional football, a transfer fee is a sum of money paid by one club to another to ‘transfer’ the contractual/registration rights of a player. Often, the purchasing club will negotiate with the selling club regarding the amount to be paid as compensation for losing the player, however in certain circumstances, the purchasing club may activate a ‘buy out’ clause in a player’s contract, enabling them to transfer the player’s registration status to their club. Selling clubs may also negotiate an ‘on sell percentage’ of future transfers that player is involved in, meaning a club may be further remunerated as a player’s career and therefore contract value develops.

With this rule change, what Australian clubs can access or receive a transfer fee?

Following this regulatory amendment, any club outside the A-Leagues able to register a player to a professional contract will have the possibility to access or receive a transfer fee as compensation for selling a player to another club. Not all competitions in Australia permit clubs to register professional player contracts, however clubs competing in Australia’s National Premier Leagues (NPL) can contract players on professional contracts.

It is important to note that the removal of the cap on transfer fees for professionally contracted players does not currently allow for A-Leagues clubs to transfer players to other A-Leagues clubs for a fee. However, an A-Leagues club may now engage in negotiation with a NPL club regarding the transfer of a professional contracted player. Similarly, NPL clubs may engage with one another regarding the transfer of a professionally contracted player.

All transfers must take place during Australia’s two annual transfer (contract registration) windows.

Why is the new rule beneficial?

Football Australia believes this new rule is beneficial as it means that clubs below the A-Leagues, particularly at NPL level, will now be incentivised to contract more players on professional terms at their clubs, with the knowledge that free market forces will determine the value of a potential transfer to another club rather than a mandated figure. Since 2007, the maximum fee that could be paid for the transfer of a player under contract transferring domestically has been capped to 50 per cent of the total salary owing to player under their existing contract. With this rule change, clubs will now be able to negotiate with other Australian clubs potential fees that they could receive for the transfer of top talent.

Football Australia also believes that providing a more open environment where fees and remuneration is available for clubs that contract and develop professional players outside of the A-Leagues environment will encourage transparency regarding player contracting and stimulate the Australian football economy as funds are circulated throughout the football ecosystem. From a development perspective, having more players signed to professional contracts around Australia will also offer players the opportunity to progress their level of play. This could help to propel them to higher standards of the game, be it the A-Leagues, international careers, or national team selection.

How does Australia currently fare in global terms regarding the transfer market?

The absence of a modern Domestic Transfer System in Australia has meant that Australian football has been unable to fully integrate into world football, by embedding itself in the global football market. This has led to lose economic and sporting opportunities for the game over many years.

In 2019, FIFA reported that Australia received just USD$1.9 million in transfer receipts from a market valued at USD$7.35 billion for men alone. This low figure received by Australian clubs is in stark contrast to many nations of a similar or lower international ranking than our National Teams, and to many countries with significantly smaller populations to Australia. This highlights that Australian clubs, from professional right down to the grassroots, are missing out on vital funds that could be used to underpin and enhance the sport.

What are the next steps?

Football Australia is committed to providing information, education, and resources to clubs and stakeholders interested in learning more about this regulatory amendment. In parallel, Football Australia is continuing to pursue Principle III of its XI Principles for the future of Australian football, which speaks to the evolution and growth of an integrated and thriving football ecosystem driven by a modern Domestic Transfer System. 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.

/Public Release. View in full here.