Fifa is facing a serious revolt within the ranks against its ban on third party ownership (TPO) of players which was imposed in December, writes David Shonfield.
Both the Spanish and Portuguese football leagues have come out against the ruling on TPO, which is due to come into full effect at the end of next month, and have started legal proceedings by making a complaint to the European Commission. Those leagues argue Fifa’s new rule, known as 18ter, breaks two Articles of the Treaty on the Functioning of the EU, on “anti-competitive agreements” and “abuse of dominance”. They also claim that Fifa’s ban breaks EU principles on free movement of capital: essentially that EU residents are free to invest where they wish, just as they are free to seek work where they wish.
EU rules also prohibit restrictions on payments between member states and third countries, except in exceptional circumstances. So citizens are allowed to invest their money where they want, outside the EU as well as within — always provided the activity is legal. Sport has a special status under EU regulations which allows for some leeway for bodies such as Fifa, but only to a point, as the Bosman ruling established. Their regulations have to respect rules on competition as they are considered “economic operators”.
“The decision to ban TPO restricts the economic freedoms of clubs, players and third parties without any justification or proportionality,” say the two leagues. “This ban harms clubs, especially those with fewer sources of income, preventing them from sharing the economic rights of their professional players with third parties, and forces them to manage their financial obligations more prudently. This ban also harms dozens of players whose professional careers have been helped along by people, coaches and third party funds. Lastly, this ban completely prohibits third parties from managing footballers’ rights, a practice that has been carried out legitimately in the vast majority of the world’s professional leagues up until now.”
Spain and Portugal are the two European countries where third party ownership and investment in players has been most common, so it is no surprise that there has been some opposition to the ban. Because people from Spanish or Portuguese families have the right to citizenship, it is relatively easy for many South American players to gain a work permit — and many of those have their “economic rights” in the hands of third parties.
In Brazil as many as 90% of players are owned by outside investors as well as their clubs.
Fifa imposed the ban with hardly any warning and contrary to previous assurances, there is hardly any transitional period. That was no doubt, to avoid investors and others taking evasive action. But it has also antagonised the league authorities. The Portuguese feel especially strongly because they have a relatively weak league and most clubs depend heavily on recruiting South American players, the best of whom are usually sold on to wealthier clubs in stronger leagues in England, France and Germany and also to the likes of Zenit St Petersburg and Shakhtar Donetsk.
They fear young players will also move abroad because clubs will not be able to hang onto them. For the Spanish, the ban represents a serious threat to their marketing strategy for La Liga. TPO is essential to their financial model to “continue to strengthen and to prevent talent from leaving Spanish shores”, said Liga director-general Javier Gomez at a consultative meeting last week.
“If we fail to stand together on this, within five years we will be the fifth biggest league in the world.”
Spain and Portugal are looking for a compromise. They want to retain TPO, but with a new set of rules, with regulations to protect players’ interests and outlaw bad practices. “For fear of having to regulate this practice, they have instead imposed an outright ban,” says Gomez. “Restrictions are required, not the elimination of investment funds, a financing method born out of necessity that has helped a lot of clubs.” It is not an argument that carries much weight in countries that have already banned TPO — nor with the players unions. The conflict looks set to continue.
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