FIFA bans third-party ownership of players

Global Business

Football’s governing body, FIFA, has announced a ban on investors buying a percentage of a player, hoping their values will increase. The ban on the practice, known as third-party ownership, will be phased in over the next three to four years.

The ban would have a major impact on how the multibillion player-transfer market operates, especially in South America where the practice is common. CCTV America’s Joel Richards reports from Uruguay.

FIFA bans third-party ownership of players

Football's governing body, FIFA, has announced a ban on investors buying a percentage of a player, hoping their values will increase. The ban on the practice, known as third-party ownership, will be phased in over the next three to four years. The ban would have a major impact on how the multibillion player-transfer market operates, especially in South America where the practice is common. CCTV America's Joel Richards reports from Uruguay.

Many of South American football’s most famous chapters in history have been written by Uruguayan clubs and its national team. However, in a small country with a rich history, even the biggest clubs struggle financially.

Nacional has the most league titles in the country. Selling a percentage of transfer rights of its promising players is one solution to its cash-flow problem. Income from membership fees, sponsorship, and TV rights simply is not enough.

“Clubs here don’t have an economy that matches the prestige Uruguayan football haa on the world stage,” said Hernan Navascues, Nacional Club Secretary. “People think big clubs like Nacional and Perols are rich, but they’re not, they are very limited. The Uruguayan market is small.”

Clubs and analysts in Uruguay believe the new FIFA regulation outlawing third-party ownership is designed for a European football market. They said it ignores the reality of many clubs that struggle to make ends meet.

“They’re forgetting that players like Neymar, Messi, and Suarez come from here, from South American clubs,” said sports lawyer Horacio Gonzalez. “How did those players get there? From clubs that found a way to survive, and nurture those players.”

Third-party ownership can generate fresh income for clubs. However, it also makes a lot of money for investors with little or no connection to football. These investors can then take that money out of the sport for good.

Uruguay is often used as a bridge to Europe. Players move from bigger football markets, such as Argentina to the south or Brazil to the north.

“Clubs are almost like a terminal at an airport, where players arrive, stop over, and move elsewhere,” explained journalist Diego Munzo. “It’s almost always the businessmen who make the money here. There are players who don’t know where the club is, or what are the colors of the club that they have supposedly played for.”

The system is already banned in England, France and Poland, with conflict-of-interests cited as a major problem. A 2013 study conducted for FIFA estimated the market value of third-party owned players at $1.3 billion.