Governance | Feb 17, 2015

Daniel Lorenz, FC Porto

Third-party ownership: A major source of revenue

Third-party player ownership (TPO) occurs when the transfer rights of players are wholly or partially owned by agents, sports agencies or investment funds, instead of only the player’s club. It is a financing method that’s common practice in south America, in particular with younger players, where their economic rights are sold in return for percentage of their future transfer fee. However, FIFA has outlawed the practice from May 1 this year.

Over the years at FC Porto, I have been involved with the transfers of many young talents from south America, and these players have gone on to have even greater success at the biggest clubs in Europe.

We have been using TPO – or third-party investment as I prefer to call it – because we are not a so-called ‘rich’ club. The majority of the income we receive comes from the transfer of our players – not from TV money, commercial assets or ticketing – so this tool has been our major source of revenue.

We understand how this became banned in England, as everybody knows what happened with the Tevez and Mascherano affair, but we don’t agree that these rules should be applied in the same way to Spain, Portugal and others.

If you look at how we have used TPO in the past, it is not an abuse of talent, it is not slavery and it is not a threat to integrity. In fact, it is a very normal thing to do.

I am not saying we should allow TPO to carry on exactly as it is now, as like any other commercial tool it needs to be regulated to protect the integrity of football. However, an outright ban of TPO is really not something we could defend.

It has always surprised me why UEFA – much more than FIFA – has been so keen to ban TPO in the past. UEFA’s argument of TPO “threatening the integrity of players and its competitions” would be equally solved by stricter regulation instead of an outright ban.

My concern is that FIFA will not allow for a long-enough transition period. As such, I feel there is no tolerance from FIFA to reach a reasonable outcome.

Sometimes issues like this are like a big ship going around in the ocean. You can’t just suddenly put a red light in front of it and tell it to stop straight away.

by Daniel Lorenz, Director of Legal Affairs, FC Porto

Taken from the latest issue of SportBusiness International

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