When a player signs a schoolboy contract with a club, he then becomes a registered player with that first club. If that player wants to move from that first club to a different academy, or a bigger club wants that player to move to their academy, compensation has to be paid to the first club. The amount of compensation is dependent on the number of years that the player had been registered with that first club. 

Situations can arise where this compensation might be waived between the two clubs for a variety of different reasons. For example, it may be that a player’s family has to move house, and that move puts the player beyond the distancing rules.  

But for somebody to say that they don't enjoy life at one academy anymore, and want to go to another one, or feels that they could move from say a Cat 3 to a Cat 1 academy, this compensation rule can make things complicated. The compensation rules are there to protect football clubs, especially those lower down the pyramid. They were designed to prevent the bigger clubs just swooping in and taking the best players from a smaller club’s academy, without having to compensate a club for finding a young player in the first place, and then developing them to their present age.  

Compensation rates vary from club to club, but typically in the foundation phase the amount is about £3K for each year the player has been at the club. In the youth development phase it varies from £12K up to £24K per year. So, if a player joined a club at U’9s and stayed to U14’s, but now wants to leave, this could be a substantial sum of money. This obviously varies, and is unique to any given set of circumstances, depending on the player and the two clubs involved. 

Some clubs may be happy to release a player out into grassroots football or private academy football, but they might ask the player to sign a form which then gives the club the rights to still retain their registration, or be entitled to compensation should they then go on and join another football club further down the line.  

As a general rule, these compensation rules are negotiable, and do not necessarily stand in the way of a player moving to another academy. For instance, a club might say that they will only ask for their compensation if that player goes on to make a first team appearance or sign a pro contract or sign a scholarship.  it can be backdated, or back weighted, according to how successful that player becomes.  

Alternatively, a club might ask for all the compensation up front, if they feel that another club has been tapping up their player and has encouraged him to ask to leave. But this is all very negotiable and clubs try their best to make sure that this compensation doesn't stand in the way of players advancing their careers, and moving on to be successful elsewhere.