Recently Soccerex published a post by Marcos Motta, notably a board member of the European Football Agents Association and Neymar’s attorney, in which he defended the practice of Third Party Ownership (TPO) as not only legal but instrumental to the survival of Brazilian soccer. While it is unsurprising that someone in the TPO industry would express support it is important to touch on each point.
Motta begins by casting TPO opponents as primarily engaged in an emotional argument conflating ‘ownership’ for ‘slavery’. He suggests that the false association has fueled much of the “populist intent” that has brought TPO into the limelight, whereas in Brazil ‘economic rights’ of a player is an understood and accepted concept. This is a straw man. Although there are inevitably individuals and fringe media outlets who delight in using inflammatory language to garner attention, most people understand that a soccer player’s economic rights are separate from their freedoms as a human and a club or entity may hold ownership over the former without the latter.
He then describes at length the provisions which form the basis for TPO under Brazilian and Portuguese law. As with the supposed ‘slavery’ misunderstanding, the legality argument is misdirection. Certainly, there must be plenty in the law to support TPO activities, it would be surprisingly obtuse of Motta and other TPO beneficiaries to practice without legal backing. But what is legal is not necessarily beneficial to a market as a whole. Laws are formed through a constant battle between market participants and imbalances are not only possible but likely. We only need to look at the debate over High Frequency Trading to see a practice which is wholly legal but has profound and possibly severely negative effects on the whole markets.
The health of Brazilian soccer is offered up as the final leg of the TPO case. Motta points to the economic interest that Brazilian clubs have in seeing players command high interest and eventually find their way to the lucrative European markets. This is perhaps the only valid argument in the whole post. If TPO entities do in fact play a vital role in increasing the value of players (and subsequently the value that clubs receive in transfers) then it can be argued that they play a beneficial role in the transfer market. Whether that value comes in the form of marketing, player development, international relationships or some combination is largely irrelevant as long as the overall pie is expanded.
However, if investors are merely capital adding friction to transfers that would have happened anyway how is that beneficial to soccer? Are TPOs better at moving players internationally? Do selling clubs get substantially higher transfer fees? What is the distinction with agent services? Motta does not provide answers to these questions which are at the very heart of the ownership debate.
Proponents must demonstrate the value added to the transfer market in order to make a positive case for TPO and differentiate themselves from mere middlemen. If the claim is that TPO benefits selling clubs does that not simply come at the cost of larger clubs with additional value taken out by investors? If TPO is for players how does it differ from traditional agency relationships? These questions and larger questions about the incentives and motivations of actors in the ownership industry are the real issue that should be driving the debate about TPO legality.