Transfer Window Analysis: Third-Party Ownership an Impending Reality?

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Transfer Window Analysis: Third-Party Ownership an Impending Reality?
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As the 2012-13 season gently confines itself to the annals of history and the technicolour of memory, the football world begins to turn to the future. As the inexorable cycle of the sport rolls around again, the screens of our computers and the pages of our papers become swamped in transfer rumour and "new signing" gossip.

Third-party ownership may not be the most glamorous aspect of the buying and selling of football superstars, but, whether we like it or not, it has become a pressing feature of the global market.

This article aims to give you a complete rundown of third-party ownership, its whys and wherefores, so that you can no longer be puzzled or intrigued by the complexities of this important subject. I touch on the history of the practice and the associated moral dilemmas, and I would be interested to hear your opinions on the model.

 

Neymar

The transfer of Brazilian superstar Neymar to Barcelona feels like a perfectly apt place to start. The Selecao forward, like many of his compatriots, is partly owned by a third-party investor. This means that his economic rights are split between player, club and another element. 

Forty percent of the ‘Neymar’ vehicle is owned by DIS, or to give the full title: D.I.S. Esporte e Organizacao de Eventos LTDA—a private football fund that invests in players at a young age, builds relationships with clubs and academies and then reaps the financial benefits of the player’s progress. DIS’s other ‘investments’ include Ganso, Rafael Sobis and Dentinho.

Similarly, Chelsea’s Brazilian youngster Oscar is another whose economic rights are shared—25 percent of the player’s rights were bought by BMG while he was still a youngster in Brazil.

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Genesis

The phenomenon of third-party ownership has arisen due to the increased commercialisation of football, and the enormous financial rewards that can now be found within the sport. Investors have realised the lucrative advantages of having a stake in a team or a player, and have come to the game in swathes, dollars firmly in fists, looking to back a promising horse and then profit from their future success.

South America, and especially Brazil, has been a major beneficiary of the increased investment.

In 2003, FIFA revealed that the World Cup would be returning to South America for the first time in 36 years for the 2014 spectacle. Since then, the continent’s sport has received major financial backing—businessmen convinced by the potential financial rewards that the global sporting occasion will bring to the region.

The recent regeneration of Brazilian football and the increased financial muscle of her clubs, has been driven by investors. Some years ago, with many clubs facing insolvency or with major financial limitations, a window of opportunity was opened. The situation was—in the short-term at least—mutually beneficial, with investors able to support the ailing clubs, and the businessmen were allowed to profit from the much larger financial rewards that come from the future successes of their investments.

 

Lost in Translation

Despite already becoming ingrained in the complexion of the game in Brazil and Argentina, the third-party model has received a severely negative response in some corners of Europe.

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The approach came to the attention of the English public at the beginning of the 2006-07 season, when West Ham United completed the unlikely signings of Carlos Tevez and Javier Mascherano. Despite being one of the great old clubs of Britain, the Hammers evidently didn’t have the global standing nor the financial backing to secure such a coup.

Realistically, the signing was facilitated by Kia Joorabchian—the president of sports investment company MSI—Media Sports Investments, and a key player in several other companies, all of which held percentages of the rights of the two Argentines.

The move brought controversy onto both club and model, and the whole episode left an unhappy stain on West Ham and the Premier League. It ultimately prompted the FA to alter the wording of their stance toward third-party ownership.

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The rules changed from restricting the “influence” that third-party investors could have over the policies of clubs—such as has been the case in Brazil, where Joorabchian has used his stake in Corinthians to manipulate and inform the buying and development decisions of the club—to outlawing the policy altogether.

The whole approach continues to have its detractors, those who believe that the method is akin to slave-trading or an utter commodification of the young players who populate the beautiful game. However, the transfers of Neymar, the high-profile moves of Joao Moutinho and James Rodriguez to Monaco, and the imminent transfer of Radamel Falcao serve to demonstrate the continuing encroachment of third-party ownership in the major European leagues.

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A Norm for the Future?

Perhaps it’s not all bad either, and perhaps the Prem’s reluctance to embrace the model is merely an out-flowing of the English sporting predilection for tradition and stability over innovation and the experimental.

In Brazil, the influx of third-party influences has regenerated the sport and allowed the nation’s top flight to retain their top talents ahead of the 2014 World Cup, to attract international players back to their homeland and to entice major sporting names such as Clarence Seedorf to have a taste of the action in South America.

‘Super Agent’ and prolific third-party owner Pini Zahavi—who has been involved in Rio Ferdinand, Ashley Cole and Glen Johnson among others—is a major apologetic for the practice. The Israeli has argued that sharing the investment in personnel splits the burden and therefore reduces the risk naturally involved in this most volatile of businesses.

While the model does see more money than would be ideal leaving the sport, and entering the pockets of private investors, it both encourages investment in football and also allows modest clubs to be more competitive than they originally might have been without sharing the financial burden of acquisitions.

From a Premier League point of view, third-party ownership could in fact be a major advantage to clubs hamstrung by a lack of financial firepower. Everton and West Ham, for example, are two sides that have been, historically, restricted by their ability to spend big and attract the major names.

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Third-party ownership, and the sharing of the financial burden, could, in principle, allow these sides to compete with their more-illustrious rivals and to acquire the calibre of talent, on the enormity of contract, in a way that is currently the reserve of only the elite clubs.

Ultimately, the speculation may be futile. The ever-increasing influence of third-party investors is hard to deny, and may well become the norm for top-level football. Doubtless, there are genuine, searching questions that need to be considered before the floodgates are opened universally, but I imagine that a negotiation of the practice, in order to best preserve the integrity and spirit of the sport, is the best possible (realistic) outcome.

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