Third-party ownership (TPO) in football-The transfers of Carlos Tevez and Javier Mascherano to West Ham in 2006

Written by Shamantak Ashok Kopp

A. Introduction

The transfers that occurred in 2006 from Corinthians to West Ham United of football players Javier Mascherano and Carlos Tevez are a turning point in football history that is significant as well as controversial. The case is strongly connected with the third-party ownership phenomenon, which is highly discussed and popular. The practice of third-party ownership is common not only in South America but also in other regions in Europe, and it involves allowing third-party investors to own a part of economic rights linked with football players. It entails that these investors gain economically from future transfer transactions in which these players are involved. The case of West Ham highlighted both juridical as well as moral issues that third-party ownership can cause as well as made people question its future impact on upholding fairness as well as competitive integrity in football as a sport.

B. Third-Party Ownership Transfers with West Ham United Football Club

Third-party ownership occurs when an investor has a partial stake in the future transfer value of a football player, which means that the investor shares in any financial benefits that come from the player being sold to another club in the future. In this scenario, the football club does not maintain full ownership of the player's registration rights; instead, the ownership is divided. This kind of arrangement often involves contractual agreements that are not entirely transparent and may lack clarity, leading to a complicated situation between the football clubs and outside investors. Such agreements can significantly cloud the true nature of who owns and exercises control over the rights associated with the player. In August of 2006, West Ham created quite a big stir in the football world when they secured no less than two big Argentinean stars, Carlos Tevez and Javier Mascherano, who had recently played in the World Cup, under highly secretive circumstances. As later became known, it turned out that West Ham had actually breached Premier League third-party ownership (TPO) rules. The economic rights connected with players were part-owned by a firm going under the name Media Sports Investment (MSI), which was controlled at that time by Kia Joorabchian, who still retained control over players even after surrendering his shareholdings in players' former club, Corinthians. In addition to that, West Ham United had actually entered into secret private agreements with these third-party owners, under which MSI was still able to retain considerable control over players, including the right to force them to be moved in later transfer windows.

This particular agreement did not grant West Ham United the complete and total control that it desired, specifically 100% control over the registrations of its players, which is a requirement set forth under the regulations established by the Premier League. These regulations clearly demand that football clubs possess full ownership (100% ownership) of a player's registration rights in order to uphold the integrity of competitions and ensure that there is no outside interference when it comes to transfer policies that could affect fairness. Moreover, it is crucial to note that Premier League regulations explicitly prohibit third-party ownership, known as TPO, with the intention of preventing external agents from influencing or dictating the policies of clubs or the performance of their teams, which, as has become evident in this situation, was indeed a concern. Reports have indicated that West Ham United was actively engaged in efforts to keep these clandestine private arrangements with third-party agents hidden and secretive from the Premier League authorities, attempting to create the appearance of compliance to evade any potential breaches of the rules.

C. Legal and Regulatory Reactions against Multiple Issues and Challenges

The West Ham United scandal was a turning point for football authorities. FIFA and the English Premier League considered TPO as a posing threat to football integrity, fair competition, and financial transparency. The Premier League made third-party ownership a complete prohibition in 2007 with a clause that required clubs to own players entirely without breaking economic rights with outside investors. FIFA made important and decisive moves to codify and reinforce its influence over the increasingly sophisticated sphere of player transfers through the enactment of a blanket international prohibition on third-party ownership that began to take effect from May 2015. This significant shift in policy was enacted through the addition of an additional article, titled Article 18bis, to its existing Status and Transfer of Player Regulations. According to this new rule, it is directly prohibited for clubs and players to enter into any agreement or contract that would enable third parties to become entangled with players' rights or transfer remuneration in any capacity. The main momentum behind its codification was largely based on fears over the prospects of conflict of interest occurring within the transfer framework, combined with a perceived lack of adequate openness in terms of dealings that commonly occurred. Furthermore, serious fears existed over risks from external agents having any influence over player transfer conclusions or over club policies that might be adverse to the sport's integrity. Despite these new stipulations, third-party ownership was still rampant and continued to be so in certain parts of the globe, especially in South America as well as certain parts of Europe, until FIFA started to enforce the prohibition stringently, along with issuing fines as well as several sanctions on individuals who contravened these guidelines.

D. Results and Controversies

The West Ham case presented evidence of TPO risks even beyond gross rule breaches. Personal contracts held back by third parties like MSI essentially deflected player careers' direction, along with clubs' transfer policies from clubs' control, which cast doubts over sporting integrity as well as governance. The case unveiled how TPO can be used to insulate investors' economic interests while clubs are subjected to sporting as well as reputation risks. In spite of the dramatic reduction in international Third-Party Ownership, aka TPO, as a result of the FIFA ban, as well as some remaining debate on questions of transparency issues within this area, there are still controversies as well as suspicions of attempts made under these bans through economic devices like floating charges or sophisticated contractual arrangements that try to circumvent existing bans. There are still debates notwithstanding on such bans existing within the European Union labour as well as competition law. There are more who are now pushing for a system of controls that allows regulated participation rather than a general prohibition on third-party investment that is more proportionate in its approach.

E. Conclusion

The transfers of highly-profiled players Javier Mascherano and Carlos Tevez to West Ham United are a central and compelling case that reveals the built-in dangers of third-party ownership, also known as TPO, in the football arena. These transactions in particular have exposed the different mechanisms through which TPO insinuates itself, thus subverting not only football club autonomy but also distorting the broader transfer marketplace itself. In addition, these tactics have undercut the integrity and transparency that undergird the sport itself. As a direct result of this incident, both FIFA as well as the Premier League responded forcefully by enacting a prohibition on TPO that led to the institutionalising of stronger governance bodies specifically aimed at protecting football's integrity. Since regulatory and jurisprudential challenges remain endemic to this field, the West Ham United case nevertheless is a perdurable as well as powerful reminder of the paramount significance of upholding open ownership as well as control within the sport itself.

*The Author is a legal Scholar from India

(The Image used here is for representative purposes only)

References

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