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It allows you to move out fringe players to balance the books while keeping a "safety valve" if your starters get injured or decline. The Cons:
Use it on 18-21 year olds who aren't quite ready for your first team but have high potential. buy back clause fm12
Even if the club accepts the bid, the player can still reject the contract if they feel they've outgrown your club or dislike you. It allows you to move out fringe players