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Blog Symposium: The Impact of the TPO Ban on South American Football. By Ariel N. Reck

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 4: Third Party Investment from a UK Perspective.
Day 5: Why FIFA's TPO ban is justified.

Editor’s note: Ariel N. Reck is an Argentine lawyer specialized in the football industry. He is a guest professor at ISDE’s Global Executive Master in International Sports Law, at the FIFA CIES Sports law & Management course (Universidad Católica Argentina) and the Universidad Austral Sports Law diploma (Argentina) among other prestigious courses. He is a regular conference speaker and author in the field of sports law.

Being an Argentine lawyer, Ariel will focus on the impact FIFA’s TPO ban will have (and is already having) on South American football.


Before discussing the impact of the TPO ban, it is important to highlight that the purposes of TPO in South America are somehow different than in Europe. Here “economic rights” (that’s how we call it) are basically assigned in four different moments and/or situations:

First, when a youth player is first registered for the club at amateur level. 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 practice widens the club’s scouting net and attracts promising young players 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 / intermediary) 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 dependent of many factors (the player is not even a professional yet).

A second stage in which rights are assigned to third parties is when the club needs money to cover other obligations, unrelated to that particular 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 to balance its books and provides an alternative source of credit. In this case there’s no “standard” percentage, it depends on the money the investor is willing to pay, the potential value of the player and the needs of the club. The influence, or the ability to “force” a transfer of the player, of the third party is also subject to each particular agreement, with a direct correlation between percentage owned and influence.[1]

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. Consequently, the new club is used as showcase only. Under this situation, the player is usually hired for a single season with an option for the purchase of a percentage in favor of the new club, triggering –if executed- a long term employment contract. Sometimes, even if the option is not executed the TP owner 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. Under these circumstances, the influence of the TP owner is clearly strong, irrespective of how the relevant documents are drafted. 

Clubs could also turn to selling economic rights to third parties in order to cancel debts or to seduce a player for a contractual renewal. A club accepts to assign a share to the player against previous salary debts or in order to convince him to renew the contract without a mayor salary raise. If the club cannot pay the amounts wanted by the player to renew, it offers to assign the player a percentage of his own transfer. In most South American countries, the law or a collective bargaining agreement grants players a minimum percentage of the proceeds of his own transfer (between 10% and 20% depending the country)[2], but this additional assignment is heavily used to satisfy a player’s demands at a renewal of the employment contract.

With so many purposes, and taking into account the financial needs of clubs, the lack of alternative sources of financing and the number of South American players transferred each year, it is obvious that the use of TPO in South America is definitively widespread. Therefore, the impact of the ban will be certainly important, especially in the first years when clubs have not yet found alternative forms of financing.  

The impact of the FIFA Ban

The situation is aggravated by the short transitional period established by FIFA. While previous statements of FIFA officials suggested a period of 3 to 4 seasons[3], the FIFA Circular letter 1264 reduced it to just four months.

It is hard to predict the effectiveness of the prohibition. The current scenario shows many parties looking for forms or mechanisms to circumvent the prohibition, while others are trying to challenge it before the courts. If we consider the experience of art.18bis of the FIFA Regulations on the Status and Transfer of Players (RSTP) (an article included in the FIFA rules right after the Tévez affair as an attempt to protect the independence of clubs in its transfers decisions limiting the power to force a transfer, third parties usually had in TPO agreements), the forecast for the effectiveness of art.18ter is not good. But, as we will show, in the case of art.18ter there’s a clear new impulse and moreover, UEFA stands strongly behind the prohibition. Therefore, in my opinion, we can expect a different outcome. I think the ban will be especially effective in cases of players involved in transfers from South America to the European leagues. Transfers to Portugal, Spain or Greece (countries that relied on TPO in the recent past) will be heavily scrutinized. Nonetheless, it is unclear whether at domestic level, especially in South America, the practice will be banned with similar efficiency or if it will continue secretly with limited or no control by the national Associations. Some federations already implemented their own form of TPO ban (even when art.18ter RSTP is mandatory at national level). Brazil was one of the pioneers[4] and in Argentina, the fiscal authorities, passed a regulation banning TPO agreements.[5]

As to the ways to try to circumvent the TPO ban, I think we will see a raise in the use of “bridge transfers”, which is basically the registration of a player in a club just to cover the TPO with a federative “shell”. With this maneuver, the TP owner artificially enjoys all the benefits of being a club, like retaining a percentage of the player’s future transfer or controlling the player’s career by signing a long term contract with a huge buyout clause loaning the player to different clubs each year.[6] According to the FIFA regulations any club that had ever registered the player is not a “third party” (see definition 14[7]). There is no further requirement, no “sporting interest” in the registration or playing time, the simple act of registration allows a club to have a share of the player’s future transfers. To this regard, while it is true that FIFA already sanctioned clubs for “bridge transfers”[8], it was only an isolated case (still pending at CAS) and we can see examples of patent “bridge transfers” in every transfer window and in the top-5 leagues, not just in minor competitions. 

Another way to deceive TPO is to assign a share to the player and a further (hidden) assignment from the player to a third party. At this point, a big question arises: is the player a third party according to the FIFA regulations? Can a club assign a percentage of the player’s future transfers to the player himself?
As said, the opportunity for a player to profit from his own transfer is a labour right in many South American countries. While South American employment laws, statutes and/or CBAs tend to fix a minimum percentage of the transfer fee for the player, there is no cap and in theory a player can receive up to 100% of the transfer price. 

The FIFA regulations only exclude the two clubs involved in a transfer and the previous clubs where the player was registered from being a third party. Hence, in principle, the player seems to be a “third party” too.

But art.18ter provides that no club or player shall enter into an agreement with a third party, based on the wording of this provision it is clear that a player should not be considered a “third party”. Moreover, the player is a necessary party in every transfer agreement and he is also subject to sanctions if he violates the aforementioned FIFA prohibition on TPO according to paragraph 6 of art.18ter.

In addition, the fact that in many South American countries the player’s entitlement to a share of his own transfer is a labour right, a systematic interpretation of art.18ter makes it plausible to sustain the validity of the assignment of a percentage of the transfer fee to the player. In that regard, it is important to recall that FIFA’s prohibition has in principle effect only at federative level. This means that at civil level, any assignment will still be valid and enforceable.

Furthermore, the jurisprudence of the majority of the South American countries holds that federative rules have only effect within the framework of the federation and cannot contradict the civil legislation, of a higher hierarchy.

Argentina is an exception in South America. Ordinary Argentine courts settled that Federative rules are the “lex specialis” in relation to the general rules of the civil code. Therefore, if the regulations of FIFA and/or the Argentine Federation prohibit TPO, any contract in that sense will be null and void, even when under our civil code the assignment of a future transfer is perfectly valid.

Saved for this exception, the result of this is that FIFA’s remedy might be worse than the disease. Since FIFA can only sanction its own members (meaning clubs and players), if a club or a player enters into a TPO agreement, such player or club might be subject to disciplinary sanctions and the contract will still be valid and enforceable.

It is not unthinkable that a player or a club surrendering to the need of funds and signing a TPO agreement despite FIFA’s ban, thereby placing himself in a difficult position. The counterpart (the third party) might force the compliance of the agreement by threatening with reporting the deal to FIFA. In the end, the ban will have the opposite effect to what was sought: Players and clubs will be more vulnerable in their relationship with the third-party than before the introduction of art.18ter RSTP.

As said, it is hard to think that clubs will immediately find an alternative source of funding or will be able to live within their own means. Therefore, it is probable that clubs will try to circumvent or challenge the rule.

Again, the final consequences are hard to predict, but will of an important magnitude. TPO is not just a financing method ‎to bring players to clubs, sharing the risk with the investor, it is also a way to get cash-flow without the need to transfer the player to another club. Furthermore, it is an essential part of the scouting method that widens the club’s network, attracts young talents to the clubs and is also a way to cancel debts towards the player or to achieve a renewal of his contract.  


To conclude, I don’t think the TPO ban is the best way to achieve the –alleged- objectives declared by FIFA. Obligation to disclose, controlled payments (via TMS for example) and other regulatory approaches would have been better options. The pressure from an investor could have been diluted by setting a limit (maximum percentage or maximum number of players under TPO) and the reality is that the pressure to “force” a transfer comes in general from other actors, mainly the player and/or his agent. 

Now the new “pushers” will be the European clubs. How will it be possible for an Argentine club to refuse a -say- € 5 million transfer for a 19 year old player even if the club knows his value will double or triple if he stays at the club? With the TPO ban the club cannot rely on an investor paying, for example, € 3 million for 50% of the player's economic rights to “hold on” a few years. It is worth remembering that Chelsea tried to seal the transfer of Neymar for € 20 million when he was 18. However, Santos managed to reject such offer relying on TPO.

South American players account already for approximately 25% of all the international transfers worldwide[9], after the TPO ban this percentage will certainly raise.

As to the “morals” arguments, recently reiterated by UEFA’s president Platini who said TPO is “a form of slavery”[10], I believe they are just a fallacy. Every transfer needs the player’s consent and the investor owns a share of the profit of a potential future transfer, not a part of the human being. Otherwise, for clubs, owning 100% of a human being would be equally immoral.

Moreover, other types of assignments, like third party litigation funding, are legal in many countries, including the UK and France. The similarities and analogies than can be made with TPO are immense and nobody is claiming third party litigation funding is a way of “owning a person’s justice”.

With the introduction of the Financial Fair Play Regulations European clubs and federations are looking into ways to reduce expenditures and also scrutinizing what the “neighbors” are doing. Clubs want cheaper players and clubs from countries were TPO was long ago banned had a handicap for UEFA spots against clubs from countries were TPO was allowed and relied on TPO to acquire players.[11] The TPO ban serves both objectives: A reduction in the player’s transfer price and an end to the Spanish and Portuguese transfer “tactics” that relied heavily on TPO. 

Also, the inclusion or exclusion of the player in the definition of “third party” triggers conflictive issues. In most South American countries national labour laws or CBAs allow the player to obtain a percentage of the proceeds of his own transfer. If FIFA tries to extend the definition of “third party” to include players, this might certainly prevent a complete implementation of FIFA´s TPO ban in South America. 

As a conclusion I can say that, for South American clubs, the TPO ban just changed the “predator” in the transfer market. Our clubs can now stand stronger against investors, but as counter-effect they are in a much weaker position against European clubs‎.

[1] For a discussion on “buy-sell” clauses (the core of any TPO agreement) and whether they constitute prohibited influence see my opinion: Do “Buy-Sell” Clauses In Third Party Ownership Agreements Constitute Undue Influence Under FIFA’s Art 18bis?

[2] Brazil, Peru and Bolivia are exceptions to this rule; no such right is established in their regulations. In Argentina the minimum percentage is 15% according to art.8 of the CBA 557/2009 , in Paraguay 20% for international transfers, art.12 law 5322 from 29th  October 2014 , in Uruguay 20%, art.34 of the Professional Footballers Statute , in Ecuador 15%, Chile 10% law 20.178 , and Colombia 8% art.14 Colombian Players Status Regulations



[5] General Resolution 3740/2015

[6] For more on “Bridge Tranfers”

[7] Third party: 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.”


[9] Source: FIFA TMS Global Transfer Market Report 2015, page 78.




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