Third Party Ownership and its repercussions on the financial success of top performing athletes

Third Party Ownership and its repercussions on the financial success of top performing athletes

By Andreas Themistocleous, Contributor

Third Party Ownership (TPO) is a mechanism, most widely utilized in international football, through which clubs assign a player’s economic rights or part thereof, including the right to benefit from transfer fees, to third-party investors in return for a financial counterpart. It was a mechanism devised by Clubs looking to fund their operations, by creating investment opportunities for third parties, who in turn seek long term benefits and great returns; young promising players, destined for international careers were the main focus and Latin America as well as Europe were the geographical focus areas of this mechanism.

In 2015, FIFA banned this practice which had been a grey-area of legal/contractual operations for at least two decades, however the legal debate is ongoing as to the legality of the ban and its compliance with EU Law. Additionally, the ban excluded agreements that were already in place and active, hence it is safe to say that the TPO practice is by no means yet extinct. Uncertain if it will ever become extinct, if you ask me.  

Looking at TPO from an athlete’s perspective, one can easily conclude that safeguarding the athlete’s best interests, especially in terms of performance, financial success and integrity, should be the top priority. The FIFA ban of TPO certainly moves towards that direction, aligning the regulations with the athletes’ best interests. UEFA former president, Michel Platini, had been one of the most outspoken critics of TPO. In March 2014 Platini called it a danger to the sport. “TPO threatens the integrity of our competitions, damages football’s image, poses a long-term threat to clubs’ finances and even raises questions about human dignity; players are owned by opaque companies based in tax havens and controlled by some unknown agent or investment fund.”

It is obvious that TPO posed (and continues to do so) a major threat to athletes’ careers, in so many ways. First of all, the future of athletes under TPO is not dependent on the athletes’ will or achievements and performance, but rather on the financial and/or other interests of the third party in this arrangement. In a time like this, where football corruption is a proven fact, where match fixing is a real threat to the game itself, where money laundering through sports is a trend, it would be catastrophic for any professional athlete to allow the fate of his/her career to be dictated by TPO. It would be very logical to assume that any third party would have demands from athletes in such an arrangement. It would also be logical to expect any third party to exercise full control over such an investment in order to serve its best interests. Where does that leave the athlete?

Additionally, it must be pointed out that athletes’ performance on the field is highly dependent and directly related with the right mindset and psychological approach from the athlete. Having the burden to serve multiple interests rather than concentrating on the game and the performance is for sure not a favorable situation for an athlete to be placed.

So, what is the end result? An athlete under TPO is an athlete that is susceptible to outside influences; an athlete forced to discount his/her own integrity, if need be; an athlete whose main focus shifts from the game, from preparing to excel and performing at its best. An athlete under TPO is an athlete who is highly vulnerable to being projected as such, given that TPO is seen as a form of widespread “disease”, highly infectious and detrimental for any carrier.

Players who cannot control their future are not free players; they are not happy players; they are not performing as well, if the psychology is not right; they are not receiving the maximum amount of money from any transfer; hence they are not capitalizing on their athletic performance the way they should. At the same time, such athletes have a reputation of perhaps being an easy target from outside influence. Those who know and understand sports can recognize this vicious cycle that can destroy an athlete all together. It can hurt the athlete’s performance, whether that be due to voluntary or involuntary reasons, it can destroy the athlete’s image and integrity, it can prevent the athlete from capitalizing on contracts, sponsorship deals etc., as well as prohibit the athlete from future transfers, better contracts and financial success.

Given that athletic performance, financial success, personal and sporting integrity are all put in serious jeopardy, I find myself asking the same question over and over again: “why on earth would any athlete agree to TPO?”    

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Andreas T. Themistocleous (BSc, MA, MBA) is a native of Famagusta, Cyprus. He is a former basketball player, a NCAA Division I student-athlete and now a sports management/business professional. He has served in the sport industry from several positions, most notably in club football management, as a Board member of sport federations and as lecturer in academia. He is currently in the sports services industry. To connect and network with Andreas, you may find him on Twitter and LinkedIn.

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