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June - October 2012

READ ALL ABOUT THIRD PARTY OWNERSHIPShould Third Party Ownership be prohibited or should it be permitted under certain conditions?How to guarantee the game’s integrity and financial transparency?What are the real risks? What are the real benefits?What’s the situation in Europe? And South America?

12 OPINION ARTICLESRichard Andrews; Jane Purdon; Victoriano Melero & Romain Soiron; Juan de Dios Crespo Pérez & Adam Whyte; Ariel Reck; Daniel Geey; Paulo Gonçalves; Fernando Veiga Gomes; Luca Ferrari; Mikhail Prokopets; Eduardo Carlezzo; Carol Couse.

And much more….

THE EPFL IN ACTIONLatest Legislation, Sports Regulations and Jurisprudence.

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CEO EDITORIAL 01TABLE OF CONTENTS01 CEO EDITORIAL02 EPFL IN ACTION

06 · European Leagues join in Istanbul07 · EPFL Countdown on Players’ Transfers Window Launched07 · EPFL hosts summit with Eastern European Leagues and Clubs

03 SPORTS LEGISLATION AND REGULATIONS09 · Lega Pro enters into Collective Bargaining Agreements with AIC and A.DI.SE.10 · Re-organisation of Eredivisie CV’s internal structure10 · All changes at SPL12 · Approval of Italian Lega Serie B’s Code of Ethics12 · Föreningen Svensk Elitfotboll signs Collective Bargaining Agreement13 · Spanish LFP reaches agreement on tax debt clearance14 · Football League clubs choose Financial Fair Play

04 JURISPRUDENCE16 · FIGC Disciplinary Committee, Judgement, 10 August 2012, Calcio

scommesse cases17 · High Court of England and Wales - Queen’s Bench Division, Judgement, 24

July 2012, case [2012] EWHC 2113 (QB) Leeds United Football Club Ltd v. The Chief Constable of West Yorkshire Police

18 · Swiss Federal Tribunal, 23 July 2012, 4A_134/2012, Olympique des Alpes (FC Sion) v. UEFA, Atlético de Madrid, Stade Rennais Football Club, Celtic and Udinese Calcio

19 · Court of Arbitration for Sport, 19 July 2012, CAS 2011/A/2625 Mohamed Bin Hammam v. FIFA

20 · Court of Arbitration for Sport, 10 July 2012 , CAS 2012/A/2824, Besiktas JK v. UEFA

20 · Scottish Football Association’s Appellate Tribunal, 16 May 2012, Rangers Football Club case

05 RESEARCH22 · An Overview of Third Party Ownership in European Professional Football by

Ezéchiel Abatan

06 OPINION ARTICLES33 · Third Party Ownership – Risk or Reward? by Richard Andrews38 · Third Party Investment by Jane Purdon41 · The dilemma of third-party ownership of football players by Victoriano

Melero and Romain Soiron45 · A review of third party ownership – Where do we go from here? by Juan de

Dios Crespo Pérez and Adam Whyte50 · Third party player ownership: current trends in South America and Europe by

Ariel Reck55 · Third Party Player Ownership: A UK Perspective by Daniel Geey61 · Brief Note for a positive view on player’s third-party ownership by Paulo

Gonçalves63 · Third Party Player Ownership, Again! by Fernando Veiga Gomes66 · Some thoughts on Third Party Ownership by Luca Ferrari70 · Third Party Players in Russia by Mikhail Prokopets73 · Investments in Economic Rights of Football Players: a Brazilian and

international overview by Eduardo Carlezzo75 · The International Transfer System and the Principle of Specificity of Sport by

Carol Couse

07 EPFL SPORTS LAW COLLABORATORS

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01 CEO EDITORIAL

The 10th edition of the EPFL Sports Law Bulletin, which we are proud of sharing with you, represents an important milestone in our strategy of consolidation of our Association as a knowledge leader and our commitment to positively shape the way our sport is regulated and administered.The EPFL Sports Law Bulletin is unique in its kind within the football universe. To our knowledge no other footballing body has ever produced something alike.

The launch of this pioneering editorial project, back in 2008, embodied an ancient personal aspiration. An aspiration underpinned by a strong determination. The determination to respond to what was then perceived as one of the most pressing needs, not only of the legal community, but also of all football executives and decision-makers: the need to provide them with the most relevant, updated and accurate information on the latest developments in the field of Sports Law and first-hand juridical insights on the most critical issues, regulations and jurisprudence related to sport in general and professional football in particular. Judging from the resounding impact and the ample recognition and encouragement echoed by our readers during these last four years, it is fair to say, without any presumption or false modesty, that we have achieved our goal. The EPFL Sports Law Bulletin has indeed imposed itself and is regarded, today, as a prestigious publication which has captured the interest of both the sports world and the legal community and rightfully earned their respect and recognition.It took us hard work to get to this position. But, being a lawyer and football executive for more than two decades, it also gave me an enormous personal satisfaction.

Over these first ten editions, we have brought to your attention many vital topics. We have assessed from multiple angles the relationship between sport and Community Law. We have identified the main threats posed to contractual stability and issued guidelines to further safeguard such fundamental principle, for the benefit of both clubs and players. The pages of our Sports Law Bulletin were also the meeting point of important reflexions on the regulatory frameworks governing the commercialisation of television rights in several countries and other pertinent aspects, such as players’ transfers, protection of minors or players’ agents and their financial dealings. We have also addressed the regulation of the online sports betting market at EU and national level and dissected a number of impacting legal cases. Cases like Granada 74, Webster, Matuzalem, Olivier Bernard, Bwin vs SCML or the FC Sion saga, among many others, without forgetting, of course, the QC Leisure case and its legal and commercial implications on the territorial selling of audiovisual rights within the European Union.

During these past four years we were fortunate to count with the regular collaboration of more than 50 preeminent columnists. To Adam White, Alexandre Mestre, Albino Mendes Baptista (a brilliant jurist and a friend who unfortunately is no longer among us), Ariel Reck, Benjamin Viard, Borja Garcia, Carol Couse, Cécile Huet, Chris Anderson, Claudius Schäfer, Daniel Geey, David Folker, Brigadier General Dick Andrews, Diogo Guia, Eduardo Carlezzo, Fernando Veiga Gomes, Georgi Gradev, Gerardo Planás, Holger Blask, Ivan Antipov, Jane Purdon, Jérôme Perlemuter, Jorge Ibarrola, José Eduardo Fanha Vieira, José Manuel Meirim, Juan de Diós Crespo, Laura Vilches, Luca Ferrari, Luca Tettamanti, Madalena Viara Pedreira, Marco Villiger, Maria Iglesias, Mario Galavotti,

Emanuel Macedo de Medeiros

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CEO EDITORIAL 01Mark Boetekees, Mark Goddard, Mathieu Moreuil, Matthew Reeb, Miguel Caba, Mikhail Prokopets, Nick Bitel, Nicolas Acker, Nicolas Gyss, Oliver Weingarten, Orlando Carvalho, Paulo Gonçalves, Pedro Velazquez, Philippe Diallo, Rhadamès Killy, Richard Parrish, Roberto Branco Martins, Robert Siekmann, Robert Pongracz, Romain Soiron, Ross Biggam, Ruggero Stincardini, Rui Botica Santos, Sam Miettinen, Serhat Yilmaz, Victoriano Melero and many others who have contributed to the success of this project we owe therefore a special word of appreciation.

By showing how important the legal analysis of sports matters is and how decisive legislations, regulations and jurisprudence can be for our game, the EPFL Sports Law Bulletin has propelled and influenced vibrant discussions within the football, legal and political spheres.

To celebrate the launch of this special edition, we have decided to introduce a brand new, fresh and rejuvenated look. We hope you will enjoy it!As far as content is concerned, we have also introduced several noteworthy innovations. Firstly, we have added a new chapter fully dedicated to research and, secondly, we have placed emphasis on a very special issue. In this edition focus is given to one of the most serious and controversial subjects of the moment: the so-called third party ownership of players’ economic rights.Opinions are openly divided on whether third party ownership should be banned or admitted. On one side, opponents argue that this practice of owning players’ economic rights is tantamount to the trade of human beings, represents a sword of Damocles on the fairness of competitions or lacks transparency. One the other side of the barricade, the defenders of the third party ownership see it as a vital source of financing for clubs and an activity which is ultimately lawful and widespread across Europe and the rest of the world. Discussions however seem to be dominated by emotions, intuitions and hearsay, rather than by concrete evidence and real knowledge. The current edition of the EPFL Sports Law Bulletin will hopefully invert this situation and provide, for the first time ever, a scientific, fact-based and unbiased assessment on the pros and cons of the third party ownership issue.The following pages contain thus an exceptional and exclusive survey developed by the EPFL Research Unit and as well as a series of opinion articles which examine the regulatory frameworks and existing realities in several football nations, such as the United Kingdom (England and Scotland), France, Portugal, Spain, Italy, Russia, but also Brazil and Argentina. Several critical questions are addressed here: should the third party ownership be prohibited or should it be permitted under certain conditions? And, if so, which regulatory measures would be appropriate to prevent the risks this practice bears for the game’s integrity and guarantee the necessary financial transparency? In the event it is outlawed, would third parties that have already invested in players’ economic rights be entitled to some sort of compensation? Could such ban be implemented worldwide? How? And how the alleged anticompetitive effects of such prohibition could be justified? The list of questions is truly endless…

To bring this enterprise to fruition, we have invited 14 prestigious contributors, who will offer us a diversified, multifaceted and certainly interesting perspective and give us some leads on what is, in their opinion, the best approach vis-à-vis this practice. For all these reasons, we are confident that this EPFL Sports Law Bulletin will contribute to elevate and enrich the debate in this respect and wish you a pleasant reading.

Emanuel Macedo de Medeiros Chief Executive Officer The European Professional Football Leagues (EPFL)

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European Leagues join in Istanbul

EPFL General Assembly, Istanbul, 6 July 2012.

All roads led to Istanbul for the EPFL’s last General Assembly of the 2011/12 football season, on 6 July 2012. Co-hosted by the Turkish Super League Clubs’ Union, the meeting of the European Leagues’ supreme body gathered senior representatives from all EPFL Members, as well as from FIFA and UEFA, headed by UEFA’s senior Vice-President and Honorary President of the Turkish FA Mr Senes Erzik.

The EPFL was welcomed by the Turkish Prime Minister, Mr Recep Tayyip Erdogan, and the Sports Minister, Mr Suat Kilic, who in their messages to the General Assembly praised the decision to bring such an important event to Istanbul.

The EPFL General Assembly addressed a number of critical and pressing matters, such as good governance in sport, sports betting integrity and legislative reforms, third party ownership, release of players for Olympic Games, the formation process of the World League Association and youth development, including a first-hand presentation on the EPFL Report on Youth Development in European Football.

On the occasion, the EPFL have noted the strategic objectives and priorities currently pursued by the Turkish Clubs’ Union to restructure Professional Football in the country and extended full support to the upcoming creation of a Professional League Organisation. At the end of the EPFL’s conclave, President Halil Unal, stated: “We are really proud to host the EPFL General Assembly here in Istanbul. We appreciate the EPFL’s acknowledgment of our credentials as the true representative body of the major Turkish clubs and our vital role within European Professional Football, as well as the overwhelming support we have received to launch the foundations of the future Turkish Premier League”.

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EPFL Countdown on Players’ Transfers Window Launched

EPFL 2012 Summer Transfer Windows Closure Countdown.

The EPFL announced the launch of its Summer 2012 Transfer Windows Closure Countdown on 8 June 2012. The system was available on the EPFL Official Website until 6 September 2012 at midnight.

This EPFL initiative was aimed at informing the whole football community, namely the Leagues, clubs, football administrators, players and agents, as well as the sports media and the wider public opinion, regarding the Players Transfer Periods in all its 30 member Leagues. All interest parties had,

once again, this unique tool at their disposal with accurate and up to date information related to the exact period remaining until the closure of the 2012 summer transfer windows in all major Leagues.

EPFL hosts Summit with Eastern European Leagues and Clubs

EPFL Summit with Eastern European Leagues and Clubs, Moscow, 4 May 2012.

On 4 May 2012, the EPFL gathered a hundred East European Leagues’ and clubs’ senior representatives in a special summit co-hosted by the Russian Premier League and National Football League of Russia.

Welcomed by opening addresses from the President of the Russian Premier League and EPFL Board Member Sergey Pryadkin and EPFL and Premier League Chairman Sir David Richards, the participants addressed a substantial number of key challenges facing professional football. The discussions also focused on particular topics impacting upon Leagues and affiliated clubs’ sporting and business models, such as:

• The current situation of professional football in East Europe - common concerns and challenges facing Eastern European football;

• Strategies and and best practice examples on how to organize a successful football event, with emphasis on event management from a sporting and commercial perspective, as well as the operation of the stadia as a whole, including safety, security and integrity policies; and

• Best practices to ensure the positive commercial development of football in Eastern Europe, considering key aspects like customer relationship management (including management of ticketing and hospitality), new media opportunities, selling of media rights and creation of a League TV channel as well as the relation between League/ club and sponsors.

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At the end of the Summit, the EPFL CEO Emanuel Macedo de Medeiros concluded the working session by stating: “This summit was indeed a success! Once again, we have gathered the first line of professional football industry with some of the most knowledgeable experts in stadia and customer relationship management of leagues competitions, as well as in the media, new media and marketing areas. We gave the floor to leagues, clubs and other key stakeholders. Common concerns, knowledge and best practice were shared in a constructive spirit. This is part of a global, proactive and inclusive strategy which values the crucial role which Eastern European Football plays and will play in the years to come”.

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Lega Pro enters into Collective Bargaining Agreements with AIC and A.DI.SE.

The month of July saw Italy’s Lega Pro reached two important milestones in the area of social dialogue. And all this in less than one week.

Agreement with Players’ UnionOn 7 July 2012, the Italian Lega Pro signed a new Collective Bargaining Agreement with the Italian Players’ Union (AIC) for a period of three years starting from the 2012/13 season.

The Agreement also included a shared commitment from both parties to fight against illegal practices in sport such as doping and match-fixing. In addition, both organisations committed to lobby for the approval and adoption of a legislation recognising the practice of apprenticeship in sport, which would provide benefits for both the clubs and the players.

Lega Pro President Mario Macalli explained “The Agreement was signed keeping in mind the difficult current economic environment. We have also included a shared commitment on actions to combat fraud in football and the approval of legislation on apprenticeship in sport.”

“There is great satisfaction with the agreement reached” highlighted AIC President Damiano Tommasi. “We have worked in collaboration with the Pro League, reaching in few months a three-year agreement which is absolutely in line with both the current economic turmoil and the delicate situation of Italian football surrounded by crime and other treats”.

The deal also provides new procedures for the signing of players’ contracts. For instance, in case of multiple contracts in the same season, from now on it is required to specify whether that contract is or is not part of previous agreements, favouring in this way the certainty of the data registered and the financial commitments of the parties.

Moreover, the agreement recognises the establishment of mixed forms of compensation for contracts which organise payments exceeding EUR120,000, with a variable remuneration related to the sport performance that could be up to a maximum of 50% of the fixed part.

Finally, the stipulation of player’s injuries insurance policies was also agreed.

Deal with Sports DirectorsThree days later, Lega Pro signed another Collective Bargaining Agreement with the Italian Union of Technical Directors (Associazione Italiana Direttori Sportivi - A.DI.SE.) in Milan.

This CBA is complying with the new regulations of the Italian Football Association (FIGC), which established, among others requisites, the implementation of national licenses for the Club’s Technical Directors or any other similar existing positions.

Furthermore, it was agreed that the Clubs will not be obliged to pay wages to those Technical Directors who have been subject of exclusion from football activities, following implications on illegal sporting practices such as match fixing.

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03 SPORTS LEGISLATION AND REGULATIONSRe-organisation of Eredivisie CV’s internal structure

During the Shareholders’ Meeting on the 31st May, the 18 Eredivisie Clubs expressed their confidence towards the Eredivisie’s Management and Supervisory Board. On the occasion, the clubs stated that, given the current market developments in media and exploitation of media rights, a need for a more direct involvement in the decision making process has arisen. Moreover, the clubs expressed their wish to empower the Board with knowledge on specific areas, such as media and finance. As consequence, it was unanimously decided to

expand the Supervisory Board from three to five members; hence Jacco Swart (NEC Nijmegen CEO) and Toon Gerbrands (AZ Alkmaar CEO) were nominated to join the Board with immediate effect.

This new five-member Board, in consultation with the Eredivisie Management (composed by Alex Tielbeke and Frank Rutten), shall start the recruitment for two additional members, being one a media specialist and the other an expert in finance. These two members will replace the current Supervisory Board members Arie van Eijden and Hans van Delft after the next Shareholders’ Meeting, in autumn 2012.

Finally, the Clubs have appointed a committee which, in consultation with the Eredivisie Management and the current Eredivisie President Peter Vogelzang, shall select a new independent President. The new President will be officially appointed during the Shareholders’ Meeting of spring 2013, when Peter Vogelzang will step down. The selection committee is formed by Tiny Sanders (PSV Eindhoven), Joop Munsterman (FC Twente), Robert Veenstra (sc Heerenveen) and Jan Smit (Heracles Almelo).

All changes at SPL

The Scottish Premier League (SPL) has enacted or announced a wide range of ground-breaking regulatory and institutional changes over the last few months.

Under 20 League

At the SPL General Meeting on the 12 April 2012, Scottish top-tier clubs unanimously approved the introduction of an Under 20 League from season 2012/13.

The introduction of the Under 20 League forms an important part of Scottish FA Performance Director Mark Wotte’s review of the Elite Player Pathway.

All SPL clubs will participate in the Under 20 League and the SPL Board may also permit a club or clubs in the SFL to participate in the Under 20 League.

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Rules changes

Moreover at the General Meeting of SPL clubs on the 30th April 2012, a number of other proposals to amend Rules of the SPL were also given the green light.

SPL Rules regarding financial disclosure requirements have been strengthened to include the requirement that Clubs have no outstanding sums due to other SPL clubs as at 31 December in any year.

From next season, pitch protection rules will be introduced to minimise the risk of damage to pitches during pre-match warm-ups, along with media co-operation rules to ensure Clubs co-operate with SPL broadcast partners.

Financial Fair Play

On 30 May 2012, SPL clubs met again at Hampden Park to consider a number of different matters relating to newcos and financial fair play.

During this meeting, it was agreed that, in future, any decision on the transfer of a share to a newco from any club will be considered by all member clubs, rather than the SPL Board, with flexibility to impose sanctions appropriate to each individual circumstance. The resolutions proposing fixed penalties on a newco were therefore withdrawn as being obsolete.

Following the circulation to creditors of CVA proposals, the SPL Board withdrew the resolution to consider a transfer of Rangers FC SPL share to a newco.  No newco proposal is currently under consideration by the SPL.

The following resolutions were also approved by the Clubs and came into effect immediately:

• An increase in the sporting sanctions for any Club going into administration in the future, from ten points to the greater of ten points and one third of the Club’s SPL points total in the preceding season;

• An extension of the sporting sanctions regime to the situation where the parent company of an SPL Club goes into administration;

• Updates and extensions to the definition of ‘Insolvency Events’ in the SPL Rules to track recent changes in insolvency law;

• Specific requirements for SPL Clubs to pay their players and HMRC on time and be subject to sanctions if they do not.  Clubs must also report to the SPL any failure to pay players or HMRC on time.

Proposals for a radical and co-ordinated reconstruction of the Scottish game

Finally, the SPL, together with the Scottish Football Association (SFA) and the Scottish Football League (SFL), released a joint statement on 11 July 2012 to announce a package of reforms aimed at rejuvenating Scottish football at senior level and safeguarding its future at a time when uncertainty and fear prevail.

The proposals are based on five principles previously outlined by the Scottish FA as key to streamlining Governance, ensuring greater financial distribution and above all, providing better entertainment, enhanced competition and value for money for supporters.

Upon agreement by the respective Boards, the proposals will placed before the SPL and SFL clubs for approval to be activated immediately and phased in over a two-year period.

A working party will be formed, including three representatives from both the SPL and SFL, to devise a new structure for the senior professional game in Scotland.  This group will have an independent Chairman appointed by the Scottish FA.  They will be tasked with delivering, by 30 November 2012, a recommendation for structural change effective 2013/14.  This will incorporate primarily:

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1. The introduction of an enlarged top tier for Scottish Senior Professional Football.

2. A new detailed model for senior professional football in Scotland including number of divisions; number of clubs per division; number of matches per season per division; number of promotion and relegation places per division and the introduction and operation of play-offs.

3. An all-through distribution model providing certainty for all clubs as to the percentage of distributable income which will be received. As a minimum, clubs in the current third and fourth divisions will receive the settlement agreement proportion guaranteed as per the current arrangement. In addition, the value and number of parachute payments to relegated clubs will be considered.

4. The introduction of a pyramid for Scottish football to provide a route for licensed clubs to enter the new structure effective 2014/2015.

In the event that a final decision is not reached by 30th November 2012, the Scottish FA will seek to implement a new structure in time for the 2013/2014 season. The members of the working party including Chairman will be announced in the near future and will ensure consultation with all stakeholders prior to final recommendations being made.

Approval of Italian Lega Serie B’s Code of Ethics

In its meeting held on 23 May in Milan, the Lega Serie B Assembly has unanimous approved the adoption of the Code of Ethics.

The Code of Ethics, which had previously been presented to all clubs, specialized in media and general public, on 26 April, provides a set of principles that are designed to enhance positive behaviours, to raise ethic values and at the same time it intends to improve the reputation of the sport community.

The Code is an integral part of both the Lega Serie B Manifesto for Respect and the Governance and Compliance Programme.

On Monday, 5 December 2011, the German League announced its decision to integrate the revised version of the UEFA regulations regarding club licensing and Financial Fair Play into its own licensing rules .

Föreningen Svensk Elitfotboll signs Collective Bargaining Agreement

Föreningen Svensk Elitfotboll, the Swedish Elite Football Association (SEF), and Svenska Fotbollspelare, the Swedish Union of Football Players (SFS) has signed a new Collective Bargaining Agreement, which will be valid for the next three and a half years.

The long negotiation process came to an end through the use of mediation.  The Employer’s Alliance of Sweden joined the SEF for negotiating the terms of

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the agreement on behalf of the SEF members, while Unionen, a trade union, took part in the negotiations to represent the interests of the SFS.

With the new agreement, the parties have incorporated a greater social responsibility perspective as it includes important improvements in topics such as pensions, insurance and opportunities for players after the end of their football careers.

Spanish LFP reaches agreement on tax debt clearance

On 25 April 2012, Spain’s Minister of Education, Culture and Sports José Ignacio Wert, Spanish National Sports Council’s (CSD) President Miguel Cardenal and Spanish League’s (LFP) Chairman Jose Luis Astiazarán signed at the Sports Ministry’s headquarters in Madrid a protocol aimed at controlling and reducing football clubs’ unpaid tax debt owed at the Spanish National Agency of Tax Administration (AEAT).

The protocol, which recognizes the important contribution of professional football to the country’s

economy, employment, prestige and image, constitutes a major step towards changing trends of indebtedness, which has reached 673 million euros for top-flight Spanish sides.

To this end, the country’s clubs have adopted a new mechanism of financial self-regulation, which intends to help clubs improve their financial planning while reducing their debt gradually until its final extinction.

Starting in the 2014-2015 season, TV rights will guarantee the accomplishment of club’s tax obligations. Each club will guarantee its commitment by depositing 35 per cent of each payment made by the broadcasting operators for their media rights.

In addition, it was confirmed that the Spanish State will not carry out any public aid to reduce or exonerate the debt owed by football clubs. Thus, Spanish professional football will pay the totality of its debt in Spain. It was also highlighted that clubs’ indebtedness is not indeed a widespread problem, as the bulk of it is owned by a small group of clubs.

The CSD shall exercise an administrative control over the Spanish League. It was announced that the economic control will be strict, incorporating sanctions which ultimately may prevent the registration in the professional competitions of clubs that do not fulfil these requirements. Moreover, the negligence of the LFP in exercising such control could result in the disqualification of their managers and the suspension of the payments coming from the National Lotteries.

The protocol also establishes that the CSD and LFP will promote all necessary legal, statutory and regulatory provisions to impose to the clubs with tax debt deferrals with the AEAT the obligation to accept offers for the federative rights of their players. This means that if a team increases its tax liabilities to the AEAT, potential buyers could submit offers for acquiring the federative rights of any player of the squad of the indebted club directly to a special commission formed by the LFP, CSD and the clubs. This commission will be able to accept or decline those offers.

The parties also established the creation of a committee for monitoring the implementation of the protocol.

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03 SPORTS LEGISLATION AND REGULATIONSFootball League clubs choose Financial Fair Play

The Football League is to implement Financial Fair Play regulations in all three of its divisions, after Championship clubs voted in favour of a breakeven approach based on UEFA’s Financial Fair Play regulations.

From the beginning of next season, the Championship will join League 1 and League 2 clubs in applying rules that exert greater control over club expenditure with each division having the flexibility to determine their own specific approach.

The decision to adopt Financial Fair Play regulations follows a strategic review by The Football League Board which identified the state of club finances

as the organisation’s greatest challenge. League Chairman, Greg Clarke, said: “On the pitch we have three exciting, competitive divisions with crowds at their highest levels for 50 years. But that success isn’t necessarily being reflected on our clubs’ balance sheets and we have to remedy that situation or face an uncertain future.

Financial Fair Play in the Championship:

Financial Fair Play (FFP) in the Championship will require clubs to stay within defined limits on losses and shareholder equity investment that will reduce significantly across a five season period.

Permitted losses will reduce from an acceptable deviation of £4m for 2011/12 to £2m by 2015/16, with additional investment in certain areas of club infrastructure being excluded (e.g. youth development and community programmes).

The permitted level of shareholder equity investment will reduce from £8m for the 2011/12 season to £3m by 2015/16.

Clubs will be required to provide annual accounts to The Football League by December 1, covering the previous playing season.

Failure to stay within the defined limits will lead to the imposition of sanctions. The sanctions will vary depending on whether the club was ultimately promoted to the Premier League, remained in the Championship or was relegated to League 1.

Clubs promoted to the Premier League will have to pay a ‘Fair Play Tax’ on the excess by which they failed to fulfil the Fair Play requirement ranging from 1% on the first £100,000 to 100% on anything over £10m. Any proceeds will be distributed equally amongst those clubs that complied with the FFP regulations for the season in question.

Clubs remaining in the Championship will be subject to a transfer embargo until they are able to lodge financial information to demonstrate they comply with the FFP regulations (either for the previous reporting period or a future reporting period).

Clubs relegated to League 1 will not be entitled to any payout derived from the Fair Play Tax and will be required to comply with the FFP rules in operation in that division.

Clubs relegated from the Premier League will not be subject to sanctions in their first season in the Championship, as long as they have met their financial obligations under Premier League regulations. They would, however, be subject to the potential of a Fair Play Tax if they achieved promotion in the first season in

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the Championship whilst not complying with the FFP regulations.

The first reporting period will be for the current playing season (2011/12), however sanctions will not be applied until the 2013/14 reporting period in order to give clubs a sensible period of transition.

Financial Fair Play in League 1 and League 2:

League 1 and League 2, clubs have chosen to implement the Salary Cost Management Protocol (SCMP) first used in League 2 in 2004/05, although it will operate at different thresholds in each division.

The SCMP broadly limits spending on total player wages to a proportion of each club’s turnover, with clubs providing budgetary information to The League at the beginning of the season that is updated as the campaign progresses.

Any club that is deemed to have breached the permitted spending threshold will be subject to a transfer embargo. Wherever possible, The League will seek to tackle the issue ‘at source’ by refusing player registrations that take clubs beyond the threshold.

At the beginning of the current season, League 2 clubs reduced the permitted spending threshold to 55% from 60% and this figure will continue to be operated next season.

League 1 clubs are currently operating a ‘pilot’ of the SCMP with clubs complying with a 75% threshold but with no sanctions being applicable this season. This threshold will reduce to 65% in 2012/13 and 60% in 2013/14 with sanctions (transfer embargoes) being applicable in both seasons.

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04 JURISPRUDENCEFIGC Disciplinary Committee, Judgement, 10 August 2012, Calcio scommesse casesLast year, Italian football authorities unearthed different cases of match-fixing and irregular betting in the Lega Pro and Serie B divisions, which led to a trial from that ordered point deductions for some clubs and bans for several players in August 2011.

The football proceedings were followed up by investigations from police and judiciary forces in Italian cities of Cremona and Bari. Arrests were carried out in several cities.

As the scope of Calcioscommesse spread to clubs promoted to the higher levels of Calcio, thirteen clubs and 45 individuals were deferred to the Italian Football Federation’s (FIGC) Disciplinary Committee on 26 July 2012 as part of corrupt football betting cases, related to the investigation by the Cremona and Bari public prosecutors’ offices.

The FIGC prosecutors deferred Lecce and Grosseto for direct responsibility, while Ancona, Siena, Novara, Torino, Varese, Albinoleffe, Bari, Udinese, Portogruaro, Sampdoria and Bologna were deferred for strict liability.

Among the 45 indicted individuals, some were deferred for failing to fulfil their obligation to inform the prosecutors of facts relating to sporting malpractices, while others were investigated under the more serious charge of sporting fraud. In the latter case, the Disciplinary Committee needed to determine if the individuals indicted for sporting fraud had conspired among themselves as well as with other non-players and unidentified suspects to perform direct acts to alter the play and the result of games in violation of the article 7 of the Code of Sports Justice.

The first two days of proceedings – held on 1-2 August 2012 - looked into the Cremona case, while the last two days - on 3-4 August - were dedicated to the Bari case.

In the Cremona case, Federal Prosecutor Stefano Palazzi accepted the proposals for plea bargains from four clubs (Siena, Torino, Varese and Albinoleffe) as well as the requests from 13 individuals. The following sanctions were handed outto the clubs involved:

• Siena: deduction of six points for the following season and a forfeit of EUR20,000;

• Albinoleffe: one-point penalty and a EUR30,000 fine

• Torino: one-point penalty and a EUR30,000 fine; and

• Varese: one-point penalty and a EUR30,000 fine.

For the different individuals which were punished, sanctions ranged from a three-month suspension and a EUR30,000 forfeit to a ban of two years coming with a EUR50,000 fine.

Following further negotiations over the punishments to be handed out, the Prosecutor requested more severe punishments for the three clubs (Grossetto, Novara and Ancona) and various individuals, which were involved in the Cremona case but had their plea bargains rejected. In that framework, Mr Palazzi demanded the following punishments for the clubs involved:

• Grosseto: relegation to Lega Pro, a three-point penalty for the next season as well as a five-year ban with proposal of lifetime exclusion from football for club’s Chairman Piero Camilli;

• Novara: 4-point penalty;

• Ancona: EUR10,000 fine

Additionally, bans ranging from nine months to four years were requested against the different deferred players.

The second part of the Disciplinary Committee continued on 3-4 August with the proceedings for the Bari case.

On the first of the Bari proceedings, the Disciplinary Committee accepted the plea bargains proposals offered by four clubs (Sampdoria, Siena, Bari and Portogruaro) and ten players. Clubs received the following sanctions:

• Sampdoria: one-point penalty and a fine of EUR30,000;

• Bari: deduction of five points with a EUR80,000 fine;

• Siena: EUR80,000 fine on top of the sanctions the club received in previous proceedings;

• Portogruaro: forfeit of EUR5,000;

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JURISPRUDENCE 04On top of this, the players aware of the fix or involved in it were handed out punishments, which ranged from one-month suspension to ban of 2 years and 2 months, alongside with fines that attained up to EUR30,000.

In his closing speech for the prosecution, Mr Palazzi requested more severe sanctions for three clubs (Lecce, Bologna and Udinese) and 12 players. He proposed to give the deferred clubs the following punishments:

• Lecce: relegation to Lega Pro and six-point penalty;

• Bologna: deduction of two points and a forfeit of EUR50,000;

• Udinese: EUR50,000 fine.

Moreover, he called for indicted players to receive sanctions which, depending on the different individuals level of involvement, could as far as five years of suspension – with the minimum punishment being a nine-month ban.

The final decisions of the FIGC Disciplinary Committee on the two cases were issued on 10 August 2012.

The following sanctions were handed out:

• Lecce: relegation to Lega Pro and a EUR30,000 fine;

• Grosseto: relegation to Lega Pro;

• Novara: two-point deduction;

• Bologna: a forfeit of EUR30,000; and

• Ancona: EUR10,000 fine.

Additionally, 19 individuals were sanctioned – on top of the plea bargains already agreed earlier during the proceedings.

The more severe sanctions were received by Piero Camilli, the President of Grosseto, and Giovanni Semeraro, the Chairman of Lecce, who were convicted under the charge of sports fraud. They were both given five-year bans. On the other hand, Davide Bombardini, Ferdinando Coppola and Mavillo Gheller, were handed a smaller suspension of six months for failing to report irregularities in league games. Former Siena coach and current Juventus manager Antonio Conte and his deputy, Angelo Alessio, received ten and eight-month bans respectively under the same charge.

On 22 August, the Federative Court of Justice overturned Grosseto’s relegation to Lega Pro, while Angelo Alessio’s eight-month ban was reduced to six months and Marco Di Vaio, who originally received a six-month ban, was acquitted in appeal.”

High Court of England and Wales - Queen’s Bench Division, Judgement, 24 July 2012, case [2012] EWHC 2113 (QB) Leeds United Football Club Ltd v The Chief Constable of West Yorkshire PoliceThe central question to be answered by the High Court of England and Wales in this case was whether the police forces of the area of Leeds, UK, (the West Yorkshire Police, WYP) can recoup from Leeds United Football Club the costs of policing the immediate environs of the English club’s grounds before and after matches or if the WYP are confined to recovering in respect of special police services on the agreed “footprint”, which includes the land owned, leased or directly controlled by the club.

The club argued that the cost of policing the streets and car parks near the club’s premises should be borne by police forces because it fell within the scope of constable’s normal common law obligations to maintain public order.

The Championship side, who acted as claimant, asked for a decision on which of the services deployed by West Yorkshire Police for the last three seasons were special police services, and whether it was entitled to be repaid for services wrongly categorised.

The club said it was happy content to pay for services within the stadium and on land owned or controlled by it,

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04 JURISPRUDENCEbut argued policing and crowd control in the extended footprint of land around the stadium which is not owned, leased or controlled by the club did not constitute special police services.

The West Yorkshire Police in their role as defendant told the Court the footprint around the stadium was a tightly drawn and strategically determined boundary, which was exclusively – or nearly exclusively – for the protection of those attending Leeds United’s matches and the benefit of the club, and not for the safety of the public at large.

As a result, they considered that Leeds United’s claim was wrong in law, offended logic and was not supportable on the facts.

The judge said those services fell within the normal constabulary duty to keep the peace and as such could not be classified as special police services.

He added: “More generally, it seems wrong to discount the majority of well-behaved fans who come to Elland Road, whether club supporters or visitors, all of whom retain their status as members of the public. In that capacity, they too are entitled to expect police protection. In any event, I consider that there would be insuperable difficulties in seeking to sub-divide people, in public highways and other spaces, when trying to assess to whose benefit such duties were carried out. They are intended to keep the Queen’s peace in the interests of the general public.”

The Court then concluded that while the club has one of the worst records of football-related violence in the country for its games, it should be repaid for policing in the extended footprint.

Upon the issuing of its decision, the judge said he understood that his ruling was “unfortunate not only for West Yorkshire Police but also for the public purse”, but he added that if the government wants to extend the scope of special police services beyond the current limited definition, and to ensure recoupment of police costs incurred over a wider area, legislation would be needed.

The Court then brushed aside the argument according to which his decision would lead to police officers not being able to charge for services rendered for cycle races on public roads or by escorting articulated lorries anymore.

“The situations are not comparable. Police officers performing such duties are not there, normally, for the purpose of preventing public disorder or crimes of violence.”

The force must now reimburse the club for payments made over the past three years. The amount has not been revealed.

Swiss Federal Tribunal, 23 July 2012, 4A_134/2012, Olympique des Alpes (FC Sion) v. UEFA, Atlético de Madrid, Stade Rennais Football Club, Celtic and Udinese CalcioOn 23 July 2012, Swiss Federal Tribunal announced that the appeal which was lodged by the Olympique des Alpes SA (FC Sion) against the Court of Arbitration Sport (CAS) decision rendered on 31 January 2012 in the case opposing FC Sion to UEFA was inadmissible.

In its award, the CAS upheld UEFA’s decision to exclude FC Sion from the 2011/2012 edition of the Europa League after the Swiss club fielded players whose registrations it had acquired while it was the object of a transfer ban.

Olympique des Alpes SA lodged a motion to quash the decision from CAS in front of the Swiss Federal Tribunal, under the grounds that the CAS had no jurisdiction and lacked independence from FIFA, the world football’s regulatory body.

On 23 July 2012, the Swiss Federal Tribunal stated that the FC Sion’s appeal was inadmissible to the extent that it was not already moot.

Although relatively short, the judgment of the Federal Court will have an impact beyond this single case. Indeed, it established that athletes or clubs excluded from competition by sports courts or authorities cannot undo those sporting rulings by appealing decisions in front of the Swiss Federal Tribunal once the competition is already completed - even though damages could still be claimed in case of illegal exclusion.

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JURISPRUDENCE 04With regards to the CAS general jurisdiction on football matters, the Tribunal Federal finally did not take up the question. Indeed, this question had already been ruled at the cantonal level with civil courts of the cantons of Vaud, Bern and Valais all recognizing the jurisdiction of the CAS in the numerous proceedings previously initiated by FC Sion.

Court of Arbitration for Sport, 19 July 2012, CAS 2011/A/2625 Mohamed Bin Hammam v. FIFAFollowing a meeting of the Caribbean Football Union (CFU) with former Asian Football Confederation’s (AFC) President Mohammed Bin Hammam on 10 and 11 May 2011, allegations of attempted corruption at the meeting were reported to Chuck Blazer, a FIFA Executive Committee member and former General Secretary of CONCACAF. It was reported that during the meeting, Caribbean officials were handled USD40,000 each in brown envelopes in exchange for their backing of Mr Bin Hammam against Mr Blatter in the FIFA election contest.

Mr Blazer initiated an official investigation and on 25 May 2011, Mr Bin Hammam was reported to FIFA Ethics Committee over allegations of wrong-doings. On 29 May FIFA Ethics Committee temporarily suspended Mr Bin Hammam, who had withdrawn from FIFA presidential election earlier on that day, from taking part in any football-related activity pending the outcome of a full inquiry into accusations of bribery.

On 23 July 2011, Mr Bin Hammam was suspended for life from all football-related activities by a five-person panel of the FIFA Ethics Committee. The Committee found that the AFC ex-president’s actions violated seven articles of FIFA’s ethics code, including one on bribery. Mr Bin Hammam lodged an appeal against his suspension. This appeal was rejected by the FIFA Appeal Committee on 15 September 2011.

Mr Bin Hammam took his claim to CAS in November 2011. On 18 and 19 April 2012, CAS completed a hearing of Mr Bin Hammam’s appeal in its Lausanne headquarters. The CAS Panel heard 10 witnesses and the parties had 2 hours each to present their closing oral arguments.

The CAS Panel, after deliberations and on the basis of the evidence before it, issued a verdict on 19 July 2012 concluding by a majority of 2-1 that there was insufficient evidence to support Mr Bin Hammam’s ban.

While the CAS Panel established that Mr Bin Hammam enticed Mr Warned to call a special meeting of CFU, with the latter arranging for each delegate to receive a gift of USD 40,000 which he said was coming from Mr Bin Hammam, the CAS Panel observed that there was no direct evidence linking Mr Bin Hammam to the alleged bribe payments.

However, while outlining its decision to annul the ban, the Panel said that “ this conclusion should not be taken to diminish the significance of its finding that it is more likely than not that Mr Bin Hammam was the source of the monies that were brought into Trinidad and Tobago and eventually distributed at the meeting by Mr Warner, and that in this way, his conduct, in collaboration with and most likely induced by Mr Warner, may not have complied with the highest ethical standards that should govern the world of football and other sports. This is all the more so at the elevated levels of football governance at which individuals such as Mr Bin Hammam and Mr. Warner have operated in the past. The Panel therefore wishes to make clear that in applying the law, as it is required to do under the CAS Code, it is not making any sort of affirmative finding of innocence in relation to Mr Bin Hammam. The Panel is doing no more than concluding that the evidence is insufficient in that it does not permit the majority of the Panel to reach the standard of comfortable satisfaction in relation to the matters on which the Appellant was charged. It is a situation of “case not proven”, coupled with concern on the part of the Panel that the FIFA investigation was not complete or comprehensive enough to fill the gaps in the record.”

CAS said it would be possible to re-open the case with FIFA Ethics Committee if new evidence was presented.

One week after the CAS decision, Hans-Joachim Eckert, the Chairman of FIFA Ethics Committee’s adjudicatory chamber, provisionally suspended Mohamed bin Hammam for 90 days. The decision was made to prevent interference with the establishment of the truth in respect of a preliminary investigation aimed at assessing the CAS proceedings and undertaking further investigative efforts in this context as well as at evaluating the PricewaterhouseCoopers (PwC) report on potential financial mismanagement from Mr Bin Hammam during his time as AFC President.

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04 JURISPRUDENCEOn Friday, the 10th of August 2012, the Chairman of the investigatory chamber of the FIFA Ethics Committee, Michael J. Garcia, formally opened investigation proceedings against Mohamed Bin Hammam. These proceedings follow the provisional suspension of Mr Bin Hammam for 90 days by the Ethics Committee after a preliminary investigation of the case.

Court of Arbitration for Sport, 10 July 2012 , CAS 2012/A/2824, Besiktas JK v. UEFA Following their fifth place in the 2010/11 season of the Süper Lig, Turkey’s top-tier professional football league competition, Turkish club Besiktas JK qualified for the 2011/12 UEFA Europa League. On 31 March 2011, Besiktas was granted a licence from the Turkish Football Federation (TFF) to participate in the above-mentioned continental club competition.

On 15 July 2011, the TFF sent to the UEFA Club Financial Control Panel monitoring information on the figures which were provided by Besiktas JK. This information displayed overdue payables - notably on transfers, salaries, social charges and taxes - amounting to several million Euros in total.

On 19 April 2012, the UEFA Disciplinary Inspector concluded that Besiktas had violated the UEFA Club Licensing and Financial Fair Play Regulations and reported the case to the UEFA Control and Disciplinary Body.

On 1 May 2012, UEFA Control and Disciplinary Body imposed a fine of EUR 500’000 on Besiktas for violation of the UEFA Club Licensing and Financial Fair Play Regulations, and excluded the Turkish club from the next two UEFA club competitions for which it would qualify in the next five seasons, with a period of probation.

Both the Besiktas and the UEFA Disciplinary Inspector appealed the decision.

On 30 May 2012, the UEFA Appeals Body upheld the decision to exclude Besiktas but reduced the fine to EUR200,000, of which EUR100,000 was suspended for a probationary period of five years.

On 15 June 2012, Besiktas appealed UEFA Appeals Body’s ruling before the CAS. In agreement with the parties, the Court of Arbitration for Sport (CAS) conducted an expedited procedure and heard the parties at a hearing held in Lausanne on 5 July 2012.

After hearing both parties on 5 July 2012, the CAS dismissed Besiktas’ appeal on 10 July and confirmed the sanctions imposed by the UEFA Appeals Body:

• Besiktas is excluded from the next two UEFA club competitions for which they qualify in the next five seasons;

• The exclusion for the second competition is suspended for a probationary period of five years; and

• Besiktas is also fined EUR200,000, of which EUR100,000 is suspended for a probationary period of five years.

This ruling constituted a confirmation of the jurisprudence established in the case of Hungarian club Györi ETO on a violation of the UEFA Licensing and Financial Fair Play Regulations.

Scottish Football Association’s Appellate Tribunal, 16 May 2012, Rangers Football Club caseOn 14 February 2012, administrators Duff & Phelps were called in to Rangers Football Club after Her Majesty Revenue & Customs (HMRC), the UK tax authorities, seek payment through court proceedings of an unpaid bill that had built up since Craig Whyte took charge of the Glaswegian club in May 2011.

On 23 April 2012, a Scottish Football Association’s (SFA) Disciplinary Tribunal imposed a year-long transfer embargo and a £160,000 fine to Rangers after charging the 54-time Scottish League winner of failing to procure that its officials act in accordance with Rule 1, being subject to an insolvency event, bringing the game into disrepute, acting in a manner which is improper, and failing to pay to [Dundee United FC] on the day of the match monies due under Rule 46 c (3) and e of the Scottish FA Cup Competition Rules; being [Dundee United’s] share of receipts for the match; and by failing to pay to the Scottish FA within three days monies due under Rule 46 c (1) of the Scottish FA’s Cup Competition Rules; being the Scottish FA’s levy on admission charges for the above match..

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JURISPRUDENCE 04Upon issuing of this decision, Rangers FC’s administrators immediately challenged it. They argued the ruling could hinder chances of finding a new owner for the club.

On 16 May 2012, a three-man SFA Appellate Tribunal rejected Rangers FC appeal.

While announcing that it will give full reasons for rejecting the appeal in writing “in early course”, but the SFA appeal body issued a summary of its findings.

“1. It was competent for Disciplinary Tribunal to impose the additional sanction of prohibiting registrations of any new players of 18 years or older for a period of 12 months.

2. The Disciplinary Tribunal was correct to determine that the conduct involved - especially the deliberate non-payment of very large sums, estimated in excess of £13m of tax in the form of PAYE, NIC and VAT - was attributable to the club as a member of the Scottish FA.

3. The Disciplinary Tribunal was correct also in holding that the maximum fine available for this breach was £100,000, and on its own was inadequate as a punishment for this misconduct. It was therefore correct to select an additional sanction.

4. The sanctions available included expulsion from participation in the game and termination or suspension of membership of the Scottish FA, which would have had a similar effect. The Appellate Tribunal observes that serious consideration was given by the disciplinary tribunal to imposing one of these sanctions, which would have had obvious consequences for the survival of the club. The Disciplinary Tribunal rejected these as too severe and this Appellate Tribunal agrees with that conclusion.

5. Although the Appellate Tribunal has listened carefully to the representations from Rangers FC about the practical effects of the additional sanction, it has concluded that this sanction was proportionate to the breach, dissuasive to others and effective in the context of serious misconduct, bringing the game into disrepute. In particular, the Appellate Tribunal recognises that the Disciplinary Tribunal decision does not affect Rangers’ ability to extend the contracts of existing professional players, including those whose contracts will expire at the end of this season and including also those currently on loan to other clubs. The Appellate Tribunal observes that Rangers FC have over 40 professional players in this category.”

As a consequence, the Appellate Tribunal upheld the Disciplinary Tribunal’s decision.

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05 RESEARCHAn Overview of Third Party Ownership in European Professional Football1

Introduction: the emergence of third party ownership as a football issue

In broad terms, “third party ownership” (hereinafter TPO) can be defined as 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 third party to receive a share. The TPO finds its origin in the dissociation between players’ registration rights and the economic value that such registrations drive.

Recognised as a common practice in South America, TPO has reached European Professional Football more than a decade ago but only gained visibility following the transfers of Carlos Tévez and Javier Mascherano from the Brazilian club Corinthians to English side West Ham United, through the players’ investment fund Media Sports Investments (MSI) in August 20062.

Since then, this controversial practice has been positioned at the very top of international and European football’s agenda.

One year after the Tévez/Mascherano affair, FIFA got to grips with this new phenomenon. In article 18bis of FIFA’s Regulations on the Status and Transfer of Players, the world football’s governing body refers to the close – but still different - concept of “third party influence”3. The article foresees 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”. In accordance with the above mentioned provision, “third party influence” refers to any kind of contract-originated interference that would result in an entity that operates outside football’s structures to effectively affect the autonomous decision-making of a club or prevent such club from pursuing its own interests. As such, FIFA’s Transfer Regulations does not prohibit external investors buying stakes in players, but rather prevent those investors from exerting any control over when and how the players can play or when they are bought and sold. It is also important to note at this point that pursuant to article 3 a) of the FIFA’s Regulations on the Status and Transfer of Players, the article 18bis is binding at domestic level4.

At European level, the Association of European Professional Football Leagues (EPFL) has been discussing this matter for more than two years within its own standing committees and brought it to the attention of both FIFA and UEFA. More recently, the EPFL International Workshop on Players’ Transfer System was the theatre of a discussion on “Third Party Ownership: risk or opportunity?”, which gave the attending audience an extensive overview of the different facets of the debate5. The question was also tackled by the Association in the context of the European Commission’s overall evaluation of transfer rules in professional sport in Europe. In its response to the study on the economic and legal aspects of transfers of players, which is currently conducted by KEA, the EPFL recognised the widespread of TPO’s cases in European and world football, while acknowledging the different approaches adopted by its Members and Associate Members on this question.

In parallel, the subject has also been debated at UEFA, both within its Professional Football Strategy Council (PFSC) and its Working Group “Safeguarding the Future of Football in Europe”. During the last PFSC meeting on 18 May 2012 in Munich, delegates exchanged their views on the opportunity to prohibit the registration of players subject to third-party ownership arrangements for UEFA competitions6. The topic should be further

1. This article, authored by EPFL Public Policy and Research Manager Ezechiel Abatan, takes up in its largest part the content of the EPFL Report on Third Party Ownership in European Football, which will be released soon as a stand-alone publication.

2. In April 2007, West Ham FC was fined GBP 5.5 million by the Premier League for breaking rules over third-party agreements when bringing Argentinean football players Carlos Tévez and Javier Mascherano to the club.

3. The article 18bis was incorporated in the Regulations by the FIFA Executive Committee on 29 October 2007 and came into force on 1 January 2008. The provision has been maintained in the latest edition of the Regulations, which is in vigour since 2010. FIFA, Regulations on the Transfers and Status of Players (2010). Retrieved on 28 June 2012 at http://www.fifa.com/mm/document/affederation/administration/01/27/64/30/regulationsstatusandtransfer2010_e.pdf.

4. FIFA, Ibid.

5. ‘EPFL Workshop concludes - International Transfer System is not in need for revolution’, EPFL, 14 April 2008. Retrieved on 28 June 2012 at http://www.epfl-europeanleagues.com/news_from_the_EPFL_archives.htm.

6. In the news relating the meeting, UEFA stated that: “Third-party ownership of players was one of the issues that was top of the day’s agenda and was debated extensively at the meeting. In light of the widespread emergence of this phenomenon in European football, and the threats associated with it, UEFA is considering a

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RESEARCH 05discussed at the next meeting of the PFSC in September as well as at upcoming UEFA Executive Committee meetings. Latest developments in this field have seen UEFA mention for the first time “players’ economic rights” in the new version revising of its Club Licensing and Financial Fair Play Regulations, which was published in May 2012. Indeed, the article E.1.m.ii of the Annex VI of the 2012 edition of the Regulations provides that licence applicants – that is clubs - must disclose “for any player for whom the economic rights or similar are not fully owned by the licence applicant, the name of the player and the percentage of economic rights or similar held by the licence applicant at the beginning of the period (or on acquisition of the registration) and at the end of the period must be disclosed”7. This represents a move towards greater transparency on third parties’ investment in European football. Moreover, the article C.5.b of the Regulations’ Annex VII puts that “for the avoidance of doubt, any profit arising from the disposal of economic rights or similar of a player to any other party must be deferred, and a profit can only be recognized in the profit and loss account following the permanent transfer of a player’s registration to another club”8. As Ariel Reck rightly puts it in the following pages of the Bulletin, this latter provision has for main effect to restrict, de facto, the financial benefits of TPO in the framework of European competitions.

While some regard the practice of third-party ownership as a necessary or even indispensable resource to alleviate the financial burden on clubs, by making it easier to balance their books and lowering their needs for debts, while ensuring that they remain competitive on the pitch, others see it as a potential threat to the fairness of the competitions, financial transparency and the long term interests and reputation of the game as well as a risk for clubs’ independence.

In order to make a proper and accurate diagnosis of the situation, balance all possible pros and cons resulting from TPO as well as identify the most appropriate measures to safeguard football values as well as leagues and clubs legitimate interests, the EPFL, in pursuance of its role as knowledge leader, has carried out a survey to assess the current state of play in this field at domestic level. To this end, the Research Unit used publicly available information, as well as the responses provided by fifteen of its Members and Associate Members to a Questionnaire on TPO.

Table 1- List of respondents to the survey

Österreichische Fussball Bundesliga Austria

Pro League Belgium

Divisionsforeningen Denmark

The Premier League England

The Football League England

Veikkausliiga Finland

Ligue de Football Professionnel France

DFL Deutsche Fussball Liga GmbH Germany

Lega Serie A Italy

Federatie Betaald Voetbal Organisaties (answered for both FBO and Eredivisie)

Netherlands, The

Polish Professional Football League Poland

Liga Portugal Portugal

ban on the registration of players subject to third-party ownership arrangements for its competition. “ See ‘PFSC discusses third-party ownership’, uefa.com, 18 May 2012. Retrieved on 13 July 2012 at http://www.uefa.com/uefa/stakeholders/professionalfootballstrategycouncil/news/newsid=1798900.html.

7. UEFA, UEFA Club Licensing and Financial Fair Play Regulations – Edition 2012, p. 59. Retrieved on 13 July 2012 at http://www.uefa.com/MultimediaFiles/Download/Tech/uefaorg/General/01/80/54/10/1805410_DOWNLOAD.pdf.

8. UEFA, Ibid., p. 63.

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05 RESEARCHScottish Premier League Scotland

Liga Nacional de Futbol Profesional Spain

Swiss Football League Switzerland

The results of this survey will be presented thereafter trough a general overview of the various national regulatory frameworks governing TPO and an analysis of the existing measures put in place to monitor and control third party businesses and third party-owned players.

I. The different national regulatory frameworks on third party influence and third party ownership

As a starting point, it needs to be reminded that the article 3 a) of the FIFA’s Regulations on the Status and Transfer of Players dictates that the article 18bis on third party influence is “binding at the national level and must be included without modification in the association’s regulations”9. As a consequence, all EPFL Members must abide by the FIFA’s regulations on third parties. Such regulations only refer to third party influence. It means that in all those national regulatory frameworks, third parties activities are regulated through a generic material influence clause, in line with FIFA’s approach. However, some governing bodies have chosen to go further by regulating not only third party influence, but also third party ownership (or investment - which in practice means the same).

Within this context, it is important to make a distinction between those national Leagues which have regulations on third party influence only and those Leagues that have put in place more stringent frameworks with the aim of also regulating the possibility for clubs to register players whose economic rights have been entirely or partially acquired by third parties. Both groups will be reviewed thereafter.

9. FIFA, op. cit.

Members with specific prohibitions on third party ownership

• Premier League• Football League• Ligue de Football Professional• Ekstraklasa

Members with mandatory prohibition on third party influence

NB: Members in black, while also complying with FIFA’s regulation on third party influence, have not answered the survey, which means that we could not determine if they have specific regulations on third party ownership

Source: EPFL Research

• Osterreichische Fußball Bundesliga• Pro League• Divisionsforeningen• Veikkausliga• Deutsche Fußball Liga• Lega Serie A• FBO/Eredivisie• Liga Portugal• Scottish Premier League• Liga Nacional de Futbol Profesional• Swiss Football League

Chart 01 Prohibitions on third parties’ activities in European football

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RESEARCH 051. The Leagues where compliance is only required on third party influence

In Belgium, Denmark, Finland, Italy, the Netherlands, Portugal, Spain and Switzerland, the professional football Leagues must abide by the FIFA’s article 18bis on third party influence simply because of the transposition of the above-mentioned FIFA’s regulations in their respective domestic FAs’ rules at national level.

A very good example of this is the article 60.2 of the Swiss Football Association’s Game Regulation, which is also applicable by the Swiss Football League. The Swiss FA’ provision transcripts almost ipsis verbis FIFA’s article 18bis. It provides 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. The competent disciplinary authority can impose disciplinary measures to clubs who violates this obligation”10.

The Pro League of Belgium, the Danish Divisionsforeningen, Finland’s Veikkausliiga, the Lega Serie A in Italy, FBO and Eredivisie from the Netherlands, and the Iberian duo of Liga Portugal and Spain’s Liga Nacional de Futbol Profesional all follow that same pattern. There, Leagues comply with the clause on the material influence of third parties only because it has been incorporated in the national regulatory framework by their respective FAs.

However unlike in Switzerland and in the other above-mentioned countries, some Leagues have opted for the introduction of specific provisions on third party influence in their own domestic regulations to complement those of their national FAs. Among the responding Leagues to our survey, this is the case of Germany’s DFL, the Austrian Bundesliga and the Scottish Premier League.

Thus, in German professional football, the prohibition on third party influence is also contained in the article 5 para. 8 of the German League’s Regulations on licensed professional players11. Like in FIFA’s regulations, the DFL rule on third party refers to any kind of influence that could affect the independence of a club..

Elsewhere, the Austrian Football League’s club licensing regulations, which are inspired by UEFA’s licensing system, stipulates that clubs must have the full and exclusive responsibility for their players12. Any breach of this rule is to be sanctioned.

Finally, the Scottish Premier League has also established its own rules on third party influence in order to prevent any third party to affect clubs’ decisions as to when or against whom a particular player can play. The SPL Rule D1.17 foresees that: “A Player shall not be Registered where there is any restriction or condition, howsoever arising, as to when, against whom or on what terms the Player concerned shall or shall not Play”. Moreover, SPL Rule D4.8 related to transfer agreements further adds that “It is not permitted for a transferor club to stipulate when or against whom a Player so transferred may or may not Play and any such stipulation in any agreement or other document shall be void”.

2. Leagues where compliance is also required on third party ownership

England, France and Poland are actually the only countries where the regulations enacted by the football governing bodies specifically target TPO. This is done by the means of a prohibition of this practice. It is worth adding that, prior to the introduction of their respective rules on TPO, the Premier League, the Football League, the French Football League and Poland’s Ekstraklasa all had similar “material influence” clauses. However, while the material influence clauses have been retained, all of them have established additional, more restrictive rules.

In England, the Premier League introduced a ban on third party ownership at the start of the 2008/09 season13. The Premier League prohibited it following the Tévez/Mascherano affair. The Rules L.37 and L.38 of the 2011/2012 Rules

10. Association Suisse de Football, Règlement de jeu. Retrieved on 29 June 2012 at http://www.football.ch/sfv/cm/WR_2012_F.pdf.

11. Deutsche Fußball Liga, Lizenzordnung Spieler. Retrieved on 29 June 2012 at http://www.bundesliga.de/media/native/dfl/ligastatut/neue_lo/lizenzordnung_spieler_los.pdf.

12. Österreichische Fußball Bundesliga, Lizenzierungs Handbuch. Retrieved on 29 June 2012 at http://www.flutlichtanlagen.at/Downloads/lizenzierungs-handbuch.pdf.

13. Before this, the English regulatory framework on third parties activities was only banning material influence of third parties on the clubs’ policies or sporting performances.

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05 RESEARCHof the Premier League quite explicitly relates to the “Prohibition of Third Party Investment”. The article L.38 notably provides that “In respect of a player whom it applies to register as a Contract Player, a Club is permitted to make a payment to buy out the interest of a person or entity who, not being a Club or club, nevertheless has an agreement either with the club with which the player is registered, or with the player, granting it the right to receive money from a new Club or club for which that player becomes registered. Any such payment which is not dependent on the happening of a contingent event may be made either in one lump sum or in installments provided that all such installments are paid on or before the expiry date of the initial contract between the Club and the player. Any such payment which is payable upon the happening of a contingent event shall be payable within 7 days of the happening of that event.” In addition, Rule V.21 specifically tackles “third party influence” by stating that that “No Club shall enter into a contract which enables any other party to that contract to acquire the ability materially to influence its policies or the performance of its teams in League Matches or in any of the competitions set out in Rule E.10” 14.

The Football League prohibits third party investment since the 2009/10 under its Regulation 48, which is in all material respect the same as the Rules L.37 and L.38 of the Premier League15. On top of this, third party influence is controlled by Regulations 44.2 and 95.1, which, like Premier League’s Rule V.21, provides that “No Club shall enter into a contract which enables any other party to that contract to acquire the ability materially to influence its policies or the performance of its teams in League Matches or matches in any other recognised competition”16.

In 2009, the English FA adopted a somehow identical provision. The article C 1 (b) (iii) of the FA Rules Season 2011/12 deals with both third party influence and ownership. It stipulates that “No Club shall enter into a contract which enables any party to that contract to acquire the ability materially to influence the Club’s policies or the performance of its teams in Matches and/or Competitions. This Rule shall be applied in conjunction with any regulations governing Third Party Investment in Players as may be adopted by The Association from time to time” 17.

It noteworthy that all English football governing bodies share a very similar phrasing. In all three regulations, third party influence is tackled alongside TPO, which, in the English wording, is replaced by the expression “third party investment”. Altogether, the English regulations pursue a common aim, which is that a player’s federative and economic rights should not be held by any third-party when this player is transferred to a new club. The new club must become the sole owner of these rights.

Outside England, other Leagues have banned third party ownership.

The French Football League enacted a regulation on third party ownership in the early 1990s - that is more than a decade before the Tevez/ Mascherano affair, English TPO regulations and FIFA’s article 18bis made the headlines. The article 221 of the French League’s 2011/12 Regulations refers to the “cession and acquisition of the players’ ownership rights”. It poses that “A club cannot conclude a contract with any moral or physical persons (with the exception of another club) that directly or indirectly results in such persons acquiring or being granted all or some of the economic rights resulting from the various fees to which the club is entitled when transferring one or more players”18. The objective of that rule is to ensure that clubs are the only entities benefitting from the economic value of players, so that they can retain sole control over their team policies.

Finally, third party ownership has also recently been forbidden in Poland’s Ekstraklasa. Indeed the article 33. 4 of Polish Football Association’s Status and Players Regulation states that “clubs cannot sign any contract with a third party which may have an impact on loans or transfers or may create any obligation from clubs towards a third party in case of temporary or permanent transfer of a player”19. In the Polish approach, what is key is the

14. The Premier League, Handbook. Retrieved on 29 June 2012 at http://www.premierleague.com/content/dam/premierleague/site-content/News/publications/handbooks/premier-league-handbook-2011-12.pdf.

15. The Football League, Regulations, Section 6 – Players. Retrieved on 29 June 2012 at http://www.football-league.co.uk/regulations/20110629/section-6-players_2293633_2125731.

16. The Football League, Regulations, Section 9 – Association and Dual Interests. Retrieved on 29 June 2012 at http://www.football-league.co.uk/regulations/20110629/section-9-association-dual-interests_2293633_2125750.

17. The Football Association, FA Rules Season 2011-12. Retrieved on 29 June 2012 at http://www.thefa.com/TheFA/~/media/Files/PDF/TheFA/Rules_Regs/RulesOfTheAssociation201112.ashx/RulesOfTheAssociation201112.pdf.

18. Ligue de Football Professionnel, Règlements 11/12. Retrieved on 29 June 2012 at http://www.lfp.fr/reglements/reglements/2011_2012/reglement_integral.pdf.

19. Polski Związek Piłki Nożnej (Polish FA), Status zawodników występujących w polskich klubach piłkarskich oraz zasady zmiany przynależności klubowej. Retrived on 29 June 2012 at http://www.pzpn.pl/index.php/content/download/1117699/10909449/file/UCHWA%C5%81A%20ZARZ%C4%84DU%20PZPN%20Z%20DNIA%2029%20CZERWCA%201992%20R..pdf.

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RESEARCH 05contractual obligation made to the club towards a third party. The broad phrasing used by the Polish FA is also likely to encompass a wide range of situations that may go beyond TPO. It could for instance be understood as a prohibition to use the future transfer fee for collateral security reasons20.

Now that the general framework has been set out, we shall analyse, in the second part of this study, how third parties’ activities are monitored and controlled in those Leagues where players’ investment funds are allowed and/or effectively operate.

II. The monitoring and control of third party businesses’ activities in European professional football Leagues

In this second part we shall provide an outlook of the supervision of the third parties’s investments, as well as the measures aimed at controlling them, in those territories where they can lawfully do businesses as per the national football bodies’ rules (i.e. all surveyed countries, except England, France and Poland).

1. The monitoring of third parties and third party-owned players in territories which authorise third party ownership

Pro League was also the only League without TPO ban that keeps records of third parties operating in its market. The Belgian FA is in charge of tracking those data. The Belgian football’s governing body recommended its affiliated clubs not to enter in labour relationships with third party-owned players.

20. In the article featured in the following pages of this publication, The dilemma of third-party ownership of football players, Victoriano Melero and Romain Soiron highlight that such interrogations were initially raised regarding the French regulation on third parties, which adopts a very similar terminology. The situation was later on cleared up by a decision of the LFP Bureau on 4 March 2011.

Chart 02 Record of third parties operating at domestic level

9%

73%

9%

• Pro League • Deutsche Fußball Liga

Did not answerRecord of third parties operating in the country

• Osterreichische Fußball Bundesliga• Divisionsforeningen• Veikkausliga• Deutsche Fußball Liga• Lega Serie A• FBO/Eredivisie• Liga Portugal• Scottish Premier League• Liga Nacional de Futbol Profesional• Swiss Football League

No record of third parties operating in the country

• Scottish Premier League

Not applicable

NB: This graphic only takes place into account responses from Leagues where third party ownership is not prohibitedSource: EPFL Research

9%

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05 RESEARCHNone of the Leagues where players’ investments funds can legally operate oblige their affiliated clubs to disclose the list of third party-owned players. Moreover, among those Leagues who allow TPO, only Belgium’s Pro League was able to provide us with data on third party-owned players playing their trades in the League’s respective domestic market. Information the League gave us, which comes from the Belgian Football Association’s licensing department, reveals that there are two players in this situation in Belgium. However, the Belgian FA was not willing to reveal any names or businesses.

The Austrian, Danish, Finnish, German, Italian, Dutch, Portugal, Spanish and Swiss Leagues have stressed that no listing of footballers whose rights were entirely or partially owned by third parties was in place at national level.

Among the Leagues who operate in territories where TPO is allowed and a financial monitoring of professional clubs’ accounts is operated, Pro League and Spain’s Liga Nacional de Futbol Professional were again the only Leagues who have stated that the value of third party-owned players is taken into account when assessing the equities of domestic clubs. In Belgium, the Football Association monitored third party-owned players in its financial assessment of the clubs of the Jupiler Pro League, while in Spain third-party ownership will be dealt with as a relevant criteria to assess financial fair play and the economic stability of all member clubs in the framework of the Spanish League´s new Economic Control regulations, which are currently under implementation. In Switzerland, applicants to the SFL License can only capitalise costs relating to the (own) acquisitions of players.

As a consequence, it is necessary to look into other sources to find further information on third party-owned players in Europe.

Thus, according to Raffaele Poli, head of the Neuchatel, Switzerland-based CIES Football Observatory, as many as 1,000 players, or 15% of all squads in Europe, may be part-owned by investors21.

Moreover, in some European countries, the obligation imposed on clubs that are listed in the stock exchange market to publish their financial accounts or to answer enquiries made under the domestic Freedom of Information Act may offer a good overview of third party-owned players. Thus, the latest financial statements published by FC Porto show that, as of June 2011, the current Portuguese League’s champion owned the entirety of the economic rights to three of the members of its 19-man squad. The economic rights of all the other players were partially owned by third parties22. The same way in Turkey, requests made under the Turkish right to information system have shown that Quality Football Ireland, a subsidiary of the Quality Sports Investments fund, has acquired part of the economic rights of Besiktas players Necip Uysal, Atınç Nukan, Muhammed Demirci and Hugo Almeida23.

While they always need to be taken with a pinch of salt, domestic press reports also help understand how widespread third party owned-players are across Europe. For instance, German news agency DPA recently revealed that billionaire investor Klaus-Michael Kuehne acquired stakes in five players from Hamburg for EUR 12.5 million euros24. In Spain, El País newspaper reported in August 2011 that Real Zaragoza financed the signing of goalkeeper Roberto Jimenez with as much as EUR 8 million from an unnamed fund. Upon admission by Real Zaragoza that the club’s owner was part of the unnamed fund, the Spanish football League issued a strong statement, by the voice of League’s Chairman José Luis Astiazarán, dissociating themselves from the Aragon club’s behaviour as it was in contradiction with the League’s best practices in this field25.

These few examples are sufficient to show that, alongside Belgium, players - sometimes high-profile ones –

21. Quoted in Tariq Panja, ‘Soccer Body Considers Champions, Europa League Bans for Fund-Owned Players‘, Bloomberg, 1 February 2012. Retrieved on 2 July 2012 at http://www.bloomberg.com/news/2012-02-01/soccer-body-considers-champions-europa-league-bans-for-fund-owned-players.html.

22. FC Porto, Annual Report 2010/2011. Retrieved on 29 June 2012 at http://www.fcporto.pt/IncFCP/PDF/Investor_Relations/Ingles/RCConsolidado20102011INGLES.pdf.

23. See Turkish Public Disclosure Platform (KAP), ‘Quality Football Ireland Limited ile görüşmelere istinaden herhangi bir gelişme olmamıştır’, 10 October 2011. Retrieved on 2 July 2012 at http://www.kap.gov.tr/yay/Bildirim/Bildirim.aspx?id=171344; Turkish Public Disclosure Platform (KAP), ‘Quality Football Ireland Limited ile görüşmelere istinaden herhangi bir gelişme olmamıştır’, 3 November 2011. Retrived on 2 July 2012 at http://www.kap.gov.tr/yay/Bildirim/Bildirim.aspx?id=175343.

24. HSV: Milliardär Kühne zu weiteren Investitionen bereit’, Westdeutsche Zeitung, 25 June 2012. Retrieved on 2 July 2012 at http://www.wz-newsline.de/home/sport/fussball/bundesliga/hsv-milliardaer-kuehne-zu-weiteren-investitionen-bereit-1.1024355.

25. Amaya Iríbar and Jordi Quixano, ‘El Zaragoza admite que su dueño participa en el fondo para fichajes’, El País, 4 August 2011. Retrieved on 4 July 2012 at http://elpais.com/diario/2011/08/04/deportes/1312408802_850215.html.

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RESEARCH 05have been third party-owned in Germany, Portugal, Spain, and Turkey notably.

With regards to the monitoring of third parties themselves - as opposed to the players they owned - the information available to Leagues is also very scarce. None of the responding Leagues was able to provide us with a list of third parties that have signed partnerships with their affiliated clubs. As a matter of fact, there are no regulatory obligations in force in this sense. However, here again publicly available sources were of great help to give us some understanding and mapping of third party businesses’ activities26.

From the information compiled over the course of this study, it is possible to say that a very large number of third parties are now active in the football market, both in countries where governing bodies authorize their activities in football, but also in countries where it is forbidden. Companies involved in third party investments include among others Portugal’s second largest bank Banco Espirito Santo-managed funds Benfica Stars Fund and Sporting Portugal Fund (both partly-owned by the two Portuguese clubs themselves), London-based Doyen Capital Partners, Kia Joorabchian-run investment fund Media Sports Investments, Creative Artists Agency’s Jersey-based subsidiary Quality Sports Investment, Schwerin, Germany-based business Hanseatisches Fussball Kontor, German billionaire Klaus-Michael Kühne, Renewable energy company and FC Cologne sponsor Solar World, Sao Paulo-based player agent Juan Figer, Brazilian sports marketing agency Traffic Sports, Pini Zahavi and Fernando Hidalgo’s partnership HAZ Sports, DIS Esporte, Gol Football Luxembourg, Mamers BV, Pearl Design Holding Ltd, etc.

According to the findings of a survey on football agents recently published by the CIES Football Observatory, 15% of the agents who have responded to the research questionnaire have owned shares of players’ transfer rights during their career as a licensed agent27. While only 83 agents responded to the CIES study, the fact that we know that there are a bit less than 6,000 licensed agents worldwide allows us to try give a tentative first estimate of the phenomenon. Thus, a basic methodology applying the 15% percentage of the CIES study to the whole licensed player agent industry would mean that, roughly, 900 (6000 x 15%) agents have been involved in third party deals. However, when this first estimate is put into perspective by the fact that third party investment does not only involved licensed agents, but also unlicensed ones as well as external stakeholders such as banks, club sponsors, stock-exchange investors, etc. that do not directly belong to the structures of the game, it makes one believe that such valuation must be far from the actual figures.

This brings us directly to the second point of this second part: the control exerted on third party businesses by football authorities.

2. The control of third party businesses

The answers collected among our respondents Leagues have shown that, beyond the obligation to respect the previously mentioned material influence clause, there are no restrictions to the activities of third parties at domestic level in the European countries where third parties are allowed to operate.

For example, none of the Leagues authorising third party ownership has put in place limitations on the maximum amount (or percentage of the player’s total value) a third party can invest in a player’ economic right.

Likewise, the Leagues that have not banned third party practices have not established any limitation on the maximum amount or percentage an investment fund can receive for the sale of a player of which it holds the economic rights.

26. For some examples of third party coverage in the news please see notably: John Sinnott, ‘Does third-party ownership benefit or hinder football?’, BBC Sport, October 2011. Retrieved on 29 June 2012 at http://www.bbc.co.uk/sport/0/football/15298353; Hugo Daniel Sousa, ‘Dinheiro que alimenta o futebol português perde-se numa rede de fundos’, Público, 28 February 2012. Retrieved on 29 June 2012 at http://desporto.publico.pt/noticia.aspx?id=1535472; ‘HSV: Milliardär Kühne zu weiteren Investitionen bereit’, Westdeutsche Zeitung, 25 June 2012. Retrieved on 2 July 2012 at http://www.wz-newsline.de/home/sport/fussball/bundesliga/hsv-milliardaer-kuehne-zu-weiteren-investitionen-bereit-1.1024355; Alex Duff, ‘Hedge Funds Eye 64% Return on Soccer Transfer Market as Clubs Seek Funding’, Bloomberg, 31 October 2011. Retrieved on 29 June 2012 at http://www.bloomberg.com/news/2011-10-30/hedge-funds-eye-64-percent-return-on-soccer-s-next-ronaldo-as-fans-jeer.html.

27. Raffaele Polli and Giambattista Rossi, Football Agents in the Five Biggest European Football Markets – An Empirical Research Report, CIES Football Observatory, February 2012, p. 77. Retrieved on 2 July 2012 at http://www.cies.ch/uploads/media/report_agents_2012.pdf.

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05 RESEARCH

Due to the sheer number of undertakings involved, the near-impossibility for football governing bodies to have a say on the business of operators which quite often ply their trade outside the Rules of the Games, or sometimes the legal restrictions in place at national level, it is very difficult to effectively control third parties’ activities.

UEFA, through its Secretary General Gianni Infantino, has recently acknowledged this issue: “We are urging state authorities to look into it. (…) Because we are a private company, an association, we cannot go to a company when it is a letter box saying ‘please tell us who you are and what you’re doing.’ They will tell us: ‘Who are you to ask me?’”28

In this context, according to some streams of opinion the most effective way to control the activities of third parties is to simply ban them all, like in England, France and Poland. In this framework, it is interesting to note that the Article 221 of the French League’s Regulations foresees that “the Direction nationale du contrôle de gestion (DNCG, National Directorate of Management Control) is competent to hear violations of the rule set in the first alinea of the article 221”. This may suggest that the complete prohibition gives more tools to really enforce the respect of rules on third parties.

However, others have argued that a ban on third party ownership could be challenged in front of courts. The rationale behind this claim seems to be that, in essence, prohibitions on third party ownership are restrictions to the freedom of trade and, as such, they need to be both justified by legitimate objectives and proportionate. While there are obvious reasons for governing bodies to be concerned about third parties, as it said to pose risks for the integrity of competitions, level playing field among clubs and good reputation of the game, it

28. Alex Duff and Tariq Panja, ‘European Soccer Ruling Body Asks U.K. to Probe Funding of Porto Purchases’, Bloomberg, 31 January 2012. Retrieved on 2 July 2012 at http://www.bloomberg.com/news/2012-01-31/european-soccer-ruling-body-asks-u-k-to-probe-funding-of-porto-purchases.html.

• Osterreichische Fußball Bundesliga• Pro League• Divisionsforeningen• Veikkausliga• Deutsche Fußball Liga• Lega Serie A• FBO/Eredivisie• Liga Portugal• Liga Nacional de Futbol Profesional• Swiss Football League

No limitation to the maximumfee a third party can receive for the sale of a player

• Scottish Premier League

Not applicable

• Deutsche Fußball Liga

Did not answer

Chart 03 Limitations to the maximum fee a third party can receive for the sale of a player

9%

82%

9%

NB: This graphic only takes place into account situation for Leagues where third party ownership is not prohibitedSource: EPFL Research

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RESEARCH 05remains to be seen whether a ban is the most appropriate measure to tackle third party investment, which is seemingly a widespread and well consolidated practice across Europe and beyond, or whether it should rather be allowed under specific conditions and subject to proper supervision.

There are thus many questions and prisms which may be taken into account in the framework of the current discussions on TPO.

Conclusion: review and prospects on the third party ownership debate

This short study allows us to have a better overview of the current situation vis-à-vis the way third parties’ activities have been dealt with at national level.

The first important finding of this study is that 47% of the respondent Leagues to our survey have incorporated a specific prohibition on third parties’ activities (either influence or ownership) in their own regulatory framework (Austrian Bundesliga, England’s Premier League and Football League, France’s LFP, the DFL of Germany and the Scottish Premier League). However, prohibitions on third party ownership of the economic rights of football players are only in place in 27% of the responding Leagues.

The second significant observation to be made is the overall lack of monitoring and control of third parties in territories which allow them to invest in players. Apart from Belgium, where supervision of the activities of third parties is in force and records of the players they own are kept by the Football Association, and in the future, to some extent, Spain, whose new Economic Control Regulations result in a control body assessing third party ownership while reviewing clubs’ equities, no League or Football Association monitors or exercises its authority on the activities of third parties.

As a prospect for future discussions, this assessment of the current situation also led us to ask what were the respondents’ positions vis-à-vis a ban on TPO in European football. The data collected during the survey allow us to say that 46% of the respondent Leagues expressed the wish to see TPO permitted under certain conditions and subject to adequate supervision, while another 40% have considered that it should be banned.

• Pro League• Premier League• Football League• Ligue de Football Profissionnel• Ekstraklasa• Scottish Premier League

Prohibition

• Osterreichische Fußball Bundesliga• Divisionsforeningen• Veikkausliga• Deutsche Fußball Liga• FBO/Eredivisie• Liga Nacional de Futbol Profesional• Swiss Football League

Authorization underconditions

• Liga Portugal

Need for further consultationamong affiliated clubs

• Lega Serie A

Did not answer

Chart 04 Leagues’ positions on a prohibition on TPO in Europe

7%

46%

7%

Source: EPFL Research

40%40%

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05 RESEARCHThe main reasons invoked by the Leagues to back the prohibition on third party ownership are the risks for the integrity of competitions, ethics, the impact of TPO on clubs’ financial return, the loss of football money, the complexity tracking third parties, the differing interests of third parties compared with football stakeholders, transparency, the threats in terms of money laundering, tax evasion and outflow of capital, as well as the increased risks of litigation.

Leagues advocating an authorization under certain conditions have mainly argued that TPO - or third parties’ participation in transfer revenues - should be allowed pending it offers all the guarantees in terms of the clubs having the only and sole control over the players´ registrations, it safeguards clubs’ independence in their decision makings (notably in transfer and employment matters) and it involves only legal and legitimate businesses.

The following text needs to be added in the aftermath of the previous paragraph:

While expressing their general support for a permission under limitations rather than a complete a ban on TPO, some Leagues have however expressed their interest in seeing proposals on how a ban would be formulated and carried out, if such a regulation was to be put in place at European level.

The Portuguese League considered that this issue needs further consultation among its affiliated clubs.

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OPINION ARTICLES 06Third Party Ownership – Risk or Reward?

DEFINING THE ISSUES

Third party ownership (TPO) – the term that is most commonly used to refer to the ownership of economic rights in a football player by an entity which is not a football club – has become one of the key discussion points of football in recent years. It is an established part of the transfer market in some parts of the world but is a relatively new phenomenon in Europe.

Awareness of the issue became more widespread after the high profile case involving Carlos Tevez and Javier Mascherano in August 2006, since when numerous examples of TPO of players in South America and Europe have emerged. TPO is a manifestation of the extent to which the trade in football players in the 21st century has developed. This article examines what this means for the integrity of the transfer market and the game as a whole in terms of the possible consequences from a financial, commercial and regulatory point of view.

THE CURRENT REGULATORY APPROACH

At international level, FIFA has incorporated requirements in its Regulations on the Status and Transfer of Players at Article 18.bis such that it is prohibited for any third party to exercise any “influence” over a club’s activities in relation to its players. This does not, on current interpretation and application, prohibit third party ownership as a matter of principle.

As such, in many major European countries there is no outright prohibition in place. UEFA has recently moved to adjust its Financial Fair Play requirements amid growing concerns over the impact of TPO. These amendments do not prohibit TPO outright but they do seek to increase transparency and ensure TPO is not used to circumvent the parameters of Financial Fair Play.

A more prescriptive approach is adopted in France and England where the national association/the professional leagues have implemented regulations on third party investment which effectively prohibit the ownership of any player by an entity other than a football club. These leagues are vehement in their opposition to TPO.

In England, the regulations allow for a player already under third party ownership to enter English football, but on signing with an English club, the ownership of the player and all associated rights must be transferred in full to the English club. There are also full disclosure requirements that must be satisfied in advance of a transaction as part of obligations on the players and clubs involved.

The philosophical difference between these approaches comes down to the interpretation of the term “influence” in FIFA’s regulations. From an independent external perspective, it is almost impossible to see how influence would not be exercised, either directly or indirectly, by the owner(s) of rights in a player. If there genuinely were no influence at all, we would have to believe that an investor, having acquired the economic rights to a player at a cost, would not want to have a hand in deciding when that player is sold, to whom and for how much. Even more fundamentally than that, can FIFA realistically uphold the notion that an investor, whose money is at stake, will allow a club to let a player’s contract expire (thereby wiping out his transfer value) or retain him indefinitely without exercising some influence, either contractual or otherwise, in the outcome?

This also highlights the way in which one of FIFA’s guiding principles, namely the protection of contractual stability, stands to be significantly undermined by TPO. Third party investors have an inherent interest in ensuring a player moves clubs in order to crystallise their investment.

Richard Andrews, Chief Executive, Monitor Quest

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06 OPINION ARTICLESIn reality, it is a necessity for third party owners and investors to exercise influence in order for their investment to be protected. Without influence, their investment is hopelessly exposed to the point where it would not be contemplated by any rational investor.

RISKS AND REWARDS TO THE GAME

Who are the owners?

This question is perhaps not asked enough or investigated fully at a European level. The investors in the economic rights in football players range from international finance funds looking for a high risk/high return niche for an investment portfolio, through to one-off individuals, often with business interests in football already, including agents and other financiers.

Many of the vehicles for TPO are based offshore or have ownership structures that are complex and opaque. This raises the possibility that what appear to be separate third party vehicles are in fact connected via the interests of one or more groups or individuals. The extent to which the ultimate beneficial ownership of the rights in players is fully known and understood remains limited and should be the subject of further investigation in order to better understand the real nature of the market.

Just as the ultimate beneficial ownership of football clubs should be transparent, the same should be required of third party owners – they are trading in football’s key marketplace and have an increasingly significant level of control over football’s key assets. Lack of transparency increases potential exposure to issues such as money-laundering and tax evasion, thus exposing clubs to legal risks. The ramifications for this on the integrity of the game and the transfer market cannot be disregarded.

As in any other form of business, and in the current regulatory environment, associations, clubs and leagues should be asking who they are doing business with and conducting their own integrity checks/due diligence to ensure they are properly safeguarding the interests of shareholders, the fans and the game generally. As a minimum, they should ask themselves if they can fully answer the following:

• Who is the ultimate beneficial owner and how has this been proved?

• Are there other investors involved apart from the ‘front-man’ or company?

• What is the source/destination of funds?

• What is their reputation?

• What are their other business activities?

• Are they certain that the entity involved actually holds the rights in the player?

Why invest in players?

The obvious answer to this question is that it is a business decision based on an opportunity for significant financial rewards. If you can invest in ten young players in South America for relatively modest sums of money and one of those players ends up being good enough to be sold internationally for a seven-figure transfer fee, it is easy to see the attraction.

It is also easy to see how important it is to have access to the right players for investment purposes and how agents and other intermediaries potentially occupy an increasingly influential position. This is already a reality in Brazil, where the market for young players has become dominated by a small number (less than twenty) of private entities that effectively control the market, almost all of whom have some link to agents and or agencies.

Aside from rational investment reasons, it is clear that the transfer market provides opportunities for abusive and or illegal behaviour, particularly given its lack of transparency. This can be attributed to the fact that the transfer market is a multi-billion euro business, consisting of relatively high value, cross-border / multi-jurisdiction transactions, in an environment that is not tightly regulated particularly at international level, and where the assets that change hands in the market are extremely difficult to value objectively.

Access to the market is also relatively straightforward and third party ownership makes it even more so,

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OPINION ARTICLES 06because an investor does not even need to own a football club to engage in player trading. It is easy to see how the market could be abused, if it isn’t already happening.

How should the market operate?

It is impossible to establish whether third party ownership may harm the market’s operation or enhance it without considering the fundamental principles that underpin its operation.

At its most basic, the transfer market is a solidarity mechanism. It exists to provide a “trickle down” of funding between the clubs at the top of football’s pyramid to the clubs at the bottom that have been involved in the development of a talented player. This is reinforced by the regulatory structures that exist around player movement including FIFA’s requirements for the payment of Training Compensation and Solidarity.

The effect of the solidarity principle is two-fold: firstly, it provides a mechanism that ensures money generated by the game remains within the game and can therefore enhance the game’s infrastructure over the long-term; and secondly, it ensures that there is an on-going incentive to develop talented young football players who are ultimately the lifeblood of the sport.

The problem for third party ownership as a concept, is that it undermines both of these core principles: firstly by taking money out of the game for the benefit of financial speculators/other parties who are not necessarily interested in the long term health and viability of the sport; and secondly, by removing, or reducing, the benefits that accrue to clubs when they develop top-class talent.

Following this logic through, one could argue that third party owners do not necessarily need the traditional club structure within which to nurture these players. They could equally easily operate through private academies, which could ultimately lead to the widespread privatisation of the player market and have serious consequences for the pyramid structure of football worldwide.

Issues of integrity

We have established that ownership of rights in football players is unregulated in almost all jurisdictions, is not transparent, and allows ready access to the player trading market. It would be naïve to assume that it may not be used as a vehicle for wider wrongdoing.

In recent years football, and the sports industry generally, has coordinated its approach to the very real integrity risks of betting and match-fixing in a commendable way. But has it missed a trick in relation to third party ownership?

The English Premier League cited the threat that third party ownership poses to “the integrity of competitions” as one of the key reasons why it has adopted a zero-tolerance approach in its TPO regulations. It is relatively easy to understand why. As a competition organiser, the idea that players in your competition could be owned (and therefore potentially controlled or influenced) by parties who were not known to you, and whose motives you could not assess, is far from appealing.

It would be equally unpalatable, if not more so, to contemplate circumstances where players on opposing teams could be owned (and therefore potentially controlled or influenced) by parties who were not known to you, and whose motives you could not assess. The opportunity for such circumstances to be abused in individual instances or on a more systemic basis has to be taken seriously, not only for the potential threat to sporting integrity but also for the overall reputational harm that could undermine the industry more widely.

Exploitation of minors

In recent years, FIFA has taken steps to enhance significantly the monitoring and oversight of the movement of minors across international borders, in particular through the introduction of the Transfer Matching System.

The trading of potentially talented young footballers around the globe is an incredibly sensitive issue for the game’s governing bodies, given the rewards that are now on offer and the unscrupulous way in which this trading can occur. The charity, Culture Foot Solidaire, exists as a result of young African players ending up stranded in Europe after supposed contract offers do not materialise.

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06 OPINION ARTICLESIt is relatively easy to see how a proliferation of players whose economic rights are owned by external investors could potentially exacerbate these problems. There will of course be many young players that do not make the grade but what happens to them? If they do not have the infrastructure of pastoral care that is usually provided through a club environment, where do they end up, and how are they looked after by the sport? Third party investors need to find carefully considered answers to these questions if they are to establish a greater level of credibility for their own involvement. The risk is that they are seen as “traffickers” who are interested in trading human beings solely for financial gain.

Sustainability – a double edged sword

Third party ownership is effectively a mechanism by which clubs can operate beyond their own financial means. This can happen in different ways depending on whether the club is an importer or an exporter of talent.

As an importer, a club may be able to compete for, and retain, talent that is beyond its financial reach by only acquiring a certain percentage of the economic rights in a player. This enables the club to obtain the registration of the player for a fraction of actual market value (the remaining part being paid for, or retained, by a third party investor). In the short term, this may well be attractive and may enable smaller clubs to compete in the arms race for talent with their larger rivals. However, in the long term it will mean that money flows out of the game as clubs forgo future rights in a player’s value, despite the fact that it is the club, and not the third party investor, that is ultimately responsible for the development of the player’s skills and therefore the generation of that value.

The short termism of this approach has now spurred UEFA to incorporate new requirements into its Financial Fair Play process, designed to move European football towards a more sustainable business model given that its clubs have traditionally operated on the very edge of viability, at best. One of the reasons cited for this was the opportunity that TPO creates for clubs to circumvent the spending requirements of those regulations. Equally, as an exporter, a club may sell the economic rights in its best players in order to bring in immediate cash and to share risk. It may also be a means to open up the international market, given that the same agents and intermediaries are often involved in the player transfer, as well as the third party ownership process. This may improve the liquidity of clubs in the short term, but at what cost? Not only does it create potentially unmanageable conflicts of interest, but it also depletes football’s asset base and underlines the systemic problems of sustainability (or lack of it) in club football.

The selling of economic rights to third parties is another example of the way in which football clubs have sought to raise funds through the pledging of their assets, irrespective of the long-term consequences. In European football, this has been seen in the securitisation of their property (be it stadia naming rights or training facilities) which has led to many clubs not owning the grounds they play in, the securitisation of future television broadcast rights income, and/or the securitisation of ticket revenues.

All of these methods have in various ways and in numerous cases, including the recent example of Rangers in Scotland, led to circumstances where clubs overstretch themselves financially and sell their future assets to pay for financial risks in the present. As such, third party ownership cannot be seen as a more appealing option.

CONCLUSIONS: HOW TO MITIGATE THE RISKS?

We have identified the following risks associated with TPO:

• Unrestricted freedom of access to the transfer market by unknown owners/entities;

• The exercise of influence by third parties being an unavoidable consequence of their involvement;

• TPO compromises core principles that underpin the operation of the transfer market, including solidarity and contractual stability;

• Increased integrity risks due to possible conflicts of interest and control over assets at opposing clubs;

• The lack of transparency regarding third party ownership structures poses a risk to the business integrity of football clubs and the transfer market generally;

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OPINION ARTICLES 06• Potentially increased risk that young players are exploited for financial gain without meaningful support

structures put in place;

• The financial benefits that may accrue in certain circumstances under third party ownership in terms of greater short term liquidity and increased financial leverage, are counter-balanced by the longer term effects of money leaving the game and the pledging of club assets, thereby undermining the long-term sustainability of clubs in football’s pyramid structure.

Given the very significant values that talented football players can generate in the transfer market, it is inevitable that external speculators are looking to share in that wealth. This will be true whatever the regulatory structure; TPO is already well established in certain regions, so a simple and immediate worldwide prohibition is unlikely to work and would likely lead to a different manifestation of the same problem (eg. third party owners investing directly into academies and football clubs instead, which is already happening in some places).

As such, it is imperative that steps are taken as swiftly as possible by the game’s governing bodies to ensure that these risks and threats are appropriately managed. Any proposed solution must eventually be global and harmonised to reflect the nature of the market place and to ensure consistency. We would recommend the following:

That a staged approach to an enhanced regulatory framework is adopted with a clear timetable to cover the following within the next 3-5 years:

1. Initial recognition of the issue and acknowledgment that further regulatory intervention is required:

• Consultation/commission research/investigation into impact;

• A transition phase during which clubs and players are required to divest/unwind any economic interests particularly in jurisdictions where TPO is endemic;

• Full prohibition introduced on a harmonised basis at global level;

• That UEFA adopts an outright prohibition for its competitions at the earliest opportunity, supported by enhanced disclosure and integrity checks.

2. That UEFA researches the impact in a European context of EU law on TPO to assess its enforceability, in particular with reference to the Bosman ruling and freedom of movement requirements.

3. That clubs, governing bodies and leagues undertake a greater level of coordinated due diligence in relation to third party investment (until such time as it is prohibited outright) which should include proactive investigations/background checks on third party owners before a transfer deal is sanctioned or completed.

4. That the governing bodies are empowered to establish an investigations-led approach which is capable of enforcing rules retrospectively where a problem is identified.

5. That the governing bodies are empowered to encourage and, if necessary, enforce through regulation, a greater level of transparency across the whole market with particular focus on transactions in which third parties are involved, and ultimate beneficial ownership of economic rights.

We do not suggest that this will be an easy process or that other developments will not be encountered along the way, but it is imperative that football acts now to ensure that the game and its unique structures are appropriately safeguarded for generations to come.

Profile

Dick Andrews is the Executive Director of Monitor Quest Ltd. The company has a special focus on sports integrity and governance issues. As a result of its investigations it now runs the Integrity Unit for the Fédération Équestre Internationale and the World Snooker and Darts. Monitor Quest also conducted the inquiry into the English Premier League Player Transfers which resulted in significant recommendations to improve the process.

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06 OPINION ARTICLESThird Party Investment

Third party investment means the right of a third party, not being a football club, to purchase part or all of the economic rights of a professional footballer. The incentive to do this for third parties is that it can result in them receiving a share of the future transfer fee that will be payable on the future transfer of a player. This may seem a simple enough proposition, and one may query what possible harm could emerge from such arrangements. This article will attempt to answer that question.

Football is unique in the modern age in employing its key employees – players – on relatively long, fixed-term contracts. Professional players in the top European leagues are usually employed on contracts which last between three and five years. There are advantages for both club and player in this arrangement. The player benefits because he has the security

of employment, often for considerable remuneration, for a long period of time. The club benefits because it has the security of knowing that it has the player’s services for the period of the contract, and that it will need compensation – a transfer fee - in order to release him from it.

At the same time, never in the history of football has there been so much competition for the top playing talent, competition which takes place in a sophisticated global market with top clubs in Europe and beyond vying to sign the best players, and thereby driving up player values. While players have always moved between clubs in different countries, the increasing internationalisation of the transfer market is a key feature of recent years: as the world globalises, so does football. Global exploitation of the rights of top competitions and clubs within Europe has led to unprecedented growth in revenues within the European game. The best players are now superstar global entertainers, and the fees that one club has to pay another in order to obtain that club’s agreement to release a player from his fixed term contract likewise have grown to match this new status. The debate about whether this is a good thing or something which needs to be controlled is for another day and another article. What is beyond doubt, however, is that third party investors are trying to partake in the potentially vast financial upside of trading footballers.

Traditionally, transfer fees have been relied upon by clubs as vital revenue. A club develops a promising player. The player plays successfully for the club. The club sells him on for a fee which it uses to reinvest in its playing squad or for other football purposes, e.g. in youth development or training facilities in order to try to repeat the cycle of developing players. Under this model, players rise to their natural level within the football pyramid, and the top club for which the player ends up playing pays a fee to the club beneath it from which it acquired the player, that club in turn having paid a fee to the club lower down the pyramid and so on. There are of course many exceptions to this very simplified model of how transfer fees pour down through the game but broadly they have worked to cascade finances from the top clubs to those lower down, and hence spread wealth and make a vital contribution to the financial health of football at all levels.

So how does third party investment work and why would a club wish to engage in it? Under third party investment, a club receives immediate payment from the third party in respect of a player who remains on the club’s books. In return, the club guarantees to give that third party a share of the future transfer fee of that player. The third party is of course taking a gamble: it can acquire the right to a share of a future transfer fee in a player who may not turn out to be one who is sold for a high value. Alternatively, the third party may achieve a spectacular return for a comparatively modest investment if the player develops into an outstanding talent who is much in demand amongst the top clubs of Europe. This can look like a nice piece of business from the third party’s point of view. It also begins to look like a terrible piece of business from the selling club’s point of view: put simply, the money that the third party has taken from the transfer is money that is no longer available to the club, and to the game.

Arguments in favour of third party investment from a club point of view concentrate on the moment when the

Jane Purdon, Director of Governance, Premier League

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OPINION ARTICLES 06financial assistance is received from the third party. The club will say that it could never have afforded a player without the third party help: for example, if the open market value of the player is EUR10 million, a club may be able to acquire the player for much less with the third party providing the balance of the transfer fee (and in return taking a pro-rata share of any future transfer fee). From the immediate point of view of the acquiring club, this looks highly advantageous: it can buy players it could not otherwise afford. From the wider point of view of good governance in football, it begins to look problematic, raising as it does the difficult question of why a club should be permitted to acquire players for less than their true market value. Taken to its extreme, it would be possible to construct a team using third party investment at no actual initial cost to the club if the acquisition costs were met in full by third parties, who would in turn take any future transfer fees in full. The true cost of players is avoided by acquiring them with the assistance of third party investors. This undermines financial regulatory regimes based on the premise that only a club’s “football income” is used to buy its players.

A variety of models of third party investment have emerged over the years, from fully regulated investment funds, registered with state financial services authorities, through to, at the other end of the scale, individuals who wish to keep their identities entirely hidden via the use of corporate entities in jurisdictions without transparency of ownership. The latter model in particular raises substantial integrity concerns including the following.

• A third party whose identity is not disclosed cannot be monitored to ensure that they have no interests in players of more than one club, possibly raising issues about influence over the affairs of more than one club.

• An owner or benefactor of a club might likewise have interests in the players of another club or clubs.

• The football authorities cannot be satisfied about the ultimate source of money coming into the game.

The risks raised by this lack of transparency can be heightened if the third parties try to protect their interests in players by attempting to place some control on how and when a club can sell the player. At one extreme, the normal rights that a club has over a player’s destiny (which are of course subject to the player’s own wishes and aspirations) are transferred to the third party. Thus, it is the third party who decides when the player will be sold, for how much and to whom. This might be coupled with a direct relationship between third party and the player himself. For example, the third party may be acting as an agent or quasi-agent (unregulated and unlicensed via the proper FIFA procedures) to the player. The third party may be taking a percentage of the player’s direct earnings as well as a percentage of any transfer fees. This raises a conflict between the interests of the player and those of the third party.

It will be seen that this lack of transparency can raise other risks such as the potential use of football as a channel for money laundering, an ability to influence players (perhaps not necessarily for their or anyone’s good). It cuts entirely through all the good work that is being undertaken by football to try to improve standards of corporate governance. In recent years, the Premier League has substantially strengthened its rulebook to raise standards of governance and transparency. Examples of these initiatives include the following.

• All owners and directors of Premier League football clubs have to undergo the Owners’ and Directors’ Test which states that an individual cannot become an owner or director of a Premier League club if, for example, he or she has a relevant criminal conviction or if he or she is the subject of a ban from a sports governing body or a professional standards body (such as those that regulate, for example, lawyers or accountants). The drive to ensure that all those involved in the highest levels of professional football are of good standing is undermined if large financial interests in the game can be controlled by third parties who can hide who they really are by using offshore corporate vehicles.

• The football governing bodies at international level (and, in many cases, national level) are making substantial investment in protecting the game from the threat of unlawful activities related to betting, e.g. by investigating and prosecuting those involved in match fixing. There is a real risk that this hard work will be to no avail if unidentified persons, who are not regulated by any football body, can have access to highly confidential information, which comes into their hands as a result of their involvement in the game as third party investors.

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06 OPINION ARTICLES• There has been considerable work undertaken over recent years, across Europe, to ensure full transparency

of club finances. Each year, the Premier League scrutinises all member clubs’ accounts and future financial information, repeating the process if the club is subject to a change of ownership. The Premier League and FA operate clearing houses for the payment of all transfer fees and agents’ fees to ensure full transparency of money flows within the game. FIFA have recently undertaken considerable investment in the TMS system which is another vital step to ensure the transparency and propriety of international transfers. Uncontrolled, unscrutinised third party investment allows money to pass outside the TMS system, presenting a further risk of jeopardy to the integrity of the game.

It has been suggested that it is possible to overcome many of the objections to third party investment by permitting it but regulating it. By this argument, the possibility for the third party to have undue influence over the key football affairs can be removed. Indeed, Article 18 bis of the FIFA Regulations on the Status and Transfer of Players prohibits clubs from entering into contracts which permit an entity to “acquire the ability to influence in employment and transfer-related matters its independence, its policies or the performance of its teams”. However, even with the removal of all offending influence, there are still objections to third party investment. As noted above, it removes vital equity from the game. Further, third party investment is entirely predicated on players being sold on, often several times. It thus creates an impetus in favour of player churn, which is at odds with the desire of clubs to keep or transfer players primarily for football-related reasons only. A further concern is that even if the third party has no express influence in respect of the players who are the subject of its investment, de facto influence might arise: inevitably, power follows the money, and if a club has a key investor assisting it in funding player capital costs, will it truly feel unfettered when it comes to making decisions about what to do with those players, and able to do so without reference to that investor?

Third party investment also opens up the possibility of a “shadow” or “grey” transfer market. Currently the transfer of players’ registrations is heavily regulated in all countries, and as noted above the introduction of the FIFA TMS system places a new and welcome emphasis on the full disclosure of all parties to a transfer agreement and on the monitoring of flows of transfer fees. However, there is nothing in the football regulations of most countries and governing bodies which prevents third party investors freely trading their investments between themselves. Thus, the future liabilities owed by clubs to third party investors could be sold on. It could become impossible to track into whose hands they eventually end up. This could transform the transfer market as we know it. It could be replaced by a grey transfer market, where money and rights pass between entities, well away from the attention and regulatory powers of the football authorities.

Finally, the question of third party investment must be considered in the wider European regulatory landscape. The fact that third party investment is banned in France, England and Poland, but not in other European countries opens up the possibility of unfairness to the clubs of those three countries. If a French club has to pay full price for a player, but a German, Spanish or Portuguese club can pay a discounted price because third party investment is permitted by its national association, it will be seen at a glance how players are more expensive for some clubs than others. In a global market characterised by increasing trans-border regulation, and in which international club competitions are hugely popular, the possibility of unfairness is increased. No single league or national association can by itself address this potential unfairness, and we await with interest the full response of those tasked with dealing with these issues at an international level.

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OPINION ARTICLES 06The dilemma of third-party ownership of football players

«Nobody is pretending football is not a business, but it is not all about money”. This quote from a former football player summarises the tensions inherent in third-party ownership in football. How far are football governing bodies willing or able to go to make football even more grandiose and spectacular? How does one determine the best suited solution to respect the balance between integrity and profitability?

Third party ownership is not defined by any legislation nor any international or local football regulations. It can be described as the ownership by a third party of the economic value (i.e. economic rights) of a football player’s federative right.

Therefore, in order to characterise “economic rights”, it is necessary to refer to the concept of “federative right”. The “federative right” is the right of a club to register, by virtue of an employment contract, a player with a national federation or professional league in order to allow him to participate in the official competitions organised by such sporting organisations. Clubs only hold this federative right due to this employment relationship.

The “economic rights” are linked to the federative right since they refer to the financial income arising from a transfer of a player’s federative right. Put in other words, they are the pecuniary rights of the assignment of the federative right of a player from one club to another.

This dichotomy is somewhat reminiscent of the concept of intellectual property rights under French law with the economic rights on the one hand and the moral rights on the other hand. The authors’ economic right can be summarised as the right to authorise the exploitation of a work in consideration of remuneration. The moral rights include notably the right to disclosure and the right to the integrity of the work. If there is a real analogy between the two sets of economic rights, the comparison ends here, because of the inalienable nature of the moral right. The possibility to assign the federative right is precisely where the whole concept lies together with third parties benefiting from such an assignment.

The “third party” is generally a private company owned by football agents or investment funds which, by owning the economic rights of a player, will be entitled to whole or part of the amount of the future transfer value of that player, whereas usually, the player’s club is the only beneficiary of such value.

The notions of third-party ownership, economic right and federative right, are polymorphous and difficult to qualify from a legal standpoint, in particular since FIFA changed its regulations on the status and transfer of players in 2001.

What is the essence of the rights purchased by investors? The fact that there is a myriad of different kinds of investments makes it rather difficult to outline such concepts. Indeed, third-party ownership arises in number of ways.

The most common form is an investor purchasing all or part of the economic rights of a particular player from a club. Such an operation often takes place when the player is young, in the hope that his value will increase. The amount paid by the investor in consideration of such an acquisition finances the activities of the club. In

Victoriano Melero, Avocat à la Cour, Clifford Chance, Paris

Romain Soiron, Avocat à la Cour, Clifford Chance, Paris

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06 OPINION ARTICLESreturn, the investor will receive all or part of the transfer value of the player, which might be up to several million Euros. This investor may also be an investment fund which will purchase the economic rights of several players from the same club, and will thus receive a percentage of any transfer fees from any of these players. As an example, the Benfica Stars Fund would have acquired part of the economic rights of several players in exchange for cash, the fund being entitled to receive a percentage of the transfer fees of those players.

Third-party ownership can also take the form of financial support in relation to a player. In that case, the investor pays for a young player’s training, in return for an agreement that provides that, when the player signs a professional contract with a club, the investor will be entitled to a percentage of any future transfer fees. South America was the birthplace of this type of third-party ownership in football. The reason that this practice developed so vigorously in such countries (mainly Argentina and Brazil) is that many clubs are financially limited, yet they have very talented players. Third parties thus allow clubs that could not otherwise afford to, to keep and train these players, since businessmen buy the economic rights of young players and often cover the costs of their training and accommodation. In return, the investors are entitled to a percentage of the players’ future transfer fee, which would never have existed if nobody had invested in these players in the first place.

Although involvement of investors in the ‘ownership’ of players has been confined to developing countries for some time, western countries being reluctant to follow due to the legal uncertainty and the potentially unethical nature conveyed by such practices. Moreover, European clubs did not need investment from these sources as they were wealthy enough to hire good players directly. However, due to the world economic crisis striking the Euro zone, European football clubs have come to be increasingly interested in this practice, so as to stay afloat and expand.

Because on the one hand, successive economic crises impose on football clubs to find new forms of financing, and on the other hand, investment funds (sometimes driven by football agents) seek high potential yield, the gap between supply and demand has consequently narrowed and provided fertile ground for the growth of third-party ownership in Europe.

The current trend in football is moving towards greater regulation, seeking integrity of competitions and discipline in club football finances, in particular with the UEFA Financial Fair play. However, despite the fact that third-party ownership concerns everybody in the football world, regulation of this matter is rather scarce.

Panorama of current third-party ownership regulations in Europe

As a matter of fact, there are major discrepancies between national football regulations across Europe on this topic, which is highly detrimental to the game’s well-being and the transparency of European football.

Indeed, some national football regulations strictly prohibit such practice at all. In Europe, the French Professional Football League’s (the Ligue de Football Professionnel, LFP) and the English Football Association Premier League’s (FAPL) regulations are the most severe since they expressly outlaw third-party ownership.

Regarding the French football clubs, the LFP’s Regulations provide that “A club cannot enter into with legal entities, with the exception of another club, or individuals, an agreement having for purpose to entail, directly or indirectly, to the benefit of such persons, a total or partial assignment or acquisition of the patrimonial rights stemming from the determination of the various compensations the club is entitled to receive in case of a transfer of one or several of his players“29. Enacted in the early 1990s, this provision aims at ensuring that football clubs are the only entities to benefit from the value of players, and so they can keep control over the management of their teams.

The wording of this article is quite broad and is thus likely to encompass a high number of situations (in particular it could be interpreted as prohibiting the assignment of the amount of the future transfer for collateral purposes, as security for a loan for example). Consequently, the LFP recently stated that this article did not aim to ban assignment for collateral purposes and confirmed that third-party ownership was prohibited30.

29. Article 221 of the LFP Regulations for the Season 2011/2012 provides that “Un club ne peut conclure avec des personnes morales, à l’exception d’un autre club, ou physiques, une convention dont l’objet entraîne, directement ou indirectement, au bénéfice de telles personnes, une cession ou une acquisition totale ou partielle des droits patrimoniaux résultant de la fixation des diverses indemnités auxquelles il peut prétendre lors de la mutation d’un ou plusieurs de ses joueurs.”

30. Decision of the LFP Bureau dated 4 March 2011.

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OPINION ARTICLES 06As for the English Premier League, in reaction to the “Tévez and Mascherano case”31 the FAPL decided in 2008 to expressly outlaw third-party ownership32. The English Football Association and the FAPL have very similar regulations33 and ban third-party ownership in a very descriptive way. They require that a player’s registration and economic rights are not retained by any third-party when a player is transferred and registered with a new club, who must become the sole owner of these rights.

At the worldwide level, FIFA takes a relatively soft stand towards this issue. Indeed, through article 18 bis of the FIFA regulations on the status and transfer of players, FIFA provides 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”. This provision prohibits third-party influence, but is rather unclear as to whether third-party ownership is banned or not. In order to obtain a clear position on this highly controversial topic, the French Football Federation asked FIFA to clarify how this article should be construed.

FIFA answered by saying that they were not entitled to give such directions in the absence of any ongoing dispute, but gave some terminological explanations on the “federative rights”, which unfortunately does not enlighten the subject34.

The fact that FIFA does not, as such, prohibit third-party ownership probably explains why the perception of this topic is nothing but heterogeneous, and that most of European national football regulations still allow this kind of practice today, in particular in Spain, Portugal, Germany and Italy.

Pros and cons of third-party ownership

Whether against or in favour of third-party ownership, there is no doubt that the issue is causing many heated debates.

The main argument raised by the opponents of third-party ownership is intrinsically linked to human rights concerns: for many people, it can be assimilated to trading in human beings. Indeed, the concept of third-party ownership implies that investors “own” the player, or at least a part of him, and this is emphasised by the name of such practice (“ownership”) which was most certainly not used by accident. For western countries, where self-determination is the cornerstone of the society, it is rather difficult to conceive that someone may be owned by anybody other than himself.

From a less philosophical standpoint, integrity of sporting competitions is also at stake. As a matter of fact, the more mercantile sports become, the more difficult it gets to control integrity. Conflicts of interest may arise if such a practice became prevalent. If individuals or legal entities own stakes in several different players from various clubs, the necessary transparency to prevent conflict of interests will be very difficult to meet. In this regard, it is worth noting that to prevent conflicts of interests, article 122-7 of the French Sport Code, the FIFA’s and UEFA’s regulations prohibit the multi-ownership of clubs.

Moreover, the opponents consider that this practice is opaque and will undoubtedly lead to fraudulent activities. The risk of capital flights outside the football sector is also put forward. Indeed, if a third party earns money from a transfer, there is no certainty that it be reinvested in football, whereas a football club would more likely invest this money in its sporting activities.

On the other hand, defenders of third-party ownership consider that this practice represents many benefits and should not be demonised. To them, it is nothing more than a new form of financing, and thus investment, a way to increase the quality of players for clubs who cannot afford to do so without this practice. They argue that it constitutes a way of sharing the burden of investment in a player, investment that is nowadays more and more expensive. From this point of view, it is undeniable that it offers ways for financially limited clubs to find

31. Argentinean football players who were transferred on 31 August 2006 to the English club West Ham United, and whose “economic rights” were owned by a third-party.

32. Until this case, the English regulations were only prohibiting arrangements pursuant to which a third party was able to materially influence the club’s policies or the performance of a team.

33. These new rules are contained in “Premier League Rules L34-35” and in the “FA Third-party Player Ownership Regulations”.

34. Fax from the FIFA dated 26 August 2008.

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06 OPINION ARTICLESfinancing instruments, and for investors to make profits, which makes the third-party ownership a win-win practice for many involved.

On top of these benefits, defenders underline the fact that prohibiting such practice would cause anticompetitive effects, in the sense that it constitutes an undue barrier to entry into the football business market. It has also been argued that, in the absence of a uniform prohibition, it obstructs the freedom to provide services as guaranteed under article 56 of the Treaty on the Functioning of the European Union.

Should third-party ownership be banned or admitted under conditions?

As a preliminary remark, it should be stressed that it is necessary to implement a uniform regulation on this topic at the world, or at least at the European, level since, for the time being, there is an unfair discrimination between European clubs. The fact that French and English clubs are the only ones for which third-party ownership is prohibited may potentially put them at a disadvantage compared to their European club rivals. Pursuing the goal of transparency in football, the supranational football governing bodies should put an end to these discrepancies, by enacting a clear position, whether authorising or prohibiting the practice.

In considering the different options available, the governing bodies should bear in mind that, if they decide to outlaw third-party ownership, such prohibition would be rather difficult to implement and would raise many conflicts. What would happen to players already transferred whose rights belong to a third-party? Is it possible to effectively enforce such a strict prohibition worldwide? Would it be retroactive? These questions clearly need to be settled before enacting any prohibition, otherwise it would result in highly detrimental legal uncertainty.

Moreover, some specific practices might be inadvertently encompassed in the event of a broad worldwide ban. For example, in the United States, the professional football league (the Major League Soccer) is a third-party (i.e. it is not a football club) who owns the registration rights of its players (excluding designated players). If FIFA were to outlaw all types of third-party ownerships of player’s federative rights, it would disrupt the entire structural organisation of American soccer, and potentially many other countries.

If sporting bodies were to refuse a full prohibition of third party ownership, it will then be highly recommended to implement a variety of measures aimed at controlling the risks afore-mentioned. For example, it could be made mandatory for investors to declare to the relevant federation (or to any equivalent body that would be responsible for controlling these matters) every share they hold in a football club’s players’ economic rights and each agreement they enter into with football clubs and/or with players. Also, a plethora of solutions and measures could be enacted to prevent potential conflicts of interests.

Fortunately, the football governing bodies are aware of this situation. As a matter of fact, both UEFA35

and FIFA have made statements according to which they are intending to adopt a firm position on this matter, mainly in the direction of a prohibition of third-party ownership.

The general trend of FIFA and UEFA, shown by the creation of the Financial Fair Play regulation, tends towards more regulation; although in the Financial Fair Play regulation, there is no such third-party ownership prohibition. However, it is highly likely that the next move will be towards the ban of this practice. Notwithstanding the fact that the advantages of a strict prohibition are debatable, a uniform and unique regulation on this topic must be supported, since it will fix the current discrepancy between countries who authorise such practice and those who have outlawed it.

35. In a press release dated 18 May 2012, the UEFA said that: “Third-party ownership of players was one of the issues that was top of the day’s agenda and was debated extensively at the meeting. In light of the widespread emergence of this phenomenon in European football, and the threats associated with it, UEFA is considering a ban on the registration of players subject to third-party ownership arrangements for its competition”.

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OPINION ARTICLES 06A review of third party ownership – Where do we go from here?

Introduction

The concept of sharing the “economic rights36” of a football player between multiple parties is not a new idea in the world of football. However, it seems that only since the well-documented “Tevez Affair37” has the notion of “third party ownership” come to the fore front of the modern football fans lexicon.

Indeed, the investment in the “economic rights” of a player that is not playing for your club or entity is a model which has existed for many years without being a hugely disruptive force to the world of football38. However, the powers that be in the said world are conscious of the potential negative impact that third party ownership could have on the integrity of the game, particularly if it ever impacts the certainty of result or paves the path to victory for a club.

Jean-Louis Dupont, one of the Jean-Marc Bosman´s lawyers, raised concerns about the compatibility of bans on third party ownership that the Premier League and the Football Association have imposed with EU law 39 stating:

“The main principle under EU law is the freedom of enterprise, where the restriction is the exception. You should start with the principle rather than the exception”.

Most of the bodies that govern and regulate football allow for third party investment so long as the third party investor cannot influence the conduct of the football club. In other words, one can invest in the value of a player´s economic rights however they cannot have any power regarding sporting decision such as where and when the player shall play, where and when the player will be sold or loaned, etc.

History

“This kind of ownership has continued spreading in the last 15 years, as a consequence of which the clubs are no longer the sole owners of their players”40.

It is not always companies who co-owned players with football clubs. Indeed, co-ownership is a system which has existed for years whereby two or more clubs own the contract of a player jointly, however the player is only registered to play for one club 41.

37. http://www.carlezzo.com.br/en/ler-publicacao.php?id=12

38. http://en.wikipedia.org/wiki/Third-party_ownership_in_association_football#Carlos_T.C3.A9vez_and_Javier_Mascherano

39. “In South America more than 500 players are owned by third party ownerships” – http://www.football.co.uk/blogs/5022/1656700.shtml

40. http://www.bbc.co.uk/sport/0/football/15386863, Case C-415/93, available at http://eur-lex.europa.eu/smartapi/cgi/sga_doc?smartapi!celexplus!prod!CELEXnumdoc&lg=en&numdoc=61993J0415

41. http://web-back.uianet.org/documents/seminaires/programmes/BA%20flyer%20%20BAT%20110908.pdf

42. http://en.wikipedia.org/wiki/Co-ownership_(football)

Juan de Dios Crespo Pérez, Director, Ruiz-Huerta & Crespo Sports Lawyers 1

36. www.ruizcrespo.com

Adam Whyte, Associate, Ruiz-Huerta & Crespo Sports Lawyers

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06 OPINION ARTICLESThe system of co-ownership is not practiced everywhere in the world of football but it exists in some countries including Italy, Argentina, Chile and Uruguay 42. The co-ownership system is similar to the third party ownership in that typically two parties share the cost and risk associated with the purchase of a football player.

The Tévez Affair

In 2004, Kia Joorabchian, a well-known intermediary in football, purchased a reported 51% controlling stake in the Brazilian club, Corinthians, under the name of Media Sports Investments, “MSI”. Subsequently, the club registered both Carlos Tévez and Javier Mascherano, whose rights were owned by Mr. Joorabchian43 via MSI as well as Just Sports Inc 44.

Thereafter they were transferred to West Ham United Football Club in England where they famously played with Carlos Tévez having particularly success, famously scoring “the goal that kept West Ham up” against Manchester United and being voted the Player of the Season45.

West Ham were fined £5 million for their violation of the Premier League rule V.20 (formerly rule U18) which stated that no club could enter into a contract which would allow a third party “to acquire the ability to materially influence its policies or the performance of its teams”.

The fact that the owners of Tévez were entitled to decided where to and for how much Tévez could be sold or loaned for46 was the reason why West Ham were fined in this instance. As a result of this dispute the regulations of the FA and the Premier League were amended so as to avoid similar scenarios happening again in the future.

Despite the ban on any third party ownership in the Premier League and FA regulations, third party ownership continues to play a large role in the economics of football on the continent. For example, FC Porto´s annual report47 of 2009 indicated that FC Porto only owned 100% of the economic rights of five members of their 27 player roster.

The reaction to the Carlos Tévez affair saw the Premier League draft news rules L34 and L35 to come into force from the start of the 2008/2009 season to outlaw all forms of third party ownership. I shall cordially examine the current regulations on third party ownership of several different football organizations so as to indicate the legal status of such agreements and how said status might change in the future.

Football Organization Rules on Third Party Agreements – FIFA

The Tévez affair drove FIFA to modify its Regulations on the Status and Transfer of Players, “RSTP”, was amended in 2007 to include Article 18bis.1 which states:

“1. 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”.

One can see that these provisions do not forbid third party investment however; they prohibit the third party that is making the investment from having any influence in the decision making of the football club.

It is clear that when FIFA refers to a third party being unable to “influence in employment and transfer-related matters” that the international organization is referring to events wherein the club might be forced to sell or loan a player should a certain amount of money be offered, be forced to raise or lower the salary of the player based on performance, or even consult with the third party investor in the event of an offer.

Moreover, it is clear that FIFA forbids that a third party have influence on the “policies and the performance of

43. Ibid.

44. http://www.dailymail.co.uk/sport/football/article-1181543/Inside-story-How-Joorabchian-bought-Tevez-West-Ham-fallout.html

45. http://www.law.ed.ac.uk/courses/blogs/sportandthelaw/blogentry.aspx?blogentryref=8140

46. http://en.wikipedia.org/wiki/West_Ham_United_F.C.#Hammer_of_the_Year

47. As well as the non-disclosure of this agreement between West Ham and Tevez´s owners.

48. www.fcporto.pt/IncFCP/PDF/Investor_Relations/Ingles/RCConsolidado20092010INGLES.pdf

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OPINION ARTICLES 06its teams” meaning that a third parties are barred from, for example, obliging the club they have engaged in a contract with to field a certain player during a certain match, or not field a player during a match as the case may be48.

The Premier League

The effects of the Tévez case saw the Premier League change its rules on third party ownership from a system which resembled FIFA´s regulations on the issue to a more stringent and restrictive system which now prohibits any third party ownership.

Rule V.20 (Formerly Rule U18) of the Premier League Regulations stated that:

“No club shall enter into a contract which enables any other party to that contract to acquire the ability materially to influence its policies or the performance of its teams in league matches or in any (other) competitions”.

As a direct result of the “Tévez affair” the Premier League adopted the rules L34 and L35 (now L37 and L38 respectively) to govern third party ownership to be applicable from the start of the 2008-2009 season with non-retrospective effect49.

Rule L37 provides an exhaustive list of when third party agreements can be entered into50. Rule 38 states the following with regard to the Premier League clubs´ obligation to buy out any third party should they wish to register a player who is partially owned by a non-football club.

The Football League

The Football League, perhaps recognizing the economic limitations of its clubs, imposes no such absolute prohibition of third party involvement on its members. Rather Rule 86 of the Football League Regulations51 discusses “Interests in More Than One Football Club.”

Prior to the 2009/2010 season the Football League issued guidance on what finance agreements would be permitted under Rule 86 (formerly Rule 81) of the Football League Regulations. The preamble of the Football League Board Policy on Finance from Investment Funds indicated that the objective of the Football League Board is to attract “finance in a challenging credit market” while ensuring “that the reputation of the League is maintained”52.

In this regard, it was crucially indicated that Football League clubs could only enter into an agreement with one third party investor at a time, and that the investor could not solely benefit from the sale of one particular player. In other words, the third parties´ investment would have to be in the entire squad 53.

The FA

Until 4 August 2009, the FA rules54 only contained Rule C1 (b)(iii) regarding third party ownership which stated, similar to the previous Premier League Regulations, that no Club could enter into a contract where a third

49. For example if a third party owned some of the economic rights of a player but also owned a football club and the player was to play against its clubs, the third party might want the player not to play, play out of position, etc.

50. Meaning all third party ownership agreements that previously existed, provided no material influence was possible, were still valid and the club didn´t have to “buy-out” the third parties interest in the player.

51. http://www.premierleague.com/content/dam/premierleague/site-content/News/publications/handbooks/premier-league-handbook-2011-12.pdf

52. http://www.football-league.co.uk/regulations/20110629/section-9-association-dual-interests_2293633_2125750#84

53. Geey, Daniel; Third Party Player Ownership: the Regulations for Premier League and Football League Clubs for the 2009/10 Season; Entertainment and Sports Law Journal Volume 7 Number 2.

54. Also, Article 86.5 states that: The holding of not more than 10 per cent of the share capital of any football club shall be disregarded for the purposes of this Regulation 86 provided that those shares are, in the opinion of the Board, held purely for investment purposes only. Theoretically one third party investor could own <10% of the interest of all of the football clubs without falling foul of these Regulations.

55. http://www.thefa.com/thefa/rulesandregulations/~/media/Files/PDF/TheFA/Rules_Regs/RulesOfTheAssociation201112.ashx/RulesOfTheAssociation201112.pdf

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06 OPINION ARTICLESparty would have “the ability to materially influence the Club´s policies or the performance of its teams in Matches and/ or Competitions”. However, now these rules have been supplemented by the FA Third Party Ownership Regulations55 which crucially state in Article A.2 that no third party shall own or carry on owning the economic rights of a player. Moreover, Article B.2 of said Regulations provides a mechanism where clubs can buy out a third parties interest.

It is interesting to note that Rule A.1 of the FA Rules states that Clubs must comply with FA rules. As the Premier League rules are more prohibitive than the FA rules then it is unlikely that the FA rules would be enforced in the event of a complaint regarding third party ownership from a Premier League club. However, perhaps these rules could be applicable to Football League clubs found to have breached the FA rules regarding third party influence.

UEFA

UEFA states, with regard to Player Eligibility56, that:

“Players must be duly registered with the association concerned in accordance with the association’s own rules and those of FIFA, notably the FIFA Regulations on the Status and Transfer of Players”.

Such has direct implications on the English Premier League clubs´ compliance with the UEFA Club Licensing and Financial Fair Play regulations as English clubs will be obliged to submit the entire value of players which they purchase, including the fees which are paid to third parties in order to “buy out” their interest in the players, whereas other continental clubs are only charged with the task of submitting the transfer fees which they have paid and are not obliged to disclose how much of the player they own.

The future of third party ownership

Certainty of ownership

Previously, when discussing third party ownership, “certainty of ownership” was a concerning issue57. That is to say, previously, clubs were not forced to disclose which of their players were owned by third party investors and who the third party investors that had an interest in their players were.

In some countries like Brazil or Argentina, a register is kept by the FA or the clubs which is public and can be accessed by anyone, in order to know which player has is “economic rights” in possession of third parties and in which percentage.

Transparency in football is always a matter which the judicial bodies have held as being of the utmost importance. We have seen from the CAS in the ENIC58 at paragraph 129 of the decision that the Panel stressed such stating:

“Among the myriad of rules needed in order to organize a football competition, rules bound to protect public confidence in the authenticity of results appear to be of the utmost importance. The need to preserve the reputation and quality of the football product may bring about restraints…”

It is clear that the CAS felt the need to protect football and indeed its fans from any potential conflict which might compromise the veracity of the game.

The new 2012 UEFA Club Licensing Regulations, “CLR” foresee such a problem, and now clubs, while still being entitled to engage in third party agreements, must offer full disclosure of the terms of these agreements.

56. http://www.thefa.com/thefa/~/media/Files/PDF/TheFA/FA%20Handbook%20200809/Third%20Party%20Investment%20-%20FA%20Regulations%20JUNE%2009%20FINAL.ashx/Third%20Party%20Investment%20-%20FA%20Regulations%20JUNE%2009%20FINAL.pdf

57. Article 18.02 of the UEFA Champions League & Europa League Regulations 2011/2012 - http://www.uefa.com/MultimediaFiles/Download/Regulations/competitions/Regulations/01/63/02/44/1630244_DOWNLOAD.pdf http://www.uefa.com/MultimediaFiles/Download/Regulations/competitions/Regulations/01/62/69/60/1626960_DOWNLOAD.pdf

58. Reck, Ariel & Geey, Daniel; Third –party ownership & UEFAґs FFPR: a Premier League handicap, Sport & EU Review Volume 3 – Issue 2 – December 2011.

59. CAS 98/200 AEK Athens and SK Slavia Prague / Union of European Football Associations (UEFA), award of 20 August 1999 .

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OPINION ARTICLES 06Moreover, clubs are now prohibited from purchasing a player and later selling his economic rights to a third party during the course of the contract and using these funds to declare a lower acquisition cost than they would have.

Prohibiting Third Party Ownership?

There are certainly advantages and disadvantages to this system which many view as a necessary to the development and expansion of the game59. The new UEFA CLR foresee, potentially, the most sustainable and secure system of third party ownership. A system wherein transparency is encouraged, but investment in football is encouraged rather than hindered60.

We have seen in England that third-party ownership, by non-football clubs has been outlawed for now, and two factors will contribute to its continued illegality for the proximate future; 1) the financial stability of the Premier League and 2) the shroud of negativity which falls over the concept of non-football-related entities entering into the game.

Returning to co-ownership

The rules and regulations of the various bodies in England do not regard sell-on agreements with other football clubs as being illegal. Therefore, it is submitted that third party investors could circumvent these regulations by purchasing “feeder clubs” that purchase both the economic and federative rights of promising players only for these players to be sold on to “proper” football clubs at a later date.

We have already seen clubs like Desportivo Brasil Participações Ltda., associated with football investment group “Traffic”61, establish a concrete link with Manchester United62, and there is no reason why third party investors who are anxious to invest in talented youth players as a way to generate profit via player loans and sales in the future could not use these “feeder clubs” to evolve the system of third party ownership and continue investment in the world of football.

Solicitor, Daniel Geey commented in his article “Heroes or Villains? Third party ownership in the Premier League63” that “the new Premier League rules go much further than the FIFA rules governing third party ownership. The principle of the FIFA rules is to outlaw outside influence, where as the Premier League rules actually ban any agreement regardless of whether there is a material influence or not”.

The world economic crisis has had a direct effect on the finances of a plethora of football clubs, and in times of recession those with money often have the potential to make even more money with the right investment. We have seen for several years that those with the right business savvy, the eye to spot talent, and the right motivation can thrive economically via their investment in football.

In light of the recent discussions engaged in by the Professional Football Strategy Council, the establishment of the new UEFA Club Licensing Regulations 2012, and the potential for third party investment via feeder clubs that this is not the last we have heard about this topic.

60. Third Party Player Ownership in Football and the aftermath of “Tevez-gate” - http://www.law.ed.ac.uk/courses/blogs/sportandthelaw/

61. http://online.wsj.com/article/SB10001424052970204369404577204842526105550.html

62. https://www.trafficfootball.com/academy.php

63. http://www.unitedzone.info/threads/reds-announce-brazil-link.3488/

64. Geey, Daniel; Heroes or Villains? Third party ownerhsip in the Premier League, On the Ball Issue 2; Field Fisher Waterhouse.

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06 OPINION ARTICLESThird party player ownership: current trends in South America and Europe.

Introduction

“Economic rights” is the way we call TPPO in South America and is truly an invention from this side of the football world. The concept was created in the late 90s when Bosman opened borders and TV rights cash opened wallets in Europe.

Some people linked to clubs here in South America and also some of the first agents, came from the financial world and they quickly realize that the profit of a potential transfer was a future event, tradable as any other futures market product.

The notion of owning a share of the profits of a future transfer was rejected at first by FIFA, it was perceived as an attempt to

maintain “federative rights” over a player, meaning control over his movement even after the end of the relevant labour contract. This was clearly against the very foundations of the FIFA 2001 regulations.

It took a few years but CAS settled the issue and admitted the validity and legality of the economic rights ownership. There’s today a consolidated collection of cases in that sense. The first cases involved only clubs as the “third party”, not casually teams from Argentina, Brazil and Paraguay. Later, cases involving private companies and natural persons arose, and CAS maintained the same line of reasoning (All these cases are ordinary and therefore confidential, hence I only know those I have been part of, or those provided to me by colleagues).

It seems that the issue is well settled today so, why is it again in the football public agenda? The interaction with Financial Fair Play is the reason.

Since buying and selling shares of a player’s potential transfer has concrete financial effects, discussion is if countries where TPPO is banned (England and France) are in disadvantage among those were it is allowed and intensively used (Portugal, Turkey or Spain for example).

This article will briefly explore these topics and the new trends and problems associated with economic rights. Finally I will address the issue of the legality of the economic rights ownership.

Recognition era

As said, CAS recognized in various awards the conformity of these agreements with the FIFA regulations as long as they comply with some minimum requirements: a) the player’s conformity and b) the existence of a labour contract between the player and the club. CAS 2004/A/635 RCD Espanyol De Barcelona Sad v Club Atletico Velez Sarsfield is probably the first landmark decision: “In the Panels opinion, in professional football a basic legal distinction is to be made between the registration of a player and the economic rights related to a player” (par. 64). “A club holding an employment contract with a player may assign, with the player’s consent, the contract rights to another club in exchange for a given sum of money or other consideration, and those contract rights are the so called economic rights to the performances of a player. This commercial transaction is legally possible only with regard to players who are under contract, since players who are free from contractual engagements – the so called free agents – may be hired by any club freely, with no economic rights involved’ (par.64)

“In accordance with the above distinction, while a player registration may not be shared simultaneously among different clubs, a player can only play for one club at a time, the economic rights, being ordinary contract rights, may be partially assigned and thus apportioned among different right holders’ (par. 65). After this one, further decisions

Ariel Reck, Sports lawyer

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OPINION ARTICLES 06were taken in that same sense64.

CAS also entered into the rationale of such agreements characterizing them as joint ventures “the Co-ownership Agreement established a sort of joint venture between the two clubs, whereby they arranged to jointly hold title to the economic rights to the performances of the Player. As a result of their reciprocal commitments, both clubs had a duty of transparency and cooperation towards each other”65. Consequently, practices such as terminating the player’s contract or letting him go for free were considered to be against good faith and against these economic rights agreements.

In later cases, the possibility to trade with the economic rights of a free agent was also admitted, but in general, the principles laid down in the first awards remained applicable and valid. CAS decisions really affected the business. Former common practices like considering the subsistence of the rights after the end of the contract, or unilaterally terminating the contract of a “co-owned” player, came to an end in a short time due to the fear of Investors and clubs of having their contracts considered null and void.

Today is clear that economic rights are ancillary to an employment contract or to a free player status and those rights do not remain or subsist after termination of the relevant employment contract or change of status. The need of the player´s conformity is also widely admitted as a requirement for the validity of the agreement. The same goes for the prohibition of practices like releasing the player in bad faith, in order to extinguish third party rights.

Limitation era

The consolidation of the notion that the rights were only ancillary to the player’s status led to a new kind of contracts. The economic right holders or purchasers were trying to control the status and the movement of the players. This led to really abusive documents and behaviours, bringing the business into more disrepute.

While such conduct was known and openly criticized, it was limited to South America. European clubs were not bothered by the practice so FIFA had no pressure and no intention to intervene in the matter. I have to admit how hard can be for FIFA or any other federation to enforce regulations against private companies and persons out of its reach. Enforcement is only possible indirectly, through rules limiting and sanctioning clubs and/or players.

When the Tevez gate came to light, FIFA had no choice but to intervene, and the reaction was fast but –in my view- limited. FIFA adopted the English regulation in force at the time and made it mandatory worldwide (Art. 18 bis and art 1.3a FIFA RSTP).

Months later, the new FIFA agent’s regulation came in force, including a second provision limiting TPPO. Art. 29.1, which provides “Payment restrictions and assignment of rights and claims: 1. No compensation payment, including transfer compensation, training compensation or solidarity contribution, that is payable in connection with a player’s transfer between clubs, may be paid in full or part, by the debtor (club) to the players’ agent, not even to clear an amount owed to the players’ agent by the club by which he was engaged in its capacity as a creditor. This includes, but is not limited to, owning any interest in any transfer compensation or future transfer value of a player”.

Again, this limited intervention considerably impacted the business. Is true that abusive clauses did not simply disappear from contracts, but the improvement was notorious.

One particular aspect to consider for further improvement is that the notion of influence is not clearly defined. No case is yet decided by FIFA as far as I know. CAS rendered an award considering the issue but only as obiter (the case was decided based on the previous regulations but after the release of art 18bis, so the influence argument was brought by the appellant). In CAS 2008/A/1482 Genoa Cricket and Football Club S.p.A. v/ Club Deportivo Maldonado the panel stated: Par.87. The Panel does not need to decide whether the July 9, 2003 Contract (the economic rights contract), was valid. Indeed, the existence itself of such a contract is irrelevant as with regard to the validity of a transfer agreement. For international registration purposes, it is only the club, as employer,

65. CAS 2004/A/662 RCD Mallorca V/ Club Atletico Lanus, CAS 2004/A/781 Tacuary FBC v Club Atlético Cerro & Jorge Cyterszpiler & FIFA, CAS 2004/A/701 Sport Club Internacional v Galatasaray Spor Kulubu Dernegi.

66. CAS 2004/A/701 Sport Club Internacional v Galatasaray Spor Kulubu Dernegi paragraph 51. In the same sense CAS 2005/A/848 Internacional v Bayer Leverkusen and CAS 2009/A/1756 FC Metz v/ Galatasaray Sk (in these 2 cases by analogy because they were related to a sell on fee agreement).

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06 OPINION ARTICLESthat is able to transfer a player under an employment contract to another club. The fact whether further “internal” arrangements may exist between investors, the player and even the club itself, does not matter, as it does not have any legal impact on the validity of the Transfer Agreement.

In England (“birthplace” of art 18 bis) a case was recently decided and is the second after Tevez. In The Football Association and (1) Queens Park Rangers Football Club (2) Gianni Paladini an independent panel held that “The fundamental principle that underpins the Rule is that, in a competitive sport, a club should not be placed in a position, because of an agreement it has entered into with a third party, which enables the third party to acquire the ability to influence the way in which the Club operates, or how it performs in matches and competitions. If it were otherwise, the integrity of the sport would be threatened” To finally decide “(vii) The absence of any influence, actual or attempted, over the Player by TYP/Tasco at any time before the TPI was bought out. The Club’s policies and performances were unaffected by the presence of the third party in the background, we find”.

It goes certainly beyond the scope (and the length) of this article, but let me just briefly express my position. When a club trades with the economic right of a player, it is stating that there’s at least the intention of transferring the player and obtaining a profit. The counterpart that acquires a share of such potential transfer believes in good faith in the intention of the club and the possibility of a transfer. So, when a possibility finally arises, the club cannot simply say, without any financial consequence, it does not want to transfer the player. Therefore clauses imposing an acquisition of the investor´s share if the club rejects an offer by a third club (under the same conditions of the rejected transfer offer) are in principle valid and do not represent an unduly influence in transfer matters.

Current trends: Out of contract players and “straw man” clubs

In South America, economic rights are basically assigned in 3 different moments and/or situations:

First, when the youth player is registered for the club. This is a recognition to the person or entity that brings the player to the club and is usually between 10% and 20% of a future transfer. This widens the club´s talent scouting net and attracts young promises from the small clubs to the big ones. The percentage can be assigned to the former club of the player, a third person who brings the player (a scout) or to the player´s family if he comes as a free or unregistered player. In these cases the position of the beneficiary is really passive and the assigned rights are fragile and dependant of many factors (the player is not even a professional yet).

Rights are also assigned to third parties when the club needs money to cover other obligations, unrelated to the player. Every club has one or more starlets and investors are willing to take the risk and acquire a percentage of the player´s economic rights. For the club, the sale of portions of the economic rights helps it to balance its books and find credit from alternative sources. In this case there´s no “standard” percentage, it depends on the money the investor paid, the potential value of the player and the needs of the club. Influence of the third party is also subject to each particular agreement, with a direct correlation between percentage owned and influence.

The third situation is when a club wants to hire a player but does not have the financial resources to do it. The rights of such a player might be owned by a company or a company might be willing to acquire the player´s rights from the former club and bring him to the new club. In this case, the new club is used as showcase only.

Usually, the player is hired for a single season with an option for the purchase of a percentage in favour of the new club, triggering –if executed- a long term employment contract.

Sometimes, even if the option is not executed the company recognizes the club a small percentage (around 10%) as “showcase rights” in case the player is immediately hired with a long term contract by another club after the termination of his one season contract.

This practice is fostered by the spread of buyout clauses in football contracts. With such clauses anyone can “release” the player from the former club for a given amount and then register the player as a free agent with the new club, selling the economic rights for a higher amount; all this, “under the radar” of the FIFA TMS. Therefore is no coincidence that 70% of the international transfers in 2011 where of “out of contract” players against only 10% of “regular” transfers and 12% of loans66. Such a huge number can only be explained as a disguise for many transfers involving undisclosed payments.

67. According to the FIFA global transfer market 2011 available at http://www.fifa.com/aboutfifa/organisation/news/newsid=1592495/index.html.

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OPINION ARTICLES 06In this type of cases the influence of the company is clearly strong, irrespective of how the relevant documents are drafted.

Moreover, this kind of economic rights ownership is closely related to a growing and problematic phenomenon: The rise of “straw man” clubs.

While owning economic rights of a free player might be legally valid, the truth is that such an ownership is more fragile than the one related to a player under contract. Also, having as the owner of the rights a football club, a member of the FIFA “family”, gives the investor further securities, mainly the possibility to pursue disciplinary proceedings in case of non-payment (especially after the last change of FIFA´s disciplinary Code) and to claim compensation and sporting sanctions for contractual breach based on art. 17 RSTP before FIFA´s jurisdictional bodies.

So, investors take control of small clubs where they register “their” players with a valid employment contract. The club then loans or transfers the player to clubs really interested in the player´s services and the “straw man” club retains a percentage of the economic rights that can be claimed and enforced lately via FIFA jurisdictional and disciplinary bodies. In case of loans there´s a further security for the investor because, after the end of the loan period, the player must return to the straw man club.

TPPO and Financial Fair Play

Many of these practices where transferred to Europe together with the South American players. To be honest, I think most EU clubs perceived the business as something unworthy for important clubs and reserved for South Americans. Whit the economic crisis the situation changed. Now more and more clubs are in need of players and they don´t have the money to bring them, or they need to balance their finances in order to compete at national or at European level67.

But a further practice is wide-spreading through Europe, one that is not common in South America: The use of TPPO as a financial tool. Portuguese teams have mastered the art and now they are followed by many others.

The club that uses this tool has an advantage towards the club that does not. Basically, it can acquire the player´s registration and services for only a portion of the transfer price and then, it can also sell small percentages to banks or funds in order to balance its finances, not as a loan, but as a TPPO agreement. That´s what my dear colleague Daniel Geey and I explained recently in recent article “Third-party ownership & UEFA’s FFPR: a Premier League handicap”68.

While it is hard to be conclusive, one might consider that the ownership by a Bank or Fund, operating in a “scale economy” with various players and a small percentage of each one, will reduce the influence of the third party owner.

This advantage is the reason why France and England, countries where TPPO is already banned, are lobbying at UEFA for an European ban on TPPO.

It is curious how UEFA changed its position in just a few months. Right after the release of our article (December 2011), the editor of the law review contacted UEFA asking a few questions about the issue and the answer was “UEFA is aware that some clubs use third party ownership to ease liquidity concerns. However the analysis below in FFP context only presents the upside and not downside. The very nature of how the break-even rule has been structured, assessed over a rolling 3 year period to take into account transfer cycles, means a club will not benefit from the full financial upside if they don’t own the player rights, gaining only a short term liquidity benefit. We should also not look at transfer fees in isolation as transfer fees are connected to employment contracts. As an indication of this, for clubs in large countries salaries outweigh total transfer spending by an average multiple of 2.3x and net transfer spending by a multiple of 7.5x. Therefore the competitive advantage should not be overstated. It is possible that regulations linked to this could be possible but unlikely in the short term.

Only two months later, General Secretary Infantino confirmed UEFA will consider banning from the Champions League players whose transfer rights are owned by third parties. He said the practice – which is already

68. The recent “Roberto case”, the goalkeeper registered by Zaragoza is probably the best (and most extreme) example of this new situation http://www.guardian.co.uk/football/2011/aug/11/transfers-roberto-jiminez-benfica-real-zaragoza

69. Published in World Sports Law Report December 2011 Volume: 9 Issue: 12 and in Sport & EU Review Volume 3 Issue 2 Dec. 2011.

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06 OPINION ARTICLESoutlawed in the Premier League and France’s Ligue 1 – could not be allowed to continue. “This kind of player ownership is a growing threat. We will ourselves look into this matter because it cannot continue in this manner 69.

In May 2012 UEFA released the new licensing and FFP regulations including for the first time references to economic rights. Annex VI includes the obligation to disclose the economic rights ownership at the beginning and end of the period (Annex VI art. E.1.m.ii) and Annex VII art.C.5 establishes that “any profit arising from the disposal of economic rights or similar of a player to any other party must be deferred, and a profit can only be recognized in the profit and loss account following the permanent transfer of a player’s registration to another club”, limiting the financial use of the TPPO70.

Conclusion

FIFA and UEFA shall not ban TPPO, a practice that is perfectly valid, legal and useful, but probably needs to be more regulated. Other jurisdictions and ordinary courts are taking advantage of the current status and are placing themselves as alternative jurisdiction for investors instead of FIFA and CAS.

This is not good for the football world, since the principles established in the football regulations and in CAS case law face the risk to be simply ignored or considered just another inherent risk to the business71.

Regulation proved to be very effective in the past. Even a small intervention, like the recognition by CAS under certain conditions or the limitation by FIFA´s art 18bis RSTP and art. 29.1Player´s Agents regulations had a huge impact on the business.

The explanation for such effectiveness is that most of the clubs and entities doing business with TPPO just want to make a legitimate profit and to comply with the law and regulations.

The lack of clear norms and rules leads only to a degradation of the business practices affecting it negatively. Banning TPPO at UEFA level won´t end the practice, it just will sweep it back under the carpet, leading to new (and probably more sophisticated) abusive behaviours.

While it might be a disadvantage for French and British clubs, they placed themselves in that position by voluntarily banning (and only at national level) what is a perfectly legal practice. With the same reasoning, different rules on TV rights distribution, merchandising, club legal status (company or civil association) or taxation may lead to similar disadvantages.

TPPO is a legitimate business and -properly regulated- a good alternative source of income and financial tool for clubs and is really needed in these times of economic crisis.

Regulation shall aim to protect:

a) Sporting integrity: By limiting the possible influence of third parties, with a concrete definition of the notion of unduly influence and the practices that fall under it.

b) Player´s rights: Imposing at regulatory level the player´s conformity in any contract and establishing further limits, basically related to contracts signed with straw man clubs with no sporting interest in the player.

c) Transparency: Establishing mandatory disclosure of any TPPO agreement, and making its approval subject to revision by the relevant Association. Also, ordering payments to third parties to be made exclusively through the relevant association.

The imposition of further principles and limits to the TPPO will only benefit the practices in the industry. Based on the experience, any regulation designed to straighten out the TPPO instead of banning it, will immediately improve the current conducts and contracts.

70. http://www.guardian.co.uk/football/2012/feb/01/uefa-champions-league-third-parties

71. Thanks to my good friend and FFP specialist Daniel Geey for pointing me this recent modification.

72. See for example Rio Football Services Hungary KFT and Sevilla Futbol Club SAD [2010] EWHC 2446 (QB). While the judge´s reasoning is clear and precise, he considers the player´s conformity with a further transfer just another commercial risk taken by the club in the TPPO agreement (see par.23 to 25 of the ruling). It is also to be noted that the case was based on a contract signed before art 18bis came in force (see Par.27 of the ruling).

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OPINION ARTICLES 06Third Party Player Ownership: A UK Perspective72

The below article sets out a brief description of how an entity apart from a football club can own the economic transfer rights of a football player. A review of the current football regulations for a English or Welsh club playing in the English Premier League (PL) or Football League (FL) is then undertaken. Finally there is an assessment and analysis over some of the current issues affecting third party player ownership (TPPO) and whether such a practice should be banned or become more tightly regulated.

What is Third Party Player Ownership?

TPPO in the football industry is where a football club does not own, or is not entitled to, 100% of the future transfer value of a player that is registered to play for that team. There are numerous models for third party player agreements (TPPAs) but the basic premise is that companies, businesses and/or individuals provide football clubs or players with money in return for owning a percentage of a player’s future transfer value. This transfer value is also commonly referred to as a player’s economic rights. There are instances where entities will act as speculators by purchasing a percentage share in a player directly from a club in return for a lump sum that the club can then use as it wishes.

Current FIFA and UK Regulatory Framework

Prior to the Tevez affair, the PL, Football Association (FA), FL, FIFA, and UEFA rules did not make any explicit reference to TPPO. UEFA and FIFA rules still do not. This section sets out the 2012-13 season TPPO regulatory framework taking the example of an English club participating in the PL or the FL.

Past and Present PL Rules

The PL rules on TPPO were amended in 2008. Before 2008, TPPO was regulated in the PL through a generic material influence clause. This prohibited any entity having the ability to affect the behaviour of a PL club. The PL rules from the 2008/9 season onwards prohibited a third party owner having any economic rights in a player registered to a PL club.

The relevant PL rules are V.21 (and formerly PL rule U18) which stated that no club may enter into a contract that enables a third party:

“to acquire the ability materially to influence its policies or the performance of its teams”.

A common misconception throughout and after the Tevez case was that any third party player owner would have been in breach of the PL rules. This was not the case. It was the clause giving the owners of Tevez influence over West Ham which incurred the PL’s wrath (plus the non disclosure of the agreement itself). It was for this reason that West Ham was judged to have breached the old PL rule - Rule U18 and fined £5.5 million by the PL.

At the time, there was therefore no express clause prohibiting TPPO; only the act of influencing a club’s policies or performance was forbidden. Tevez’s third party contract contained a clause giving exclusive power to the third party owners, MSI and Just Sports, to facilitate the transfer of the player. West Ham did not have a veto over this right and such a stipulation breached the above PL rule as it meant that outside parties had material

73. This is an updated version of an article I published for the Entertainment and Sports Law Journal in 2009 which can be accessed here http://www2.warwick.ac.uk/fac/soc/law/elj/eslj/issues/volume7/number2/geey/

Daniel Geey, Associate, Field Fisher Waterhouse

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06 OPINION ARTICLESinfluence over the decision making of West Ham.

The PL decided that from the beginning of the 2008/9 season an absolute ban on third party ownership was required. A PL spokesman stated:

“The clubs decided that third-party ownership was something they did not want to see. It raises too many issues over the integrity of competition, the development of young players and the potential impact on the football pyramid. It was felt the Premier League was in a position to take a stand on this. No one wants to see what has happened to club football in South America repeated over here73”

PL rules L37-38 govern this prohibition. PL Rule L37 is the exemption rule which covers scenarios where clubs are allowed to receive money from a third party. Such instances include stipulations allowing clubs to receive: 1. payments or incur a liability for transfers to, or from, other football clubs; 2. enter into loan arrangements or bank loans to finance a player purchase; or 3. payments to agents74. PL rule L38 is the mechanism to enable a third party owned player to transfer to a PL club. This can occur so long as the PL club purchases the third party’s economic interest in the player. It states:

“In respect of a player whom it applies to register as a Contract Player, a Club is permitted to make a payment to buy out the interest of a person or entity who, not being a Club or club, nevertheless has an agreement either with the club with which the player is registered, or with the player, granting it the right to receive money from a new Club or club for which that player becomes registered”.

This ensures that any future transfer sums, should the player be subsequently sold, would be kept by the selling PL club. This eliminates any third party element to any future sale transaction.

The FL rules, when the FL clubs more recently adopted their own TPPO prohibition, almost exactly mirror the PL’s rules.

Past and Current FA Rules

The FA rules on TPPO were amended in 2009. Before 2009, TPPO was regulated by the FA through a generic material influence clause. This forbid any entity having the ability to affect the behaviour of an FA affiliated club. The rules from the 2009/10 season appear to prohibit a third party owner having any economic rights in a player registered to any FA affiliated club.

FA Rule A.1 states that,

“All Clubs and Affiliated Associations shall play and/or administer football in conformity with these Rules”.

PL and FL clubs fall within the definition of “any football club”. There is therefore overlap between the FL, PL and FA rules. This rule indicates that all clubs regardless of which league they play in must adhere to all FA rules, including the FA rules on TPPO.

Until 4 August 2009, the solitary FA rule governing TPPO was Rule C 1 (b) (iii). It stated that,

“No Club shall enter into a contract which enables any other party to that contract to acquire the ability materially to influence the Club’s policies or the performance of its teams in Matches and/or Competitions”.

This rule is still in place but has now been supplemented by the “FA Third Party Ownership Regulations” which came into force on 4 July 200975. As will be highlighted below, the new FA rules appear to be without retrospective effect because they only relate to newly registered players signed after 4 July 2009.

FA rule A.2 states that before a club may register a player, the FA must be satisfied that no third party will own or continue to own the economic rights of that player. The rules require clubs to submit to the FA any

74. http://www.guardian.co.uk/football/2008/dec/10/premierleague

75. This list is not exhaustive. The definitive list can be found at Rule L37, http://www.google.co.uk/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=1&ved=0CFIQFjAA&url=http%3A%2F%2Fwww.premierleague.com%2Fen-gb%2Fabout%2Fhandbook-2011-12.html&ei=BbvtT-jfFMm80QWJleCNDg&usg=AFQjCNFiMZwKO0CG8iLsuxDqHKsXzUS-0Q

76. (This can be accessed at http://www.thefa.com/TheFA/~/media/Files/PDF/TheFA/FA%20Handbook%20200809/Third%20Party%20Investment%20-%20FA%20Regulations%20JUNE%2009%20FINAL.ashx/Third%20Party%20Investment%20-%20FA%20Regulations%20JUNE%2009%20FINAL.pdf.)

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OPINION ARTICLES 06agreements related to a player, oral or written, involving a third party selling or acquiring rights, or making or receiving payments, for a player.

The new FA rules are similar in many ways to the PL’s stipulations which came into force in time for the 2008/9 season. Rule B.1 and B.2 appear to have similarities with PL rules L37 and L38.

At this point, brief mention should be made of the Faurlin case which is presently the only TPPO regulatory case brought by the FA against a club (Queens Park Rangers76). QPR at the time played in the FL but were on the verge of being promoted to the PL. They were however charged with breaching the FA TPPO regulations which could have resulted in a points deduction. For TPPO related matters, the independent regulatory commission (the Commission), found in favour of the club. This was because the Commission considered, among other things, that:

The economic rights owned by company TYP had been suspended for the entirety of Faurlin’s contract so that TYP could not have had a material influence over QPR; and

Rule A1 was not engaged as the club did not incur a liability when the economic rights were suspended.

There were certainly unique circumstances to the case. The FA’s regulations governing TPPO came into force on the same day that the agreement to suspend the economic rights of TYP was entered into between TYP and QPR (4 July 2009). The Commission concluded that the regulations should not have retrospective effect even though it is not clear when the agreement was actually concluded on 4 July 2009.

Nonetheless, it does leave an issue of whether a third party owner could suspend their rights and the club not incur a liability (like in this case) in order to circumvent the FA regulations. This potentially unsatisfactory position could still lead to the FA redrafting certain of its provisions. It would remain to be seen whether, as the FL rules were not in operation at the time (thus why the FA used its rules to charge QPR), a third party owner would be able to circumvent the above PL rules in the same manner.

Current FIFA and UEFA Rules

Article 18bis of FIFA’s Rules on the Status and Transfer of Players states 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”.

UEFA Rule 18.02 ensures for all teams entering the Champions League or Europa League that:

“Players must be duly registered with the national association concerned in accordance with the national association’s own rules and those of FIFA, notably the FIFA Regulations for the Status and Transfer of Players”.

The probable reason why FIFA or UEFA do not implement more restrictive rules is because in Spain and Portugal for example and especially South America TPPO is prevalent. Outlawing such a practice would be both politically and practically difficult. This is in contrast to the FA, PL and FL position which prohibit any TPPA regardless of whether there is external material influence or not. The rationale is that it is evidently easier for national associations to implement TPPO prohibition rules with narrower scope, than it would be for FIFA or UEFA.

Contemporary Third Party Ownership Issues

Introduction

This section aims to show how:

• PL clubs are likely to be at a disadvantage in UEFA competitions, due to rules banning any TPPO. This article highlights how PL clubs, have to buy out any economic transfer right when they purchase a player;

• Clubs in other jurisdictions are under no such requirement and can split the transfer cost with third party companies; and

77. See http://www.thefa.com/TheFA/Disciplinary/NewsAndFeatures/2011/~/media/Files/PDF/TheFA/FA-v-QPR-and-Paladini-Full-Written-Reasons-for-Distribution.ashx

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06 OPINION ARTICLES• When non-PL clubs submit their accounts for Financial Fair Play Rule (FFPR) scrutiny, non-PL club’s

transfer amortisation costs have the potential to be lower. This makes compliance with the FFPR more difficult for PL clubs.

A Wider UEFA Financial Fair Play Context

As previously explained, TPPO is prohibited under the PL, FL and FA rules. It means that a PL club must purchase the economic interest in any player whose registration is not 100% owned by the selling club prior to becoming registered with the PL. Therefore a PL club cannot share the burden with an investor in only purchasing 50% of a player’s economic rights.

In order to adhere to the FFPR, clubs must break-even or fall within the acceptable deviation provisions set out in the FFPR77. In order to participate in UEFA competition from the 2013-4 season, clubs will have to submit accounts (for the 2011-12 and 2012-13 seasons) demonstrating that they fall within the monitoring regulations. If they fall outside of the provisions, sanctions are likely to follow which could include expulsion from the relevant Champions League or Europa League competition. The reason this has significance is because transfer fees (accounted for by amortisation charges in a club’s accounts) alongside player wages continue to be the largest costs that clubs incur78.

It is likely that non-PL clubs will have a competitive advantage over PL (and Ligue 1) clubs wishing to participate in UEFA competition. This is because their transfer expenditure may be reduced as they can share their transfer outlay with companies willing to contribute to the transfer fee. The basic point is that PL clubs will have to account for the whole of the transfer fee paid when submitting their accounts to UEFA in time for the 2013-14 season. This is in contrast to non-PL clubs, who will presumably only have to account for the amount spent in taking – for example - a 50% stake in a player.

A Working Example

Player A is available for transfer for EUR20 million. PL club Arsenal agrees to pay EUR20 million for the player but in order to register him, the club must ensure that all third party economic rights are extinguished prior to registration. The club will therefore have a EUR20 million liability. Porto, if buying the same player, does not have to ensure that any third party rights are extinguished. Porto may even agree to pay the club for its stake in the player, e.g. EUR10 million with a third party company retaining their stake in a player. Importantly, Porto’s liability is half the transfer amount that Arsenal would be paying for the same player.

When factoring in such a situation for FFPR compliance, clubs usually value their players in their accounts as intangible assets through an amortisation cost. This means that when a player is purchased, his transfer cost is usually capitalised on the club’s balance sheet and is written down (amortised) over the length of his contract. Thus in the example above, if the EUR20 million player was bought on a five year deal, Arsenal’s amortisation cost for each year in its accounts would be EUR4 million (EUR20 million divided by five years). Porto’s amortisation costs would be EUR2 million per season (EUR10 million divided by five years). The difference is therefore stark. If both teams are participating in the Champions League which, from the 2013-14 season includes adhering to the monitoring criteria in the FFPRs, then teams like Porto have an advantage.

Indeed, PL clubs with little transfer money available, may argue that they are being unfairly prohibited from sourcing additional capital investment from companies willing to enter into transfer financing agreements. This could lead to the PL or FL voting to change their regulations accordingly.

Next Steps

In a relatively far reaching recent development UEFA recently stated it may not permit registration for players who participate in the Champions League and Europa League if such player transfer rights are owned by third party investors. UEFA general secretary Gianni Infantino has said UEFA “will certainly look into” the possibility of

78. See a recent article I have written on the UEFA Financial Fair Play Rules http://www2.warwick.ac.uk/fac/soc/law/elj/eslj/issues/volume9/number1/geey/

79. See a recent article I wrote with lawyer Ariel Reck on this issue http://www.sportandeu.com/2011/12/sporteu-review-december-2011-is-published/

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OPINION ARTICLES 06banning third party-owned players from UEFA competitions. “This kind of player ownership is a growing threat”.

Such a decision would be controversial especially for a number clubs like Porto whose use of such third party finance is well known. In fact, in one of their latest published accounts Porto only owned 100% of the total economic transfer rights to five members of their 27 man squad.

More importantly, it would mean UEFA having to oblige each club to reveal any players whose registrations were not totally owned by the club. This could even be expanded to include a list of the owners of such transfer rights. Such transparency could allow the football family to scrutinise any potential conflicts of interest between those who own the economic rights of a player and those who also own a stake in a football club.

If such a TPPO prohibition for UEFA competition was to be enacted, another question for UEFA to consider would be whether the provision would have retrospective effect. If so, many clubs would effectively have to ‘buy-back’ the registrations of players who they wanted to play in UEFA competition. Many would argue that would be unreasonable for contracts entered into prior to any proposed rule change. If the proposed rule did not have retrospective effect, clubs who had third party owned players would still have the benefit of being able to play them in UEFA competition but would not be able to register new players. Such uneven regulation would be far from ideal.

Is a publically available list of third party player owners required to avoid any perceived UEFA club competition callout?

Now that PL and FL clubs are prohibited from entering into TPPAs there may be a wider European context for this third party player ownership issue. For PL and FL clubs entering UEFA’s European club competitions, there appears to be a pan-European conflict issue relating to third party player ownership. The basic premise is whether an individual should have an ownership stake in Club A and an economic stake in a player competing against Club A? The below diagram illustrates such a scenario.

What if Player D, who is 100% owned by Chairman X, plays against Club A, which is 100% owned by Chairman X?

Chairman X

100%ownwership

100%ownwership

50%ownwership

40%ownwership

Player BClub A Player C Player D

In both the above scenarios it is clear that conflicts of interest could arise where a third party owner of a player is unscrupulous. One might ask how much influence one player can have on the game but if, for instance, the player was to purposely get himself sent off, clearly that can have a major impact on the game. Further, as discussed above there is no rule against an owner of a club also owning one or more players. Such a club owner could own several players in opposing teams throughout Europe.

What is more, with the PL and UEFA rules as they stand, there is no way to know whether such conflicts exist as there is no list setting out such conflicts. It remains to be seen whether UEFA should require disclosure any economic ownership rights that a person or company may have in another player in the PL or throughout Europe.

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06 OPINION ARTICLESConclusion

Banning TPPO was no doubt a far-reaching PL policy decision. Most can understand their reasons in the aftermath of the Carlos Tevez cases. Such a hard line approach has in a way by-passed the middle-point discussion about whether TPPO could be more actively regulated but not banned. Whilst the PL and Ligue 1 lobby UEFA to ensure their clubs are not sufficiently disadvantaged when competing in UEFA club competition, in the interests of transparency some have called for a comprehensive list of any entities who own third party interests to be collated and made available. Whether transparency in this traditionally opaque market will provide comfort to the regulators and fans alike remains to be seen, but in the coming months, TPPO will no doubt be making back-page headlines once again.

Profile

Daniel Geey advises clients in the football industry. Such guidance has included advice on the Fit and Proper Person Test, ownership requirements, parachute payments and the football creditors rule, disclosure obligations under the relevant football authority’s rules, conflicts of interest and third party player ownership contracts. Daniel has also provided guidance on UEFA Financial Fair Play Regulations and how the rules may affect the future financial planning of football clubs. He has also given briefings and spoken at workshops and conferences on the interplay between Competition Law, Football and Broadcasting.

Daniel has a personal website (www.danielgeey.com) where you can access all his published football law articles. Email Daniel at daniel.geey@ffw.com and follow him on twitter at www.twitter.com/footballlaw”

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OPINION ARTICLES 06Brief Note for a positive view on player’s third-party ownership

As you are, certainly, aware UEFA is concerned about the fact that the current practice on “third-party ownership”, which is allowed, among other countries, in Spain, Italy, Germany and Portugal.

The Premier League and LPF (French League) are opposed to third-party ownership because “it threatens the integrity of competitions, reduces the flow of transfer revenue contained within the game and has the potential to exert external influences on players’ transfer decisions”.

We shall point out the fact that UEFA seems to acknowledge that it is FIFA’s task to regulate this matter, which seems to be already regulated as FIFA changed its Regulations on the Status and Transfer of Players (FIFA RSTP) in January 2008, incorporating in it the Article 18bis, which provides 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 unemployment and transfer-related matters its independence, its policies or the performance of its teams “.

In the light of this, we are forced to conclude that FIFA’s regulations do not prohibit investors buying stakes in players, providing they have no control over when they can play or when they are bought and sold.

Although investments are welcome, the concern of FIFA is focused on the stability of competitions and in the creation of mechanisms to ensure the independence of clubs in face of such investors, which should not interfere with the working relationship maintained between the club and the player.

Therefore, it is undisputable that FIFA’s Regulations do not seek to prohibit the investment from third parties, but only prevent them to have influence on the working relations or in the stability of the competition.

On the other hand, all of us are aware that the vast majority of clubs would not be able to survive only with the current sources of revenues namely: ticketing, TV rights, sponsorship, etc, being crucial the player’s transfer as an additional source of revenues.

For that reason the proliferation that occurs in Brazil, Argentina and recently almost over all countries in Europe – with the exceptions above mentioned -, of the so called “football player’s fund” that aimed the purchase of the economic rights focused on the contracts of a professional football player.

According to this scope under a contract a Club ensures to a “third party”, the future credit regarding the transfer of a specific player. This “third party” is usually another football club, an investor or a group of investors, individuals and/or legal persons.

It is important to mention that on the contrary to what is mistakenly said, the holder of the economic rights of the player will not be the “owner” of the player, but will only possess part of the future financial results on a future transfer - on loan or permanent - of the player.

When a Club assigns the economic rights of a player to one of these investment funds, the club usually holds the player in their team, injects money in its accounts, and usually reached a partner who will seek to optimize the result of their investment in the transaction of the player. As better would be the performance of the player and his team, as higher would be the profits receivable by the “third party”.

Such a system, as it was said, it is a new source of revenues for clubs, assisting them on dealing with their usual expenses or to finance the hiring of new players, and finally would increase competition as their teams would become stronger and stronger.

Given that we re-iterated that it would appear that FIFA does not prevent a team from signing a player whose “economic rights” are partially owned by a “third party”. The principle of the FIFA rules is to outlaw outside influence.

Paulo Gonçalves, Lawyer, post-gratuated in Sports Law, Legal Director of SL Benfica

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06 OPINION ARTICLESTaking into consideration the awards of Court Arbitration for Sport (CAS) we will find the same understanding. The awards to be considered are:

RCD Espanyol of Barcelona and Atletico Velez Sarsfield (CAS 2004/A/635), under which was decided that “a club holder of an employment contract with a player may assign, with the consent of the latter, contractual rights with other clubs in exchange of a given value or other retribution, and these contractual rights are called economic rights about the performance of the athlete”.

RCD Mallorca and Athletic Club Lanus (CAS 2004/A/662), under which was decided that “while the registration of a player may not be split between two different clubs at the same time (the player only may perform for a club at a time), economic rights are contracts of ordinary rights and may be partially attributed, therefore, between two different clubs ...”

Further to the issued awards of the CAS, there is no doubt about the legality of the transfer and fractionation of the economic rights.

Regarding the article 18 bis of the Regulations on the Status and Transfer of Players, there is a decision involving the Genoa CFC and CD Maldonado, under which CAS have decided that “for the purpose of international registration, only the club, as employer, is able to transfer the player under a contract of employment to another club. The fact that there are private contracts between investors, players and even the club, it does not matter, because it has no legal impact on the validity of the contract transfer (CAS 2008/A/1482).”

So, the possible existence of contractual clauses that ensure the control of transfers of the investor will not be respected by the international sports courts, and may inclusive result in, disciplinary sanctions against clubs and players that submitted themselves, by a contract, to such provisions.

For this reason, we believe that the clauses that ensure the investor the right to terminate the employment contract of a player with a club, or to unilaterally choose the club for which the player should be transferred, so as those which provide the investor the opportunity to determine the participation or not of a player in a certain match, will not have any legal validity before the sports jurisdiction, for violating the international regulations.

In order to certify the influence of a “third party” in a contract under which there is an assign of economic rights, we would suggest observing the following aspects: (i) a “third party” can determine when and for which club the player will be transferred? (ii) may it prevent the transfer to a particular club? (iii) or may it prevent that a particular club terminates an employment contract of a player?

Whether the answer to any of the above inquiries would be positive, we are in face of a violation of the mentioned Article 18 bis of Regulations on the Status and Transfer of Players and the consequent interference of third parties in working relations.

On the other hand, we have to recall Jean-Louis Dupont’s opinion, the lawyer that helped Jean-Marc Bosman to change the laws regarding player opportunities at the end of their contract. He has argued that the Premier League rules about “third-party” ownership of players are not legal.

One of the main benefits of abandoning the rule would be in a transfer market with such inflated prices it would be easier for clubs with less money to buy players.

In this way Jean-Louis Dupont has already posed the question: “what is the difference between the club using a “third party” help them and a club going to the bank for a loan? This has greatly helped clubs in the Portuguese league where money is limited and indeed several of the top clubs make use of this system”.

On the other hand, we have to highlight the fact that the football player fund allows clubs to field players it would otherwise not have been able to afford.

Moreover, it also shields the club from the risk of poor player investment which is shouldered by the investors and not only by the club. It means underperforming players can be moved in or out without significant capital outlay or loss for the club.

It will be of interest to see which other European domestic associations go as far as the Premier League has gone to outlaw this new alternative way of funding and profiting from the global transfer system.

In conclusion, we believe strongly that “third-party” investments should be welcome and are necessary for the survival of clubs.

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OPINION ARTICLES 06Third Party Player Ownership, Again!

1. Introduction

It seems to be the hottest discussion in Football at the moment. FIFA is keen to keep up with article 18-bis, some opinion sectors within the EPFL the EPFL would be happy with the maintenance of Third Party Player Ownership (TPPO), though fiercely regulated, South America long ago found in TPPO a way of football living, smaller leagues (such as the Portuguese League) learned how to make money out of it, whilst the English and the French Leagues argue that it raises a question of moral behavior and transparency, and thus are absolutely convinced that TPPO should be banned because their teams are at a disadvantage (although they sometimes forget that English and French Clubs and investors may own - and in fact do own either directly or indirectly - economic rights of players outside England and France before “importing” them).

We also know that in England, it is more difficult to become a member of the board of a football club than to become a member of parliament, although we have to accept that if there was no TPPO, there would be not have been a Cristiano Ronaldo in the first team of Sporting Lisbon back in 2002, no presentation match against Manchester Utd. in 2003 (with his subsequent transfer) and no 80M GBP transfer to Real Madrid!

According to the “Pelé Law”, in Brazil, any clause where there is third party influence on transfer related matters or in the performance of a certain player is null and void. In Argentina, however, TPPO is permitted, but a minimum 30% ownership of the player’ economic rights must be in the hands of the Club.

In Portugal, for instance, we may find different new TPPO realities such as FC Porto (probably the best football player selling Club in Europe), masters in TPPO, that fully disclose - in their published accounts - the investors and percentages of economic rights of each player, and the “Benfica Stars Fund”, consisting of a football players closed fund for high profile investors, fully transparent, duly approved by the Portuguese Securities Commission (CMVM) and managed by the Espirito Santo Bank.

TPPO and consequent sharing of economic rights of a football player is, in fact, a question of influence and subsidiarity. In any business area, investors want to have control over the respective investment. In what concerns football, that’s where influence over clubs or the sporting performance of football players comes in.

Football has its own different realities that must be understood by all the entities involved, namely FIFA, UEFA, EPFL, FIFPro and ECA.

Finally, TPPO must not be approached on the basis that “we are right and you are wrong!” or that TPPO is something terrible or bad for the football industry.

2. Economic Rights (“Ownership”) and TPPO

A lot has already been written on the distinction between federative rights (the club in which the player is registered owns his federative rights - that cannot be shared) and economic rights (the club or any third parties may share the economic value of a football player - as long as the player accepts), although the legal definition may vary from a country to another.

Economic rights (“ownership”) are usually considered as the net income resulting from the early termination of the employment agreement signed between the club and the football player, including any amounts paid by any third parties (either sports entities, investors or economic groups) as compensation for the definitive or temporary transfer of the football player during the term of the employment agreement and are only valid and

Fernando Veiga Gomes, Sports Lawyer, Abreu Advogados

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06 OPINION ARTICLESeffective while the football player has a valid employment agreement with the club.

TPPO exists whenever a player is registered to play for a club, but that club does not own, or, is not entitled to, 100% of the future transfer value of the player.

There are many pros and cons concerning TPPO (see introduction), but what really matters is the existence (or not) of influence over the decision making of a football Club or over the sporting performance of a Player.

TPPO went wrong and there was strong controversy in the Tevez & Mascherano cases where it was proved that the agreements signed gave the investors the power to “materially influence the clubs policies or the performance of its teams”.

3. Restrictions

In England, the rules contained in “PL Rules L34-35” and in the “FA Third Party Player Ownership Regulations” banned TPPO. Such rules require that a player’s registration and economic rights are not retained by any third party when a player is transferred and registered with a new club, who must be the sole owner of these rights.

Article 18bis of FIFA’s regulation on the Status and Transfer of Players foresees 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“.

In fact, FIFA’s regulation restrict TPPO insofar as a third party’s influence over a club is concerned, not directly over the sporting performance of a certain Player.

Thus, according to FIFA’s regulation, TPPO is permitted. Material influence will depend on the contractual terms and conditions included in the agreement between the Club and the third-party. However, this regulation leaves an open window for “indirect influence” (gentlemen’s agreements, control over the coach, agents agreements, sponsorship deals as consideration, management agreements, shareholders agreements, etc.).

If TPPO is admitted, how is it possible to control “sporting performance influence”? In my opinion, there is no doubt that sporting performance influence does fall within the possibility to influence “the performance of its teams” as stated in FIFA’ article 18-bis, although this may be sometimes hard to find and prove.

4. What’s at stake

TPPO is also a difficult matter to judge, where different issues are at stake, such as the sporting performance influence over a certain player, the sports integrity and authenticity, transparency, the Club’s autonomy, the player’s freedom to decide where to go at each moment of his career, the moral behavior of the investors, the power to influence the competitions and serious conflicts of interest.

Conflicts of interest arise whenever a certain investor is the owner of a club and the owner of a majority percentage of the economic rights of a certain player and such player is playing for the opponent in a certain football match (or when they own a percentage of players playing against each other).

We must not also forget that in UEFA competitions there is a “transfer window” in January, during which players may be transferred according to the economic interest of the investors (not just the interests of the Club and/or the football player) and that may interfere with the outcome of the competitions (the same goes for CONMEBOL competitions where TPPO and its consequences cannot be ignored).

5. Third Party Player Agreements (TPPA) - Non-admitted clauses

In TPPA there are many examples of non-admitted clauses concerning sporting performance influence: clauses where the player shall play a certain number of matches so that the TPPO is effective; Clauses where the player shall leave the Club if not playing a certain number of games per season; Clauses where the percentage of economic rights attributed to the Club/Investor depends on the sporting performance of the player; Clauses that go against employment or labor law principles; Clauses that forbid a player to play against a certain Club; Clauses where the player cannot go to the bench; Clauses where the player shall be selected/not selected for particular matches/competitions; Clauses where the third party has the right to terminate the employment

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OPINION ARTICLES 06contract at any time, thus affecting the sporting performance of the team; Clauses where somehow results may be manipulated; Clauses where the remuneration of the player towards the investment to be made by the third party depends on its sporting performance, etc.

6. Tampere United Case – Finland – 2011

In 2011, the Finnish Football Federation surprised the football world with a decision that banned Tampere United (champions in 2007) from all competitions, for allowing a third party to influence its transfer policies. In fact, and in the lack of a specific regulation regarding TPPO, the Finnish football association became the first national association to directly apply FIFA’s Article 18bis.

The forbidden clause stated that investment in Tampere United would only be made provided the Coach chooses and makes play the players “owned” by Exclusive Sport (the Investor). According to the Finnish Football Federation’s decision: “No Club shall add to a certain TPPO Agreement clauses allowing the parties or any third party to influence the sporting performance of its team, or its policies regarding the independence of the employment relations or transfer related matters”.

7. Possible solutions (to avoid sporting performance influence):

Based on the above, I agree that TPPO must be regulated (not eliminated) in order to: 1) have a higher level of transparency; 2) reduce as much as possible third party influence in employment and transfer related matters; and 3) identify possible conflicts of interest.

Thus, possible solutions may include:

1. The registration of TPPO in order to know exactly who are the owners of the economic rights and their respective percentage (including the scrutiny of the investors, disclosure and publication);

2. A possible limitation in terms of percentage owned by investors (like in Argentina), so that the Clubs may have a minimum interest and control over the investment and in order to effectively control conflicts of interest situations;

3. To become mandatory for the investors to declare before FIFA that they shall not attempt to influence the Club or the Player and accepting the jurisdiction of the football institutions (currently any dispute between a club and a third party investor is a mere contractual dispute outside the football world);

4. There should be more severe and harmonized sanctions for those involved in case of any attempt to influence in employment and transfer related matters, in order to prevent unlawful conducts.

8. Conclusion

It is, in fact, the hottest discussion in Football at the moment. TPPO should not be regarded as something wrong or unlawful. It must be regulated and controlled, although any attempt to do so must have a careful approach by understanding the different realities of the football world. Values such as the sports integrity and transparency must be preserved at all times so that the game is only played on the football pitch.

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06 OPINION ARTICLESSome thoughts on Third Party Ownership

I am delighted to accept the invitation of EPFL to give my view on Third Party Ownership (TPO) of football players. I will not do it in my capacity as legal advisor to the Italian Serie B, an entity, which is associated in the EPFL. In fact, this contribution is my independent -and negligible- view on this topic. My freedom of expression exercise will consider both the business drivers of the phenomenon as well as practical legal aspects concerning it.

Ownership

What we are talking about is third party “ownership”. Not of players, of course, but rather of rights and interest in potential revenues generated from increase of their “market” value as expressed and obtained on the “transfer market” (because yes,

despite “Bosman” there is still a transfer market and players’ value is still determined by the classic law of supply and demand). For many years, this line of business has been a common and legitimate practice in South America, where investors’ economic interests in players are duly registered in clubs’ accounts. As far as I am aware, TPO is a term used by the Premier League, Football League and Football Association’s rules prohibiting third parties from owning an economic interest in a football Player. A similar prohibition exists under French Football League’s regulations. I am not aware of any other national association banning TPO.

A good description is given by Ariel N. Reck and Daniel Geey: third party ownership relates to the sale to a third party (i.e. a private investor, another club or a company) of a future transfer value. The entity buying the share (or the previous club keeping it for a subsequent transfer) believes the player has the potential to be transferred for a higher fee than it paid for the transfer share. For the club employing the player, the sale of portions of the economic rights helps it to balance its books and find credit from alternative sources. While risks are high (i.e. the player might not fulfil his potential or get injured), so are the potential gains79.

Ownership vs Use

Before analyzing the prohibition, I believe it important to go back to basics, by considering the economic and business reasons, which make “third-party ownership” attractive to football clubs.

Why is a club interested in letting an investor put money on a player?

To put it simply, a club does not need to “own” a football player and even less to spend money on acquiring him. As a commercial concern, a football club must allocate its capital as effectively as possible. Typically, club’s finances should be used as working capital or invested to generate new business. Accordingly, a club will try hard to avoid locking up capital in assets. Whenever financially prudent, any company would much prefer to lease (i.e. use) assets rather than own them. A player is an asset of a football club. True, he is a very special asset: he can develop his skills and, by increasing or decreasing his effectiveness on the pitch, may increase or decrease his value.

The peculiarity of players being an asset of a club can be explained through the following empirical facts: (i) it is uncertain whether a player will improve, decrease or maintain his ability/value over time; (ii) some clubs will be interested in the possibility to benefit from an increase in their players’ value and realise such added value on the transfer market; others -fewer- will be willing to enjoy the full sporting benefit of the player’s increased ability despite the opportunity to obtain a premium return on the transfer market; however, most of the times for most of the clubs, it will be a case by case decision subject of course to the player’s consent; (iii)

80. Ariel Reck and Daniel Geey, UEFA’s FFPR & ‘third party’ rules: an English handicap, in World Sports Law Report, Vol. 9, issue 12, Dec. 2011.

Luca Ferrari, Partner, CBA Studio Legale e Tributario

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OPINION ARTICLES 06a club’s management of a player’s employment contract is key to maximizing revenues on selling him, as the two critical factors will be the level of compensation and the expiry date of his employment contract.

Most clubs have very limited financial resources and simply cannot afford to buy players to complete the squad, at least not all the players that they may need and not all their first choice players. Furthermore, limited financial resources must be used to manage the club, including paying players and rewarding success on the pitch. That a costly player will increase in value during his employment at the club, and that such increase will be fully realised on the transfer market is all but certain. Investing money in the youth academy, in victory bonuses or for the improvement of the stadium’s hospitality facilities may well be better ways to use limited financial reserves.

Finally any cost incurred in acquiring a player will qualify such player as a capital asset of the club. Even conceding the chance of a capital gain on few of its players, the club will have to sustain high depreciation ratios over the duration of the contract.

In light of the above, it is not surprising that many clubs are very interested by investors’ availability to contribute entirely or in part to the cost of acquiring a player. Buying out such a “third party”, at market value, may be simply beyond the club’s possibilities. But most of the time a club will be genuinely interested in sharing, if not entirely avoiding, the financial risk and burden.

Furthermore, clubs are or should be preparing to comply with the UEFA Financial Fair Play regulations, which by their very nature and purpose incentivize clubs to take advantage of financial solutions made available by unrelated/third parties80.

Therefore, if one considers best practice in corporate management, capital allocation requirements, scarcity of financial resources and even UEFA’s Financial Fair Play agenda, TPO is a very good thing. Obviously this is not the point of view of English and French football regulators.

Third Party Ownership vs Third Party Influence

Surely readers of this contribution know about the Tevez saga, which took place in England in 2007. I am sure other contributors on the TPO theme in this edition of the EPFL Sports Law Bulletin will provide more details on this story. This case must have created such a “mess” that the English football regulators have decided to rule out the possibility that a third party can own an economic interest in a player registered in England. Here again, details of the Premier League (PL), Football League (FL) and FA regulations prohibiting TPO will undoubtedly be offered elsewhere in this issue. Suffice it to say here that after having originally only outlawed third parties’ influence over the club’s transfer and player employment decisions, English football’s governing bodies have subsequently taken the most radical approach to the problem. Under current rules, nobody can hold an economic interest in a football player (his contract, his transfer) registered in England and any investor holding any such an interest in accordance with foreign rules must be bought-out on the player’s transfer to a PL or FL club. I am not sure if the player, who in fact is not a “third party”, may own an economic interest in himself (his contract, his transfer).

By contrast, art. 18bis of FIFA Regulations on the Status and Transfer of Football Players still only prohibits third parties’ influence (TPI): no club shall enter 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.

Whereas FA, PL and FL rules only affect English clubs (as much as the French equivalent ban affects French clubs), Art. 18bis is binding at national level (art. 1.3.a) and so applies globally.

As a result, TPO is banned in England and France but is permitted elsewhere, provided of course that it does not result in a TPI.

81. As this article is being finalised, the media are reporting about UEFA’s move against TPO. Apparently on PL and French Football League’s request, UEFA is considering outlawing TPO. According to SportBusiness.com release of July 26, ‘after UEFA stated in May that it is continuing to investigate initiating a ban preventing players who are subject to third party ownership from competing in its competitions, it has closed a potential loophole by stating teams cannot use money gained from selling stakes in players to balance their books for FFP purposes’. On the face of this latest UEFA decision, a club may balance books by using money received from another club, but not funds received from an investor purchasing, at its own risk, a stake in future transfer fees. The rationale behind this move is not entirely clear, except it being a concession to English and French lobbying trying to export their ban on TPO in order to protect their clubs from being at a competitive disadvantage when it comes to FFP compliance. However, until UEFA introduces TPO prohibition, it is still useful for a club to save money by not buying out existing owners of economic interest in the relevant player as well as negotiating a lower transfer fee with the selling club keeping a sell-on participation.

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06 OPINION ARTICLESConsidering the benefits of third parties’ investment as outlined in the prior section and balancing them with the risk of external influence on a club’s employment and transfer strategy, FIFA is holding on to its more flexible approach.

Everyone should be concerned about the risk of external influence over clubs and quite sensitive to the need to preserve their autonomy. Preserving clubs from any pressure or interference in utilizing and trading players is indeed in the interests of football’s integrity. Obviously, the English and French regulators don’t believe such influence can be avoided by any measure that falls short of an outright ban on TPO, including a sell-on fee granted to the player’s former (i.e. transferring) club.

However, considering the advantages deriving from the availability of funds to be invested in football talent and the possibility to reconcile investors’ interests with TPI prohibition, I am of the opinion that FIFA’s art. 18bis is proportionate and effective in preventing abuse while still granting clubs the advantage of reducing their financial burden and capital lock-up.

Protection of Third Party’s Investment and Compliance with Art. 18bis

Obviously, nobody would invest in a football player if the underlying interest is not secured. Whether it is a club, a bank or a fund, some degree of protection is required.

If you own a 50% interest in any transfer fee generated by the trading of a player, you need some control or protection as regards two important matters: (i) that the player is transferred at the peak or near peak of his value during his stay at the club; and (ii) that any money paid in consideration of his transfer is entirely reflected in the relevant transaction.

At the same time, football regulators must ensure that clubs will not assume any obligations, which may limit their independence and freedom as regards precisely those aspects: if and when to trade the player and on what terms and conditions.

These conflicting concerns may seem irreconcilable, hence the “English solution” of an outright ban. However, this apparent conflict may be overcome by careful contract drafting, which could allow investors and clubs to come to an acceptable compromise, whereby the autonomy of the club is preserved while a good standard of protection is granted to the economic interest of the third party investor.

Going to the extreme, an absolute prohibition on the sale of a player absent the investor’s consent is obviously not acceptable; likewise the club must not come under an obligation to transfer the player at the request of the investor.

In principle, an economic interest not exceeding 50% of the sell-on fee would leave sufficient economic interest for the club to maximize its return if and when it considers it appropriate to transfer the player. But independently of the size of investors’ participation, good contract engineering can do ‘miracles’.

Importantly, an economic interest should be the expression of capital invested at risk, not a loan: there should be no remuneration as such on invested money, as return on the investment should be contingent on the increase of a player’s value. Allowing for interest to be paid on invested money should be a fall-back position that applies if the club decides not to maximize a player’s value on the transfer market, but instead continues to benefit from his valuable performances on the pitch.

Finally, an overriding requirement which increases both the investor’s risk and the club’s independence is the need for the player’s consent to be transferred. The fact that players are not mere commodities but have freewill ensures a force majeure safe harbour for the club against any investor’s claims for failure to sell: if a Chinese club makes the best offer but the player wants to play in Europe, there can be no adverse effect on the club, unless the latter, quite unreasonably, has given a warranty in this respect.

Contract Engineering

The key challenges of the contractual relationship between investor and club are as follows:

• what if the player is never transferred;

• what if the player does not renew the contract, thereby becoming a free agent on expiry thereof;

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OPINION ARTICLES 06• what if the club, instead of selling the player, keeps him until his career is declining;

• what if the club wants to sell the player too cheap;

• what if the club does not want to sell in spite of a superb offer;

• what if the club transfers the player for money+another player or just “player for player”;

• what if the club diverts part of the transfer fee on the sale of another player, which the investor has no interest in?

These and few more potential issues should be dealt with contractually. Furthermore, contracts in the world of football ought to be kept as simple as possible. And, last but not least, Art. 18bis of FIFA regulations prohibits TPI.

So, considering that:

a) the club must keep its independence in deciding about employment and transfer-related matters; and

b) a fair return on investment must be secured;

the contract should include provisions addressing critical situations without constituting any limitation on the club’s range of action. As an example of how to resolve just one of the critical issues, the parties could agree that if club intends to transfer the player, it shall notify the transfer conditions to investor; investor could, in turn, notify the club of a higher offer (subject to player’s acceptance of alternative destination) and if club refuses such higher offer, the investor’s return will nevertheless be calculated thereon. One could object by saying that the refusal of the higher offer by the selling club is unreasonable. However, such ‘unreasonable’ conduct could either conceal a ploy aimed at putting part of the transfer fee on another transaction between the selling club and the lower offeror, or possibly a genuine -even if costly- wish not to strengthen a rival club. In the first case, the pre-emption mechanism based on the alternative (higher) offer should work either as a deterrent or as a remedy. In the second case, should the club whish to maintain the freedom not to benefit a direct competitor, the funder’s protection mechanism could be limited by identifying in advance the category or identity of clubs which would not be acceptable as potential transferees, regardless of the price offered. In order to guarantee maximum freedom of decision, should the club receive an offer (and player’s consent to transfer) but decide not to transfer the player, the contract could simply grant the investor a “put option” for the immediate or progressive reimbursement of his investment plus a given rate of interest, which in fact would transform the investment into a simple loan.

Any provisions addressing material issues concerning the relationship between the club and the third party must be balanced and reasonable to meet the strict standard of art. 18bis of the FIFA regulations. Most importantly, until regulations are changed, football agents should not own, directly or indirectly, any economic interest in football players, although this prohibition appears to be regularly circumvented, especially in South America.

Conclusion

While protection of a club’s independence is vital to the integrity of football competitions such that FIFA should ensure the strictest compliance with the TPI prohibition, funding players’ acquisition should be accepted as a viable solution for clubs to cope with financial difficulties and UEFA FFP restrictions. One should be wary and avoid the risk of investors in football talent being demonized much in the way in which, in the past, the Catholic Church saw the devil’s claw in capitalism.

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06 OPINION ARTICLESThird Party Players in Russia

1. Introduction

Football has long since ceased to be nothing but spectacular sports activity, where 10 field players and the goal keeper have the leading role, and the main events take place on the football field during games. Football nowadays is a developed commercial industry, the mechanism of which lies beyond football arena, and participants are not limited to players, clubs and federations.

Certain persons have lately added themselves to the so-called “football family” (clubs, players, agents), whose influence over the football economy and over the game itself, according to some specialists, keeps growing: owners of economic rights to the players. Football specialists still disagree, whether the appearance of the institution of owners of economic rights to players is a positive or a negative thing, and whether it will benefit or harm football.

This article is a concise survey of the situation of third party ownership (TPO) in Russia. We will briefly consider the existence of this phenomenon in Russia, forms and perspectives of TPO, TPO-related problems, regulations and legislation on the issue, and make basic conclusions.

2. TPO in Russia

Let us start by giving a brief definition of what we mean by TPO. Football, like every phenomenon, is many-sided and includes, among other things, two large blocks: sports relations on the issue of registration of the player for this or that team (federative rights) and economic relations arising from the transfer of players (economic rights). The relations on the issue of transfer of titles to the economic rights arising between football clubs and third parties are what we will call TPO.

In a classic TPO, the investor, in exchange for contributing financially to the club’s development (or, as a variant, in exchange for the costs of the training of a certain player) becomes entitled to a share of the future transfer sum received by the club for the sale of a certain player. The club obviously also benefits from such arrangement, as its costs of the training of a certain player are lowered. There are also more rigid TPO schemes – prohibited by FIFA, by the way – when the club is not allowed to sell the player, economic rights on whom belong to the investor, without the investor’s approval and below the amount fixed by the investor.

As far as TPO in Russia goes, I am inclined to evaluate it at almost zero. Frankly speaking, in all my years of practice I have never met a case of purchase by a third party of economic rights to a player and further sale of such rights in Russia.

The schemes of football financing when investors, who are not football subjects (clubs, agents), invest in the development of a player (or just purchase such title in connection with a promising player) in exchange for a share of economic rights to the player are not popular in Russia due to the following peculiarity of Russian Football.

For example, one of the causes of TPO expansion in the Latin American countries was a combination of the difficult financial condition of football clubs and the existence of numerous talented football players, whose further transfer to Europe could bring sufficient profits. By combining the third persons’ investments with the outstanding work of football schools, both parties received excellent opportunities to earn money.

Unfortunately, in Russia the scheme of financing of the football clubs does not depend on how much the club itself earns, but mainly on state funding: the state, represented by the respective federation unit or municipality yearly assigns a certain amount of funds for keeping of the clubs, thus depriving the clubs of the necessity to win their own bread.

Mikhail Prokopets, Senior Lawyer and Head of the sports law practice, YUST Law firm

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OPINION ARTICLES 06Also, training and further sale of young talents is no strong point of Russian clubs: transfers of Russian players to Europe can be counted on the fingers of one hand, and it is precisely at the moment of the sale when the TPO mechanism works, it is in the sale that the investor’s profits are contained. Expensive internal transfers are also quite rare in Russia.

Another cause for the lack of popularity of TPO in Russia is that clubs frequently go bankrupt – another result of the clubs’ inability to earn for themselves and of their dependence on state funding. Dozens of clubs of the second and third divisions, which are the first to need TPO investments, went bankrupt in 2012. It is obvious that, in the case of bankruptcy, when the player’s transfer is done without payment of any transfer remuneration to the previous club, the investor too loses the acquired economic rights to the player. This fact does nothing to improve TPO popularity in Russia. The risks of such bankruptcies are so great, that it is simply not profitable for investors to put their money in economic rights.

The impossibility to consider the disputes arising out of TPO in football courts and that one is forced to take such disputes to common law courts or to CAS doubtlessly contributes to the unpopularity of TPO in Russia.

We will speak on the Russian legislation governing the sphere below, and regarding the disputes between investors and clubs, which are considered by CAS, there are serious doubts, whether such decisions are enforceable: they cannot be executed through the mechanisms of FIFA and the RFU. Execution of CAS decisions through the mechanisms of the New York Convention and the judicial system of Russia is also risky enough.

Regarding the legal and regulation governing of the issue, it should be mentioned that the documents of the Russian Football Union contain no special provisions on TPO.

Clause 7 of Article 18 of the RFU Regulations on the status and transfers of the players only repeats verbatim the general provision of Article 18 bis of the similar FIFA regulations: “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”.

As far as I know, as of the moment of writing hereof, the jurisdictional bodies of the RFU considered no cases arising out of the facts of violation of the cited Article by any club.

The RFU Regulations, unlike, for example, the Football Association of England, stipulate no special provisions prohibiting the clubs to transfer players before complete purchase of all economic rights to them from the investors.

As far as the Russian legislation is concerned, it is currently hard to say, what norms would be used by the parties when entering into TPO agreements, as I am personally not aware of such practice. Civil legislation provides for the freedom of agreements – this means that parties may execute any agreement not mentioned in the Civil Code, provided that it corresponds to the common requirements fixed by the Code for agreements. I personally think that the closest form of such agreement would be a “conditioned agreement” or “investment agreement”. I believe that TPO transactions in general are not against the Russian law, but full certainty will only appear when court practice forms on this matter.

3.  TPO-like transactions

Above it has been said that TPO is not common in Russia, however a number of transaction types have some, if not all, indications of TPO. Let us consider those transactions, their common traits and their differences from classic TPO.

3.1. A share of transfer amount as remuneration

In this situation, the club’s agent (under an agency agreement) or the player himself (under an employment contract) receives an equivalent of a certain share of the subsequent transfer of the player to a different club. For example, the remuneration in the amount of 50% of the sum received by the club from the subsequent transfer of the player.

This situation might seem like TPO situation on the outside (a party to the agreement receives an equivalent of a share of the transfer payment), however, it has material differences, due to which cannot be acknowledged as TPO.

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06 OPINION ARTICLESThe agent or the player receive said amount as remuneration for rendered services, not as income from investments into the purchase of economic rights, as it is with TPO. Football clubs receive no funds from agent or player, which the clubs could spend on their development, or on education of this or that player – in this case the club simply makes the remuneration amount of the agent or the player dependent on the amount of the transfer sum received.

3.2. A share of economic rights is retained by the player’s previous club at his transfer to the new club

This scheme is usually employed by the lower division football clubs of Russia. When selling a promising player, the clubs are unable to immediately obtain a substantial amount for him, but they mention in the transfer agreement that they receive a share from the further sale of the player.

In this case, the payment is also not a payment for economic rights but a share of the transfer compensation, postponed by the new club till the moment of sale of the player.

Therefore, it is clear that, even if the examples above seem to be similar to TPO on the outside, their nature is completely different. Thus, if in the case of TPO the investor is entitled to a share of the transfer amount in exchange for financial investments into the club or the training of a certain player, in the examples above the percentage of the potential transfer amount only reflects the amount of the remuneration of the agent, player or former club received in exchange for rendered services or, as is the case of the club, as a set off against the total transfer amount.

4. TPO perspectives in Russia

It is fully obvious that TPO situation in Russia only changes, when the economic paradigm of development of Russian football does – my personal opinion is that there are no premises whatsoever in Russia for the development of this scheme.

5. Conclusions

On the basis of the aforesaid, the following basic conclusions can be made regarding the development of TPO in Russia:

• TPO is hardly used in Russia;

• Consequently, in Russia, there is no special regulations of this phenomenon at the level of the Russian Football Union, and no TPO-related disputes or conflicts;

• There is a high probability that TPO does not go against the Russian law, however, as of the moment of writing hereof there is no practice of executing such agreements and of settling disputes arising from those;

• The specific paradigm of the economic development of the Russian football may be given as the cause for the absence of TPO practice, in general and in particular: lack of tradition and successful experience of training young talents and selling them abroad, state (plan) funding of professional sports, which deprives the clubs of the necessity to earn for themselves, lack of financial stability in the Russian football, which makes long-term investment into football extremely risky.

Regarding the nearest perspective of TPO development, it is obvious that TPO is mainly investments and planning-related business, aimed at the extraction of profits. This kind of business is logically possible only in those countries, where training and sale of young talents are mass produced (like Latin America, Portugal), or in the countries, which purchase a lot of talented youths from other countries, and where football has turned into a profitable business (like England, for example). Lamentably, one should state that Russia currently does not fit into any of those categories: football in Russia is no business but a form of the state’s social activity, and its objective, despite all allegations by the heads of the clubs, is not raising profits, but distracting the populace from acute problems and drawing public funds.

In this connection, I forecast that TPO will not become popular in Russia anytime soon.

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OPINION ARTICLES 06Investments in Economic Rights of Football Players: a Brazilian and international overview

A much used instrument in the financial market is increasingly in the headlines of the daily sports: investment funds. This is characterized by being, in its traditional concept, a community of investors that, based on common status, supervised by the Securities and Exchange Commission and managed by specialized companies, focus their resources on certain assets that can assure an appropriate return.

In football many “investment funds” have a shape that has no connection with those funds properly registered with the Securities and Exchange Commission and focused on the financial or capital market. They are nothing more than companies (normally limited liability companies) created by aiming at acquiring percentages of “player’s economic rights” with football clubs, with the expectation of making this same athlete subject to the transfer to another club in the future, which could give a return greater than the amount invested.

Although the nomenclature currently used to name the companies that make investments in football market, is normally inappropriate, slowly we are seeing some movements with the purpose of organizing the “real” investment funds, duly registered with the locals Securities and Exchange Commissions. The arrival of football to the financial market is bringing new concepts to it such as “economic rights”, “federative rights”, “buyout clauses”, “third party ownership”, among others.

“Economic Rights” of football players, although there is no definition in the majority of the sports legislations, refer to the financial income generated, regardless of the payment source, due to the termination of the employment contract of the athlete, with or without the consent of the football club, with the consequent transfer of the registration rights to another club. It is the assignment of the “sporting rights” of an athlete from a football club to another through the payment of a certain amount for this transfer. This “sporting rights” are also called “federative rights”, whose inception is the registration of the football player employment contract in its football federation. So, conceptually, the economic rights depend on the federative rights to exist.

This type of investment has a significant degree of uncertainty and sometimes the risks are greater than those for investments in shares (capital market). On the other hand, is well known in the football market some big returns that investors received in numerous transfers of famous athletes, something that currently is not easy to get on the financial market.

With regard to the legal structures and compliance with the regulations of the securities market, Portugal has been providing, since 2004, some of the first models of this type of investment. Clubs like FC Porto, Boavista and Sporting Lisboa have set, individually, the called “FP Football Players Fund”. In September 2009 Benfica also launched its fund, called “Benfica Stars Fund “, established with a capital of € 40.000.000,00. Some current top players had percentages acquired by the fund, that also saw the return of its investments when Benfica sold the rights of Argentinean Di Maria, Brazilian David Luiz and Portuguese Fabio Coentrão.

We can say without any fear that there is no better market for this type of investment than Brazil, which annually exports more than 1.000 athletes and has the largest amount of foreign professional players in major European leagues. A recent study presented by FIFA has shown that in 2011 the Brazilian players accounted to 13% of all players’ international transfers, being the Argentineans in second with 7%. Furthermore, the reality shows that even all the so-called big clubs in Brazil have this kind of arrangement with local or foreign companies.

Unfortunately the Brazilian sports legislation does not have any specific reference to the negotiation of player’s

Eduardo Carlezzo, Managing Partner, Carlezzo Advogados1

1. carlezzo@carlezzo.com.br

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06 OPINION ARTICLESeconomic rights. Some specific guidance would be more than welcome in a market that has developed itself without a clear regulation, based mostly on civil and commercial law. So, it is time to review some issues in order to, first of all, protect the clubs against the speculators and by contrast, giving the real investors a complete security environment that is able to guarantee its stakes.

At the side of the international sporting regulators, it is important to mention the recent approach of UEFA to this issue and to some concerns raised about the influence of the third party ownership in football clubs and its finances. An investigation in UEFA is still going on and its results will be carefully followed by both clubs and investors.

In Brazil during the recent years there have been several speculations regarding to the launch of a football investments funds, regulated by the local authorities. Whereas the growth of the Brazilian economy and the fact that the Brazilians players are still tracked by any relevant football market, even though the National Team is not enjoying its best moment, an increasing number of people who have been constantly looking and analyzing possibilities to pack this type if investment into professional and regulated funds. So far only one model has been launched, that is the FIP BR Soccer 1, with assets of R$ 50 million (Brazilian Reais), which bought shares of a company, whose purpose is acquiring economic rights of players and other activities connected to football. The shares of this FIP were fully acquired by a well known Brazilian bank, whose activities in football are largely recognized.

I don’t think the negotiation of economics rights (as known in South America) or the third party ownership (as know in other parts of the world) constitute an evil to football and shall be deleted from the system. However, I think that the creation of a legal framework regulating the requirements, conditions and guarantees of this kind of transaction would bring to players, clubs and investors transparency and safety to their relationship.

Profile

Eduardo Carlezzo is an attorney based in São Paulo, specialized in international sports law and Managing Partner of Carlezzo Advogados. Member of Rex Sport, British Association of Sport and the Law, American Bar Association, Sports Lawyers Association and Member of Advisory Board of the European Bulletin of Sports Law and Policy. Author of book “Business Sports Law”, 2004.

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OPINION ARTICLES 06The International Transfer System and the Principle of Specificity of Sport

The ‘Specificity of Sport’ is rather a nebulous term, but its impact is far reaching with both practical and legal consequences in the context of the international transfer system. This is a legal concept, which has been developed over the years by the EU institutions, sport’s own stakeholders and dispute resolution bodies. In this article, I propose to touch upon the legal development of the concept and examples of its practical application in football.

A. The Lisbon Treaty

In recent years, sport has increasingly become the focus of the European Union.

As sport, and particularly football, has developed socially, culturally and economically over the last decade, EU law has tried to react accordingly. However, in the absence of a clear, stable and predictable legal framework, matters have inevitably been determined by the ECJ, resulting in EU law being developed in a piece meal ‘case-by-case’ basis.

The first comprehensive policy document on sport at EU level was the White Paper on Sport, adopted by the European Commission in July 2007. The White Paper aimed at enhancing the visibility of sport in EU policy-making, raising awareness of the needs and specificities of the sector, ensuring that the specificity of sport is taken into consideration in the development and implementation of various EU policies, and promoting sport-related action at EU level.

The Lisbon Treaty then entered into force on 1 December 2009, which, under the ambit of Article 165, gave the EU a competence to support, coordinate and supplement sport policy actions by EU Member States.

In early 2011 the European Commission adopted its Communication on “Developing the European Dimension in Sport” which aimed at implementing the new Treaty provisions and outlined the Commission’s priorities for EU-level co-operation in sport for the coming years.

As you will no doubt be aware, towards the end of 2011, the Commission launched a study on the economic and legal aspects of the transfer of players, in respect of which the Member Leagues of the EPFL have already contributed.

The principle objectives of the study are to analyse the compatibility of transfer rules and practices with national and EU law and to provide an analysis of the financial issues raised by international transfers of players, the aim of which is to enable the Commission to assess whether EU action is required.

The above, coupled with the recent calls to tender for a feasibility study on possible future mobility measures for sport in the EU and a study on sports organisers’ rights in the EU are testament to the importance of the principle of the specificity of sport, and the results of such studies may well prompt new and enhanced sports centric measures and policies to be adopted by the Commission.

B. So what does the concept of specificity of sport entail?

“Specificity of sport” requires due consideration of the specific nature, characteristics and needs of sport and its stakeholders.

Carol Couse, Partner, Brabners Chaffe Street LLP1

1. Tel: +44 161 836 8800; Fax: +44 161 836 8801; E: Carol.couse@brabnerscsc.com. For more information, please see http://www.brabnerschaffestreet.com.

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06 OPINION ARTICLESBy way of example, it has been used to distinguish sport from other economic activities, often in circumstances where it may otherwise fall foul of the provisions of EU law. Specificity of sport has therefore been used to explain the rationale behind and provide the legal basis for:

the nature of sporting activities and sporting rules: such as the need for separate competitions for men and women and the need to preserve a competitive balance between participants in the same competitions; and

specificity is also relevant to rules referable to the structure of sport: including notably the autonomy and diversity of sport organisations, for example the pyramid structure of both the governance of and organisation of competition from grassroots to elite levels within football.

Crucially the Bosman81 and subsequently Meca-Medina82 cases challenged the previously held belief that sport could regulate itself autonomously. Following the Meca- Medina case in particular, the wide reach of EU law in the context of sporting regulations was summarised by the ECJ as follows: “If the sporting activity in question falls within the scope of the Treaty, the conditions for engaging in it are then subject to all the obligations which result from the various provisions of the Treaty”. Within the context of professional football, there will inevitably be few purely sporting rules which do not have an economic dimension and thereby fall outside the ambit of EU law. It is apparent that the concept of specificity will continue to be determined on a case by case basis, with the consequential lack of legal certainty in this regard.

C. Third Party Ownership

Third party ownership is an example of a sports specific phenomenon, whereby clubs, as holders of the federative (or registration) rights in players seek alternative sources of revenue from third parties in return for a share in the so called ‘economic rights’ relating to the player (i.e. a share of the revenue generated from the future sale of the player). Such a business model is common practice in South America, and given the increasing numbers of South Americans plying their trade in Europe, this new concept has been tackled by football authorities in different European territories in starkly different ways.

Following the Tevez and Mascherano cases, the English authorities have sought to tighten the regulation of Third Party Ownership with stringent disclosure requirements and the prohibition on third parties retaining interests in future transfers once the player has been registered in England. Likewise in France, the Ligue de Futbol Professionelle precludes clubs assigning economic rights, in whole or part, to third parties.

However, some commentators have suggested that such restrictive rules will not withstand a legal challenge before the ECJ for restraint of trade as the requirement to comply with EU competition and free movement laws would outweigh the leagues’ sport specific justifications for the restrictions, such as the protection of the integrity of their respective competitions.

In comparison to the restrictive regimes of England and France, in Portugal and Spain, the practice carries on virtually unfettered by regulation at a domestic level, the authorities deeming such a business model a vital revenue stream to enable clubs to continue to operate and source players in an ever tougher economic climate.

Interestingly therefore, individual leagues may all seek to rely on the principle of specificity of sport to justify their own particular domestic approaches to Third Party Ownership, whether this is a restrictive or a liberal regime.

Internationally, whilst Article 18(bis) of the FIFA Regulations on the Status and Transfer of Players focuses on preventing a third party from influencing the independence, policies or performances of clubs, these rules do not preclude a third party ownership model per se. Likewise, there are no rules at a UEFA level to prevent third party investment.

That said, UEFA, at the request of the Premier League and Ligue 1, has sought to establish more of an even playing field across Europe with regard to the scope of its Financial Fair Play Regulations. UEFA has introduced

81. Case C-415/93Union royale belge des sociétés de football association ASBL v Jean-Marc Bosman, Royal club liégeois SA v Jean-Marc Bosman and others and Union des associations européennes de football (UEFA) v Jean-Marc Bosman.

82. Case C-519/04 P David Meca-Medina and Igor Majcen.

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OPINION ARTICLES 06its own sports specific measures in this regard, to protect the integrity of its competition and to ensure that its competing clubs are not unduly disadvantaged/ do not unduly benefit from the divergent regulatory positions regarding Third Party Ownership across Europe; it has recently announced that clubs in UEFA competition cannot use money gained from Third Party Ownership in players to ‘break even’ for Financial Fair Play purposes.

I am aware that other authors in this publication will address the issues relating to Third Party Ownership in much more detail, so the remainder of the article will focus on other illustrations of the practical application of the specificity of sport principle.

D. Memorandum of Understanding between the EPFL and UEFA

Annex 1 of the recently executed Memorandum of Understanding between the EPFL and UEFA refers to the specificity of sport. Both stakeholders agree that there should be further clarity on the application of EU law to team sport which should cover a wide variety of subject areas and be as practical as possible.

There appears to be a broad measure of consensus within the team sport family as to the subjects that should be addressed, including the need to preserve uncertainty of outcome, to foster open competition, to create a more level playing field, to safeguard the integrity of team sport, and generally to protect the values of the European sports model.

Furthermore, it is specifically acknowledged that the principle of subsidiarity, which is a fundamental principle of the European Union, and also of the organisation of sport, is of paramount importance.

By way of illustration; it is considered that sports federations are the most appropriate bodies to regulate matters such as the rules of the game, competition formats (often undertaken by leagues), promotion/relegation issues and qualification systems, as well as the sporting calendar. These are all core terms of the Memorandum of Understanding, which reflects how the specificity of sport impacts on the organisation and regulation of football at a domestic and international level.

The Memorandum of Understanding also provides that a team sport, such as football requires specific sports regulations governing the transfer of players from one club to another, including rules to:

• ensure that a fair dispute resolution system exists:

• protect minors;

• compensate for the training of players; and

• provide for contractual stability.

I will address each of these points in turn.

• Dispute Resolution

Given the principle of specificity of sport, sport stakeholders tend to provide that sports related disputes should not be determined by the ordinary courts, but rather sports specific tribunals, and football is no exception. FIFA precludes clubs and players from seeking redress of disputes before the ordinary courts (except in relation to employment related disputes) under Article 64(2) of the FIFA Statutes and Article 22 of the FIFA Regulations, considering that such matters are properly dealt with by football specific dispute forums. Article 22(c) also considers that employment related disputes between clubs and players of an international dimension should be dealt with by FIFA, unless there is an “independent tribunal guaranteeing fair proceedings and respecting the principle of equal representation of players and clubs has been established at a national level”. Whilst FIFA has encouraged the establishment of national DRCs, in many territories fair proceedings cannot be guaranteed and therefore such disputes of an international dimension continue to be referred to FIFA.

The application of Article 64(2) recently came to the fore when The Rangers Football Club (now in liquidation) sought to challenge an Appellate Tribunal decision of the Scottish Football Association (‘SFA’), imposing a twelve month transfer ban, before the ordinary courts, which prompted FIFA to state that it would request the intervention of the SFA to prevent such recourse to the courts, pursuant to the aforementioned article.

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06 OPINION ARTICLESHowever, the Court of Session in Scotland found in favour of Rangers, holding that the Appellate Tribunal had indeed taken a decision which was ultra vires. Such a case highlights the blurring of boundaries between matters, which should properly be dealt with by football regulatory bodies and those which are subject to the full application of (national) law before the ordinary courts.

• Rules regulating the transfer of players between clubs

Turning to rules governing the transfer of players, the starting point is that any rule unduly restricting the international transfer of players is likely to infringe EU law and in particular, the free movement and competition rules enshrined therein, as illustrated by the Bosman case in 1995. Notwithstanding the abolition of this overly restrictive system post-Bosman, it was felt by football stakeholders that a transfer system was fundamental to the good functioning of the game. The European Commission, FIFA, the worldwide football players’ union, FIFPro, and UEFA therefore agreed rules that would govern international transfers and which, whilst compliant with the requirements of EU law, would recognise the specific nature of football and in particular would respect the significance of contractual stability.

Subsequently, the 2001 edition of the FIFA Regulations, amongst other things, provided that players may only be registered during one of the two annual registration periods fixed by the relevant association. This would therefore protect the integrity of the competition, whilst allowing freedom of movement for players during these designated registration periods. It was considered that certain limits must be imposed on player movement, in the form of transfer deadlines to protect the regularity and smooth and stable functioning of competition.

The European Commission considers such a system to constitute an example of good practice that ensures a competitive equilibrium between sport clubs, while taking into account the requirements of EU law.

A recent example of such transfer regulations being strictly applied is the decision by FIFA to bring to an end the ‘emergency loan’ system in England, which had been permitted by the Football League for domestic loans outsides of the designated FA Registration Periods. FIFA has requested that such a system should end by the 2014/2015 season.

Notwithstanding that a player and club may comply with the relevant transfer windows, however, an additional restriction to the free movement of players is the rule contained within Article 5(3) of the FIFA Regulations, which allows a player to be registered with a maximum of three clubs, but to only play for two clubs during the same season. Whilst there may be an exception for a player moving between clubs with overlapping seasons, such an onerous restriction is justified by FIFA on the premise that it safeguards the sporting integrity of the competition. This does however undoubtedly restrict the freedom of player to ply his trade within the European Union. It remains to be seen whether this provision will come under further scrutiny by the Commission following its study of transfer regulations. However, no doubt FIFA will seek to shield the rule by reliance on the principle of the specificity of sport.

• Protection of minors

Touching upon the transfer of Minors, it is an undisputed fact that clubs are increasingly looking further afield for new players, and players are being recruited (often internationally) at an earlier age.

However, the freedom of clubs to recruit these talented young players has been somewhat fettered by the FIFA Regulations. For example, Article 19 of the FIFA Regulations specifically prohibits the international transfer of players under the age of 18, subject to limited exceptions. In fact, FIFA now requires that the international transfer of minors is to be pre-approved by a Sub-Committee of its own Players’ Status Committee.

FIFA’s rationale behind these “sport specific” restrictions is to foster the training, education and welfare of young players and to encourage clubs to retain and develop their young players.

A significant reason why FIFA argues that it should be free to regulate the practice of recruiting minors is that there is considerable concern about the exploitation of young players, particularly children who are not selected for competitions and abandoned in a foreign country, which leaves them open to the risk of further exploitation. This is contrary to moral and sporting values.

Whilst these appear to be reasonable justifications, on the basis of EU competition law and rights of free

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OPINION ARTICLES 06movement of workers, FIFA has been forced to expand the practical application of Article 19(b) not only to allow players between the ages of 16-18 to move within the EU and EEA but also to those players holding an EU passport moving from outside of the EU/EEA into the EU/EEA. Whilst FIFA has, so far, not sought to expressly amend Article 19 on this basis, there is consistent DRC jurisprudence on this point and in due course FIFA may well face pressure from the Commission to expressly grant the same rights to all EU citizens under Article 19(b), thus demonstrating the practical predominance, in this instance, of the fundamental freedoms under EU law over football regulatory matters concerning the protection of Minors.

• Training Compensation

Under the general umbrella of the protection of minors, training compensation regimes have also fallen for review for the first time by the ECJ in the Olivier Bernard83 case. The focus of the ruling concerns limitations to the rules on free movement of workers arising from such compensation schemes. In France the regulations stipulated that a youth player who has trained with a club was required to sign a professional contract with that club. In Bernard’s case he signed a contract with the English club, Newcastle United FC, and his former club, Olympique Lyonnais claimed damages under the French rules which were not linked to the actual cost of training the player. It was argued that the legitimacy of the rule was unjustifiable in the context of EU Law, as it was not based on the costs of training and therefore represented a restriction on the freedom of movement for workers.

The ECJ agreed that the rule represented a restriction of the freedom of movement for workers. However, the ECJ held that a rule allowing a training club to be compensated may be justified by the need to encourage the recruitment and training of young professional players, provided that the amount concerned is based on the actual training costs incurred by the training club and/or saved by the new club. This ruling effectively ratified FIFA’s regulations on training compensation and encapsulates the principle of the specificity of sport in practice.

• Contractual Stability

Finally, with regard to the application of specificity of sport to contractual stability, Article 25(6) of the FIFA Regulations expressly provides that its relevant FIFA decision-making bodies “shall, when taking their decisions, apply these regulations whilst taking into account all relevant arrangements, laws and/or collective bargaining agreements that exist at national level, as well as the specificity of sport”.

There is a further express reference to the specificity of sport at Article 17(1) of the FIFA Regulations in its inclusion in the list of objective criteria used to calculate damages in the event of a unilateral termination of a playing contract, which is followed by the international transfer of that player.

Article 17 was applied by FIFA and the CAS in the well known Matuzalem case84, in which the CAS ordered that Matuzalem and his new club, Real Zaragoza were jointly and severally liable to pay to Shakhtar Donetsk EUR11.86 million plus interest for Matuzalem’s unilateral breach of his playing contract with Shakhtar.

In assessing the amount of compensation payable by Matuzalem under Article 17(1) of the FIFA regulations, the CAS stated that a judging body must keep “in mind that the dispute is taking place in the somehow special world of sport. In other words, the judging body shall aim at reaching a solution that is legally correct, and that is also appropriate upon an analysis of the specific nature of the sporting interests at stake, the sporting circumstances and the sporting issues inherent to the single case”. (emphasis added)

The CAS also stated that “an additional and important element of sport specificity that must be taken into due consideration when establishing the compensation due in the event of breach or undue termination is the behaviour and the status of the parties involved, with a particular attention to the behaviour of the party that did not respect the contractual obligations in place”. (emphasis added)

83. Case C-325/08, Olympique Lyonnais SASP v. Olivier Bernard, Newcastle United FC.

84. CAS 2008/A/1519 – FC Shakhtar Donetsk (Ukraine) v/ Mr. Matuzalem Francelino daSilva (Brazil) & Real Zaragoza SAD (Spain) & FIFACAS 2008/A/1520 – Mr. Matuzalem Francelino da Silva (Brazil) & Real Zaragoza SAD(Spain) v/ FC Shakhtar Donetsk (Ukraine) & FIFA.

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06 OPINION ARTICLESIn particular, the CAS criticised the behaviour of the Player, who left the club just a few weeks before the start of the qualifying rounds of the Champions League, which was obviously very important to Shakhtar. The CAS took this “into due consideration as an element to establish the value of the loss caused by the Player to Shakhtar Donetsk through the premature termination of his agreement”. The CAS also noted the importance of the player to the team in a sporting sense, as Matuzalem was the captain and top scorer at Shakhtar.

As such, the CAS awarded Shakhtar EUR600,000, a sum equal to six months salary under the Shakhtar playing contract, which the Panel considered was adequate to compensate Shahktar for its sporting loss. De Sanctis85 followed the principle of Matuzalem and, the award for sporting loss was again equal to six months salary due under the player’s new contract. However the panel remarked that specificity of sport is a “correcting factor and not one that enables a transfer fee through the back door”.

The award of damages under the head of ‘specificity of sport’ in De Sanctis took into account various factors touched upon in Matuzalem, such as the player’s standing at the club, the loss of commercial revenues from his departure, and the special role the player had in the eyes of sponsors, fans and his colleagues. The Panel also took into account factors in the player’s favour including the prolonged contract negotiations and the fact he had followed the process set out in Article 17.3 of the FIFA Regulations.

The Panel concluded that the player was a senior professional, with whom the club had enjoyed some of their greatest successes, and that ‘when a key player is sold or goes revenues will be affected’ which may not be quantifiable. The panel concluded that it is in these circumstances where the ‘specificity of sport’ can and should be used to moderate the damages to be awarded.

Conclusion

In conclusion, there are a number of sporting related objectives that have been considered by the EU Institutions as meriting special treatment under EU law. As I have mentioned, these may include the need to maintain contractual stability, ensuring the proper functioning of competitions, protecting the training and development of young players.

However, whether these objectives are sufficient to justify an exception to the application of EU law has been something that has, to date, been developed in a rather piecemeal manner by the EU institutions.

It is to be hoped therefore, with the express competence in sport introduced under the Lisbon Treaty, and the Commission’s inclusive approach to developing the EU sports related policies, that a more harmonised and consistent approach shall be adopted so that sports stakeholders may themselves have a better understanding of what the EU Institutions are likely to regard as valid sporting exemptions to the application of EU law and to give legal certainty to the concept of the specificity of sport.

The present publication was elaborated by EPFL Public Policy and Research Manager Ezéchiel Abatan, under the general supervision of the EPFL CEO Emanuel Macedo de Medeiros.

The Sports Law Bulletin is destined to be distributed between EPFL Members and Associated Members and the information herein contained is given in a general and abstract form for information purposes only. It shall not be used as a support document for any practical case unless previously and expressly authorized by the EPFL in writing and does not constitute legal advice.

The content of this Newsletter cannot be reproduced, in his enterity of in part, without the express authorization of the EPFL. In case you want to obtain additional explanations on the subject, please contact Ezéchiel Abatan through the e-mail address: ezechiel.abatan@epfl-europeanleagues.com.

85. CAS 2010/A/2145 Sevilla FC SAD v. Udinese Calcio S.p.A.CAS 2010/A/2146 Morgan de Sanctis v. Udinese Calcio S.p.A.CAS 2010/A/2147 Udinese Calcio S.p.A. v. Morgan de Sanctis & Sevilla FC SAD.

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EPFL SPORTS LAW 07 COLLABORATORS

Nicolas Acker,European Public Affairs Director, Ogilvy

Chris Anderson, Associate (Dual Qualified in Scotland and England), Brabners Chaffe Street LLP

Ivan Antipov, former In-house Attorney, Russian Professional Football League

Ross Biggam, Director General, Association of Commercial Television in Europe (ACTE)

Roberto Branco Martins,General Manager, European Football Agents Association (EFAA)

Nick Bitel, Chairman, Sports Rights Owners Coalition

Holger Blask,Chief Legal Adviser, Deutsche Fußball Liga (DFL)

Mark Boetekees,former CEO, Federatie Betaald Voetbal Organisaties (FBO)

Rui Botica Santos,Lawyer, Coelho Ribeiro e Associados

Carol Couse,Partner, Brabners Chaffe Street LLP

Philippe Diallo,Director General, Union des Clubs Professionnels de Football (UCPF)

Juan de Diós Crespo Pérez,Head of Sports Law Department, Ruiz Huerta & Crespo Sports Lawyers

For this special issue, the EPFL would like to pay tribute to all those individuals (football executives, lawyers, public officials, academics, etc.) who have collaborated with us to make the Sports Law Bulletin a success over its first nine editions.

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José Eduardo Fanha Vieira,former Vice President, Sports Institute of Portugal

David Folker,General Manager, Football DataCo Limited

Mario Gallavotti,Legal Consultant, Serie A

Prof. Dr. Miguel María García Caba, Legal Adviser - Liga Nacional de Fútbol Profesional, Carlos III University

Borja García-García,Professor, Loughborough University

Mark Goddard,General Manager, FIFA Transfer Matching System

Georgi Gradev,General Manager, GRADEV SPORTS

Diogo Guia,Lawyer, Head of Cabinet of the Secretary of State for Sports and Youth of Portugal

Nicolas Gyss,former Consultant, KEA

Cécile Huet,Jurist, Ligue de Football Professionnelle

Jorge Ibarrola,Attorney-at-law, Libra Law

María Iglesias,Head of Research and Analysis, KEA

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Rhadamès Killy,Avocat au Barreau de Paris and Attorney-at-Law of the State Bar of California, de Gaulle Fleurance & Associés

Kai Ludwig,Attorney-at-law, Scherrer Jenny & Partner

Emanuel Macedo de Medeiros,Chief Executive Officer, Association of European Professional Football Leagues (EPFL)

Jose Manuel MeirimDirector, Desporto & Direito - Revista Jurídica do Desporton

† Prof. Albino Mendes Baptista, former Director of Labour Law Department,Lusíada University of Lisbon

Samuli Miettinen,Professor, Edge Hill University

Alexandre Miguel Mestre,Secretary of State for Sports and Youth of Portugal

Mathieu Moreuil,Head of EU Public Policy, The Premier League

João Orlando Vieira de Carvalho,Vowel of Liga Portugal General Assembly

Richard Parrish,Professor, Edge Hill University

Jérome Perlemuter,Head of Legal Affairs, French Professional Football League

Gerardo Planás,Lawyer, Moreno Ruffinelli & Asociados

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Robert Ch. Pongracz,Head of International Affairs, Liga Nacional de Fútbol Profesional

Jane Purdon,Director of Governance, The Premier League

Claudius Schäfer,Head of Legal Services and Licensing – Swiss Football League (SFL)

Robert Siekmann,Professor, TMC Asser International Sports Law Centre

Ruggero Stincardini,Head of Legal Department, Italian Football League Serie A

Luca Tettamanti,Attorney-at-law, Libra Law

Fernando Veiga Gomes,Lawyer, Abreu Advogados

Pedro Velazquez,Deputy Head of the Sport Unit, Directorate General for Education and Culture of the European Commission

Benjamin Viard,Head of Legal Affairs, Union des Clubs Professionnels de Football (UCPF)

Madalena Viana Pedreira,Lawyer, Abreu Advogados

Laura Vilches,Senior Advisor, KEA

Marco Villiger,Director of Legal Affairs, FIFA

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Oliver Weingarten,former Solicitor Commercial and IP, The Premier League

Adam Whyte,Associate, Ruiz Huerta & Crespo Sports Lawyers

Serhat Yilmaz,Doctoral Researcher, University of Westminster

EPFL – Association of European Professional Football Leagues

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Telephone +41 22 308 5111Fax +41 22 308 5101E: info@epfl-europeanleagues.comwww.epfl-europeanleagues.com

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The present publication was elaborated by the EPFL Research Unit, led by EPFL Public Policy and Research Manager Ezéchiel Abatan, under the general supervision of the EPFL CEO Emanuel Macedo de Medeiros.

The Sports Law Bulletin is destined to be distributed between EPFL Members and Associated Members and the information herein contained is given in a general and abstract form for information purposes only. It shall not be used as a support document for any practical case unless previously and expressly authorized by the EPFL in writing and does not constitute legal advice.

The content of this Newsletter cannot be reproduced, in his enterity of in part, without the express authorization of the EPFL. In case you want to obtain additional explanations on the subject, please contact Ezéchiel Abatan through the e-mail address: ezechiel.abatan@epfl-europeanleagues.com.

www.epfl-europeanleagues.com