Third-party ownership: Increasing competition or player exploitation?

Earlier this year, UEFA General Secretary Gianni Infantino slammed the practice of third-party ownership in football claiming it damages the "sporting philosophy of financial fair play". In addition, the often outspoken and controversial Michel Platini, whose main concern is that TPO agreements result in capital flowing out of football, has started to lobby FIFA and promised to issue a European ban even if FIFA fail to make a ruling.

TPO is a contractual agreement between a player and an agent in which, for agreed sum of money, the player sells his league registration rights and/or a percentage of his future economic rights (wages, sponshorship, endorsements). TPO agreements are especially popular in South American football (where the majority of clubs are cash poor) and typically the agent will attempt to sell the player to a European club to make themselves a tidy profit.

After the Tevez & Mascherano saga back in 2006 the FA became the first regulatory body to outlaw the practice and strictly stated that no player registered in England is allowed to hold a third party interest. If an English club wants to buy a player who is (partly or fully) owned by a third party they must first buy out the third-party and obtain 100% of the player's registration.
Kia Joorabchian: agent responsible for transfering Tevez and Mascherano to West Ham in 2006

TPO agreements rose to prominence approximately a decade ago when a number clubs in Brazil were struggling financially and were in desperate need of capital. Clubs turned to private finance and put up a player's registration as collateral (security). A player's registration is highly liquid - if the club default on the loan then the agent can sell the registration to a different club and recover their investment.

Over a couple of years the parties and terms involved in a TPO agreement evolved. Companies began to seek young aspiring footballers and agree a deal directly with them. The majority of young players were keen to agree such deals because of the attraction of short-term riches.

Critics of the TPO practice claim that the player is treated as a commodity and could be manipulated or pressured into moving clubs just to allow the agent to make a profit on the sale.

I must say that, to date, I am not aware of any cases of forced transfers but there have been a couple of questionnable transfers, including Radamel Falcao's recent transfer to AS Monaco despite the player drawing strong interest from many elite clubs.

Conversely, there are many experts who, provided that both parties act fairly and responsibly, look favourably upon TPO agreements. They claim that having an agent who has a vested interest in the player's career will mean that they will always act in the best interest of the player. For example, it is claimed they are likely to negotiate harder for better wages, develop and use industry contacts to after lucrative sponsorship deals.

Jean-Louis Dupont, the sports lawyer who was responsible for 1995 Bowman ruling, publically criticised the FA's "over-reaction" and questioned the legality of completely banning TPO agreements. "The main principle under EU law is the freedom of enterprise, where the restriction is the exception."

As seen in the case of Tevez and Mascherano, TPO agreements can result in smaller teams attracting better players. Instead of having to pay 100% of the market value for the player, a club could purchase a 'smaller slice' and allow the agent to retain his stake. In theory, this can only lead to a greater level of competition in the game - a win/win for all fans of the game.

The effects of TPO agreements is a highly polarised topic, but no matter who you agree with, it appears unlikely they will be allowed for much longer. One thing is clear though, if the practice is stamped out, the biggest losers will be South American clubs and players who rely so heavily on exporting their talent into the European leagues

I think Neymar's agent summed true situation up nicely. "They [FIFA] are taking no account of local specificity and how football is financed in each market".

"The issue [TPO] needs to be addressed properly and FIFA need a full understanding of what it actually means".

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