Southampton chief Rupert Lowe called for changes to the academy system after Theo Walcott's £12m move to Arsenal.
Lowe (left) was disappointed to lose Walcott
As Walcott had not signed professional terms Lowe said he could have ended his scholarship agreement and they would have received limited compensation.
"This has not put us in a strong negotiating position and we have had to make the best of a very unsatisfactory situation," Lowe told the club website.
"It needs to be remedied before the academy system is discredited."
Walcott had signed a pre-contract agreement to sign as a professional with the Saints on turning 17 in March.
But the player and his family decided his future was at Highbury and the Saints decided to listen to offers.
Lowe added: "Theo has shown what he is capable of in his first season of senior football and I know every Saints fan will feel let down.
"The sad fact of this transaction is that every scholarship agreement, which is a standard FA document, contains a provision for the scholar to cancel the agreement for any reason.
"We have therefore been put in a situation where we either negotiated compensation with Theo's preferred club or faced ending up in front of the Football League Appeals Committee following cancellation.
"The largest upfront award that body has ever made was £400,000.
"Had Theo joined an overseas club the situation could have been even worse with no appeal committee and payment only of Fifa compensation on a set scale.
"Perhaps England should move to a system such as that in the Czech Republic where young players can be signed as a professional at 16.
"The game needs young people like Theo but this won't happen if the clubs who produce them suffer the same fate as we would in this case."
Despite his disappointment in losing their prize asset, Lowe paid tribute to the coaches who had developed Walcott and wished the teenager the best for the future.
Lowe added: "What's done is done but I hope for everyone's sake the necessary changes will be made to stop this happening again.
"On a more positive note, our academy has produced the most valuable 16-year-old ever and Huw Jennings, Georges Prost, Malcolm Elias, Stewart Henderson and all the Academy team should be congratulated on what they have achieved.
"As for Theo, he is a very gifted young man and I sincerely hope he fulfils his potential in the game.
"He has been a credit to both our academy and senior side and goes with our warmest good wishes for his future. In the meantime, his legacy will be available to George Burley to judiciously strengthen our team."