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Another facet of this is that it's insanely easy to get an Italian passport - you just have to prove that there's someone in your ascendance who was an Italian.

Doruk

This is quite an important bug as the same problem appears in Turkey many clubs in the same division form some sort of bond in which players are loaned between clubs helping in future transfers as well this is especially done between the bigger clubs forming bonds with the smaller ones. In fact affiliation already present in the game get canceled at the end of the first season because the clubs are in the same division.

As for Italy what can be done is this:

Clubs can only register 1 non-EU player for each transfer window, but can sign any number of non-EU players each window

So the non-registered players would be loaned out until the next transfer window and than they can join their original club as if they were a non-EU player being transfered from another Italian club. It's not exactly the same thing as it is in real life, but looks to be the best way this can be implemented into the game. As for the Passport thing well I guess nothing can really be done for that in the game. Or maybe an option can be implemented into the game in which clubs can apply for Italian citizenship for player from countries that have people likely to have Italian heritage. FOr example the game could recognize their last names as being Italian so the player can gain citizenship on the basis that their last name is Italian if it is really that easy to get Italian citizenship or that they come from a country where having Italian heritage is common like from Brazil or Argentina.