The integrity of football: Club and player ownership in the English Premier League


April 15, 2008

Introduction

The English Premier League (PL) and FIFA have recently decided to fortify their rules relating to third party ownership of players. This comes in the wake of the Tevez saga in the 2006/7 season, when it became clear that third party ownership of players and the problems associated with this were destined to have an effect on European football. The Premier League Rules (the PL Rules), as they currently stand, may raise doubts as to whether the integrity of football is fully assured.

Is there any way to ensure that third party player owners do not have economic interests in both a club and players playing for opposing clubs?

In short, the answer in the UK and possibly throughout the majority of Europe is currently no. An entity (i.e. a person or company) that holds more than 30 per cent of the voting rights in a club or has the power to appoint or remove all or a majority of the clubs board is classed by the PL Rules as having control in a football club. A person having control is defined in the rest of this article as being an Individual. Therefore an Individual is barred from:

  1. Having the power to determine or influence the management or administration of another Premier League or Championship club; or
  2. Holding more than a 10% shareholding in another Premier League club.

However, no restriction is put on an Individual as regards ownership of players. It is therefore perfectly conceivable that an Individual at Football Club A could own a player playing for Football Club B and then Club A and B play against each other.

Take for example Kia Joorabchian. Mr Joorabchian has been intimately involved in MSI Sports, which held the economic rights in Javier Mascherano at the time of his transfer to West Ham. Mr Joorabchian has been reported to have been considering a takeover of West Ham United. Should any takeover have occurred an owner of one club would have owned the economic rights to a player in another club. Whilst the PL have been at the forefront of safeguarding PL clubs being owned by the same entity, at present the PL do not appear to have any explicit controls in place to prevent such player and club conflict.

It is important to note that the distinction here is not where an entity unconnected to a football club has an economic interest in a player but where that entity also has direct or indirect links to a football club. In such instances, this may be considered a problem.

Could third party owners have multiple players playing in opposing teams and competing against each other?

There appears to be nothing in the current PL Rules to prevent an Individual holding economic interests in more than one player not at his club. It is therefore possible that a third party owner has already had two players play against each other. Indeed this happened on 16 December 2007 when Liverpool played Manchester United. Tevez who scored in the game and is apparently on a two year loan deal at United played against Mascherano (who had not yet permanently signed forLiverpool). Although both clubs held the registrations of the players, they did not own the full economic rights of the players at the time of the match. A question as to whether a third party can own multiple players in the same league without any consequences would certainly require further discussion.

The threat to footballing integrity and the need for greater transparency

In both the above scenarios it is clear that conflicts of interest could arise where a third party owner of a player is unscrupulous. If the third party owner is also an Individual, the player could be instructed to play badly against the Individual’s club. One might ask how much influence one player can have on the game but if, for instance, the player was to purposely get himself sent off, clearly that can have a major impact on the game. With further revelations in the press recently about betting and allegations of players wiping out debts by, for example, getting deliberately sent off, illustrate that a player can have a significant influence over a football match. Further, as discussed above there is no rule against an Individual owning one or more players. If one starts to think that an Individual could own several players in opposing teams throughout Europe, the collective impact could be much greater.

What is more, with the PL Rules as they stand, there is no way to know whether such conflicts exist as there is no list setting out such conflicts. The Tevez ruling found that West Ham had breached PL Rule U18 (now PL Rule V20), which prevents clubs entering contracts which may give a third party the power to materially influence its policies or the performance of the team. West Ham fell foul of this rule because MSI Sports had exclusive power to facilitate the transfer of Tevez. They also pleaded guilty to a breach of the then PL Rule B13 which stated that “In all matters and transactions relating to the League each club shall behave towards each other club and the League with the utmost good faith.” West Ham breached PL Rule B13 because club officials had concealed facts about the terms of the transfer from the PL. It remains to be seen whether the PL Rule to act in utmost good faith requires Individuals to disclose any economic ownership rights that a person or company may have in another player in the PL or throughout Europe. Whether there should be such a list in order to outlaw such conflicts is again highly debatable but worthy of discussion.

Updated Rules

The PL has stated that the PL Rules currently in place will now be more strictly applied for the remainder of the 2007/2008 season. It is unclear what is to be taken into account when determining what constitutes ‘material influence’ under PL Rule V20. The PL Rules, one would assume, would now interpret a breach of PL Rule V20 to include instances where any third party ownership agreement which gives the third party the exclusive ability to transfer a player from a club.

FIFA have also looked to regulate third party ownership. Their new regulation states that “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”. With the practice of third party ownership prevalent in South America, it would be extremely difficult for FIFA to ban third party ownership. However, it seems that FIFA has recognised the need for increased transparency and club independence when third party ownership deals are in place.

However, it seems highly unlikely that the PL would go as far as to ban third party ownership altogether if a PL Rule change is to occur in the coming summer. Most probably, third party ownership of a player would have to fall in line with the PL approved loan agreements entered into between Liverpool and Mascherano (before his full transfer) and Manchester United and Tevez.

The issue that remains is not whether third party ownership should be allowed, but rather how it should be regulated.