Third-party ownership in association football

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Third-party ownership in association football is the ownership of a player's economic rights by third-party sources, such as football agents, sports-management agencies, or other investors. Note that this differs from co-ownership in football, in that system the player's transfer rights are shared with another club.

The involvement of investors in the 'ownership' of players is a common practice in football, particularly in Brazil and Argentina, where many clubs are insolvent or financially limited. 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.[1]

Regulations[edit]

At its AGM in June 2008 the English Premier League drafted new rules L34 and L35 to outlaw any type of third party ownership of players from the beginning of the 2008-9 season.[2] The league's rule U18 had previously stated that the third parties were not permitted to "materially influence" a club's "policies or the performances of its teams".[1]

In October 2007 it was reported that Football's international governing body, FIFA, was acting to ban 'third-party' ownership.[3] Article 18 of FIFA's Rules on the Status and Transfer of Players does restrict the practice, at least as far as a third party's influence is concerned, stating that: "No club shall enter into a contract which enables any other party to that contract or any third party to acquire the ability to influence in employment and transfer related matters its independence, its policies or the performance of its teams".[2]

Criticism[edit]

Third-party ownership became highly controversial in English football after the arrival at West Ham United of Carlos Tévez and Javier Mascherano from the Brazilian club Corinthians in August 2006. One high-ranking English official called it, "an unedifying trade in young people that rips the heart out of clubs which try to develop players".[4]

Gordon Taylor, chief executive of the Professional Footballers' Association, said of third-party ownership: "It is like trading in human beings. And it's destabilising for outsiders to have a financial interest in players."[5]

Defence[edit]

Defenders of the practice said that it constitutes a way of sharing the burden of investment in a player. The 'super agent' Pini Zahavi, himself associated with third-party ownership and the companies that invested in players, said: "In England they don't understand it at all. It's easier to buy a player who you are unsure about for £10m if you are sharing the risk with a partner. Now, if the player becomes top-drawer and is sold for £30m, then of course you may feel stupid only to own half. But if the player turns out to be merely average or a failure, if he cannot even be sold, you will say, 'Fantastic, the disaster was not only mine'. That's exactly the way it works."[5]

The businessman Kia Joorabchian, heavily involved in the third-party ownership of players, defended the arrangement, calling it "the South American model and a model that appears all over Europe".[6] In his view third-party transfers are "a way of bringing outstanding players to clubs that would not be able to afford them ordinarily. So they increase the competition", further explaining: "What happens, in Brazil particularly, clubs cannot afford to buy a player. So they go to a business, a bank, a major supermarket, an individual, a person, a wealthy individual and say: 'We want Mr X. You put up 70, 80, 100 per cent of the money, let him play here.' It is a little bit like a loan deal between two clubs, except it is a loan deal between the club and a third party".[7]

After the Premiership introduced rules against third-party ownership, lawyer Jean-Louis Dupont claimed that it was illegal.[8]

Examples[edit]

Corinthians[edit]

In 2004 the Media Sports Investments fund, founded and headed by Kia Joorabchian, purchased a controlling 51% of Corinthians in a 10-year deal. In the wake of MSI's involvement a stream of new players arrived at the club, players who were engaged to play for Corinthians but whose economic rights were partly or wholly owned by the investment fund. By 2006 MSI was listing as its investments not just Corinthians itself but also the players Carlos Tévez, Marcelo Mattos, Gustavo Nery, Roger, Javier Mascherano, Carlos Alberto, Sebastián Domínguez, Marinho[disambiguation needed],[9] Rafael Moura[10] and Nilmar.

Carlos Tévez and Javier Mascherano[edit]

On 31 August 2006 Carlos Tévez and Javier Mascherano moved to West Ham United in the English Premier League from Brazilian side Corinthians for an undisclosed fee.[11] It subsequently emerged that Tévez's economic rights were owned by Media Sports Investments and a second company, Just Sports Inc.,[12] while Mascherano was jointly owned by Global Soccer Agencies and Mystere Services Ltd.[1][13] All four companies were represented by Kia Joorabchian and the deal was brokered by MSI, whose president Joorabchian had been until June 2006.[11][14]

Due to irregularities in the player's contracts, West Ham United were eventually fined a record £5.5 million by the Premier League.[15] However, despite the fine, Tévez was allowed to continue playing for West Ham United.[16] Both players remained in England after the controversy; Tévez moved to Manchester United while Mascherano went to play for Liverpool. Manchester United failed to agree a price with Tévez's owner and he left for city rival Manchester City in summer 2009. Joorabchian subsequently claimed that many Premier League players and teams conceal their third-party ownership of players.[17]

The Premier League took steps to outlaw third-party ownership in 2008.[18]

Anderson[edit]

In 2007 the Brazilian footballer Anderson was transferred from Porto to Manchester United. As part of that deal Porto paid the agent Jorge Mendes a reported £4 million for his share of Anderson's registration. Mendes was said to have contributed 20% of the £3.75 million Porto paid Anderson's previous club, Gremio, to sign the midfielder in 2006.[19]

[edit]

In June 2008, the transfer of Brazilian player from Russian side CSKA Moscow to English team Manchester City was initially blocked by the Premier League while they investigated the third-party ownership of the player.[20][21] Jô, who had played at Corinthians before moving to CSKA Moscow in 2006, was associated with Media Sports Investments and Kia Joorabchian.[22]

In 2009 it was reported that the unnamed investors represented by Joorabchian were understood to own the economic rights to 60 or 70 players across Europe and South America. He was linked with Manchester City's failed bid for then A.C. Milan midfielder Kaká.[23]

Ramires[edit]

In June 2010 it was reported that Kia Joorabchian had secured a 50% share in the Brazilian midfielder Ramires,[24] then at Benfica but subject to transfer interest from across Europe, led by Chelsea in the English Premier League.[25][26] The deal was reportedly part of an agreement reached with Benfica president Luís Filipe Vieira the previous year at the time of Ramires's transfer to Benfica from Cruzeiro in Brazil.[25] A further 30% of the player's rights were reportedly owned by Joorabchian's associate Pini Zahavi.[27]

Ramires completed his move to Chelsea on 13 August 2010 on a four year contract for a reported fee of £17million.[28] It is thought that Joorabchian would receive £6m of this fee.[29]

Portugal[edit]

As third-party ownership is allowed in Portugal, agent company GestiFute, and investment funds bought part of the economic rights of the players, namely Bebé, Deco, etc. Porto, Sporting and Boavista once partnered with First Portuguese to set up an investment fund, while Benfica set up its own fund – Benfica Stars Fund.

A part of football agent company and bank fund, José Bosingwa was once shared by Porto and International Foot,[30] while Manuel Fernandes was partly owned by Global Sports Agency.[31] Porto also sold 37.5% economic rights of João Moutinho to Mamers BV.[32] After acquired 75% economic rights of Walter, Porto re-sold 25% economic rights to Pearl Design Holding Ltd. for €2,125,000.[32][33] Aly Cissokho's 10% rights was once held by "Onsoccer – International Gestão e Marketing, S.A.", an agent until he was sold to Lyon.[32]

South America and rest of the world[edit]

Traffic Group owned Brazilian Gustavo[34] and 50% of Mozambican Mexer.[35] It also acquired rights of Diego and Lenny from Fluminense in January 2008.[36] In 2009, it acquired all the rights of Alan Douglas, 50% of Maicon, Dalton, Raphael Augusto; 30% of Sandro, Bob; 25% of João Paulo, Brayan and Matheus Carvalho; 20% of Tartá.[37] It owned 25% shares on Hernanes until he transferred to Lazio.[38] FC Barcelona bought Keirrison and Henrique from Palmeiras, but on its annual report, it shown the payment were transferred to Desportivo Brasil Participaçoes Ltda.[39]

Turbo Sports owned Colombian 80% of Pablo Armero's rights.[40]

From December 2010 to January 2011, TEISA bought 5% and 20% rights of Neymar and Elano respectively.[41][42]

Others[edit]

Argentina
Brazil
Chile
Colombia
Uruguay

See also[edit]

References[edit]

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