A thread on third-party ownership ( #TPO) in and its (ineffective) control

For those that don't know, TPO occurs when a proportion of a footballer's economic rights are contractually allocated to a party that is not the buying club, selling club, or the player themselves

An example is a club agreeing to sell 50% of a player's economic rights to an external investor (can be anyone) for a fee. The investor would then be entitled to 50% of future payments for that player (eg 50% of a transfer fee, or insurance claim if that player is injured)

Proponents of TPO argue the practice is a strategy that enables clubs to afford players that they otherwise would not be able to. This alone should raise alarm bells considering the contemporary issue of a lack of football club financial sustainability

FIFA understand TPO has other harms. The major risk is that investors, whose interests are purely financial, will coerce clubs to sell players when it isn't in the club's (sporting or financial) interests. TPO fuels a transfer market that is based purely on finance, not football

That sounds bad to football fans, but why should anyone else care? TPO contributes to the exploitation of young aspiring footballers, who are trafficked to Europe with promises of 'making it', only to find themselves stuck in a transfer merry-go-round for the benefit of others

(There are clearly other big issues associated with the trafficking of young people in football. Check out @mission_89's website for more info on the work they do to combat these harms: https://mission89.org )

As a result of their growing awareness of the harms of TPO, FIFA prohibited the practice in May 2015. Existing agreements were permitted to run their course (but could not be extended) and TPO arrangements agreed between Jan-May 2015 could only have a maximum duration of 1 year

Unfortunately #FIFA's TPO prevention efforts are found wanting. FIFA (try) to control TPO through their International Transfer Matching System ( #TMS), but there are numerous issues with the way it works. When a player is transferred the details are recorded in the TMS.

Part of this process involves all parties in the transaction (buying club, selling club, and player) uploading a signed declaration that there are no TPO considerations relevant to the transfer. (Alternatively, at this point any offenders can hold up their hands and confess )

FIFA's reliance on self-referral to combat TPO probably explains why, despite FIFA's declaration that TPO is a 'global phenomenon', only 13 clubs had been sanctioned for breaches of TPO regs by 1 Aug 2020. (This reduces to 6 clubs when excluding purely administrative breaches).

FIFA do require clubs to upload evidence of any financial transactions that have taken place AT THE POINT OF TRANSFER, but any transactions that occur after this (which is almost all of them in the modern market) are not audited. These latter transactions have no oversight.

Another issue with TPO control is the removal of agent licencing. Unlicenced agents (and other potential third-party investors) are immune to any disciplinary sanction that could be imposed by FIFA as they fall outside FIFA's jurisdiction. They can operate with absolute impunity.

In 2017 the European Parliament recommended the EU explore the option of making TPO illegal, but this has not occurred to date, and FIFA do intend to reintroduce agent licencing, but it remains to be seen if failures in previous iterations will be effectively addressed.

These issues only relate to international transfers as FIFA's TMS only records transfers between national associations (eg England to Spain). We know less about the process for auditing domestic transfers, which probably account for a greater proportion of all football transfers

National associations are required to operate their own TMSs to record the details of domestic transfers and fight TPO, but the requirements are even less strict and the operations are opaque: the FA does not publicise the workings of the English TMS

Clearly there is room for improvement in the prevention of TPO in football, but the scale of the problem and FIFA's (recent) history of 'symbolic governance' mean it could be a while before the problem is brought under control: https://www.theguardian.com/football/2020/dec/11/football-transfers-rife-with-illegality-and-exploitation-report-money-laundering-third-party-ownership-uefa