Third party ownership, also known as a TPO, is when the transfer rights of players are wholly or partially owned by a third party other than the club the player plays for. Since 2006, this practice is something that is already prohibited in England ever since the media interest surrounding Carlos Tevez and Xavier Mascherano’s transfers to West Ham United.
This new blanket ban by FIFA came in to force on the 1st January 2015 and was implemented at Article 18er of the FIFA Regulations. It states:
“No club or player shall enter into an agreement with a third party whereby a third party is being entitled to participate, either in full or in part, in compensation payable in relation to the future transfer of a player from one club to another, or is being assigned any rights in relation to a future transfer or transfer compensation.“
This ban does not come into play until 1 May 2015, any contracts which involve this kind of agreement pre-dating the new rules will be allowed to run its term and any new agreements made between 1 January 2015 and 1 May 2015 can not exceed the duration of one year.
These new rules created by FIFA have been applauded by many supporters, notably by UEFA President, Michel Platini, who in a recent interview described TPO as “a type of slavery that belongs in the past”; going on to say, “Today it is shameful to see some players with one of their arms belonging to one person, a leg belonging to a pension fund located who knows where and a third person owning his foot.” . However, there are two sides to every story and this ban isn’t welcomed by everyone. Notable arguments are that without third party ownership many clubs will struggle to keep up with the pace set by the European giants such as Manchester United, Real Madrid or Bayern Munich. An example of success is Atletico Madrid who won La Liga as well as make the Champions League final last year, through the use of such schemes.
This method of investing in players, that clubs could not otherwise afford, is predominantly seen in South America; however the biggest opposition to FIFA’s ban has come from Europe. On 9 February 2015, the Liga de Fútbol Profesional (LFP) and the Liga Portuguesa de Futebol Profissional (LPFP) denounced the world governing body to the European Commission for anti competition agreements and abuse of dominant position by them.
The above claims are made under Articles 101 and 102 of the Treaty on Functioning of the European Union, which deal with anti-competition practices. These articles state that:
“The following shall be prohibited as incompatible with the internal market: all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the internal market.”
“Any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it shall be prohibited as incompatible with the internal market in so far as it may affect trade between Member States.”
Sports governing bodies must obey this treaty as they are classed as economic operators. As a result, FIFA is under the obligation to obey Articles 101 and 102.
The LFP and the LPFP are arguing that as a result of being bound by the TFEU, FIFA have contravened this European legislation by restricting the freedom of competition by stopping clubs, that use TPOs to compete on the European market, from using them.
There is yet to be a response from the European Commission on this newly instated competition claim from the Spanish and Portuguese FAs, but if this claim was to be successful FIFA could be looking at a fairly hefty fine as well as the possibility of being liable for damages to clubs, players and companies involved in TPOs.
A ruling such as the one that is sought by the LFP and LPFP could have repercussions closer to home, this could mean that the FA Rules banning TPOs could be illegal. Therefore, re-opening the litigation on this seemingly ugly side of the beautiful game.
Written by guest blogger Steven Vettorel.