By Danielle Sharkey and Oliver Kichenside, of DLA Piper LLP
Following a meeting of the FIFA Executive Committee on 26 September 2014, FIFA President Sepp Blatter has confirmed that the controversial practice of third-party ownership of players will be banned in future.
Third-party ownership in the football industry is where a football club does not own 100% of the economic value of one of its players. There are various ways in which such an agreement can be constructed but, typically, a company or an individual investor will provide a football club or an individual player with finance in return for a percentage of a player’s economic value (usually capitalised by way of a transfer fee).
Third-party ownership has caused controversy in recent years and, as a result, countries such as England, France and Poland have already introduced regulations prohibiting the practice.
Third-party ownership famously hit the headlines in England when a dispute arose concerning Carlos Tevez when he was playing for West Ham United. More recently, Manchester City’s £32 million purchase of Eliaquim Mangala from Porto was one of four completed major transfer deals this summer in England involving third-party ownership, although English clubs buying a third-party owned player are required to buy out any contractual interest before signing a player subject to third-party ownership.
Whilst FIFA have condemned the practice of third-party ownership due to the negative effect that it has on the integrity and transparency of football, they have also recognised that the practice cannot be outlawed immediately due to its prevalence in many countries including Brazil, Argentina, Portugal and many Eastern European nations. FIFA have said that the ban will therefore only come into place “following a transitional period”. It is still to be decided how long that transitional period will be, but a Working Group has been set up by FIFA to establish the length of that period and will submit a proposal to the next FIFA Executive Committee meeting in December.
The article originally appeared at: http://blogs.dlapiper.com/mediaandsport/fifa-to-ban-third-party-ownership-of-players/
