According to a press release by FIFA, in September 24th, third party ownership is to be banned over the next period. Allowing for a transition period to settle the ongoing contracts. Third-party ownership, also known as TPO, refers to the ownership of a professional player’s economic rights or some percentage of it by a third party other than the player or his club such as sport management companies, player agents, or any other investment firms in order to receive a share of the value of any future transfer of that player.
Third-party ownership is most commonly used in South America where clubs struggle to finance its operations and struggle to have an adequate financial resources to meet the club’s economic needs in a highly competitive industry where most revenues for such clubs are made by selling a star player every once in a while to one of the big European football clubs.
The reason behind the ban is that third-party ownership have raised player’s prices and this is against fair sporting competition where money should not be the only motivation according to some sporting community officials who are with banning this practice.
Although third-party ownership had delivered so many benefits for financially struggling clubs in terms of training and accommodating their young players, the question remains whether this move is going to affect players prices negatively or positively on the long run. Also, what would be the effect on the clubs who are relaying on this practice as the main revenue stream of their clubs where sponsor-ships, TV rights, and memberships are not enough to meet the economic needs of such clubs.
Valued at $1.3 billion, the already banned practice in England and France, third-party ownership will surly impact the next transfer market prices next January and will also have a long term impact in the industry.