Third party ownership (TPO) has been recently defined as ‘the practice for a third party (ie not the club where the player is employed) to acquire rights on the future transfer value of players’. It is a concept mostly used in the European continent, especially in the English market.
In fact, there is no such a thing as ‘ownership’ of a player, particularly not by a third-party investor which is not a football club. TPO is merely an entitlement to a right of credit over a possible future transfer fee of the player. The word ‘ownership’ in itself has been conveniently used by opponents and critics of TPO as being linked to the ‘slavery’ of football players.
Such a theme, which has mainly an iconic and populist intent, has obviously had a great impact on the public and mass media. It has been repeatedly used, inter alia, by the governing body of European football, Uefa, which is openly in favour of a ban of the practice.
In the meantime, in Brazil as well as in other South American countries, the term most used is the ‘economic rights’ of the player. This can be defined as ‘the exclusive right to fully exploit all of the commercial and economic interests in, over, of and to the federative rights of a specific player including, without limitation, the rights over the economic result of a future, whether temporary or definitive, transfer of the respective player to another club.’
Under provisions of the Brazilian Civil Code, although the economic rights transaction is not foreseen as a codified contract, it is indisputably admitted in view of the general legal principle of contractual autonomy of the parties where legal persons are free to enter into a contract not foreseen by the law. This legal principal must be within the limits of legality and in line with the so-called ‘social function’ of the contract.
In any case, a majority of the Brazilian doctrine finds the economic rights to be structured as an assignment by a club to a party of a future and eventual credit in exchange for a determined amount and thus subject to, directly or simply by analogy, the respective provisions of the same Brazilian Civil Code.
Recently, and due to the great impact of the economic rights commercial practice in the Brazilian football market, the economic rights issue was partly regulated by the Brazilian legislative. On 11th March 2011 it issued the Federal Law no. 12.395|2011 directives to amend the so-called ‘Pelé Law’, the Brazilian Federal Law dedicated to ruling various aspects of sports regulation with a particular focus on football.
Specifically, these domestic provisions are basically a Portuguese version, respectively, of Article 18 of the Fifa Regulations on the Status and Transfer of Players and of Article 29 of the Fifa Regulations on Players’ Agents.
In general, the above-mentioned article aims at somehow weakening the sports agents’ activity, while seeking to protect, from one side, the grassroots clubs that train and educate young players and, from the other side, the young players themselves, all through the TPO practice.
Recently, the specialised press has reported the Brazilian government is planning to propose banning football clubs from selling player-transfer rights to investors.
The plan would be part of a wider bill that will be sent to the Brazilian Congress to improve the financial state of Brazilian football clubs, which allegedly have unpaid tax debts of about R$4 billion (US$1.6 billion). The proposed ban is not likely to be enforced soon, with the earliest possible date as January 2016.
In addition, vast groups of Brazilian football clubs are strongly lobbying against any possible ban, believing: ‘The ban – as proposed by Uefa – could impact the finances of the Brazilian and South American clubs negatively, as well as the flow of the international transfers of players between South America and Europe.’ This fear was stated openly in a public letter sent by 21 Brazilian teams to Fifa, the Brazilian Sports Ministry, the South American Football Confederation (CONMEBOL) and the Brazilian Football Confederation (CBF) on 24th April 2013.
In any case, we are of the firm opinion that a global banning of the so-called TPO practice could indeed represent a collapse of the finances of the Brazilian football market, demanding therefore a careful analysis and a more realistic approach of the governing bodies.
Marcos Motta is a founding partner at Rio de Janeiro-based law firm BicharaeMotta. A board member of the European Football Agents Association, Motta has provided legal counsel in some of the biggest transactions in world soccer and recently served as Neymar’s attorney.