Third Party Player Ownership (TPPO): Legitimate Financing Mechanism Or Threat To Sporting Integrity?
A seminar as part of the Sport Business Centre Seminar Series
Given by: Andrew Nixon, Sheridans LLP
Lankaster Lecture Theatre (University College London – UCL)
Malet Place (off Torrington Place)
Monday 4th November 2013 at 6pm
This event will operate under “Chatham House Rules” – no external reporting without the permission of the speakers
As it is anticipated that demand for attendance at this event will be very high please e-mail the following e-mail address to confirm your place at the event – RSVP to firstname.lastname@example.org
In this presentation Andrew Nixon discusses the arguments made for, and against, the practice of TPPO, and concludes by presenting some commentary on how the practice might most effectively be regulated to address the criticisms currently made of it.
Third Party Player Ownership in football is an economic practice which has grown in significance over the last decade, particularly in Latin America; although it is banned in England, France and Poland. The EPFL (Association of European Professional Football Leagues) (2012, page 22) defines third party ownership as follows: “…the partial or total ownership of `economic rights’ of a player by a third party (i.e. an entity which is not a club) which in the event of a future transfer, entitles such a third party to receive a share”. Essentially, investors, either individuals or companies, buy a percentage of a player’s economic rights in the hope that, if he becomes a successful player in the future, [that percentage, as reflected in the value of the transfer fee] can be sold for a large profit.
The main advantage for clubs acquiring players whose economic rights are, at least in part, owned by a third party, is that they can acquire these players more cheaply, as they do not have to pay the full cost of the player’s economic rights which are held by the third party. However, by the same token, when/if the player is transferred on then the club does not receive the full value of the transfer fee which goes to the third party.
In England, the Premier League introduced a ban on third-party ownership at the start of the 2008-09 season, primarily, it argued, in order to protect the sporting integrity of their competition. This followed the Carlos Tevez affair; West Ham United was revealed to have signed Argentinean international Carlos Tevez (now with Juventus) through a third party ownership arrangement but failed to disclose the arrangement. In addition, the owner of Tevez’s economic rights was able to influence when, and to which club, Tevez was transferred.
The main objections to the TPPO concept are as follows:
- It is morally repugnant for anyone to own the economic rights to another person’s labour and be able to trade these rights i.e. that it is a form of slavery;
- It interrupts the cascading of transfer fee payments from large “buying” clubs to smaller “selling” developing clubs (the ’Trickle Down’ effect), taking profits out of the football sector which might otherwise serve as a reward to smaller clubs for developing talent;
- It undermines the fundamental principle underlying the UEFA Financial Fair Play concept: that clubs should only be able to spend on playing talent what they can generate internally from the business;
- It raises particular challenges in terms of protecting the integrity of sporting competitions, as (part) ownership of the economics rights of a player(s) may allow the third party to exercise undue influence over the player, a potential threat exacerbated by the issue of anonymity of third party investors.
- It promotes player contractual instability by encouraging frequent transfers of players.
UEFA’s Professional Football Strategy Council (UEFA.org, 19th March 2013), made up of representatives of the UEFA, the ECA (European Clubs Association), the EPFL (the Association of European Professional Football Leagues) and FIFPro (the international players’ union), have called for a ban on TPPO.
- EFPL (2012). `Opinion Articles – Special Report on Third Party Ownership’, EPFL Sports Law Bulletin. 10: June-October 2012. Pages 33-80. Retrieved, 22nd October 2012, from: http://www.abreuadvogados.com/xms/files/02_O_Que_Fazemos/artigos_publicacoes/EPFL_-_SPORTS_LAW_BULLETIN_10.pdf
- UEFA.org (19th March 2013). “No place for third party ownership”. UEFA.org. Retrieved on the 27th October 2013, from: http://www.uefa.org/aboutuefa/organisation/generalsecretary/news/newsid=1931937.html
- Andrew Nixon/Daniel Geey Podcast on Third Party Ownership http://www.lawinsport.com/podcast/item/the-future-of-third-party-ownership-in-football
Andrew Nixon is a lawyer at Sheridans, a leading sports, media and entertainment law firm, where he is a Partner in the Sport Group. His practice focuses principally on regulatory, commercial, governance, disciplinary, arbitration and dispute resolution within the sport sector. Andrew’s clients include governing bodies, sports clubs, sports agencies and individual athletes. Recent work includes:
- Jimmy Bullard v Hull City AFC (Football Disciplinary Commission).
- Football League Sporting Sanction and FIFA Dispute Resolution Chamber Arbitrations.
- FIFA Dispute Resolution Chamber Arbitrations.
- Various agency disputes (player/agent; agent/agent; agent/club).
- Advice to multiple governing bodies on governance, policies and disciplinary rules (including selection dispute arbitrations).
- Regulatory and player/academy investment advice for a major Football Fund relating to economic and federative rights.
Andrew is regularly called upon as an expert in sports law by media outlets such as BBC, Sky News, Sky Sports News, Channel 4 and ITV. He has also written for numerous sports publications, including Law in Sport, World Sports Law Report, Sporting Intelligence, FC Business and Sports Business.
Andrew is also a Non-Executive Director of the English Table Tennis Association and sits on the Editorial Board for Law in Sport.
London WC1E 7EA
Follow Andrew on twitter @andrewnixon100
For further details on this seminar series contact:
Department of Management
Tel: 020-7631 6763