To start off 2016 on the right foot, the Sports Intergroup decided to mark the occasion by ambitiously setting up two consecutive high quality events. If the organizers were regrettably forced to cancel the high level forum of FIFA presidential candidate at the last minute, they fortunately proposed a highly qualitative debate about the very controversial topic of Third-Party Ownership.
FIFA bans TPO/TPI
The Third-Party Ownership, most commonly called TPO, is defined as the Agreement between a Club and a third Party, in which a third Party acquires a percentage of the economic right or a future credit related to the eventual transfer of a certain football player. When the third-party takes the form of an investment group, some prefer to use the term TPI, for third-Party Investment. This practice, originating from South America in the eighties, appeared in European football to financially support smaller leagues and clubs, but is vividly controverted due to the opacity and human rights-related issues. FIFA decided to ban TPO in May 2015, which according to what they say, were faced no other alternative.
Lack of transparency, integrity issue and human rights
UEFA goes in line with FIFA decision, and insists on the fact that TPO is deadly for the clubs, the players and the integrity of sport in general. Julien Zylberstein, legal advisor at UEFA, declared “TPO might be viable in the short-term but the practice will create dependency in the long term with the accumulation of debts (abusive clauses, clubs loose control, etc.)”. He further argued that “TPO impedes the freedom of the players with their binding contracts, imputes the integrity of competition (match-fixing, criminal activity) and contribute to abuse young vulnerable players. Zylberstein was back up by Jonas Bear-Hoffmann, from FIFPro and Omar Ongera from FIFA, who deplore the fact that TPO cannot be regulated because on top of all that “it is under no jurisdiction of sport”. This represented as many reasons for FIFA to ban TPO from the world of football.
An essential instrument to compete
If the practice became so popular in some part of Europe (estimated share of 40-50% in Eastern Europe, and 25-30% in Portugal), it is because it serves the interest of many, and often represents the only way for smaller clubs and leagues to compete with giants, such as the English Premier League. Nélio Lucas, CEO of Doyen Sports, a well-known investment group, embraces “this opportunity to bring money into the industry of football, in which 80% of clubs have no liquidity”. While strongly contesting the moral legitimacy of FIFA on the topic, he insures “transparency is guaranteed since each contract contains a clause that obliges clubs to send contracts to regulators: the leagues, the federations and the stock market”. Daniel Lorenz, from FC Porto, fears “the ban of TPO will give birth to emerging parallel markets and clubs will find creative alternatives because they can’t compete otherwise”. Finally the President of La Liga, Javier Tebas, added, “we need to find a way to regulate it, because otherwise the money will simply go somewhere else, maybe on a black market”.
Regulation as a solution?
For some stakeholders, a strong regulation of the norms could represent the future of TPO. Wouter Lambrecht, head of Legal Affairs of European Club Association argues, “As any financial tool, it can work if it is tightly regulated”. His idea is to create “a TPO library on which all agreement should be uploaded to insure perfect transparency”. Georg Pangl, General Secretary of the European Professional Football Leagues goes even further and wonders, “if we shouldn’t let the leagues decide wether or not to use TPO based on peculiarities of local markets”. The question deserves the right to be asked. The Parliament and the co-President of the Sports Intergroup, Marc Tarabella, prefer, for their part, to remain prudent. Indeed considering regulation could be examined as a solution to promote a competitive sport, but not at any price.