Third Party Rights Ownership in the UK

1. Third Party Rights Ownership in the UK Daniel Geey Solicitor daniel.geey@ffw.com 22 June 2009

2. Talk outline • Rules of each relevant association; • Prohibited under FL, FA, PL and UEFA rules?

3. What are third party agreements in football? Traditional Models • Buy a % share in a player from a club in return for a lump sum. • Financial support for a player by third party (housing, training, travelling, equipment and educational expenses) and in return the player when signing a professional contract with a football club, the contract entitles a % of any future transfer fee to be allocated the third party. E.g. Friedel funded by Milan Mandaric. • Hero Global Fund

4. Regulatory Background: Summary of PL, FA, FL, FIFA and UEFA Rules • FIFA and FA rules ensure that no entity can influence any club’s autonomy to make decisions. These rules are governed by a generic “material influence” clause. • The PL before the 2008-9 season had a similar “material influence” clause, but due to the Tevez fiasco now has a more restrictive rule in place. • The FL rules outlaw situations where an entity (either an individual or a company for example) can have an interest in more than one club. Such dual interest clauses therefore prohibit a third party owner having influence at more than one FL club. • The UEFA rule stipulates that both national and FIFA rules must be adhered to.

5. Past PL Rules and Tevez consequences The PL agreed to change its rules in the summer of 2008. The PL rules were, prior to the recent rule change, PL Rule V.20 (and formerly PL Rule U18) which stated that no club may enter into a contract that enables a third party, ‘to acquire the ability materially to influence its policies or the performance of its teams’. • There was no express clause prohibiting third party ownership; only the act of influencing a club’s policies or performance was forbidden. • This rule was cited against West Ham in the Tevez tribunal and arbitration decisions. Tevez’s third party contract contained a clause giving exclusive power to the third party owner to facilitate the transfer of the player. West Ham did not have a veto over this right and such a stipulation breached the PL Rules. • If there had been a veto right exercisable by West Ham, it is likely there would have been no breach. • Breach in the FL or UEFA competitions?

6. Present PL Rules It was decided that from the beginning of the 2008-9 season an absolute ban on third party ownership in the PL was required. A PL spokesman in the summer of 2008 stated: “At the Premier League AGM held two weeks ago it was agreed that third-party ownership of any player will not be allowed. We want to ensure no one can accuse us of compromising the integrity of the competition so we have stated that third-party ownership is illegal.” PL rules L34-35 govern this prohibition. It appears that PL rules L34-35 do not have retroactive effect meaning that any TPRO contracts entered into before the 2008 rule change would presumably still be valid.

7. Rule L35 states: “In respect of a player whom it applies to register as a Contract Player, a Club is permitted to make a payment to buy out the interest of a person or entity who, not being a Club or club, nevertheless has an agreement either with the club with which the player is registered, or with the player, granting it the right to receive money from a new Club or club for which that player becomes registered.”

8. Current FL Rules The FL rules make no explicit reference to third party ownership. Rule 81 related to Dual interests or “Interests in More than One Football Club” states that: 81.1 Except with the prior written consent of the Board a person, or any associate of that person, who is interested in a Club cannot at the same time be interested in any other football club. 81.2 A person shall be deemed to be interested in a football club if he, whether directly or indirectly… 81.2.3 is involved in any capacity whatsoever in the management or administration of that football club; or 81.2.4 has any power whatsoever to influence the financial, commercial or business affairs or the management or administration of that football club. Interestingly, the Tevez case could not have occurred in the FL as there would have been no breach of the rules so long as a third party owner does not having influence at more than one FL club.

9. Current FA Rules Under Football Association Rule C 1 (b) (iii), “No Club shall enter into a contract which enables any other party to that contract to acquire the ability materially to influence the Club’s policies or the performance of its teams in Matches and/or Competitions.” As the PL is an FA sanctioned competition, along with the FA Cup, it seems that these rules apply to any club entering either competition. The fact that the PL rules are more prohibitive than the FA rule means that it is unlikely that the FA rule would be enforced by a complaining PL club because of the absolute prohibition in the PL rules. It is debatable however, in a situation where a FL club had potentially breached third party ownership rules, whether they would be charged with a breach of the FA or FL rules. Presumably, if the complaining club was asking for a points deduction as a possible sanction, it would be the FL rules that would have to be enforced.

10. Current UEFA Rules UEFA Rule 17.05 ensures for all teams entering the Champions League, UEFA Cup or Intertoto Cup’s that: “Players must be duly registered with the national association concerned in accordance with the national association’s own rules and those of FIFA, notably the FIFA Regulations for the Status and Transfer of Players.”

11. Current FIFA Rules Article 18 of FIFA’s Rules on the Status and Transfer of Players 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.”

12. Possible third party issues • If a FL club was promoted to the PL, would previously entered into third party agreements still be valid, and if so would these contracts have to then be registered with the PL? (promoted championship clubs) • Conversely, if a PL club was relegated to the FL, could they then enter into third party agreements? • If a FL player who was partly owned by a third party rights owner is to be transferred into the PL what steps would need to be taken to achieve this under the new PL rules? • Could a third party owner buy a right in a player transferred out of the PL? • Could PL rules 34-35 (the clauses governing the absolute prohibition of TPRO in the PL) be challenged by third party rights owners? • What is the difference between a sell-on clause entitling a club to 10% of any future transfer fee and a third party agreement entitling the third party to 10% of any future transfer fee (so long as the third party cannot impose any decision making ability on the selling club)?