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Case comment: FIFA disciplinary committee decide that players are not to be considered a 'third party'

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FIFAs proposed solidarity payment reform

Third party ownership (TPO) in football concerns a club not owning, or not being entitled to 100% of the future transfer fee of one of its players.

Why is it a problem?

This became a serious problem for football when third parties owned a percentage of a player’s future transfer fees and had applied pressure on football clubs to make certain decisions based upon their commercial interests.

A clear example of this is the transfer of Carlos Tevez which occurred in 2008. This highlighted the issues of TPO and resulted in the premier league changing their respective rules regarding TPO.

Tevez had a third party player agreement with MSI and JustSports and included within this agreement was a clause giving exclusive power to the third party owners to facilitate the transfer of the player. This breached the premier league rule preventing a club from entering into a contract which allowed a third party to influence the clubs policies or the performance of its team.

Therefore, there was no specific premier league rule which prohibited TPO. However, following the Tevez scenario, the premier league changed its rule to ban TPO. The FA also changed its regulations to take a far stricter stance on TPO to ensure that clubs had complete power and control over its own decisions.

FIFA regulations on TPO

FIFA have different rules regarding TPO compared with the FA and the premier league and FIFA’s specific provision on TPO can be found below:

FIFA Article 18bis third-party influence on clubs:                

  1. No club shall enter into a contract which enables any other party to that contract or any third party to acquire the ability to influence in employment and transfer-related matters its independence, its policies or the performance of its teams.
  2. The FIFA disciplinary committee may impose disciplinary measures on clubs that do not observe the obligations set out in this article.

FIFA’s decision

The FIFA disciplinary committee have recently heard a string of four cases involving a number of clubs entering into agreements with some of their players, entitling those players to receive compensation by way of a lump sum or percentage in the event of a future transfer to another club. The respective clubs in the cases are SV Werder Bremen (Germany), Panathinaikos FC (Greece), CSD Colo-Colo (Chile) and Club Universitario de Deportes (Peru). FIFA is the global governing body for football which is why it is able to govern cases from all of these countries.

FIFA’s disciplinary committee, in a recent meeting, decided that players are not to be classed as a third party with regards to Article 18bis. The committee also stated that any percentage of the players’ future transfer fee owed to them is simply part of their remuneration due to being in employment with their clubs.

As a result, the lump sums or percentages of transfer fees received by a player in relation to their future transfer is no longer deemed to be a breach of FIFA’s rules on third-party ownership of player’s economic rights from Article 18bis.

What does this mean now?

In short, this allows clubs to reach agreements with their players entitling the players to compensation through lump sums or percentages of their transfer fees, in the event that they are transferred to a different club at a later date.

This decision does not allow the type of situation discussed above where companies own a percentage of a player’s future transfer fee. This is because it could again lead to situations where clubs’ autonomy becomes restricted, as those third party owners influence their decisions.

However, the problem that this may create for football is the possibility of third party owners taking advantage of this decision by making private agreements with players to receive that percentage when the player is transferred in the future. This decision from the FIFA disciplinary committee may have opened a door for third party owners and we may see, in the future, players attempting to force a transfer away from a club due to motivation from external parties who benefit from a transfer through a private agreement with a player.

By Cameron Stubbs, student in the regulatory team