The most expensive football transfer in Irish history was agreed on Friday. Understandably, you may have missed it.
Ricky Van Wolfswinkel is a Dutch international and he is moving from Lisbon to Norwich, but nevertheless the deal involves a business based in Dublin.
Quality Football Ireland (QFI) is one of several funds set up over the past few years to invest in players.
Much as normal investment funds put their money into platinum or pork bellies in the hope that the price will rise, so these specialised funds pick footballers whose transfer values they hope will increase.
In fact there have been three QFI funds in Dublin as well as several linked businesses in Jersey which trade under the name of Quality Sports Investments. In its latest manifestation, QFI has rebranded as Burnaby Investments.
Investment in players is naturally a bit different to pork bellies. For a start, one belly is much like another; secondly when you invest in players, you need to be sure they will play and therefore attract the attention of buyers. So it’s a business that involves a bit of expertise.
In this case the expertise is provided by our old friends Jorge Mendes, agent for José Mourinho, Cristiano Ronaldo and company, and Peter Kenyon, formerly of Umbro, Manchester United and Chelsea, now freelance after a brief time with Creative Artists Agency. Creative is best known for promoting names such as George Clooney, Meryl Streep, David Beckham and Nicole Kidman, but since 2009 they’ve also been dabbling in football investment, although they are very reluctant to reveal anything about their activities beyond the fact that these funds exist.
For this business to work, you need clubs that are ambitious enough to go along with part-ownership of their playing assets — or more likely that are seriously in need of the cash to fund the purchase of players. Sporting Clube de Portugal — commonly known as Sporting Lisbon — are definitely in the second category. For all their success in producing young players, their lack of success on the pitch and mismanagement off it means Sporting’s total debt is now around €240 million.
They bought Van Wolfswinkel from Utrecht in June 2011 for €5.4 million, and two months later announced they had sold 50% of his “economic rights” — the fancy term for transfer value — to QFI.
Four months later they sold another 15% slice to the Sporting Portugal Fund.
SPF is a different sort of investment fund. Because it is set up by the club and managed by a bank, its activities are more regulated. Both Benfica and Porto have successfully used such funds to raise cash and then subsequently sold on players at a considerable profit. In this case Sporting stand to receive just €3.5 million, a modest return though no doubt every little bit counts.
The Van Wolfswinkel case is far from unique, although clubs usually try to keep at least 50% of a player’s economic rights in their hands. But it coincides with the latest, and by far the strongest, statement from the football authorities that they want to ban third party ownership of players, as happened in England after the Carlos Tevez case ended up in the courts.
UEFA’s Professional Football Strategy council has demanded third party ownership be abolished, and so more recently has the UEFA Executive.
“Such a prohibition already exists in some European countries and it is time to introduce it across the board,” said UEFA General Secretary Gianni Infantino last week.
The difficulty is that this is a job for FIFA as third party ownership is most common outside Europe, above all in Latin America. Until recently FIFA seemed to be dragging its heels, but in January it commissioned a survey of current arrangements around the world. Coincidentally Argentina has made a move to tighten tax regulations, with the intention of ending the distinction between player registration and economic rights.
In theory. But the reality of Argentinian football is that third party ownership is not just a lifeline, it’s the principal source of finance for clubs. Reform will be blocked unless FIFA and the Argentinian and Brazilian football authorities can work something out between them. In the meantime, Infantino warns: “We will be ready to implement appropriate rules to phase out this activity in our competitions.”
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