Third-party over for La Liga

FIFA President Sepp Blatter’s promise last week that third-party player ownership (TPO) will be outlawed in the near future could well have a detrimental effect on the competitive nature of La Liga.

An internal report by world football’s governing body found the practice trapped clubs ‘in a vicious cycle of debt and dependence’, although the reality is that some of them find it difficult to challenge for the game’s major honours without resorting to it.

Typically, companies backed by unnamed investors take a stake of anything up to 50 per cent in a player, allowing them to receive a percentage from any subsequent transfer agreement – sometimes within a specific timeframe as specified by his contract.

Despite TPO being banned in such countries as England, France and Poland, it remains popular in other parts of Europe and throughout the world as it allows clubs to attract top players without having to fund the full transfer fee.

“We are sharing the risk. It’s an interesting operation because if the player doesn’t do well then the club will not lose everything,” was how Atletico Madrid chief executive Miguel Angel Gil Marin summed it up to Bloomberg shortly before last season’s Champions League Final.

Unsurprisingly, Atleti have been one of the prime movers over the past few years and a ban would see them affected more than any other Spanish team.

Despite the success of the last three years, the economic situation at Vicente Calderon has not been good – the €214m owed to the tax authorities is still being paid off – and as a result TPO has been used to purchase big-name stars who would not otherwise have landed in the Spanish capital.

For example, half of the €40m paid to Porto for striker Radamel Falcao in summer 2011 was provided by Doyen Sports, one of the largest investment funds in the game.

Of course, Atletico are not the only team in Spain to use this procedure, and supporters of it argue it helps bridge the gap between the larger and smaller teams. That gap is especially great in La Primera, where financially Real Madrid and Barcelona are way ahead of the rest due to the unfair distribution of television money, yet in Atleti’s case the system worked as last year they captured the title and were Champions League runners-up.

However, even Barca have gone down this route as their signing of Neymar before the start of last season also involved TPO. The Brazil international’s switch from Santos to Barca allegedly entailed his parents becoming majority shareholders in a company that owned his rights, with the upshot being they received over twice as much money from the deal as his former team.

Sevilla are another club that has taken advantage of this mechanism, while Valencia have also recently used it to good effect. This summer Los Che brought in striker Rodrigo Moreno on a season-long loan from Benfica, who in January 2014 sold 100 per cent of his economic rights for €30m to Meriton Capital Limited, a company owned by Singapore businessman Peter Lim, the person currently in negotiations to complete his takeover of Valencia.

A 2013 study by KPMG, one of the leading professional services companies in the world, also revealed that Spain is the second largest European market for such practices. These can range from ownership of a player by companies, agencies or other investors, to the use of his economic rights as collateral for loans, as well as payments in exchange for a percentage of any future sale. The problem with this, critics complain, is that the sale is often compulsory.

In addition, KPMG estimates that up to eight per cent of Spanish players on the market at any one time are linked to outside investors, while the rights to between 25 and 40 of them are held by third parties, often without their knowledge. Even so, this is in stark contrast to Brazil where the figure is around 90 per cent, and Portugal, where 36 per cent of players are owned by investors, not their clubs.

While some smaller clubs and obviously the investors will not relish the decision to ban TPO, in all probability the game will benefit financially as the practice has undoubtedly helped inflate transfer fees, while some have even gone as far as to say it is a modern form of slavery.

On the other hand, there are those that believe it is a contravention of a club’s right to manage its own affairs, although it is not a view shared by UEFA President Michel Platini.

“This is positive news for player freedom and also the integrity and transparency of our game. I’ve been constantly warning for years that it is becoming increasingly widespread and a danger to our sport,” said the Frenchman.

Nonetheless, without outside assistance some clubs feel it will be impossible to break the hegemony of the big two and whether it proves positive for Spanish football remains to be seen.