Brazil to lose out in FIFA's third party ownership ban

Brazilian football is bankrupt with the top 20 teams owing a collective 5.1 billion Reais ($3 billion).

The clubs survive by selling parts of player contracts to third parties who hope to recoup their money when the players are sold.

Those investors believe there are ways round the ban, but warned it was not workable in the short term and would require a complete overhaul of Brazilian football.

“Eighty percent of the players in Brazil have a percentage of their contract owned by a third party so, if (FIFA) ends this, the teams won’t have the money to pay salaries,” Roberto Moreno, executive director of DIS Sports, one of the country’s biggest funds, told Reuters.

“It can’t work in the short term. One after another, teams will stop paying salaries and football will be over.”

FIFA president Sepp Blatter said FIFA would ban the practice worldwide on Friday, but promised clubs they will have between six and eight transfer windows – three to four years – to adapt to the new rules.

Moreno said companies like DIS could avoid the ban by purchasing a club. Investors could then buy players for their team and loan them to bigger clubs who would give them a shop window.

There was no official reaction to the news from the Brazilian Football Confederation, but clubs know that if the ban is enforced it will be a game changer.

In Brazil, Sao Paulo playmaker Paulo Henrique Ganso, Chilean World Cup midfielder Charles Aranguiz and former Argentine international Andres D’Alessandro are among the top players whose contracts are at least part-owned by agents or investment funds,

“I sell portions of (my) players because I need cash flow right now,” Botafogo president Mauricio Assumpcao said last week.

His club is currently 750 million reais in debt and with the government seizing the major part of its income in lieu of unpaid taxes, selling off contracts is one of the only ways it has to pay salaries, both of players and the club’s 400 other staff.

Other investors claimed the ban was unworkable because Brazilian law cannot stop two parties from doing deals.

“The funds are not doing anything wrong or illegal,” said Frederico Pena, Director of Football at Traffic, a sports marketing firm that used to invest in players.

“If there’s a market, you can participate or not. The funds and companies and agents can continue to have private accords and each country’s law will decide if that is ok. You can’t stop them having credit assignment.”- Reuters