On September 26, FIFA President Sepp Blatter announced that FIFA would move to ban Third Party Ownership (TPO) of players in world soccer—or the practice of buying a portion of a player’s ‘economic rights’—after a transitional period. This came after the European soccer governing body, Union of European Football Associations (UEFA), announced they would attempt to ban TPOs if Blatter and FIFA failed to act. A ban on the practice is likely to have far reaching effects on world soccer, as it is integral to the way business is conducted in many leagues.
Even without any details, the term “third party ownership” of players conjures images of backroom dealings and shady enterprises. The reality isn’t actually that far off. TPO has been dubbed “indentured slavery” by the chair of the English Premier League (EPL), Richard Scudamore. Critics call the practice “pizza players” because their rights are sliced up amongst different stakeholders.
TPO in the EPL brings to mind the now infamous deal with Carlos Tevez and Javier Mascherano, where the two Argentinian players moved to the London club West Ham United. It was later discovered that the Brazilian club Corinthians, where the pair played before moving to England, did not recieve a penny in the move because a third party, Media Sports Investment (MSI), owned 100 percent of the economic rights to the players.
The problem was in a clause in the contracts the players signed with West Ham, which gave MSI the right to move the players to another club whenever they saw fit because they were the sole owners of the players. However, this was deemed a case of tampering in club activities, which led to a hefty fine for West Ham and a ban of TPO in English football.
Even with the English ban, TPO is still a very regular practice in world football, especially in South America, Eastern Europe, Portugal, and Spain. In South America, TPO is a way of life. It allows small clubs to mitigate some of the risk of buying and selling players by splitting the ownership with other groups. Many South American superstars who now play in Europe including Tevez and Mascherano, Radamel Falcao, Neymar, and James Rodriguez, were at least partially owned by third parties.
Neymar’s transfer from Santos in Brazil to Spanish giant FC Barcelona was heavily scrutinized because, among other reasons, only 17.1 million euros of the initially reported 57.1 million euros transfer fee went to Santos; the rest went to Neymar and Neymar, a company owned by his parents. Barcelona was later fined 13.5 million euros for hiding almost 30 million euros in additional fees related to the transfer, most of which went to other third parties with a stake in Neymar.
Despite its many detractors, combatting TPO is tricky for FIFA because it is an entrenched practice. According to a report by the consulting firm KPMG, up to 36 percent of the market value of players in the Portuguese first division, for example, is owned by third parties.
This is part of what makes rooting out TPO problematic. Clubs like Porto, Benfica, and even Atlético Madrid have benefited greatly from the practice because it allows them to acquire players they otherwise could not afford.
It is also attractive to “feeder” teams like Porto because TPO acts as a pipeline for South American talent moving to “lesser” European leagues like the Portuguese league. The players can develop, be seen, and then get shipped in big money deals to the EPL or to other huge clubs across Europe, all at a reduced financial risk.
TPO also gives cash-strapped clubs like Atlético a way to quickly raise money by selling a portion of the economic rights of a valuable player.
With Blatter’s announcement it looks as though FIFA is going to actively fight against TPO. Critics have long argued that allowing TPO raises integrity concerns, as match fixings become possible when investors, rather than clubs, own the players. Scudamore and UEFA president Michel Platini have blasted the practice for restricting player freedom and choice in their careers. As with Super PACs in American politics, transparency is also a problem in the TPO system, with stakeholders often putting up unknown amounts of money.
The TPO system obviously has substantial problems that need to be addressed. However, this decision, especially so soon after the blowback over the 2022 World Cup in Qatar, looks like FIFA—widely considered among the most corrupt organizations in sports—is throwing a bone to moralists and critics. It will be interesting to see the degree to which any potential ban is implemented and actually enforced by FIFA, and how leagues like the Primeira Liga in Portugal and the Serie A in Brazil adapt to a completely new landscape of player economics.
Does the removal of TPO mean leagues reliant on it have to shift towards developing more homegrown talent instead of imported low-risk talent? As with any well-established practice it will be difficult to root out completely, but having FIFA recognize the issues with TPO is an important first step in making soccer more transparent.