R.I.P.

TPO: A GUIDE TO FIFAS BAN ON THIRD PARTY OWNERSHIP

ByRichardBerry(/item/richardberry2)publishedon23January2015

(/articles/item/riptpoaguidetofifasbanonthirdpartyownership)Print(/articles/item/riptpoaguide
tofifasbanonthirdpartyownership?tmpl=component&print=1)

Born:c.1990s(SomewhereindeepestSouthAmerica).

Died:22December2014(FIFAHeadquarters,Zurich).

Stopalltheclocks,cutoffthetelephone,
Preventthedogfrombarkingwithajuicybone,
Silencethepianosandwithmuffleddrum
Bringoutthecoffin,letthemournerscome.

Auden,FuneralBlues

22 December 2014. The day that FIFA finally killed third party ownership
(http://www.fifa.com/mm/document/affederation/administration/02/49/57/42/tpocircular1464_en_neutral.pdf).
1

Three months earlier, at its meeting on 25 and 26 September 2014, the FIFA Executive Committee
(http://www.fifa.com/aboutfifa/organisation/bodies/excoandemergency/)2 passed a decision of general
principle(http://m.fifa.com/aboutfifa/news/newsid=2444471.html)3 outlining its plan to ban the ownership of
players economic rights by third parties (/blog/danielgeeysblog/item/mytoptentipstounderstandthird
partyinvestmentinfootballplayers?
highlight=WyJ0aGlyZCIsIid0aGlyZCIsInBhcnR5IiwicGFydHkncyIsInBhcnR5JyIsInBhcnR5JywiLCIncGFydHkn
Iiwib3duZXJzaGlwIiwiJ293bmVyc2hpcCciLCJ0aGlyZCBwYXJ0eSIsInRoaXJkIHBhcnR5IG93bmVyc2hpcCIsIn
BhcnR5IG93bmVyc2hpcCJd)(TPO).4
In the period since, a dedicated working group
(http://www.fifa.com/aboutfifa/organisation/footballgovernance/news/newsid=2435566/) laboured to draft
technicalregulationstoimplementtheban.5

On 18 and 19 December, the FIFA Executive Committee approved new provisions6 to be included in the
Regulations on the Status and Transfer of Players
(http://www.fifa.com/mm/document/affederation/administration/01/95/83/85/regulationsstatusandtransfer_20
14_e_neutral.pdf).7

TPO has been a hot and evocative topic (/articles/regulationagovernance/item/thirdpartyownershipto

banornottoban?
highlight=WyJ0aGlyZCIsIid0aGlyZCIsInBhcnR5IiwicGFydHkncyIsInBhcnR5JyIsInBhcnR5JywiLCIncGFydHkn
Iiwib3duZXJzaGlwIiwiJ293bmVyc2hpcCciLCJ0aGlyZCBwYXJ0eSIsInRoaXJkIHBhcnR5IG93bmVyc2hpcCIsIn
BhcnR5IG93bmVyc2hpcCJd) for some time.8 It is now almost nine years since Carlos Tevez and Javier
Mascherano brought their South American flair to the Premier League leading to the much publicised
disputewhentheyhelpedtokeepWestHaminthePremierLeagueandthesubsequentkneejerkbanon
TPO (http://www.theguardian.com/football/2014/jan/30/whypremierleaguebannedthirdpartyownership
players)bythePremierLeagueandtheEnglishFA.9

Described in characteristically understated style by PFA Chief Gordon Taylor as like trading in human
beings (http://www.theguardian.com/sport/2006/nov/26/football.features)10 and by Premier league Chief
RichardScudamoreascomparabletoindenturedslavery,11TPOisalreadyoutlawedinEngland,France
andPoland.Therestoftheworldhasnowbeenorderedtofollowsuit.

THE NEW REGULATIONS

THE BAN
NewArticle18ter(1)providesthat:

Nocluborplayershallenterintoanagreementwithathirdpartywherebyathirdpartyisbeingentitled
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
transfercompensation.12

Athirdpartyisdefinedasanypartyotherthanthetwoclubstransferringaplayerfromonetoanother,or
anypreviousclub,withwhichtheplayerhasbeenregistered.

TRANSITIONAL PROVISIONS

Agreements covered by 18ter (1) that predate 1 May 2015 may continue until their contractual expiration,
thoughtheirdurationmaynotbeextended.13

NeweconomicrightsagreementsmaycontinuetobeenteredintountiltheendofApril2015however,they
maynothaveacontractualdurationofmorethanoneyear.14

REGISTRATION REQUIREMENT
NewArticle18ter(5)providesthatallexistingagreementsmustberecordedwithinFIFAsTMSsystemby
the end of April 2015. This includes details of the third party involved, the name of the player and the
durationoftheagreement.15

BREACH
NewArticle18ter(6)providesthatFIFAsdisciplinarycommitteemayimposedisciplinarymeasuresonclubs
andplayersthatfailtoobservethenewobligationsonTPO.16

NATIONAL EFFECT

Thenewregulationisincludedinthelistofprovisionsthatarebindingatnationallevelandmustbeincluded
inregulationsproducedbynationalfootballassociations.17

THE CONCEQUENCES

TRANSITIONAL PROVISIONS
The transitional provisions provide that existing agreements that predate 1 May 2015 may continue until
their contractual expiry. However, many existing economic rights agreements (at least those that are well
drafted)willhavenofixedexpirydate.Itismoreusualforanagreementtoremaininforceuntilaplayeris
soldatwhichpointthethirdpartyinterestwillusuallybeextinguishedandtheagreementbetweenselling
clubandinvestorwillcometoanend.Thetimebetweeninitialinvestmentandtheendofaneconomicrights
agreement could be the space between two transfer windows or several years, depending on the
performance of a player. It is not clear whether FIFA has considered this or not, but on the face of it the
regulationsappeartopermitanyagreemententeredintopriorto1January2015torunitsnaturalcourse
untilthecontractexpires.

Therequirementthatanyneweconomicrightsagreementsenteredintobetween1January2015andthe
end of April must have duration of no more than one year will render the majority of such agreements
unworkableandisunlikelytobeheavilyapplied.ItissimplytoodifficulttoputadefinitiveenddateonaTPO
arrangement.Theenddateis,muchlikeanyotherinvestment,generallydeterminedbytheoptimumdate
for the club (and the associated investor) to cash out. Any new investment would effectively have to be
realisedinthenexttwotransferwindowswhichisclearlyaveryshorttimeframe.

EFFECT ON THE MARKET

Theeffectofthebanontheglobaltransfermarketishardtopredict.HereinEngland,whereabanonTPO
hasbeeninforceforsomeyears,itiseasytoassumethatthenewregulationswillhavelittleornoimpact.

However,theEnglishmarketisdependentuponasteadystreamofforeignimportsthathavecuttheirteeth
inSpain,PortugalandotherleaguesaroundEurope.ManyoftheseplayersinitiallyarrivedinEuropefrom
SouthAmericawiththeassistanceofthirdpartyinvestment(thinkSergioAgueroandDiegoCosta).Without
TPO,wemayneverhaveseentheminthePremierLeague.

UKImmigrationrulesmeanthatitisdifficultforEnglishteamstosignnonestablishedinternationalplayers
(these rules are currently under review with a view to making them even tighter). For major non EU
footballingpowerslikeBrazilandArgentina,thismeansthattherearenumerousplayersofextremelyhigh
quality who are unable to play in England because they do not meet the international appearances
requirement.Previously,suchplayerswereabletomoveinitiallytootherEuropeanleagues(primarilySpain
and Portugal) in order to develop their skills and market themselves to bigger clubs (often obtaining
citizenship in those countries in the process). Many of these deals were accomplished through TPO that
allowedsmallerPortugueseandSpanishclubstoaffordtransfers(/articles/employmentlaw/item/thirdparty
ownershipabrazilianperspective?
highlight=WyJ0aGlyZCIsIid0aGlyZCIsInBhcnR5IiwicGFydHkncyIsInBhcnR5JyIsInBhcnR5JywiLCIncGFydHkn
Iiwib3duZXJzaGlwIiwiJ293bmVyc2hpcCciLCJ0aGlyZCBwYXJ0eSIsInRoaXJkIHBhcnR5IG93bmVyc2hpcCIsIn
BhcnR5IG93bmVyc2hpcCJd)whichwouldotherwisebeoutoftheirreach.18WiththebanonTPO,Ifearthat
themidmarketBrazilianorArgentinean(andpromisingyoungplayersfromthesecountries)willceaseto
beseeninEngland.

Underthepreviousregulatoryregime,playerswerelesslikelytobetransferredatayoungage,asinvestors
andclubswantedtowaittoseetheplayerprogressand,hopefully,becomemorevaluable.WithaTPOban,
there may be pressure on cashpoor clubs to sell their stars early, which will see many more teenagers
traversingtheworldstage,arguablybeforetheyarephysicallyandemotionallyreadyfortheculturechange
andincreasedpressureinleaguessuchasEnglandsandSpains.

Manycommentatorshavesuggestedthat,followingtheban,TPOwillbeforcedundergroundandthatthis
willleadtomorewidespreadincidentsofbadTPOwithassociatedinfluenceoverclubsexactlythetype
ofbehaviourthatthebanisdesignedtoprevent.However,Iamnotsurethat,whenconsideredalongside
theaimsofTPO,thisargumentholdswater.

TPOisprimarilyusedbyclubsasameanstofinancetransfersortoprovidemuchneededincomewherea
team may not otherwise be economically viable. It is a legitimate source of revenue which is currently
instrumental in allowing many clubs to comply with financial fair play requirements. When done
professionallyandtransparently,TPOcanhaveasignificantpositiveimpactonaclubbyallowingittoboth
retain its best performers (therefore remaining competitive) and remain economically viable (whilst
complyingwithfinancialregulations)throughacashinjection.BanningTPOwill,ofcourse,cutoffthissource
ofrevenue.

ItistoostraightforwardtosaythatclubswillsimplyfindawaytocontinuewithTPObehindcloseddoors.In
ordertodosowhilecontinuingtoenjoythefinancialbenefits,aclubwouldneedtocommitaccountingfraud
andbreachesofrespectiveFIFAandUEFAregulationstocoverupitsthirdpartyinvestment.Theremaybe
clubswhoarepreparedtogototheselengths,butIsuspectthattheyarefewandfarbetweeninthemajor
professionalleaguesofEurope.

POTENTIAL ALTERNATIVES

Rather than prohibition, a better course of action may have been to enforce and enhance the already
existing FIFA regulation, Article 18bis
(http://www.fifa.com/mm/document/affederation/administration/66/98/97/regulationsstatusandtransfer_en_12
10.pdf), to ensure transparency and continue to give clubs access to the oftenvital source of finance
providedbyTPO.

The ban smacks of over regulation, which may result in previously successful clubs who have made
extensiveuseofTPOfallingfurtherbehindthetraditionalpowerhouseclubswhodonotneedtorelyonsuch
financetoacquireandmaintaintheirplayers.

Inaddition,leaguessuchasBrazilsmaysufferfinanciallyandcompetitivelywhiletheirbestplayerswillbe
moving abroad sooner, for less money and at an uncertain stage of their personal and professional
development.
Unfortunately,theseargumentsarenowdefunct.Itnowremainstobeseenwhetherthebanwill,inpractice,
be workable and what it will mean for clubs who have for over a decade depended on TPO for their
existence.Willaclub,orevenaleague,seektochallengeFIFA?

References(http://www.lawinsport.com/articles/item/riptpoaguidetofifasbanonthirdparty
ownership#references)

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Argentina(/tag/Argentina)|Brazil(/tag/Brazil)|ContractLaw(/tag/Contract%20Law)|CorporateLaw
(/tag/Corporate%20Law)|England(/tag/England)|EuropeanUnion(/tag/European%20Union)|FIFA
(/tag/FIFA)|FIFARegulationsonStatusandTransferofPlayers
(/tag/FIFA%20Regulations%20on%20Status%20and%20Transfer%20of%20Players)|Football
(/tag/Football)|Governance(/tag/Governance)|Immigration(/tag/Immigration)|Portugal(/tag/Portugal)|
PremierLeague(/tag/Premier%20League)|Regulation(/tag/Regulation)|Spain(/tag/Spain)|ThirdParty
Ownership(/tag/Third%20Party%20Ownership)

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ABOUT THE AUTHOR

 (/item/richardberry2)

RICHARD BERRY (/ITEM/RICHARD-BERRY-2)

Richard is an associate in the Sports Group at City law firm Lewis Silkin LLP (/sportslaw
firms/item/lewissilkinllp?category_id=96). An employment lawyer with particular expertise in
contractualissues,disciplinaryproceedingsandregulatorymatters.

richard.berry@lewissilkin.com(mailto:richard.berry@lewissilkin.com)
FullProfile(/item/richardberry2)

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