BCFC: The Jude Bellingham Sell On Clause

With no club matches to write about, the focus for football reporting has turned to the international scene and who might be on the plane to Qatar for the World Cup in November. Jude Bellingham is a name that is in the minds of many and despite the transfer window being months away we’re already being deluged by stories of who might be the next to buy his services.

Finances and BCFC

I have no interest in writing or rehashing transfer stories; often they’re written purely to drive advertising clicks and I’d like to think I am above that on this website.

However, the possibility of Bellingham moving from Borussia Dortmund has brought the question of sell on clauses back into the minds of fans.

In truth, there isn’t enough information out there to know what the sell-on clause was in the Bellingham deal, let alone to be able to work out how much money Blues would receive.

The only answer I’ve been able to get out of my contacts is that a clause does exist, and that it’s more than the 5% mooted in some reports.

While I can’t put a monetary figure on any sell-on that might be generated from Dortmund selling Bellingham, it is possible to talk about what the possibilities are – and why they’re more complicated than simple click-driven transfer stories might have you believe.

Solidarity Mechanism

The first question to approach is where some outlets have this figure of 5% sell on from. Although it’s easy to imagine it’s a figure plucked out of thin air, the truth is that it isn’t.

Every international transfer has a “solidarity contribution” included which pays the clubs who have trained the player involved in the transfer as a youngster. The way this works is governed by Fifa’s Regulations on the Status and Transfer of Players (RSTP).

Article 21 of the RSTP states that:

“If a professional is transferred before the expiry of his contract, any club that has contributed to his education and training shall receive a proportion of the compensation paid to his former club (solidarity contribution). The provisions concerning solidarity contributions are set out in Annexe 5 of these regulations.”

As with training compensation, this obligation only occurs when a player is transferred internationally.

For example, if Jude Bellingham moves from Dortmund to say Bayern Munich, Blues would get nothing under this “Solidarity Mechanism”.

However, should Bellingham move from Dortmund to a Premier League team, or for that matter to any other team outside the Bundesliga system, then Blues would be entitled to a cut as per the Solidarity Mechanism.

The figure specified for payments under the Solidarity Mechanism is 5%, which is where this figure has come from in media reports as a sell on.

However, these reporters have worked from a skim read of the way the article is enforced, and have missed one vital part.

All clubs who have trained a player between the ages of 12 and 23 receive a cut.

The years between 12 and 16 are valued at half of what the years between 16 and 23 are. If a player hasn’t reached 23, then the max that can be paid out is reduced by 0.5% for every year under 23 the player is.

As Bellingham moved to Dortmund shortly after his 17th birthday, by my reckoning Blues are entitled to 4 x 0.25% (age 12 – 16) and 2 x 0.5% (age 16-17), which equals a total of 2% of any future international transfer fee as a solidarity contribution.

Thus if Jude Bellingham completed a move for £100m, Blues would receive £2m as a solidarity contribution.

As the solidarity mechanism is a protocol enforced by FIFA, it’s a defined calculation and is not something that would be subject to a clause in a transfer contract.

I think there is a valid question if a “sell-on clause” in a transfer contract between clubs affects the solidarity mechanism; it’s not a question I’m sure of the answer to and I figure it would be something that would be defined in individual transfer deals.

Sell-on Clause

We often see a lot of stuff banded about by websites about “sell-on clauses” in player transfers, where the selling club will get an additional sum if a player is sold by the buying club.

Like transfer fees and wages, these clauses are simplified in football reporting and from the little bits I’ve seen of football contracts, many are more complex than a simple percentage of the next transfer fee (although some clauses are exactly that).

For example, some clubs have tried to put in place a variable clause where the percentage to be paid was higher in some circumstances than others. A good example of this was Arsenal’s sale of Chuba Akpom to PAOK and of Joel Campbell to Frosinone.

In both cases, Arsenal demanded a 10% sell on if the player involved was sold on to “a football in the UK” versus a 5% sell on if the player involved was sold elsewhere.

FIFA’s disciplinary committee found this to be in contravention of the RSTP and fined Arsenal CHF40,000. Arsenal fought the decision by appealing to the Court of Arbitration for Sport (CAS), who found that Arsenal had not broken the rules with this clause.

There are also distinctions where sell-on clauses are percentages of profit rather than percentage of the next transfer fee.

This can create a huge difference; if we accept Bellingham has been sold to Dortmund for £30m (including add ons), then 20% of a £100m transfer fee would be £20m while 20% of the profit would be just £14m.

As I’ve said before, I do not know what the sell-on is and in truth we’re unlikely to know as it’s a confidential part of a legal transfer agreement.

All I can do is to reassert that I have it on very good authority that a sell on clause exists, and that “it’s more than 5%”.

The only other question that sticks in my mind is if the clause is still active.

Selling a Sell-on

The last few years have hardened some Blues fans into cynics, and so the question has arisen if Blues can get money for a sell-on clause in advance.

We know from Companies House records that Blues have already forward funded the later instalments of Jude Bellingham transfer fee.

Forward funding a sell-on clause is a different matter though.

This is because a sell-on clause has no guaranteed value. As we’ve seen with players like Jack Butland, there have been cases where Blues have had a sell-on clause inserted where the club has ended up receiving nothing.

The effect of this is that there is only one way to forward fund a sell-on clause; to agree a fee with the purchasing club to waive the clause.

What this means in practical terms is that to forward fund any sell-on clause in the Jude Bellingham deal is for Blues to agree a fee with Dortmund, and in return agree to waive the sell-on clause going forwards.

The fee agreed is likely going to be far lower than could be received should Jude be sold for £100M+ but would insure Blues in the unlikely instance that Bellingham ran down his contract at Borussia Dortmund and left for free.

From speaking to people with experience in the field, it’s something that is done but it’s not a simple process.

As well as drawing up an amendment to the initial agreement, it would need to be lodged with the relevant leagues, the FA and uploaded to the FIFA Transfer Management Scheme (TMS).

This means in practice that any fee agreed to waive a sell-on clause has to be okay with the relevant authorities as well as with both clubs.

Cynical Blues fans might be curious as to where any money would go if such an amendment is agreed; especially in a situation like right now where it’s unclear who is funding the club and what the future ownership situation is going to look like.

The answer to this question is any money would go to the club itself rather than directly to an ownership group.

Where it goes from the club is another matter and is impossible to answer without a crystal ball.

As I’ve mentioned before, it’s difficult to know what the situation is with regards to any sell-on clause around the Jude Bellingham transfer, and some scepticism is needed if anyone declares without evidence what the exact situation is.

However, it’s clear to me that there is a substantial sum that is due to Blues, and as such it’s one thing that any buyer will be aware of and will have factored into their business plans.

Having seen the mess caused by Blues relying on sell-on clauses in the past to pull them out of a financial hole, with the clause subsequently not materialising, I wouldn’t be surprised if Blues do indeed try and agree a fee to waive any clause in the Bellingham deal.

While that would definitely help in the short term, it would almost certainly be myopic bearing in mind that Bellingham’s valuation only seems to be going up amid reports that there is no release clause in Jude Bellingham’s contract.

Part of me feels a bit cynical in all this too, because while the numbers involved are interesting, at the end of the day a person is involved.

I am proud to be able to say that I saw Jude play and score for Blues, and it somewhat hurts me to think that not only were Blues reliant on the goodness of him and his family to sign a pro contract with Blues before leaving so that Blues received a transfer fee, but that the club is almost reliant again on the goodness of Jude to move on somewhere else to bring even more money into the club.

With Jobe Bellingham turning 17 tomorrow and able to sign a pro deal, the same part of me hopes that we can allow Jobe to grow naturally as a footballer and not see him as another immediate money-making asset.