Last week, The Guardian revealed a UEFA scheme designed to suppress and ultimately eliminate the third-party ownership (TPO) of footballers’ economic rights—a report that was followed by a FIFA pledge to ban the practice within a three or four-year period.
The UEFA position, as laid out by president Michel Platini in March, holds that TPO “threatens the integrity” of competitions, “damages football’s image, poses a long-term threat to clubs’ finances and even raises questions about human dignity.”
“I have been constantly warning for years that this practice, which is becoming increasingly widespread, is a danger to our sport,” Platini remarked at the time.
The thing is—and this should hardly be surprising—the issue of outside investment within the player market is hardly cut and dry, which is no doubt part of the reason for FIFA’s inaction on the matter since initially promising to have it outlawed in 2007.
There are several questions, approaching the subject from various sides, which must be considered before firm action is taken. And even then, the process of clamping down on TPO will surely leave numerous parties much aggrieved, as the revelations over what it accomplishes stand to be widely and diversely interpreted.
Does TPO create a false economy?
Yes. When a club can retain the registration of a player they might not otherwise be able to afford because of outside investment, the transfer market is falsified.
In the case of Neymar’s 2013 move from Santos to Barcelona, for example, the Brazilian club was likely able to withstand interest from the likes of Chelsea and Real Madrid due to their stake of just 55 per cent in the attacker. Third parties DIS Esporte and Teisa artificially strengthened Santos’ position, which consequently inflated the fee.
Incidentally, DIS Esporte’s mass purchase of economic rights in the latter years of the previous decade ended up before the courts given the miniscule fee of €1.25 million paid for a handful of Santos players, the most high-profile of which was Paulo Henrique Ganso.
But the transaction also revealed the club’s desperation for cash—a common condition in many South American and European leagues.
The free-market ideal of the transfer system is mostly to the benefit of a relatively small number of clubs, and ironically the likes of Santos have turned to another free-market principle—investment—in order to bolster their positions.
So while TPO does, indeed, create a false economy, restrictions imposed on the practice would likely serve to simply turn it into a more exploitative one.
Does TPO limit a player’s ability to control his own destiny?
Yes, and it’s here that third-party ownership becomes an moral issue.
In 2004 the Media Sports Investments (MSI) company founded by Kia Joorabchian reached a deal with Brazilian club Corinthians that provided an immediate cash injection in return for a majority of profits over a 10-year period. MSI then bankrolled the acquisitions of Carlos Tevez and Javier Mascherano from Boca Juniors and River Plate, respectively, and kept for themselves a stake in the players’ economic rights.
In 2006 Joorabchian ended his relationship with MSI but took with him both Tevez and Mascherano, the latter of whom was controlled by the Global Soccer Agencies and Mystere Services companies—each a Joorabchian enterprise.
The two players were transferred to West Ham following that summer’s World Cup, although Mascherano wound up toiling in the reserves amid rumours surrounding his per-match bonus clauses.
Liverpool took him on loan in January 2007, but to do it they had to receive special dispensation from FIFA as the midfielder had already represented two clubs over the course of the calendar year.
Mascherano’s is merely a high-profile example of a player’s ability to play being shackled, but it’s a set of circumstances no doubt mimicked on smaller scales all the time. And given the European Union’s Freedom of Movement for Workers legislation, it doesn’t take a long ruler to connect TPO to potential legal ramifications.
Does TPO amount to a conflict of interest?
Yes, and Joorabchian is Exhibit A. For rather than a player’s rights being negotiated exclusively between the buying and selling clubs, an outside investor—typically linked to the seller—will affect the transaction based on a separate economic interest.
Football agent Jorge Mendes, for example, continues to get rich off the non-stop transfers of his clients.
It was only last year that James Rodriguez swapped Porto for Monaco—a move for which Mendes’ brokerage company Gestifute was paid €4.4 million—but in July the Colombian sealed a lucrative switch to Real Madrid.
Mendes is thought to control the playing rights of numerous players through his Quality Sports Investments group of companies, and once again it’s a short line that connects the dots between an invested stake and the objective of maximizing its value.
While playing the transfer market as an investment isn’t illegal under current regulations, doing it for the express purpose of jettisoning a player from one destination to another while recouping a fee would seem to cross an ethical line.
Is there a consensus on TPO legality?
No. While third-party ownership is prohibited in England, France and Poland, it is not only permitted but also considered a vital component to the football economies in numerous countries, including Portugal and Spain.
Its prevalence on the Iberian Peninsula has only grown since the credit crisis of 2008, after which many clubs in the region found revenues harder to generate and bank loans more difficult to secure. TPO arrangements provided, and continue to provide, the cash injection they needed, even if the payback was, and is, ultimately steep.
In Brazil, as well, TPO is considered integral to the player market, with as many as 90 per cent of the country’s professional players somehow linked to outside investment, according to a 2013 Soccerex report.
This is why Brazil has repeatedly balked at moves to ban the practice, and their resistance—as well as opposition within Portugal, Spain and other jurisdictions—is likely why FIFA has so far been reluctant to act on the issue.
These and other questions will no doubt shape the TPO debate going forward, and while both UEFA and FIFA have been recently rattling their sabres in the direction of outside investment, history and practicality suggest a legislated conclusion to the matter is still some way off.