A LOOPHOLE in international transfer rules has seen York City's gamble to keep star striker Clayton Donaldson backfire - as they will not receive a penny from the deal which takes him to Scottish club Hibernian.

The 20-goal hitman has signed a pre-contract agreement to join the Edinburgh-based Scottish Premier League side in the summer and the Minstermen have learned that, under FIFA rules, they are not entitled to any compensation.

The Press can reveal that Scunthorpe United doubled their initial bid of £100,000 last week, but City rejected the offer because they can net as much as £400,000 if Donaldson helps fire them back into the Football League.

It's a gamble which may not now pay off.

Under FA rules, clubs must receive a payment for out-of-contract players under the age of 24. This rule is in place so that clubs receive a reward for developing young players and, when the two clubs cannot agree a fee, the price is set by a tribunal. Under FIFA rules, however, the player must be under 23.

City would therefore have received a fee had Donaldson signed for another English club, but Scotland has its own FA and so this transfer comes under FIFA rules. And, as Donaldson turns 23 next month, his move to Hibs means City are not entitled to a payment.

Currently in the middle of a three-match ban after being sent off against Kidderminster Harriers, Donaldson watched Saturday's 2-2 draw with Grays in the stands before travelling to Edinburgh the following day with his agent Andy Sprott to put pen to paper for Hibs.

City were unaware of his bombshell until managing director Jason McGill, on holiday in Italy, was contacted by Hibs late on Sunday night.

Although KitKat Crescent chiefs described the sequence of events as "devastating", they have reiterated that Donaldson will remain a York player until the end of the season.

They have also rejected a £50,000 Hibs bid to take him to Easter Road immediately.

In a statement, McGill said he hoped the transfer arrangement would not unsettle Donaldson and that he would "still perform to the best of his ability for City."

Donaldson's impending transfer will be a bitter blow for City manager Billy McEwan, who has been widely credited with revitalising the player's fortunes.

Bradford-born Donaldson struggled as a trainee at Hull City and was farmed out on loan to Harrogate Town, Scarborough and Halifax before finally moving to York where he has scored 38 goals in 75 appearances. He is currently the Conference's leading scorer.

McGill said: "Before Clayton Donaldson joined York City it is fair to state he was a player who had enjoyed little success. It is only the work of Billy McEwan and York City Football Club that has made Clayton Donaldson the player he is today.

"It is devastating to think York City will receive absolutely nothing when he joins Hibernian at the end of the season."

An FA spokesman confirmed it was unable to act as the agreement had taken place outside its jurisdiction.

Sprott is the same agent who acted for last season's City top scorer Andy Bishop when the striker joined Bury. City did not receive a fee for Bishop.