speri.comment: the political economy blog

Third party ownership: Big Sam, football and capitalism

Third party ownership highlights the problems associated with the intertwining of football and capitalism, and why reforms are urgently needed

Thomas Hastings, Associate Fellow, SPERI, and Lecturer at Sheffield University Management School

Tom HastingsThe recent Sam Allardyce inspired saga over third party ownership in football has served to highlight the bigger and more general problems associated with the intertwining of football and capitalism. Building on existing SPERI blogs, notably Craig Berry’s insights into the shadier side of global financial networks intrinsic to the game, the following blog suggests that debates on player ownership should incorporate wider questions surrounding contractual rights and ethics. Specifically, the variability of the rules and regulations governing football globally should be critiqued, together with the widespread normalisation of labour’s exploitation in the game.

For those who missed it, last month England manager Sam Allardyce lost his position on the back of damning footage in which ‘Big Sam’ was caught by undercover journalists advising on ways around third party ownership legislation. This issue first came to attention in the 2006/2007 Premier League season when West Ham controversially ‘signed’ two third party owned players Carlos Tevez and Javier Mascherano (fronted by Kia Joordabchan). It was a grey area then but now the rules on this matter are clear: essentially, and in no uncertain terms, you can’t do it.  Accordingly while it took several months to deliberate and establish a fine for West Ham, the consequences for Allardyce have been rather more immediate.

What’s wrong with third party ownership?

At the root of this concern is a circle which football has never come close to adequately squaring: how best to recruit players and exchange their registrations. Since the first ‘£100’ player (Willie Groves moved from West Bromwich Albion to Aston Villa in 1893) large transfer fees for players have grown to be commonplace and normalised within the game.  Only FifPro – the global union for the game – currently campaigns with any vigour to address the principal of buying and selling footballers, and so far to no avail. Marx, presumably, would have pointed to the naked exploitation inherent in this system and the alienation caused when one’s labour is commodified.  In Management School language ‘Hard Human Resource Management (HRM)’ springs to mind: namely the treatment of workers as a genuine resource/object in a business or production process.  The system has never been pleasant, or as we shall see, sustainable, as a means of facilitating the movement of footballers between employers.

The key relationship here is one of transfer fees and ‘ownership’ irrespective of whether the player belongs to a club or a combination of third parties. Former UEFA president Michel Platini famously labelled the latter arrangement a form of ‘slavery’, but surely the principle is similar whether or not a club, a third party actor, or a combination of these ‘own’ your right to work and profit from your labour? This point was echoed, in sorts, by former Crystal Palace owner Simon Jordan working on the logic that players are indeed ‘assets’ of clubs. By market logic why should the risk and profits associated with a tradeable asset not be spread across different parties?  There are valid comparisons to be made here with horseracing, where it’s commonplace for the sporting asset to be joint owned by parties/conglomerates.  Hypothetically there are also benefits to be had through third party ownership. As noted by Michael Calvin, author of the excellent Nowhere Men, from a financial perspective clubs may share the risks implicit in producing young players, and so help to balance their books through reduced debt burdens.  This practice is particularly popular in South America.

Platini’s main fear was that such ownership models may cause ‘improper links between agents, financial speculators and clubs’, thus threatening the fairness of sporting competition.  This is a valid point, though it should be pointed out that managers and clubs are already heavily involved in financial speculations and dubious incentive practices in relation to transfers, as Allardyce alluded.  Alternative routes around the regulation are also likely to emerge.  Perhaps one example comes in the form of i2i (who offer a similar service to Glenn Hoddle’s Spanish academy model), a firm which have developed a model which allows for the mass development of local players and others unable to secure professional contracts.  i2i recently invested in Tadcaster Albion of the Evo-Stick Northern Premier, a club they utilise as part of their model to coach/farm swathes of young and unattached players with a view to future transfers higher up the football pyramid (see Leeds United’s influx of Brazilian players via Tadcaster Albion and the ‘i2i Academy’).  Third party ownership rules do not appear to restrict such behaviour or the development of related (innovative) business models – indeed i2i boast the status of an ‘FA Registered Intermediary’. Under the current transfer system it remains to be seen if such models are likely to have positive or negative implications for neighboring lower-league clubs within the region.

Reforms needed

If more evidence was needed that reform is needed there is plenty to be had on sporting grounds. The transfer market provides a woeful medium for distributing the financial resources generated in football.  This is epitomised by the near dominance of a clutch of cash rich teams within the game (albeit despite Leicester winning the Premier League last season).  While there is not even a hint of any appetite to change this, one obvious adjustment needed is for more centralised control and regulation of the game stemming from the national Football Association.  This comes with a view to distributing funding more evenly across clubs, though the separation of the Premier League from the rest of the football league structure has made this a near impossibility.

A further idea would be to implement a U.S. style draft system in which players are not bought and sold, but rather ‘traded’ between teams. The less successful teams would gain advantage via ‘first picks’, thus encouraging weaker teams to grow stronger (and vice-versa) unless good coaching and tactics are deployed.  This would also offer the added benefit of providing a more level playing field from which to judge the teams’ managers.

Sceptics of such systems will point to the current incentive for smaller clubs to produce youth players to sell on, who may then (in theory) generate financial stability and allow sustainable progression. But this system isn’t working: even lower league clubs renowned for producing major talents, such as League Two’s Crewe Alexandra, still tend to reside in the lower levels of football.  Moreover, the rules are continually rigged against smaller clubs, as demonstrated by the Elite Player Performance Plan which allows clubs with top ranked academies to pluck starlets from the lower leagues at standardised rates and set prices well below their potential market value.

With legislative tinkering of this sort not even bending in the right direction, perhaps now is not the most realistic time to moot a re-think of broader questions relating to player ownership itself. This is unfortunate because it is only via a paradigm re-think of this kind that radical changes in football (financial and otherwise) are likely to occur.  Given its profile, football as an industry maintains an obligation to treat its workers well and to act as a bellwether for other sports (be it managers, coaches, players or those who build the stadiums). With this in mind a statement of intent from current FIFA President Gianni Infantino with respect to amending the transfer system is arguably already overdue (and unfortunately absent in FIFA’s just-published ‘vision for the future’ strategy). The forging of stronger FIFA-FIFPro links around subjects such as worker rights, ownership and labour market regulation would also go some way to drawing a line once and for all under the ethical inadequacies of Sepp Blatter’s FIFA regime.

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