New Report Finds 1,000 Footballers in Europe Part-Owned by Third-Party Investors

A new survey has underlined the extent to which third-party ownership is becoming increasingly prevalent in European football.

According to audit firm KPMG, in a recent report seen by Bloomberg, investors and so-called "third parties" have acquired stakes in the transfer rights of up to 1,100 professional footballers in top leagues around Europe.

The highest-profile clubs involved include Champions League participants Atletico Madrid and Porto, who have sold part or all of the economic rights to a number of their talented players as a preferred method of raising capital.

Alternatives could be to turn to the bank for high-interest loans or sell the player outright to another club.

Some clubs have also taken to inviting investors to help them sign players, particularly from South America, sharing the cost of the initial transfer fee with the understanding that they will split the proceeds from any subsequent sale.

KPMG, whose Spanish arm was responsible for the report at the request of the European Club Association, believes the practice is most prevalent in Portugal, where as much as 36% of the market value of all players is owned not by clubs but by individual investors.

According to Bloomberg, one company, Doyen Sports Investments Ltd, has invested €80 million (£66.6m) in player rights over the last three years.

UEFA wants to ban the practice of third-party ownership, fearing that the financial aims of investors will erode the sport’s integrity and could occasionally force clubs to sell players against their will.

However, so far it is only England’s Premier League and France's Ligue 1 that has outlawed the practice outright.

The Premier League acted following the infamous West Ham affair, which saw the Argentine duo of Carlos Tevez and Javier Mascherano join the club from Corinthians in 2006. However, the club hid the fact the pair were actually owned by an investment group, MSI, eventually earning them a record £5.5 million fine.

Seven years on, KPMG says that the practice is growing more widespread in Eastern Europe, particularly Serbia, but is also an increasingly regular occurrence in Spanish and Dutch clubs—as the financial crisis, which has made banks less willing to loan large sums, forces clubs to look elsewhere for revenue streams.

Porto’s Eliaquim Mangala is one player whose transfer rights are at least partly owned by Doyen and another investment group, Robi Plus. The defender has been heavily linked with a move to Chelsea in the January transfer window; however, in order to complete the move to Stamford Bridge, the club would theoretically have to agree three separate fees with Porto, Doyen and Robi for their respective shares in Mangala.

Mangala was recently confronted about this unusual arrangement in a documentary for French television.

"We are financial products,” Mangala said, according to business journalist Matt Scott. “A football club is like a factory, and we are its outputs. You have to be realistic."

The practice of third-party ownership is nothing new in South America, where clubs struggle for day-to-day funding but young players can develop into hugely valuable commodities on the European market.

Players including Neymar (now of Barcelona), Hernanes (now of Lazio) and Radamel Falcao (first Porto, then Atletico Madrid and now AS Monaco) were all partly owned by investors before making the move to Europe, where in some cases the arrangement continued with their new clubs.

"

“The footballer, even if he belongs to a company or private business people, still belongs to the club, because by Fifa regulations the federative rights, the registration, belong to the club,” agent Pini Zahavi told The Guardian in 2006, defending the practice.

“A single person or company can own only the economic rights. If a company buys rights to a player and he's going to play for West Ham, or any other club, then when they sell, half or whatever share of the payment will be transferred to the owner of the economic rights.

“In England they don't understand it at all. It's easier to buy a player who you are unsure about for £10m if you are sharing the risk with a partner. Now, if the player becomes top-drawer and is sold for £30m, then of course you may feel stupid only to own half.

“But if the player turns out to be merely average or a failure, if he cannot even be sold, you will say, ‘Fantastic, the disaster was not only mine’. That's exactly the way it works.”

"

UEFA, however, fear the practice means the sale of players is often taken out of the hands of clubs, blurring the lines between sporting endeavour and pure capitalism.

"It raises ethical and moral questions," UEFA general secretary Gianni Infantino wrote in a March column.

"Is it appropriate for a third party to own the economic rights to another human being and then to trade this 'asset'? This would be unacceptable in society and has no place in football.

"Footballers (like everyone else) should have the right to determine their own future."

So far, however, little has been done actually to tackle the issue. UEFA has said this is because the problem is not isolated to their continent and, as such, it is FIFA that needs to take the lead on the matter.

For its part, FIFA is currently in the second phase of an extensive investigation into third-party ownership, with findings expected to be presented at the start of 2014.

However, UEFA has pledged to draw up its own set of regulations if the global governing body does not take the lead on the issue.

With more than 1,000 players already at the mercy of the practice, however, one wonders how easy it will be to put this particular cat back in the bag.