Day 1: FIFA must regulate TPO, not ban it.
Day 2: Third-party entitlement to shares of transfer fees: problems and solutions
Day 3: The Impact of the TPO Ban on South American Football.
Day 4: Third Party Investment from a UK Perspective.
Day 5: Why FIFA's TPO ban is justified.
On
22 December 2014, FIFA officially introduced
an amendment to its Regulations on the Status and Transfers of Players banning third-party ownership of players’
economic rights (TPO) in football. This decision to put a definitive end to the
use of TPO in football is controversial, especially in countries where
TPO is a mainstream financing mechanism for clubs, and has led the Portuguese
and Spanish football leagues to launch a complaint in front of the European
Commission, asking it to find the FIFA ban contrary to EU competition law.
Next week, we will feature a Blog Symposium
discussing the FIFA TPO ban and its compatibility with EU competition law. We
are proud and honoured to welcome contributions from both the complainant (the
Spanish football league, La Liga) and the defendant (FIFA) and three renowned
experts on TPO matters: Daniel Geey ( Competition lawyer at Fieldfisher, aka @FootballLaw), Ariel Reck (lawyer at
Reck Sports law in Argentina, aka @arielreck)
and Raffaele Poli (Social scientist and head of the CIES Football Observatory). The
contributions will focus on different aspects of the functioning of TPO and on
the impact and consequences of the ban.
Before the five blogs (starting with the
complainant, La Liga, on Tuesday) will be published next week on a daily basis, we
have the pleasure to kick off today with a light introduction to TPO. At the
end of next week we will synthesise the debate and provide our preliminary take
on the ban’s compatibility with EU law.
With this exciting Blog Symposium on one of the hottest
sports law topics, we celebrate the first anniversary of the ASSER
International Sports Law Blog (last year’s opening blog is here). We hope you will enjoy the read and feel free to comment!
What is TPO?
The
use of the notion of TPO is often criticized because it misrepresents the
situation it purposes to qualify. Indeed, no third-party owns a player, but only
a share of the “economic right” linked to the transfer of the player’s “federative right”[1].
This is why, as you will see later next week, some of our authors refuse to use
the term and have opted for alternative concepts, such as TPE (third-party
entitlements) or TPI (third-party investment). Due to our legal obsession with
the written word, we will personally hold onto TPO as it is the notion
enshrined in FIFA’s regulations.
Beyond
this semantic debate, a plurality of contractual constellations is captured
under the umbrella term TPO. What is common to all cases is that a company or
an individual provides a football club or a player with money in return for being
entitled to a share of a player’s future transfer value. Thus, TPO is enshrined
in a separate private law contract between a third-party and a club or a
player. The plurality of TPO situations derives from this contractual basis. The
parties are free under national private law to creatively draft those contracts
as they see fit, each one of them being a specific type of TPO in itself.
The
main aim of the practice is to finance clubs. Often TPO is used to externalise
the costs of recruiting a player, sometimes it is used to finance the general
functioning of a club. However, the use of TPO is always intimately connected
to the drive of professional clubs to diversify their funding sources in order
to leverage their competitiveness in national and international competitions. Nowadays,
a club like Atletico Madrid would probably not have been able to reach the
final of the Champions League or win La Liga without having widespread recourse
to it.
What are the problems with TPO?
We
do not want to spoil too much of next week’s discussion, but we need to at
least mention the possible problems that have been linked with the use of TPO
and that might serve as a potential justification for banning it. TPO is first
and foremost seen as an intrusion of a third-party in the life of a football
club and a player with the potential for an illegitimate influence on the
management of the team and the player’s career. The many conflicts of interest
that might arise in the shadow of multiple, sometimes contradictory,
investments are particularly feared. TPO is also seen as a dubious financing
technique used to circumvent the new UEFA Financial Fair Play regulations and
to prop up clubs that are chronically in financial troubles. Finally, there is a
moral dimension. For example, UEFA president Michel Platini likened TPO to a
type of modern “slavery”. In short, should it be acceptable for someone to own
a share of an economic right personally attached to a player? Can a player be
forced-sold on the basis of a TPO agreement? All these issues will be discussed
extensively next week; they are central to the evaluation of the ban’s
compatibility with EU competition law.
Regulating TPO or banning it? That
is the question!
TPO
has been banned for some time in England, France and Poland, while it was
authorized in the rest of the World. The English FA, profoundly traumatized by
the Carlos Tévez case, decided to ban the practice as early as 2008. In other
countries, particularly Spain, Portugal and South America, TPO has been, and
still is, part of the “football culture”. For example, it is estimated
that in Brazil’s top division 90% of the players are subjected to a TPO
agreement. In these countries TPO is seen as a necessity for national football
clubs - not only to compete with clubs in richer countries, but also for
professional football to be financially viable. It was no surprise that the
leagues and clubs of the abovementioned countries were against
a blanket ban of TPO and would rather see it being regulated.
They consistently expressed this opposition during the FIFA
Congress in June 2014 and the working
groups created by FIFA in September 2014 with the aim of
tackling the issue. Nonetheless, on 26 September the FIFA executive committee took
the decision to ban third-party ownership of players’
economic rights (TPO) with a short transitional period. Following this
announcement, the FIFA circular fleshing out the legal details of the ban was published
on 22 December. Article 18bis of the Regulations on the Status and Transfers of
Players was amended and the Regulations now include a new Article 18ter.[2]
These new articles came into force on 1 January 2015 and, after a transition
period, TPO will officially be banned as of 1 May 2015.
This
total ban raises many practical and legal questions. What is to become of the
already signed TPO agreements? Will the ban be fully enforced? Or, will
creative schemes arise to circumvent it? Was there a less restricting
alternative to attain its objective? And…is it compatible with EU competition
law?
The
debate is open!