Ban third party ownership of footballers across Europe to avoid distorting competition and undermining the integrity of football, says expert

Out-Law News | 31 Jan 2014 | 4:22 pm | 3 min. read

Football governing bodies should act now to prohibit third party ownership of players to prevent domestic and pan-European competitions being undermined, an expert has said.

Sports law specialist Trevor Watkins of Pinsent Masons, the law firm behind Out-Law.com, said that it was wrong that third party ownership of players was permitted in some European countries and not others. He called for an outright ban on third party ownership on the basis that it "has such a fundamental ability to distort competition and cast into doubt the integrity of the sport and key parts of it such as the transfer system".

"European football authorities need to be united in their approach to third party ownership of players," Watkins said. "The conflict of national regulations across this issue creates an uneven playing field and has the potential to distort competition in pan-European tournaments such as the Champions League."

Watkins was commenting after the Guardian reported that documents it found appeared to link Chelsea with businesses involved in part-owning the economic rights of footballers based outside of the UK.

Some footballers sell a percentage of their economic rights to investors. This may mean that those investors have rights to a share of players' income from commercial sponsorship deals or that they are due a cut of fees paid during transfers between clubs. The arrangements can mean that clubs only have to pay a proportion of a players' worth in a transfer fee because the third party investors provide the balance of the fee due in return for a share in the player's rights.

Football authorities in England, France and Poland have banned teams in those countries from registering or utilising players whose rights are owned, or part-owned, by third parties. However, other national football authorities in Europe have not banned their clubs from sharing ownership of players' with third parties. UEFA, the governing body for football across all of Europe, has not mandated a ban but has lobbied world governing body FIFA to do so. Third party ownership of players is particularly prevalent in South America.

When clubs in England wish to buy players whose rights are split between the selling club and third party business those clubs must ensure those players buy back the third party's share in them so that they can be purchased "clean" by the English clubs, Watkins said. Clubs that fail to ensure that happens risk falling foul of FA and Premier League rules, he added.

Watkins said that third party ownership arrangements can unfairly provide clubs with "economic fire power" they otherwise would not have if operating in the transfer market alone and without an investment partner. It can enable clubs to acquire players they could otherwise ill afford to. He said the arrangements also has the potential to allow clubs with ties to investors in players to exert an element of control over the transfer market by influencing which clubs players move to.

There is also the potential that third party ownership arrangements allow clubs to monitor approaches made for players by their rivals and to be privy to the contractual arrangements between players and their existing clubs, he said. Watkins added that in an extreme example, the likelihood of an outcome in any particular competition or game could be materially affected at the direction of those holding the rights to players.  

These effects of third party ownership would likely undermine the integrity of the game and result in the distortion of competition, Watkins warned.

"With the transfer window coming to an end, the burning issue is where the line should be drawn on the role investors should have in player ownership in a market where there is substantial economic value in those players," Watkins said. "Practically, with many clubs still struggling to comply with UEFA rules on financial fair play, any help they can get in funding is bound to look attractive."

"However, for football to preserve its commercial value and attractiveness to sponsors and arguably the belief of the fans the authorities need to ensure there is no actual, or perceived, distortion of competition or an attack on the integrity of the game. Fair competition and an uncertainty of outcome is the bedrock on which the commercial rights market has been able to grow, which benefits clubs and the game as a whole," he said.

"Third party ownership is of no meaningful benefit other than to those investors who make a return or might seek to influence the game through what many have equated to 'indentured slavery'. Rather than struggle to contain what could become a Europe wide disease, the simplest thing is to outlaw it altogether for the long term benefit of football," Watkins said.