O Colapso do 'Joga Bonito': How FIFA's Banishment of Third-Party Ownership Runs Counter to European Union Law and Has Tarnished the Once Beautiful Game.

Author:Bailey, Brendan A.
Position:International Federation of Association Football
 
FREE EXCERPT

TABLE OF CONTENTS I. INTRODUCTION 181 II. BACKGROUND 184 A. History of Player Ownership 184 1. Overview of the Normal Transfer 184 2. The Transfer Process Including TPO 185 B. Parsing Through the Intricacies of TPO 187 1. Economic v. Federative Rights 187 2. Types of TPO Transactions 189 C. League Responses to TPO Arrangements 192 1. Leagues Banning TPO 193 a. English Football Association & English Premier League 193 b. Polish Football Association 194 2. Leagues Permitting TPO 194 a. Spain & Portugal 196 b. Eastern Europe & South America 197 3. FIFA--Article 18, Article 18bis, Article 18ter 198 a. Article 18: Special Provisions Relating to Contracts between Professionals and Clubs 198 b. Article 18bis: Third-Party Influence on Clubs 199 c. Article 18ter: Third-Party Ownership of Players' Economic Rights 199 III. ANALYSIS 200 A. Applicability of FIFA Regulations in Relation to Domestic League Rules 200 B. CIES Report 201 C. European Law and TPO 202 1. European Union Law 203 a. 2001 Agreement: European Commission and FIFA/UEFA 203 b. Solidarity Mechanism 203 c. Free Movement of Players 205 2. Court of Justice of the European Union 209 a. Bosnian 210 b. Meca-Medina 212 3. Country-Specific Laws Conflicting with FIFA Regulations 214 a. Austria 214 b. Brazil 215 4. Article 65 of the TFEU 217 5. Article 154 of the TFEU 217 IV. SOLUTION 218 A. Investment and Financing TPO Refresher 219 B. Solution: A New Regulatory Structure 220 C. How this System Rectifies Current FIFA Defects 224 V. CONCLUSION 227 I. INTRODUCTION

Carlos Alberto Martinez Tevez was born in Ciudadela, Buenos Aires on February 5, 1984. (1) Tevez grew up in the ghetto of Ejercito de Los Andes, an area better known as Fuerte Apache by locals, where Tevez received the nickname "El Apache." (2) From the beginning of his football career, Tevez was effectively constrained by red tape, facing both league-registration and ownership-right issues. (3) For example, Tevez was forced to adopt his mother's surname as a child due to a conflict between his two boyhood clubs, All Boys and Boca Juniors, during his transfer from the former to the latter. (4)

After staking his claim at the top of Argentinian football, Tevez looked toward Europe for his next challenge. In 2007, Tevez made his move to Europe, transferring to West Ham United Football Club in London, England. (5) Tevez's arrival in England was not smooth, though, as he was immediately thrust into an investigation launched by the English Premier League (EPL) in regards to the third-party ownership (TPO) structure of his rights before moving to England. (6) While the investigation continued, Tevez played one season for West Ham, but was ultimately told to move on and landed a contract with another EPL club in Manchester. (7)

Worldwide TPO regulations conflicted with one another at the time. Different leagues possessed different regulatory codes safeguarding or forbidding TPO, leading to confusion when players transferred from continent to continent or country to country. (8) The prolonged transfer sagas that plagued Tevez's career during his time in England eventually led to changes in both EPL and Federation Internationale de Football Association (FIFA) regulations regarding TPO. (9) Tevez's transfer issues serve as a cautionary tale for players looking to enter into FIFA-regulated leagues, as FIFA has recently promulgated regulations banning the practice of TPO. (10) Unfortunately, some players are not aware that their rights have been sold or that the practice is even illegal. They operate under the assumption that if they work hard, they can play their way out of unfortunate situations and into the most competitive leagues in the world. (11)

Throughout the history of the sport of football, or, as commonly referenced in the United States, soccer, regulations of player-ownership structures have remained largely untouched. Up until May of 2015, FIFA had yet to promulgate any worldwide regulations affecting the division of player ownership between multiple parties. (12) Following increasing pressure from select major football leagues and associations, such as the EPL and English Football Association (English FA), FIFA decided to completely ban the practice of TPO, an ownership scheme where an outside investor owns a percentage of a club's player. (13) TPO is generally defined as "the Agreement between a Club and a Third Party...in accordance to which, a Third Party, whether or not in relation with an actual payment in favour of a club, acquires an economic participation or a future credit related to the eventual transfer of a certain football player." (14) Many different individuals and sources can be labeled as third parties; a few examples are investment funds, companies, sports agencies, agents, and private investors. (15)

Football provides avenues for the movement of athletes between teams completely dissimilar to those offered by any domestic American sports league. The velocity with which players transfer between European football clubs stands unparalleled to any free-agency structure that American sports have created. In the summer of 2017, 1,687 players transferred between teams in the top five European football leagues, a process valued at around [euro]4.5 billion. (16) Each league alone accounted for an average gross transfer value of around [euro]900 million spent on acquiring players, or USD$1.045 billion. (17) Major League Baseball (MLB), which has historically outspent the three other major American sports leagues (the National Basketball Association, the National Football League, and the National Hockey League) due to their position as the only major American sports league without a salary cap, spent only USD$1.411 billion during the 2017 MLB free-agency window, slightly above the mean average of what each individual, top-five European league spent on transfers. (18) Capital expenditures of European football leagues account for a much larger outlay of funds that dwarfs those of American sports leagues.

Unfortunately, as with any lucrative venture, this vast amount of money can lead to corruption. FIFA has zeroed in on the entire practice of TPO as the source of the corruption, but the statistical proof to back up such an accusation may be lacking. (19) FIFA failed to differentiate between the different types of TPO structures that exist throughout the football transfer market. Transfer-fee sharing is the only method through which this article will discuss TPO, as it is the only method banned by FIFA. Whether the corruption FIFA believes is housed within TPO structures is systemic, or bound to only one of two competing structures, is a question that FIFA has yet to answer.

The remainder of this Note will proceed as follows: Part II will discuss the history of player ownership within international football, focusing first on how the transfer process works, then progressing through a description of TPO, its growth, and where it currently stands today through the lens of regulatory scrutiny. Part III will provide an analysis of FIFA's regulations banning TPO and their interaction with European Union (EU) law, arriving at the conclusion that such regulations are illegal on multiple fronts and that FIFA blindly wielded its power. Finally, Part IV will reimagine a suitable legal solution to regulate TPO that would not only comply with EU law but also permit FIFA to ban the features of TPO it finds unsuitable. Part V will contain a brief conclusion of the topic and recap the solution proposed.

  1. BACKGROUND

    1. History of Player Ownership

      1, Overview of the Normal Transfer

      In every European football league, players are permitted to move from one team to another, biannually, in a period known as the transfer window. (20) Players change teams on a regular basis, similar to stocks traded on the open stock market, but with limited regulation and oversight beyond a standard set of rules promulgated by individual leagues. (21) This lack of uniformity in league rules has led to different forms of ownership throughout the world, with neighboring countries sometimes having completely disparate regulatory schemes. (22) Ultimately, many transfers have stalled due to these different leagues creating and enforcing sets of rules that do not align with one another. (23)

      The transfer window is open twice within a twelve-month period; the summer transfer window is open for just under three months, running from early June through the end of August, and the winter transfer window is open only in the month of January. (24) Exact opening and closing dates vary country by country and league by league, but for the most part, the preceding dates are followed by the majority of leagues and nations. (25)

      Normal transfers of footballers operate as common buy-sell transactions. Surprisingly, most negotiations take place through WhatsApp, a mobile phone application. (26) A typical transfer is conducted as follows: team A offers, or bids, a specific amount of money to team B for one of its players, which then accepts or rejects the bid. Depending on the terms of the player's contract, a release clause may be an express term within the contract. (27) If the value listed in the player's contractual release clause is met by the bidding team, a virtual trigger is flipped and the owning team must permit the player to complete a transfer to the bidding team in exchange for the stated release clause value. If a team bidding for a player meets or exceeds the contractually agreed-upon release clause, the owners of the player's contract are required to accept the sum and allow the player to transfer teams. (28) Alternatively, both sides may come to a fee agreement if no release clause term is contained in the contract or if they waive the release clause. Generally, while team A and team B discuss a fee for the player, team A also negotiates a contract with the player. If all sides come to an agreement, the transfer proceeds, and...

To continue reading

FREE SIGN UP