Grêmio finds the "map to the goldmine"

Grêmio, according to Érika Romão (erikar@lancenet.com.br), has found the map to the goldmine recently.
Note that the following post is an extract from Érika's original article in Portuguese, provided to me by Fabio Almeida.

The Porto Alegre club has made R$5.5 million (exchange rate 1 British Pound = 1.95 US Dollars = 4.12 Brazilian Reais) or c. £1.3 million in british pounds in 2006 from players developed by the club's youth set-up.

Grêmio managed in 2006 what most Brazilians clubs would like to do: to increase their source of revenue through new revenue streams. The club found out that it could benefit financially from the transfers of 200 former players, out of the 600 players which have left the club in the last 10 years. This new action on Grêmio's part is based on two of Fifa's laws which defines that clubs which have developed players through their youth set-up have the right to receive a compensation on future transfers relating to those players.

The agency responsible for this project on Grêmio's behalf, Indago Football Intelligence, was created at the beginning of 2006 to operate in Brazil. In 1 year working with Grêmio, the agency identified that Grêmio should benefit from 34 transfers of former youth team players - a total of R$ 5.5 million/ £1.3 million.
However, clubs affected, according to FIFA's laws have only 18 months post-transfers to claim their compensation. Otherwise the compensation is deemed void. Grêmio identified a loss of R$11 million/ £2.7 million in potential earnings over the last few years due to lack of awareness of the transfers of former youth team players from the club.

According to the partner and director of marketing for the Indago agency, Rodrigo Levenzon, between 2002 and 2006, 4,006 players transferred abroad from Brazil. An average of 801 per year! If these players are involved in further transfers to other clubs, the Brazilian clubs which develop them have the right to claim compensation as part of FIFA's laws - albeit having to claim it within the 18 months period.
Apparently there are a number of clubs in Brazil, even in areas such as Rio de Janeiro & Sao Paulo, missing out on these potentially critical revenue stream from abroad due to lack of awareness of transfers involving former youth team players.

There are two FIFA laws invoking potential compensation to clubs:

Compensations - Solidarity

* a player which has played at the club from 12 to 23 years of age is considered as being developed by the club
* From 12 to 15 years of age the compensation is 0.25% per year. From 16 to 23 years of age the compensation is 0.5% per year.
* it is valid in international transfers until the end of the player's career.


Compensations - Formation of Player

* Valid for players at the club from 12 to 21 years of age which are then transferred abroad at the end of their contract. Up to 23 years of age, the club must be compensated by the club purchasing the player.
* FIFA defines the financial values to the confederations from where the clubs involved are from (both the buying and selling clubs). The value varies from R$43k to R$250k per year of development at the club (£10k to £61k per year).

In Grêmio's case, the transfer of Emerson from Juventus to Real Madrid in 2006 generated the largest compensation so far for the clubs' coffers - almost R$950k/ £231k. The club was entitled to 3.5% of the value of the transfer (R$32million/ £7.8 million) due to the development of the player at the club from 1992 to 1997.