Third-party ownership in association football

Third-Party Ownership (TPO) in association football is the ownership of a player's economic rights by third-party sources. The third-party—which can be an agent such as a football agent, an agency, such as a sports-management agency, a company, investors such as a hedge-fund, or a single investor—"takes ownership of all or part of the financial rights to a player".[1][2] In some cases when a footballer is sold, the TPO, not the football club, can benefit from transfer fees and contract negotiations fees.[1] Note that this differs from co-ownership in football, where a player's transfer rights are shared between two clubs.[3]

The practice has also been widely used in football in South America, particularly in countries such as Brazil and Argentina, with a system of players, clubs, agents, teams, and investors involved. It is associated with football clubs with few financial options that face financial hardship, and are sometimes insolvent.[1] By 2007, TPOs had become common practice in football in Portugal, Spain and Russia.[1]

According to a 2007 article in The Guardian and academic articles,[3] businessmen or other investors buy shares in the economic rights of young players and often cover the costs of their training and accommodation. In return they are entitled to a percentage of a player's future transfer fee.[4] A 2016 article in the Mirror, explained how third-party owners may either purchase a percentage of a player's "economic rights" from the club, or even purchase a player's contract.[3] Owning the contract allows the third-party owner to increase profits by "parking a player" at a club temporarily until the player's value appreciates, at which time he is sold to another club and the agent earns a percentage of the transfer fees.[1]

In April 2015, FIFA announced the banning of third-party ownership, and specifically prohibited either clubs or players from entering into economic rights agreements with third-party investors.[5] The ban took effect on 1 May 2015. The European Parliament also announced a similar ban in European sports on 11 November 2015 following the passing of Rule 136 of Parliament's Rules of Procedure. In a written declaration, the European Parliament states that third-party ownership raises concerns over the integrity of competitions and introduces risks of criminal activities into sports.[6]

According to a 2015 Bloomberg News article, the Football Leaks uncovered secretive "financing practice for the global sport" with "one of the biggest firms investing millions in soccer-player futures".[7]

One method of circumventing the 2015 FIFA ban is to utilise a floating charge over designated accounts where the proceeds of player transfers is paid into.[3] This was notably used by FC Porto.[3]

  1. ^ a b c d e Richards, Alex (27 September 2016). "What is third-party ownership and how does it affect transfers? All you need to know". Retrieved 11 October 2017.
  2. ^ "Football Leaks: The Dirty Tricks of Doyen Sports". The Black Sea. 21 December 2016. Retrieved 11 October 2017.
  3. ^ a b c d e Maciel, Matteo; Walton, Adam (1 March 2019). "Can player economic value rights be used as collateral?". The International Sports Law Journal. 18 (3): 185–209. doi:10.1007/s40318-018-0140-0.
  4. ^ Conn, David (21 March 2007). "Hammers face a pounding over third-party player agreements". The Guardian. Retrieved 28 July 2010.
  5. ^ "Third - party own ership of players' economic rights" (PDF). FIFA.com. Archived from the original (PDF) on 24 January 2016. Retrieved 22 January 2016.
  6. ^ "WRITTEN DECLARATION submitted under Rule 136 of the Rules of Procedure". Europa.eu. European Parliament. Retrieved 22 January 2016.
  7. ^ Panja, Tariq (23 November 2015). "World Soccer's Financing Secrets Revealed in Leaked Documents". Bloomberg. Retrieved 11 October 2017.