The football world has been buzzing with Doyen’s name for a few years now. Yet, in practice very little is known about the way Doyen Sports (the Doyen entity involved in the football business) operates. The content of the contracts it signs with clubs was speculative, as they are subjected to strict confidentiality policies. Nonetheless, Doyen became a political (and public) scapegoat and is widely perceived as exemplifying the ‘TPOisation’ of football. This mythical status of Doyen is also entertained by the firm itself, which has multiplied the (until now failed) legal actions against FIFA’s TPO ban (on the ban see our blog symposium here) in a bid to attract attention and to publicly defend its business model. In short, it has become the mysterious flag bearer of TPO around the world. Thanks to a new anonymous group, inspired by the WikiLeaks model, we can now better assess how Doyen Sports truly functions. Since 5 November someone has been publishing different types of documents involving more or less directly the work of Doyen in football. These documents are all freely available at http://footballleaks.livejournal.com/. By doing so, the group has given us (legal scholars not involved directly in the trade) the opportunity to finally peruse the contractual structure of a TPO deal offered by Doyen and, as we purport to show in the coming weeks, to embark upon a journey into Doyen’s TPO-world.

The footballleaks group leaked two types of documents: documents related to the internal structure of Doyen and documents related to the various deals (involving mainly Portuguese and Spanish clubs and FC Twente) signed by Doyen. Regarding Doyen Sports itself as a company, the documents provide a good overview of its functioning and shareholder structure. The company based in Malta was registered in May 2011 and is controlled by two main shareholders, Refik Arif and Malik Ali. The aims of the company, based on its Memorandum and Articles of Association (point 1.1), include:

1.    Acquisition and sale of representation rights of football players, coaches and managers and representation of football players, coaches and managers in all aspects of their football career, including associated off-field and commercial activities (including, where necessary, through licensed agents);

2.     Acquisition and sale of football players and/or the economical rights of football players;

3.     Making an offer to the player for his player registration documentation, a part thereof or some other offer to the player and/or football clubs;

4.     Transferring football players, coaches and managers between different football clubs;

5.     Representing football clubs;

6.     Having a benefit or take an active role in the day-to-day running of football clubs, subject to complying with the FIFA Regulations and other relevant national or international regulations;

7.     Granting loans to football clubs; and

8.     Carry out such activities as may be ancillary to the above or as may be necessary or desirable to achieve the above objects without territorial restriction anywhere in the world. 

Thus, Doyen’s business model blends different types of activities: investment and loans to clubs (broadly speaking the TPO side of Doyen’s activities) and the representation of players/coaches (the agent side of Doyen’s activities). We will not investigate further the internal structure of Doyen or its shareholders; such enquiries are better left to investigative journalists.

We, for our part, are going to focus on the contracts signed by Doyen with two clubs: FC Twente (Twente) and Sporting Club Portugal (Sporting). This analytical and descriptive exercise will feed into an evaluation of the compatibility of FIFA’s TPO ban with EU law. While it is difficult to know who precisely is responsible for footballleaks (maybe the ideal of transparency should also apply to the group), one thing is sure: the group seems to have a keen interest in the activities of Sporting (and Portuguese clubs in general). The emergence of this website targeting in priority Doyen might be linked to the on-going dispute between Doyen and Sporting about the TPO agreement signed over the transfer of the player Marcos Rojo. The dispute has been heard in September by the CAS, which will render its award on the matter in the coming month(s). In any case, the documents released until now by footballleaks enable us to draw a detailed profile of the TPO deals struck by Doyen with Twente and Sporting. The deal between Doyen and Twente, and its legal ramifications, will be the subject of a first blog early next week. We will map the network of obligations to which Twente accepted to be subjected in return for Doyen’s capital injection in the club. The case stirred a public controversy in the Netherlands and already led to the departure of Twente’s President. The second blog will focus on Sporting and more precisely on the “Rojo” TPO-deal with Doyen and its legal implications. Based on these empirical studies of the structure and implementation of the TPO agreements struck by Doyen, we will revisit the crucial pending question of the compatibility of FIFA’s TPO ban with EU competition law.

I think we would all agree that the reputation of players’ agents, nowadays called intermediaries, has never been a good one for plenty of reasons. But the truth is their presence in the football industry is much needed and probably most of the transfers would never take place if these outcast members of the self-proclaimed football family were not there to ensure a fluid and smooth communication between all parties involved.

For us, sports lawyers, intermediaries are also important clients as they often need our advice to structure the deals in which they take part. One of the most recurrent situations faced by intermediaries and agents operating off-the-radar (i.e. not registered in any football association member of FIFA) is the risk of entering in a so-called multiparty or dual representation and the potential risks associated with such a situation.

The representation of the interests of multiple parties in football intermediation can take place for instance when the agent represents the selling club, the buying club and/or the player in the same transfer, or when the agent is remunerated by multiple parties, and in general when the agent incurs the risk of jeopardizing the trust deposited upon him/her by the principal. The situations are multiple and can manifest in different manners.

This article will briefly outline the regulatory framework regarding multiparty representation applicable to registered intermediaries. It will then focus on provisions of Swiss law and the identification of the limits of dual representation in the light of the CAS jurisprudence and some relevant decisions of the Swiss Federal Tribunal.

A)   Regulatory framework:

Those agents acting in the market as registered intermediaries will necessarily be subjected to the specific football regulations enacted by FIFA and the national associations in which they operate. The answer as to the possibility to represent more than one party to a deal will therefore, be necessarily found in internal rules of each association. 

As opposed to the obsolete FIFA Players’ Agent Regulations[1], the FIFA Regulations on Working with Intermediaries (RWWI) allow intermediaries to represent more than one party in a transaction. Pursuant to the definition of intermediary[2] in combination with Article 8 RWWI, the only substantive requirement to intermediaries willing to act for multiple parties is that they obtain prior written consent and confirmation in writing on which party (i.e. the player and/or the club) will remunerate the services of the intermediary. The regulations, therefore, prioritize transparency over the question of who pays for the services of the intermediary. Consequently, it is not forbidden for an intermediary to represent and be paid by multiple parties to a transaction, as long as they all know and agree to it in advance.  

At a national level, most FIFA member associations[3] have followed the solution adopted in the RWWI and have transposed ad literam the right of intermediaries to multiparty representation as long as the transparency and information requirements are met (i.e. any potential conflict of interest is disclosed to the parties in advance, and subject to the prior written consent of the parties to the transaction).

However, there are still many agents that prefer to operate off-the-radar of organized football and its regulations. For these ‘rogue’ agents, the scenario is different and the question of the legality of multiparty representation will ultimately depend on the applicable law chosen by the parties[4]. Based on my personal experience, off-the-radar agents often end up acting through very rudimentary authorizations subject to the ordinary jurisdiction of the CAS. For this reason, I chose to dissect in this paper the limits of multiparty representation according to Swiss law, for based on article XY of the CAS Code of Sports Arbitration it represents the applicable law to ordinary disputes before the CAS when parties fail to make a particular choice of law.

The provisions of the contract of brokerage (“contrat de courtage”) in Articles 412-418 of the Swiss Code of Obligations (CO) are of relevance in this regard. The cornerstone provision concerning conflict of interest is found in Article 415 CO[5] whose English translation reads as follows:

“Where the broker acts in the interests of a third party in breach of the contract or procures a promise of remuneration from such party in circumstances tantamount to bad faith, he forfeits his right to a fee and to any reimbursement of expenses”.

The article differentiates between two non-cumulative hypothetical situations where the broker (i.e. agent) may be in a position of conflict of interests.

• First: the broker “Acts in the interest of a third party in breach of the contract”.
• Second: the broker “Procures a promise of remuneration from such party in bad faith”.

The first hypothesis establishes the prohibition of the broker to act in the interest of a third party if the obligations towards his client are breached. Accordingly, an agent representing a player is prevented from assisting the players’ contracting club to negotiate the terms of his employment contract, as he would be defending irreconcilable interests (i.e. the interest of the club to pay the lowest salary possible v/ the interest of the player to obtain the highest possible salary). Conversely, the same agent could be hired by the club in a different transaction without incurring a conflict of interest with the player. The condition triggering this first hypothesis will be thus, whether the agent acting for the third party is in breach of his contractual obligations.

It is important to note that the published English translation of the CO differs slightly from the original text of the code[6]. While the English translation refers to the breach of the “contract”, the original French version refers instead to a breach of the “obligations” which has obviously a broader scope, covering a wider range of situations than a contract might include.

This linguistic difference can be misleading as the obligations emanating from the CO may go beyond the obligations set forth in a simple authorization or a brokerage contract. By way of example, think of a very simple “Authorization” that does not explicitly prohibit the agent of the player to simultaneously act for the club. Sticking to literal text of the English translation, one could be tempted to believe that the agent was not acting in breach of the contract. However, the same situation seen under the lens of the legal obligations would imply that the agent could still be infringing the obligation of loyalty and trust stemming from the CO.

In view of the above, a correct evaluation of the first hypothesis will necessarily account for the legal obligations inherent to the brokerage contract, the scope of which might go beyond the obligations stipulated in the contract. Amongst these, the obligation of loyalty, the obligation to safeguard the interest of the client by not entering into conflictive situations, and the obligation of transparency and information.

The second hypothesis covers the prohibition in Swiss law of dual representation by procuring a promise of payment from third parties to the relationship broker/principal, if such a promise amounts to bad faith.

It needs to be underlined that this provision does not exclude dual payment, but subjects it to a certain limit, i.e. not incurring in bad faith. Delineating bad faith can turn out to be a difficult task as the concept itself has an inevitable component of subjectivity and, as opposed to good faith which is legally presumed (cf. Article 3 of the Swiss Civil Code), bad faith must always be proven by the party claiming it, who ultimately bears the burden of proof[7]. 

Applied to football agents, it can be safely assumed that an agent acting in good faith towards his client would necessarily act in a transparent way and inform his client that he is simultaneously acting for the other contracting party. Not disclosing such information in the context of negotiations can serve as indication of bad faith when combined with other elements. However, to prove the presence of bad faith will still require sufficient material evidence in order to discharge the burden of proof, since the simple negligence of the broker would not be sufficient to fall under the scope of the article.

The consequence for a broker (i.e. football agent) infringing the prohibition of dual representation in he hypotheses described in article 415 CO is the nullity of the contract and the forfeiture of the right to be remunerated, or the obligation to reimburse the amounts received if the infringement is ascertained after the realization of the contract and payment of the fee (“quod nullum est nullum producit effectum”).  

With the above premises in mind, a detailed look into the CAS and the Swiss Federal Tribunal jurisprudence regarding Article 415 CO will help identifying the scope of the legal obligations of a football agent towards his client (i.e. club and/or player), as well as the mechanisms used by the decision-making bodies to determine the existence of bad faith.

B)   Jurisprudence:

One of the very few CAS cases dealing with Article 415 CO in the context of football agents' relationships with clubs is the CAS award  2012/A/2988 PFC CSKA Sofia v. Loic Bensaid.

In short, the dispute opposed the flagship Bulgarian football club CSKA Sofia against a French football agent and revolved around the right of the latter to be remunerated by the club, considering he had acted simultaneously in representation of the player in the signature of the employment contract.

One of the many arguments used by the club in support of its alleged right not to pay the agent was based on Article 415 CO. The club asserted that the agent acted in violation of his obligations for having represented both parties. On the merits, the Sole Arbitrator concluded, nevertheless, that the agent had fulfilled the obligations of transparency and information as the Club was aware at all times that the agent also acted for the player and knew about the existence of the representation contract with the player[8]. The full knowledge and acceptance of the situation impeded the club to contend, at a later stage, the violation of the duty of loyalty and transparency.

Secondly, adhering to the grounds of the supporting FIFA decision, the Sole Arbitrator also remarked that the mandate between the Agent and the player did not contain any obligation to remunerate the services of the agent. The prohibition of agents to be remunerated twice for their services has been traditionally a key element in previous FIFA decisions where dual representation was at the center of the dispute[9]. This fact possibly led the Sole Arbitrator to also highlight this circumstance when assessing the behavior of the agent. However, the Sole Arbitrator further stated that, even if the mandate would have provided for a remuneration in favor of the agent (quod non), Article 415 CO would still not have been violated as the club failed to discharge the burden of proof as to the existence of bad faith, reinforcing with it that dual representation is only forbidden to the extent the agent acts in bad faith[10].

This final remark of the Sole Arbitrator is crucial as it evidences, in my view, that whether the player and the agent agreed upon a remuneration, remains in the end irrelevant for the evaluation of a possible violation of Article 415 CO. Indeed, pursuant to the CAS arbitrator’s interpretation of the article, the agent can be remunerated twice, as it is the disregard of the obligations inherent to the contract and in particular for the second hypothesis acting in bad faith that determines compliance with Article 415 CO.

To better illustrate the irrelevance of the “double remuneration” discussion, think for a moment of a brokerage contract where there is no explicit reference to the remuneration. Does such a lacuna in the contract imply that the brokerage is necessarily, pro bono? The answer is no, for as a general rule, mandates given in the context of professional relationships are presumed to be lucrative (see Art. 394(3) CO). That is precisely the case of football agents when they contract with players or clubs. This circumstance renders the reference to a remuneration in the contract a secondary element, or at least not an essential one. The former FIFA PAR (Ed. 2008[11]) followed this ratio legis when explicitly providing for a default remuneration of 3% of the players’ basic income where the parties cannot agree on the remuneration.

Beyond the specific CAS awards, some decisions of the Swiss Tribunal Federal help getting the full perspective on dual representation in the context of disputes subject to Swiss law. Although these do not refer to football agents, the similarities that exist with real estate and/or corporate brokers allow to derive important conclusions that can be applied to football agents.

A first decision worth mentioning is no. 4A_214/2014 of 15 December 2014. The case concerned a classic real estate intermediation where the agent agreed a commission from both the seller and the buyer involved in the transaction. The agent also failed to inform the seller of the existence of a better buying offer from a third potential buyer. In this context, after concluding the deal, the buyer refused to pay the agent, invoking Article 415 CO.

This case is important because it reveals the existence of two types of brokerage contracts under Swiss law (i.e. “courtage de negotiation” and the “courtage d’indication”). Whereas in a brokerage of negotiation the broker is entrusted by his client to negotiate the conditions of the transaction, in a brokerage of indication, the broker is simply called to indicate the possibility to conclude a transaction, with no negotiation duties involved. Furthermore, according to the doctrine cited in the decision, both types of contract are treated differently under Article 415 CO.

In casu, the Federal Tribunal qualified the contracts signed by the agent with the buyer and the seller as “courtage de negotiation” as he was entrusted with conducting all aspects related to the transaction. The agent was required to obtain the best possible conditions for his clients (e.g. the best buying and selling price respectively) and this circumstance directly generated an irremediable conflict of interest (i.e. the negotiation was either benefitting the financial interests of seller or the buyer) infringing the obligation of loyalty inherent to the brokerage contracts with the parties.

All in all, the Federal Tribunal rejected the appeal submitted by the real estate agent and confirmed the nullity of both contracts for violating Article 415 CO. The Federal Tribunal followed a strict interpretation of Article 415 CO according to which “no one can serve two masters” and thus, dual representation would only be possible (if so) in simple intermediations where no negotiation from the broker is required[12], in other words in “courtage d’indication”. In addition, in this case the agent also acted in bad faith for failing to disclose the existence of a more favorable offer to the detriment of the seller.

The main lesson that can be learnt from this decision is that Article 415 CO must be interpreted restrictively and that it has to be distinguished between those intermediation contracts that imply an active involvement of the agent (i.e. the agent is contractually required to negotiate the terms of a transaction for the player and/or the club) and those contracts of intermediation where the agent is called to simply indicate the possible opportunity for his client to conclude a deal with no other involvement in the transaction. In this last case, dual representation could be allowed for there would be no conflict of interests, and therefore, no infringement of the obligations under the brokerage contract. The specific contractual clauses are therefore crucial as they ultimately reveal the extent of the role assumed by the agent.

The second important decision by the SFT is more recent, no. 4A_529/2015 of 4 March 2016. The factual background of this dispute is extremely complex. In brief, the case revolved around the selling and buying of the shares of a company exploiting a luxurious Hotel located in Switzerland. The seller and the broker entered into a negotiation brokerage contract whereby the latter was entrusted to find a buyer of the company against the payment of remuneration. The principal had to agree with the final potential buyer. In the end, it was proved that the broker misled the principal about the true identity of the final buyer (to whom the principal expressly refused to sell), with whom the broker had also agreed remuneration. On the basis of these facts, the principal refused to pay the broker. 

The Federal Tribunal confirmed again that Article 415 CO is always interpreted strictly, and considered that by allowing the banned buyer to indirectly acquire the company, the broker acted in the interest of a third party against the obligation of loyalty. What is most significant about this decision is that the court delimitates very clearly the scope of the obligation of loyalty. It is described as a double-edged sword, implying on the one side: a positive obligation consisting of actively safeguarding and defending the interest of the principal; and on the other side: a negative obligation, consisting of abstaining from any conduct that could harm the interests of the client.  

In particular, the fact that the principal had not objected to a previous e-mail sent by the broker where he expressly indicated that the potential buyer was “C or any company indicated by it” was also irrelevant for the principal could not expect in ‘good faith’ that the buyer would make use of this substitution prerogative in favor of the real buyer. The arguments of the broker according to which it was not important for the principal to know who the buyer was and that he suffered no damage, were also dismissed.   

Finally, the argument of the broker according to which the remuneration to be received from the buyer was agreed after the transaction took place was also irrelevant in the eyes of the court.

With these cases in mind, when applying the holding of the SFT above to football agents' professional relationships, it follows that the scope of the obligation of loyalty will be significantly wider for football agents entrusted with negotiations than for agents simply tasked with identifying possible opportunities to close a deal.

Likewise, in order to determine the existence of a violation of the obligations assumed by the agent, it will not be enough to demonstrate that there has been no threat to the interests of the client or that the agent has not actively engaged in a conduct against those interests. Indeed, a simple passive conduct with the potential of jeopardizing the interests of the principal, such as failing to disclose relevant information, can be sufficient to violate the obligation of loyalty and deprive the agent from the right to be remunerated.

To this effect, the correct identification of the interest pursued by the client will ultimately determine the infringement by the agent of his obligations under the representation contract. In the end, the agent will only violate his obligation of loyalty as long as his behavior damages the interests of his client. These interests will vary depending on whether the principal is a football club or a player. If a club is trying to transfer or recruit a player, the interests will in most cases be of a financial nature. If instead, the principal is a football player terminating or signing a contract with a club, he might have non-economic interests (e.g. willing to play in a different championship, lack of integration of the family in the country etc.). Furthermore, the moment in which the remuneration is agreed is not relevant to establish the violation of the obligation of loyalty.

In conclusion, the contract of representation and its clauses in combination with the particular circumstances of each case will be fundamental to establish compliance with Article 415 CO when multiple representation takes place.   Football agents pretending to be remunerated by both contracting parties simultaneously without risking to violate their obligations must either enter into simple brokerage contracts with no negotiation attributions, or, when acting through a negotiation brokerage, always inform all parties in complete transparency. 

[1] See Article 19.8 FIFA PAR.

[2] “Definition of an intermediary

A natural or legal person who, for a fee or free of charge, represents players and/or clubs in negotiations with a view to concluding an employment contract or represents clubs in negotiations with a view to concluding a transfer agreement.” [Emphasis added]

[3] Only the FFF (France), the RFU (RUSSIA), the BFU (Bulgaria) the JFA (Japan) have explicitly adopted stricter rules prohibiting any conflict of interest. See Comparative Table of “The FIFA Regulations on Working with Intermediaries Implementation at a national level” (Ed. Michele Colucci).

[4] E.g. Arbitrage TAS 2007/O/1310 Bruno Heiderscheid c. Franck Ribéry.

[5] See article R45 of the CAS Code (ed. 2017).

[6] Art. 415. III. Déchéance:

“Le courtier perd son droit au salaire et au remboursement de ses dépenses, s'il agit dans l'intérêt du tiers contractant au mépris de ses obligations, ou s'il se fait promettre par lui une rémunération dans des circonstances où les règles de la bonne foi s'y opposaient.”

https://www.admin.ch/opc/fr/classified-compilation/19110009/index.html

[7] See. Decision of the SFT 131 III 511 para. 3.2.2 of  http://relevancy.bger.ch/php/clir/http/index.php?highlight_docid=atf%3A%2F%2F131-III-511%3Ade&lang=de&type=show_document

[8] See para. 118.

[9] E.g. Decision of the Single Judge of the PSC of 12 January 2012: “12. In view of the above, the Single Judge formed the view that, although the Claimant appears to have represented the Respondent and the player in the same transaction, the documentary evidence contained in the file clearly demonstrates that the Claimant could not have possibly been remunerated twice for his services. Consequently, and in accordance with the general principles of bona fide and pacta sunt servanda the Single Judge decided that the Respondent must fulfill the obligation it voluntarily entered into with the Claimant by means of the representation agreement concluded between the parties, and therefore, the Respondent must pay the Claimant for the services he rendered in connection with the transfer of the player to the Respondent.”

[10] See also para. 118.

[11] See i.c. article 20 para. 4 FIFA PAR (ed. 2008).

[12] See para. 1.1.3 of the SFT decision. An example of a courtage d’indication would be the brokerage of insurances, where the broker, acting for the policy-holder, is paid instead, by the insurance company.

Introduction: FIFA’s TPO ban and its compatibility with EU competition law.
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 5: Why FIFA's TPO ban is justified.

Editor's note: In this fourth part of our blog symposium on FIFA's TPO ban Daniel Geey shares his 'UK perspective' on the ban. The English Premier League being one of the first leagues to have outlawed TPO in 2010, Daniel will outline the regulatory steps taken to do so and critically assess them. Daniel is an associate in Field Fisher Waterhouse LLP's Competition and EU Regulatory Law Group. As well as being a famous 'football law' twitterer, he has also published numerous articles and blogs on the subject.

What is Third Party Investment?
In brief Third Party Investment (TPI) 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 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.

Why did the Premier League ban the practice?
The Premier League, Football League, Football Association, the Polish and French leagues have all brought in TPI bans. The original ban in the Premier League came as a result of the Tévez affair where a third party owner had the contractual right to force West Ham to sell the player if a suitable bid was received. This was against the 'material influence' regulations that were in place at the time. Previously, there was no express clause prohibiting TPI; only the act of influencing a club’s policies or performance was forbidden. Tévez’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 Premier League rule as it meant that outside parties had material influence over the decision making of West Ham.
A common misconception throughout and after the Tévez case was that any third party player owner would have been in breach of the Premier League rules. This was not the case. It was the clause giving the owners of Tévez influence over West Ham which incurred the Premier League’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 Premier League rule Rule U18 and fined £5.5 million by the Premier League.
Subsequently, the Premier League significantly strengthened its regulations to prohibit any type of TPI. Other leagues followed as a result. The Premier League decided that from the beginning of the 2008/9 season an absolute ban on TPI was required. A 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 here”.

There are also Football League and Football Association rules prohibiting TPI but the below analysis takes the Premier League rules by way of example. Current Premier League Rules U39-40 (which at the time were rules L34-35) govern the actual prohibition and buy-out mechanism.
Premier League Rule U39 is the exemption rule which covers scenarios where clubs are allowed to receive money or incur a liability, for example, for the player registration or transfer of a player registration. Such instances include payments or receipts of transfer fees, loan fees and sell-on fees, payments for image rights contracts, payments for agency/intermediary work and payment of training compensation and solidarity contributions as set out in the FIFA regulations.
Premier League rule U40 is the mechanism to enable a third party owned player to transfer to a Premier League club. This can occur so long as the Premier League 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. Any such payment which is not dependent on the happening of a contingent event may be made either in one lump sum or in instalments provided that all such instalments 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".
This ensures that any future transfer sums, should the player be subsequently sold, would be kept by the selling Premier League club and eliminates any third party element to any future sale transaction. Interestingly, the Premier League club who 'buys-out' the third party interest may still be paying the third party investor through installments during the period that the player is playing for his new Premier League club. Whilst the player is owned by the club and no third party interest is possible, there is still the eventuality that a club could default on the installment plan and then the third party investor could sue based on the buy-out obligations in the contract. It would be unlikely yet is unclear from the regulations whether the investment stake could be transferred back to third party investor if default occurred or what other alternative recourse that an investor may have.
Nonetheless, any player registered to play in the Premier League cannot be third party owned by a TPI company. It means that the buying Premier League club has to satisfy the football authorities that all other economic interests have been extinguished. This occurred over the summer when TPI players Markovic and Mangala were transferred to Liverpool and Manchester City respectively. Premier League clubs undertake to the football authorities that it is the only entity that owns the player’s economic rights and only then can the transfer can be completed. It is likely that Falcao had a TPI contract whilst he was at Porto but as the French league also prohibits TPI, when Monaco bought him, there may well have been a requirement in place to extinguish any third party rights. As such, when he was then loaned to Manchester United this summer, his TPI rights would certainly have been extinguished to ensure there were no major complications with his Premier League registration.

Why is it such a problem?
As the Premier League spokesman explained above, their major concerns related to integrity, youth player development and money flowing out of the game. An internal FIFA report recently concluded that TPI trapped clubs in a “vicious cycle of debt and dependence” and “posed risks to players and to the integrity of the game”.
The main concerns about TPI include:
1. Conflicts of interests can potentially occur between investors, club owners, agents and coaches. For example, what if the owner of Club A also owns an economic stake in Player B playing against his club? What if an agent of a manager who buys TPI players is also an advisor of a TPI fund? Regardless of any actual conflict, there is certainly a perceived conflict which may damage the image of the game, public confidence in integrity of competitions and even lead to potential match-fixing or insider trading concerns. Questions continue to be asked over the transparency of the TPI funds and what role they have, if any, in influencing clubs.
2. Clubs become reliant on such funding which in turn leads to dependence on external owners to continue to assist in such financing arrangements. As such, TPI encourages short-term profit making with economic owners looking to the club to sell its players to realise their ‘asset’ ahead of purely on-field sporting concerns. The consequence is that the rapid turnover of TPI players at certain clubs means fans become less loyal to the players who know they will be transferred when the right offer is received. Clubs are seen as a short term ‘speculation tools’ with the result that money leaves the football family.

Why is the practice necessary?
To counter the arguments set out above, the following points demonstrate are why TPI is so vital for many clubs around the world.
1. A growing number of clubs cannot compete with the larger commercial and broadcasting deals of the bigger European leagues. Clubs in so-called smaller European leagues, for example, need to leverage their assets and find innovative ways to find competitive advantage for playing against teams in the Champions League.
2. Purchasing players is an inherently risky business. Clubs with less money to spend would therefore usually be more risk-averse when having to invest heavily in transfers. One way of limiting such risk, is to share the financial burden. Therefore contracts are entered into between economic owners and clubs to either help the club with the purchase price for a talented individual or free up capital and ‘monetise’ a current players value whilst he still remains at the club. In either event, the club benefits from external finance that cushions the club’s position if the player is not a world beater. Both the club and the fund then benefit if the player is a success through a large transfer fee received that is shared according to the contract.
3. There are various ways to alleviate conflict of interest, integrity and transparency issues. Instead of banning TPI, many believe regulation through a transparent approach to TPI by disclosing a register of interests would alleviate a number of concerns as well as making TPI contracts available to FIFA/UEFA to ensure ‘material influence’ issues are correctly dealt with in the TPI contracts.
With FIFA regulating to ban players who are third party owned, many are questioning whether regulation of the practice rather than an outright ban would be preferable. In addition, some believe that it is not a ban but total transparency of the arrangements that is required. 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, for example, those who own the economic rights of a player and those who also own a stake in a football club. With FIFA’s regulation governing the TPI prohibition, UEFA and FIFPro have backed such a position too.

What is the current state of play?
The current FIFA Rule 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.”
This was not a specific ban on TPI but a ban on a third party owner from influencing a club’s employment or transfer related matters.
Throughout 2014, UEFA and FIFA made a number of public statements concerning their aim to outlaw TPI. In September FIFA’s President Sepp Blatter explained that:
“We took a firm decision that [TPI] should be banned but it cannot be banned immediately there will be a transitional period”.
FIFA then set up a working group to address the topic of TPI. At the time, in their press release there was no explicit mention of a ban but “to analyse all possible regulatory options in relation to this complex practice and to make preliminary suggestions”. It was to the surprise of many that in late December, whilst the working group was still debating several possibilities that FIFA announced that they were to ban TPI globally. It is important to set out the exact wording of the FIFA circular to grasp the wide scope of the prohibition. Specifically, a third party is defined as "a party other than the two clubs transferring a player from one to the other, or any previous club, with which the player has been registered".
"Article 18ter Third-party ownership of players' economic rights
1. No club or player shall enter into an agreement with a third party whereby a third party is being entitled to participate, either in full or in part, in compensation payable in relation to the future transfer of a player from one club to another, or is being assigned any rights in relation to a future transfer or transfer compensation.
2. The interdiction as per paragraph 1 comes into force on 1 May 2015.
3. Agreements covered by paragraph 1 which predate 1 May 2015 may continue to be in place until their contractual expiration. However, their duration may not be extended.
4. The validity of any agreement covered by paragraph 1 signed between 1 January 2015 and 30 April 2015 may not have a contractual duration of more than 1 year beyond the effective date.
5. By the end of April 2015, all existing agreements covered by paragraph 1 need to be recorded within the Transfer Matching System (TMS). All clubs that have signed such agreements are required to upload them in their entirety, including possible annexes or amendments, in TMS, specifying the details of the third party concerned, the full name of the player as well as the duration of the agreement.
6. The FIFA Disciplinary Committee may impose disciplinary measures on clubs or players that do not observe the obligations set out in this article".
Article 18ter imposes a blanket global ban for TPI specifically forbidding any entity that is not a club from being entitled to future economic rights and/or transfer compensation. Whilst it has been explicitly considered that the prohibition only comes into force in May 2015, agreements entered into from 1 January can only be one year in length. This effectively reduces the possibility of new TPI contracts being entered into. Interestingly, Sporting Lisbon for example, recently announced that they had bought back a number of economic rights contracts from third party investors. They presumably considered that their position may well have been strengthened as a result of the new regulations.
Nonetheless, existing third party contracts will continue until expiry meaning that some players may still be subject to third party investment contracts for a number of seasons to come.  Such contracts will however be monitored through FIFA's TMS system as any club will be required to disclose a valid third party contract due to the mandatory disclosure obligations set out in paragraph 5 above. Such obligations are required to be adhered to in a relatively short time period (by the end of April 2015). The result of such disclosure may be that the contracts submitted to FIFA may themselves breach Article 18bis, for example, regarding TPI material influence clauses. Clubs will be faced with the obligation to provide all continuing TPI contracts to FIFA and will be subject to disciplinary measures if they do not. There is now an added compliance factor for clubs to adhere to under the new regulations and a variety of disciplinary cases against clubs should not be ruled out.
Lastly, the Portuguese and Spanish leagues are reported to have made a formal complaint to the European Commission, presumably assessing that Article 18ter is contrary to the free movement and competition rules. They will no doubt be arguing that the absolute ban that FIFA has imposed, is disproportionate i.e. that there are less restrictive ways of achieving the same objective.
Many have suggested that regulating TPI through transparency and disclosure obligations is a better alternative than an outright ban. It will be for the European Commission to decide whether to take the complaint forward and make a more substantive assessment or to reject the complaint. It should be noted that when the Premier League banned TPI, although there were some that argued that the prohibition breached competition law, no one actually came forward to challenge the regulation. A mere two months after FIFA announced the ban did the two Iberian associations challenge Article 18ter. That suggests, as many believe, that TPI has played an integral part in the way that clubs in those leagues use finance to 'de-risk' transfers and compete against clubs in associations with higher revenue generating capabilities. TPI has been an essential financing option.

Conclusion

Whilst the Premier League, as a reaction to the Tévez affair, made a strong policy decision to ban the practice in its league, a more fundamental shift is occurring on the global stage. Football specifically is very much in the European Commission's view with current Intermediary and TPI complaints and a previous Financial Fair Play complaint that was rejected but is now before the Belgian national courts. The TPI complaint will not be a quick process and in the meantime, unless interim relief is sought, existing TPI contracts will soon have to be lodged with FIFA and from 1 May, no new contracts can be entered into. Whether the practice is banned for good is now in the hands of the European Commission