Third party transfer ban has made big impact

Every transfer window is different; the one just closed has been unique. Not because of the deals that were done, but because of those which have been blocked. For the first time ever, third parties have been excluded from acquiring players’ economic rights, not just throughout Europe but worldwide.

Fifa circular 1464, imposing the ban, was rushed out just nine days before the window opened, and has had an immediate impact on the market. There are further repercussions to come. Not so much in England, where third party ownership (TPO) has been outlawed since 2008, but in both Spain and Portugal and above all in South America. In Brazil, sports lawyers estimate around 90% of professional players currently have contracts involving third parties — individual businessmen, companies or investment funds.

Fifa had been dithering and prevaricating about TPO for years. New regulations were flagged up for months. A working party was set up to consider options. So there was real surprise when the new regulation — 18ter as it is called — was imposed at such short notice. And contrary to previous assurances, there is no real transitional period. While existing TPO contracts remain in force, new ones can only be agreed up until May 1 and are restricted to 12 months, which makes them of very limited interest to investors.

All existing agreements have to be notified to Fifa’s Transfer Matching System, their international transfer database, by the end of April — another departure, as hitherto the TMS has only had authority over transfers between different countries. This means Fifa staff will from now on have access to details of all third parties involved as well as the length of agreements. The ban extends to individual players as well. They too are now prohibited from agreeing deals that relate to their future transfer value.

Superficially the change has had little obvious impact so far. The Portuguese and Spanish clubs that used outside investment to buy players — notably Benfica, Sporting and Porto in Portugal and Atletico Madrid and Sevilla in Spain — changed their strategy in advance. There are still players on their books whose ‘economic rights’ are part-owned by outsiders. These contracts will remain in force until there is a transfer to another club, and most if not all are open-ended.

It is more the supply of future recruits that will be affected and several of the big player investment funds have moved fast to shore up their position.

Doyen Sports, based in Malta, the investment fund involved in the controversial transfer of Marcos Rojo from Sporting to Manchester United last summer, hurriedly concluded one important deal in Brazil. Marcelo Cirino, a promising young forward, moved from Atletico Paranaense to Flamengo, with the paperwork completed before the January 1st cut-off date. Three young Santos players were also acquired, among them right back Daniel Guedes, who only made his debut at the end of November.

Doyen also says it concluded “many other deals” in December, details of which are yet to be announced by the clubs concerned. Other more publicity-shy funds have presumably been doing the same.

In the short-term, probably during the next couple of windows, the market for Brazilian footballers could well become a bit chaotic. There are some established players, such as Everton Ribeiro, a midfielder with Cruzeiro, whose transfer rights are held by several separate funds and agencies. Each will be looking for their own percentage.

Longer term, the effects will be more far-reaching.

Richard Berry, a sports lawyer with London firm Lewis Silkin, points out that the English market depends on a steady stream of recruits who began their careers in South America and came to Europe with the assistance of third party investors. Clubs are usually unable to sign these players directly because of immigration rules. They have often arrived via mid-table teams in Spain, Portugal or Italy. That supply of talent could now start to dry up.

It is possible that such clubs will find ways round the new restrictions — for example, sponsorship or share deals. In the past, the big three Portuguese clubs have set up their own funds, managed at arm’s length.

But the concern is that like Financial Fair Play the ban will hurt middle-ranking European clubs the hardest, leaving the wealthiest relatively unaffected.