Third Party Ownership

Welcome to the Chris Farnell Lawyer blog. The issue of Third Party Ownership in football remains a live one, despite FIFA’s outright prohibition in 2015. Any analysis of the current landscape needs to start with an understanding of what is meant by Third Party Ownership, or TPO for short. It reflects the practice, previously widespread in large parts of world football, whereby an investor, the third party, would invest in a player, a club or an academy, usually by way of a loan, in return for a right to a percentage of the future transfer fee or fees that the player who is the subject of the investment attracts.

TPO was a common practice in many parts of the world before FIFA banned it – in particular in Latin America and in Spain, Portugal and Italy. It allowed many smaller clubs to compete with bigger clubs by being able to purchase players for less than they would do had there not been third party investors holding some of the rights of the player. 

The main problem with TPO, however, was the risk of Third Party Influence, that is the risk of third party investors influencing the playing or trading polices of the engaging club. Third Party Influence leads to a number of other problems – potentially undermining the integrity of football, especially where a third party has an interest in a number of players in the same competition, and undermining team stability where third parties are incentivised to force multiple transfers for economic and not football reasons.

So, for example, a loan from a bank to a football club securitized against a 20% assignment of the future fee the club might receive from a transfer of its best player is prohibited. A club’s right to a “sell-on fee” from a second club to which it has sold a player (something not prohibited, because the first club is not a “third party”) cannot be assigned to another party. Imagine Club A sells Player X to Club B for GBP  1  million (approx. EUR 1.17 million) and there is a 25% sell-on fee; three years later Player B’s value has increased to GBP 4 million (approx. EUR 4.7 million), Club A shall receive GBP 1 million when Club B sells the Player for GBP 4 million to Club C. But Club A cannot assign the right to that future sell-on fee, even though there is little real risk in Club A (as a third party) assigning the right or indeed interfering in the ability of Club B to decide whether or not to sell Player X.

In light of all these factors, while governing bodies and regulators will face the harder task of monitoring players (in addition to clubs), if they intend to ensure effectiveness of the ban (which remains) in place under art.18-ter of the FIFA Regulations.

Sports law

Welcome to the Chris Farnell Lawyer blog. While there may not have been as much action on the pitch in 2020, this year has been an eventful one. Esports it’s no longer just a game. The professionalisation of esports continues to accelerate at a blistering pace. 

In 2020, European giants Fnatic secured a $10m investment before going on to successfully close a £2m crowdfunding round. Similarly, fellow UK team Excel Esports continued their professional evolution by securing a groundbreaking partnership with a non-endemic sponsor, BT. As demonstrated by the number of disputes, there’s been a real increase in esports players seeking to protect themselves by appointing their own legal advisors. 

The Premier League TV times. The next auction for domestic broadcast rights to show the Premier League from 2022-23 is set to conclude in 2021. The headline last time around was the entrance of Amazon, which secured 20 Premier League matches a season for its Prime Video platform. 

However, given the rise of other streaming platforms such as DAZN, which splashed onto the scene in 2018 signing the first ever $1bn boxing deal with Matchroom Boxing, having been advised by Mishcon, we could still see a challenge to the dominance of traditional broadcasters Sky and BT. Either way, the legal terms will certainly be pored over. If the Premier League does pursue this route, it could constitute a transformative shift.

Rather than taking a softer approach in light of the pandemic, sports regulators around the world seem to be gearing up for a year of introducing tougher rules and ans of several clubs will be hoping that the regulators take a sensible approach to enforcement, though, ultimately recognising diminution in value of club’s assets and revenues that were completely unforeseen and have impacted even the best run clubs. 

We are also likely to see the imposition of stronger rules, including caps on fees, for agents.  Such measures will be hotly contested, though, and ironically, in light of Brexit, may be stopped in their tracks by legislation that originates from Brussels. 

Our experienced lawyers represent many professional sportsmen, sportswomen and teams. Visit the Chris Farnell IPS Law website today to find out how we can provide legal advice for your needs. Follow Chris Farnell Lawyer on instagram here. You can also read the latest Chris Farnell Charlton news here.