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.

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