Has Third Party Ownership Found a Back Door into Premier League?

One of the most popular topics in the soccer industry at present is third party ownership (TPO) of professional footballers and the corruption, dollars, and drama that come with it. Essentially, companies and individuals outside of the football club can purchase the economic rights of individual players thereby alleviating the financial stress on the club of acquiring top talent for top dollars. In some parts of the world, like South America, TPO is actually quite common. The topic has surfaced on a global scale in recent years as the practice has found its way to some top footballing European countries such as Spain, Portugal, and some areas in the Balkans. England and France, along with other countries, have official bans on TPO and have thus far, for the most part, prevented it from entering through their leagues’ doors.

Courtesy doyensports.com

Courtesy doyensports.com

Investment fund Doyen Sports, which finances the purchase of professional football players, has its sights set on the highly lucrative Premier League, the richest league in the world. Despite the ban on TPO, Doyen believe they operate within compliance of the league’s financial regulations because they do not own any of the economic rights of the players themselves – they merely act as a true lender for the soccer clubs. Doyen loans a club the funds needed to purchase a desired player and they require that the money to be paid back in full over a three year term. The clubs can either keep the player and repay the borrowed funds over the three year term, or sell him and return any borrowed funds along with a percentage of the profits gained from the sale back to Doyen.

Nelio Lucas, chief executive officer of the Malta-registered subsidiary of London-based Doyen Group, seems confident in the group’s plan and ability to penetrate the U.K. market:

We can operate with this model in the Premier League and we’re preparing a version of this model especially for the U.K. At the end of the day, there is also a big gap between the big clubs and the other clubs. I’m sure the Premier League sees us with good eyes.

Premier Legaue spokesman Nick Noble offered his comments on TPO in an email saying,

We believe that the practice threatens the integrity of competitions, reduces the flow of transfer income into the sport and has the potential to exert external influence on player transfer decisions. Any lending arrangements entered into by Premier League clubs must not allow lenders to exert influence over player transfers.

UEFA has been very involved in the conversations around TPO and how it will impact the game in Europe and has strongly urged FIFA to take action to ban the practice globally from the game. The world football governing body wrote to its members regarding the topic and said that it would discuss the issue, as well as potential new regulations, at the organization’s upcoming global Congress just before the World Cup.

Daniel Geey, a lawyer with Field Fisher Waterhouse LLP who specializes in soccer law, said to Bloomberg by phone that Doyen would be “taking a regulatory risk” if they were to try and bring their practices to England:

To me they would have to offer something impressively different to what’s already available.

Doyen would need to go to great lengths to prove to the league that they had no control whatsoever over the player’s contracts or influence over the operations of the clubs themselves. There are other implications to this sort of practice that affect both league and club when it comes to Financial Fair Play (FFP), which is muddy at best already and does not need further complication.

Even if Doyen were able to prove that they would not be operating as true third party owners under their new U.K. model, they would still likely be met with real resistance by league officials because it would allow a back door way out for clubs to be able to afford top dollar players that they normally would not be able to afford. True TPO ownership represents a real threat to FFP as it allows clubs to report only a percentage of what the player’s costs truly are on their FFP submission because a third party would own the costs for the other percentage. For example, a third party could own 99% of a player, and 99% of the costs, and the club would only have to report 1% of the true costs on their FFP submission.

Doyen’s model would not have quite the same effect on the club’s financial situation as the full amount of the player cost would still be hitting the team’s books, but they could amortize it over a three year period, which would help alleviate some of the financial pressure depending on the organization’s FFP standing. The pressure to compete, and consequently spend money for players, and the rising costs of top talent coupled with the relatively new financial pressures to comply with FFP regulations has created something of a paradox in the football industry. Doyen Sports provides a solution of sorts, especially for the smaller clubs competing with the big names like billionaire-backed Chelsea and Manchester City – the question that will be very interesting to see is whether or not that solution is welcomed in staunch TPO opposing countries.

 

What do you think about Third Party lending for player acquisition in the football industry? Let us know in the comments section below, or via Facebook or Twitter.

 

Reporting on the business side of the world's game.