Asser International Sports Law Blog

Our International Sports Law Diary
The Asser International Sports Law Centre is part of the T.M.C. Asser Instituut

Revisiting FIFA’s Training Compensation and Solidarity Mechanism - Part. 3: The Curious Non-Application of Training Compensation to Women’s Football – By Rhys Lenarduzzi

Editor’s note: Rhys Lenarduzzi is a final semester Bachelor of Law (LL.B) and Bachelor of Philosophy (B.Phil.) student, at the University of Notre Dame, Sydney, Australia. As a former professional athlete, then international sports agent and consultant, Rhys is interested in international sports law, policy and ethics. He is currently undertaking an internship at the T.M.C. Asser Institute with a focus on Transnational Sports Law.

 

As recently as September 2020, questions were raised in the European Parliament on the non-application of training compensation to women’s football. Whilst this blog will predominantly consider potential inconsistencies in reasoning for and against training compensation in men’s and women’s football, the questions before the Commission were largely on the theme of disrespect and discrimination. Somewhat unfortunately, the questions raised were side-stepped, with Ms Gabriel (Commissioner for Innovation, Research, Culture, Education and Youth) simply stating that: “The TFEU does not give the Commission the competence to interfere in the internal organisation of an independent international organisation such as FIFA.” This might be true in theory, though one might feel some degree of uneasiness if privy to the Commission’s role in the 2001 FIFA regulatory overhaul.

It is currently explicit in the regulations and the commentary, that in women’s football, signing clubs are not required to compensate training clubs for developing players, through the training compensation mechanism that exists in men’s football. Though it is a contentious comment and as will be expanded below, this may not have always been the case.

At Article 20 of the FIFA Regulations on the Status and Transfer of Players (RSTP), one will find that the principles of training compensation shall not apply to women’s football. Further, in FIFA’s recently released Women’s Football Administrator Handbook (the handbook), it states that disputes relating to training compensation are limited for the moment to male players only.[1]

Regulations on solidarity contributions on the other hand do apply to women’s football, but given transfer fees are not so common, the use of the mechanism is not either. As an indication of how uncommon the activation of the solidarity contribution mechanism in women’s football might be, FIFA reported in the handbook just four claims with the Players’ Status Department in 2016 (three claims involving the same player), and zero since.[2] That is in comparison to hundreds of claims made per season in men’s football, where signing and owing clubs had not fulfilled their obligation to pay the solidarity contribution.

Given the aforementioned, this blog will largely focus on training compensation and how it came to be the case that this mechanism, often presented as critical in the context of men’s football, does not apply in women’s football. To do so, I will first discuss the reasoning advanced in an unpublished CAS award, which one may reasonably suspect played a fundamental role in shaping the current exemption. I will then turn to FIFA’s timely response to the award and the adoption of its Circular No. 1603. Finally, I will point out the disconnect in FIFA’s decision to adopt two radically different approaches to the issue of training compensation in male and female professional football.


1. CAS 2016/A/4598 WFC Spartak Subotica v FC Barcelona

This little-known, David vs. Goliath, Court of Arbitration for Sport (CAS) award on appeal of a FIFA Dispute Resolution Chamber (DRC) decision, might be what prompted FIFA to make the relevant changes excluding women’s football from the scope of Article 20 RSTP in 2017. Though not a public case, one might reasonably suspect the decision was the nudge that led FIFA to change the regulations and explicitly state that training compensation does not apply to women’s football, given the timing and the fact that this was ultimately a decision that went counter to the internal decision at the DRC.

A significant consideration for the CAS and one which needed to be made clear by the panel, was the distinction between whether training compensation should apply versus does apply. The CAS deemed its task was not to consider the former, regarding the latter it found the Serbian women’s club reasonably interpreted the then applicable RSTP as covering women’s football, given in other places within the same regulations there is a concerted effort to make no discriminatory distinction between the genders, and, the regulations at this stage did not explicitly state that the mechanism did not apply to women’s football.

Consequently, the award provided that FC Barcelona was to pay 2.5 years at the category 1 rate of EUR 90,000, amounting to EUR 225,000 (plus 5% interest and costs) to WFC Spartak Subotica despite numerous attempts from FC Barcelona’s legal team to aver training compensation does not apply to women’s football.

Some of the ill-received arguments were attempts to raise the question of whether training compensation should exist, largely pointing at the commercial differences and size of the game in women’s and men’s football. The panel would not deal with these questions and instead insisted on considering whether it does exist, per the regulations as they were. FC Barcelona attempted a comparative argument with Futsal where the training compensation mechanism does not apply. This was also dismissed and deemed an improper comparison. Not due to the comparison per se however, but rather the panel concluded the point may well go against the respondent, given:

“the fact that FIFA included an express exception of futsal but no equivalent exception of women’s football is at least some indication that it did not intend to exclude women's football.”[3]

The applicant relied heavily on that which was stated at the “General Provisions’ section of the RSTP (2012), namely “Terms referring to natural persons are applicable to both genders.” The tribunal saw the provision as favourable for the applicant and that the burden was with FC Barcelona to show that the RSTP ought to be interpreted another way, by either providing some additional context, history, intention or similar. The respondent was unable to do so and instead relied heavily on the previous DRC decision in its submissions and did not submit much by way of evidence at all. The panel paid particular attention to the lack of evidence given by the respondent and that this case may have looked differently had FIFA accepted an invitation to join, as FIFA may have been able to shed light on how the regulations ought to be interpreted, had they been able to provide the context and intention that FC Barcelona could not.[4]

Ultimately when it came to FC Barcelona’s submissions and the prior decision of the DRC, the CAS was uncomfortable with “a distinct undercurrent of a policy decision that the RSTP should not apply to women's football”[5] when a rigorous interpretation of the RSTP (2012) as it stood then was what was required. Furthermore, the panel landed at “an overall conclusion that the DRC reasons are flawed at various points and did not sufficiently grapple with the arguments for the Appellant.”[6]

 

2. 2017 amendments and FIFA Circular No. 1603

Though FIFA declined an invite to join the above CAS case,[7] it is in a sense as though the submissions made by FC Barcelona’s legal team were simultaneously on behalf of FIFA, given a heavy reliance on the prior DRC decision and what followed. In what may have appeared a clarificatory exercise at the time, it appears the 2017 amendments announced via FIFA Circular No. 1603 were at least in part a response to the above CAS case.

Within that circular, FIFA announced that the regulations “now explicitly specifies that the principles of training compensation do not apply to women's football.” It made a point that the express amendments pertaining to training compensation now reflect existing DRC jurisprudence and “clarify the always intended meaning”. Whilst that clarity is direct, it may also contain an undertone of frustration in relation to the above CAS case. FIFA were undoubtedly addressing what it perceived as a problem, though it is the following from Circular No. 1603 that might raise more questions than offer solutions: “It should be noted that the existing training compensation formula would act as a deterrent to the movement of female players and consequently stall the development of the women's game.” Sound familiar? This will be expanded upon below.

Finally on training compensation and women’s football and before addressing other issues therein, Circular No. 1603 states that “FIFA administration is working on a specific concept to be applied to the women's game in consultation with the stakeholders, bearing in mind the overall objective to promote and enhance the development of women's (professional) football.” Whilst this is for another blog and for another day, one can reasonably wonder what has been done. Or might it be the case that refraining from more regulation has resulted in more growth in the women’s game?

Noteworthy in hindsight, given the CAS case is and was not public, is that FIFA did not have the pressure it may have otherwise had to explain its regulatory amendments regarding training compensation in women’s football, that were contrary to the CAS decision. Whilst the CAS left the door open for sound arguments to be made against training compensation in women’s football, they found serious flaws in the arguments made by FC Barcelona, as well the reasons given by the DRC in the initial decision. Most notable on this front might be an out-and-out rejection of a comparison with futsal, as well rejecting a general distinction between the men’s and women’s game as being useful.  Despite this, it appears FIFA proceeded to explicitly enshrine in the RSTP that training compensation does not apply, without dealing with the fundamental questions raised but not necessarily answered in the CAS case. It is just interesting to note, that the CAS award that was challenging FIFA’s rationale was coincidentally kept confidential. This might speak for greater (and systematic) transparency with regard to the CAS’ appeal awards.


3. The Incoherence of a Double Standard Between Men’s and Women’s Football

It is certainly true, in a very general sense, that women’s and men’s football are in a different place commercially inter alia. However, as mentioned in my introductory blog, men’s football has since the late 1800s in the form of the ‘retain and transfer’ system, and now with the current mechanisms, had systems that were claimed to be imperative to incentivise training by compensating clubs for developing players (not to mention the growth and survival of the game). So why is the same rationale not applied to women’s football? Might it be reasonable to conclude that women’s football in its current stage of economic development is at an equivalent stage to where men’s football was at some point between then and now, where a system for compensating training clubs and incentivising clubs to develop youth did exist?

In any case, the rationale appears flawed, as comparing men and women’s football in the general sense is not a useful exercise. Just a brief analysis of the gap between the richest and poorest clubs in men’s football exposes it so. Other than the fact both entities are football clubs, what is the same about Real Madrid of Spain and Rèal Comboni of the Central African Republic? What are we to make of a comparison of Olympique Lyonnais Féminin (the most successful women’s football team in history and a commercially successful club and story), and Liberty Professionals F.C. men’s team of the Ghana Premier League (who do not always fill their 2,000 seat stadium)?

At paragraph II. 19 of the prior DRC decision to the above CAS case “the DRC deemed necessary to stress that the award of training compensation for the transfer of female players could possibly even hinder the further development of women’s football and render the previous efforts to have been made in vain”. A near identical claim to that made in the aforementioned FIFA Circular. This may be the case, but isn’t this just an extension of the “hindrance effect” I referred to in my previous blog regarding African players? Though not the exact same flavour of hindrance, as in the case of the African player I was largely referring to the mechanism hindering an individual from being able to transfer freely. In this instance the hindrance might be more macro in that, a growing women’s club may be set back if forced to pay compensation to the training clubs of the players they sign and in turn the women’s game suffers. In any case, the notion that training compensation might act as a deterrent or hindrance being exclusive to women’s football is absurd in theory, and even more so in my experience in practice.

The commercial differences are widely stated and perhaps overstated as reasons why signing clubs ought not or could not pay training compensation in women’s football. Whilst such a claim may at least contain a grain of truth, the commonly used argument overlooks the fact that the cost of developing and training players at grassroots level, that which is the subject of compensation, is often similar within nations and certainly across the genders. In the above CAS case, the only witness and the president of both Spartak Subotica men’s and women’s clubs, Mr Zoran Arcic, stated that the costs were almost identical for men and women and that they were paid approximately the same amounts of monthly salaries or scholarships.[8]

It has been argued that Futsal is comparable in its development with women’s football commercially, and that is why the principles of training compensation apply to neither. At paragraph II.16 of the DRC case prior to the appeal at CAS, it was averred that "the grade of professionalism reached in futsal also lies far behind the one of eleven-a-side men’s football insofar, according to the DRC, the situation may be considered as comparable to the one of the women’s game.” However it has been reported that some futsal players are signing contracts in excess of EUR1 million. How then could one conclude that training compensation regulations should apply to a small men’s club in South America or Africa, or any confederation for that matter, with entire budgets much smaller than individual players’ salaries in futsal or women’s football, when the evidence suggests the commerciality of futsal and the women’s game in size and opportunity trumps many men’s football entities.

In 2019, FIFA initiated a Club Solidarity Fund for the Women’s World Cup, which compensates or rewards clubs that trained and developed players from the age of 12 who participated in the World Cup.[9]  What is one to draw from this positive though peculiar commitment? Are only training clubs that had the fortune of one of their players going on to a world cup, worthy of being compensated? This appears inconsistent with far reaching societal effects training compensation was said to have and why it was deemed justified in the relevant cases, commentary and media. Might it be the clubs that are not able to produce players of a high enough quality to go to a World Cups that need the funding? Further, this fund will not trigger the same alleged incentives to train players that the training compensation mechanism apparently has.

An array of arguments and justifications made for a system that hinders free movement to a considerable degree, though incentivises training, was embraced in the Bernard[10] ruling of the Court of Justice of the EU. So how come women’s football should fall outside of this widely acknowledge necessity to encourage training according to FIFA? Nowhere in Bernard can one find a specific reference to men only when the importance of encouraging training is explored at length. Elsewhere in EU policy documents one finds instead the explicit recognition that “investment in and promotion of training of young talented sportsmen and sportswomen in proper conditions is crucial for a sustainable development of sport at all levels”.[11] Until the CAS award discussed above, FIFA had appeared to argue that such investment only eventuates if a training compensation system is introduced. Hence, this strange double standard between men and women’s football might deserve a much more elaborate explanation than the one put forward by FIFA.[12]


4. Conclusions

If it is the case that training women is the same or similar in cost as training men, and it is that actual cost that the training compensation mechanism is geared towards incentivising clubs to spend on youth and then be compensated for, then one might have difficulty in concluding the principles of training compensation should apply to one and not the other. If it is the case that there is vulnerability of women’s clubs and in turn of the women’s game if they had to pay training compensation, and there exists a myriad of men’s clubs in the same economic predicament, might that say something about the appropriateness of the mechanism more broadly?  Ought a player’s free movement be prioritised simultaneously with the financial viability of mid to low wealth clubs, which raises questions about the suitability of the mechanism across the genders, yet is significantly amplified by its apparent inappropriateness for women's football. 

The identification of the various flaws in the justifications for the regulations is to say nothing of whether the systems ought to exist. Rather, it is to highlight that two sets of contradictory rules are operating within the FIFA regulations and the arguments for the current state of affairs are philosophically and economically flawed.

It appears that the women’s football community has bought into this notion around transfer fees, etc. What is culturally happening then is that clubs are more likely to let a woman follow her dreams and not stand in the way in the form of demanding transfer fees (and cannot in the form of training compensation), as the concept of fees is a relatively foreign one in comparison to the men’s game. This can at first glance appear unfortunate that women’s clubs are not being compensated, but it could just as plausibly be uncovering that the important principles of free movement ought to trump a flawed redistributive system, and that in fact a system of redistribution in football could (and maybe should) be entirely divorced from the transfer system and the movement of players.


[1] FIFA Women’s Football Administrator Handbook 2020, 125.

[2] Ibid, 118.

[3] CAS 2016/A/4598 WFC Spartak Subotica v FC Barcelona at 54.

[4] Ibid at 49.

[5] Ibid at 55.

[6] Ibid at 55.

[7] Ibid at 104.

[8] CAS 2016/A/4598 WFC Spartak Subotica v FC Barcelona at 73.

[9] Women’s Football Administrator Handbook 2020, 151.

[10] Case C-325/08 Olympique Lyonnais SASP v Olivier Bernard and Newcastle UFC, ECLI: EU: C:2010:143

[11] Commission’s White Paper on Sport of 11 July 2007,6.

[12] Consider also at Annex IV to the Conclusions of the French Presidency from the European Council meeting in Nice, where it was said the “training policies for young sportsmen and women are the life blood of sport, national teams and top-level involvement in sport and must be encouraged”

Comments are closed
Asser International Sports Law Blog | Unpacking Doyen’s TPO Deals: The Final Whistle

Asser International Sports Law Blog

Our International Sports Law Diary
The Asser International Sports Law Centre is part of the T.M.C. Asser Instituut

Unpacking Doyen’s TPO Deals: The Final Whistle

Footballleaks is now operating since nearly half a year and has already provided an incredible wealth of legal documents both on TPO (and in particular Doyen’s contractual arrangements) and on the operation of the transfer system in football (mainly transfer agreements, player contracts and agents contracts). This constant stream of information is extremely valuable for academic research to get a better grip on the functioning of the transfer market. It is also extremely relevant for the shaping of public debates and political decisions on the regulation of this market. As pointed out on the footballleaks website, it has triggered a series of press investigations in major European news outlets.

In this blog, I want to come to a closure on our reporting on Doyen’s TPO deals. In the past months, we have already dealt with the specific cases of FC Twente and Sporting Lisbon, reviewed Doyen’s TPO deals with Spanish clubs, as well as discussed the compatibility of the TPO ban with EU law. In the Sporting Lisbon case, Doyen has since earned an important legal victory in front of the CAS (the ensuing award was just published by Footballleaks). This victory should not be overstated, however, it was not unexpected due to the liberal understanding of the freedom of contract under Swiss law. As such it does not support the necessity of TPO as an investment practice and does not threaten the legality (especially under EU law) of FIFA’s ban.

In our previous blogs on Doyen’s TPO deals we decided to focus only on specific deals, Twente and Sporting Lisbon, or a specific country (Spain). However, nearly six months after the whole footballleaks project started, we can now provide a more comprehensive analysis of the TPO deals signed by Doyen. Though, it is still possible that other, yet unknown, deals would be revealed, I believe that few of Doyen’s TPO agreements are still hidden. Thanks to footballleaks, we now know how Doyen operates, we have a precise idea of its turnover, its return on investments and the pool of clubs with which it signed a TPO agreement. Moreover, we have a good understanding of the contractual structure used by Doyen in those deals. This blog will offer a brief synthesis and analysis of this data.


I.              Doyen’s “geoeconomics” 

A.    The Iberian base

If you trust the veracity of Doyen’s map of deals,[1] Doyen had signed 31 TPO deals before March 2015, of which many ERPAs are published on the footballleaks website. It started operating in August 2011, with a deal involving Abdellaziz Barrada, which was then a player at Getafe and is now playing at Olympique de Marseille. Until the end of 2013, and the signing of the controversial deal with FC Twente, Doyen was only operating in the Iberian Peninsula (with the exception of an isolated contract involving Felipe Anderson from the Brazilian club Santos in September 2011). The clubs involved were Sporting Gijón, Atlético Madrid, FC Porto, Sporting Lisbon, Getafe, Sevilla FC, Benfica, and Valencia. Those deals concerned a wide range of players, from the highly profitable stars Falcao, Mangala or Rojo to a series of unknown players. Based on the aforementioned ‘map of deals’, Doyen has extracted substantial profit margins from those deals. The maximum of 524% profit being reached on Kondogbia’s transfer from Sevilla to Monaco (Doyen invested €1.5 million and recouped €9.358.653 one year later!).

What drove Spanish and Portuguese clubs into the arms of Doyen? The first openly acknowledged reason for TPO deals is enshrined in many of the ERPAs signed during this first phase of Doyen’s operation: it’s the financial crisis, stupid! Spain and Portugal were directly affected by the crisis. Their financial systems broke down as well as their public finances. At once many Spanish and Portuguese clubs (like most of the local businesses) must have been cut off from their usual credit lines and unable to rely on the traditional patronage of local authorities. In 2012, the outstanding debt of Spanish football clubs with the public authorities was restructured. A recent economic study shows the depth of the financial difficulties faced by a majority of the Spanish clubs in the BBVA League at that time. Barcelona and Madrid are the two lone trees that are hiding a very poor forest. This is a fertile ground for risk-averse investors like Doyen to supplement traditional lenders. As far as the three Portuguese top clubs (Benfica, Sporting Lisbon and FC Porto) are concerned a different dynamic might be at play. Indeed, they have a (quasi) secured spot in the most prestigious European club competition, the UEFA Champions League. There is obviously no better competition to feature the qualities of a player and boost his market value. Their collaboration with Doyen is, thus, less risky than for mid-level Spanish clubs (Getafe, Gijón, Sevilla or Valencia), which were unlikely (or at best uncertain) of ever participating in the Champions League.

In 2014 and 2015, this Iberian bias progressively faded. Doyen entered in new deals only with Granada (Luis Martins), FC Porto (Brahimi) and Cadiz FC (multiplayers). As FIFA announced its decision to ban TPO in September 2014, this might have cooled off the interest of the most prominent Spanish and Portuguese clubs. It is also possible that since the Eurozone crisis came to a slow end and the European central bank flooded the financial markets with cheap money, football clubs progressively recovered access to more traditional (and less risky) sources of credit.

B.    Doyen’s internationalization

This disaffection of its traditional market has probably incentivized Doyen to internationalize its investments beyond its Iberian basis, starting with the infamous multiplayer deal with FC Twente in December 2013. Since August 2013 and a first TPO deal with a Mexican investment company, Twente’s management seems to have been desperately looking for cash to finance its unlimited ambitions. The fire sale of Twente’s key players to Doyen was probably urgently needed to cover the club’s short-term deficits. In practice, some of the players concerned (Tadic and Promes) were sold only six months after the deal. Doyen made a huge profit out of those sales, reaching 300% for Promes’ transfer. In that case Doyen’s intervention was triggered by the financial despair of an overambitious mid-level club, with an insufficiently solid source of stable revenues to support its activity on the transfer market. Doyen was no white knight. It is an investment fund, not a charity! The group was interested in the worthy assets of Twente and bought them at cheap value. This was probably the most destructive intervention of Doyen, as it was not aimed at supporting the recruitment of a specific player but at temporarily propping up the finances of a bankrupt club in return for its only solvable assets.

In 2014 and 2015, Doyen decided also to heavily invest in the South American market. It made a number of deals (11) involving mostly Brazilian players (from Santos FC, Sao Paulo, Atletico Paranense and Flamengo) and also two Columbians (from Deportivo Estudiantil). Those deals are for the most part still on-going. They are also probably riskier for Doyen than the European deals because of the limited guarantees that South American clubs can provide. The Leandro Damiao case is there to remind us that those deals are in any case risky for the clubs. Damiao was a great prospect when he was transferred for €15 million to Santos in December 2013. Based on the map of deals Doyen loaned €12 million to Santos in return for 80% of the economic rights attached to him. Yet, after three years, Damiao’s contract was rescinded in December 2015 and he moved on a free transfer to Betis Seville, leaving Santos with an €18 million debt to pay to Doyen (which was recently upheld by the Brazilian justice). This is a good reminder that TPO, on whichever continent, is everything but risk-free for clubs. The sweet feeling of short-term cash might very well turn into the (very) sour taste of long-term debt.

Finally, in 2015 Doyen entered into a surprising deal with an unknown Belgian club: Seraing United (or RFC Seraing). The relatively small deal (€300.000) concerns three of Seraing’s players. It is definitely an unusual investment for Doyen with very little potential to extract substantial profit. One hypothesis is that this contract is used as a legal Trojan horse to support Doyen’s legal challenge against FIFA’s TPO ban in front of Belgian courts. Indeed, Doyen has hired (for €200.000 in 2015 as indicated in the ‘map of deals’) star lawyer Jean-Louis Dupont, who was Jean-Marc Bosman’s lawyer in the eponym case, to entertain complaints in front of the European Commission and simultaneously the Belgian courts against FIFA’s TPO ban. In that regard, it has successfully used the sanctions imposed by the URBSFA (the Belgium Football Federation) and FIFA against Seraing to justify the jurisdiction of the Belgian courts over the case (see our blog on the latest ruling in this case). Doyen’s TPO investment in Seraing has probably more to do with a smart legal stratagem than a long-term investment.

II.            Doyen’s Contractual System

A.    Doyen’s guarantee: the Put Option or Free Agency Fee

Doyen’s contractual system has been relatively stable since it started operating. The principle is always the same: Doyen provides a lump sum (for various purposes, often the recruitment of the player) and gets a percentage of the economic rights attached to a player in return. However, what it does not do, and that is decisive in making it a rewarding business model, is share with the club the risk that the player fails to become a star or that the player leaves on a free transfer at the end of his contract. For the latter scenarios, Doyen quickly developed a bulletproof contractual system structured around a number of contractual clauses limiting its exposure. Be it named ‘Free Agency Fee’ or ‘Put Option’, the idea is that if a profitable transfer of the player fails, Doyen will secure a minimum return on its investment (often the original grant plus 10% of interests each year). This minimum return on investment is usually secured with a ‘hard’ warrantee, a pledge on a share of fixed revenue. This ‘deed of pledge’ (as it was called in Twente’s case) is often attached to the future revenues derived from the broadcasting rights to which the club is entitled as a member of a professional league or its future ticketing proceeds. It is this secured minimum return on investment that makes it a low risk economic endeavour for Doyen. Basically, Doyen’s only risk is that a club would go bankrupt and disappears, but football clubs are a bit like systemic banks, they are too popular to fail and have the tendency to be rescued by public authorities when they face deep financial trouble.[2]

B.    The ‘Reasonable Transfer Offer’ and Doyen’s influence on the transfer policy of clubs

Doyen’s TPO system also guarantees that in case a player is successful, a club will be forced to transfer him if a ‘Reasonable Transfer Offer’ is made. The ‘Reasonable Transfer Offer’ is defined as a minimum amount. If an offer matches or exceeds this amount, Doyen can force the club into choosing either to sell the player or to buy back Doyen’s share for a price equivalent to Doyen’s share of the transfer proceeds if the player would have been transferred. This is a mechanism that ensures that clubs will not be able to keep an outstanding player and pay the minimum fee due at the end of his contract (or the put option fee), rather than sell the player for a more substantial amount. As the clubs having recourse to Doyen are, as it is argued in its own submissions to the French and Belgian courts, unable to afford recruiting these players in the first place, they are more than unlikely to be able to buy back the share of the economic rights owned by Doyen when their price has tripled or quadrupled. The alternative is simple: sell or go bankrupt. Until now few clubs have chosen the latter option. The mechanism of the ‘Reasonable Transfer Offer’ is in itself aimed at influencing the transfer policy of the clubs signing a TPO deal with Doyen. They have their hands doubly tied: if the player fails to materialize as a star they will have to repay at least Doyen’s investment plus healthy interests; if he does become a star they will lose him as soon as the right transfer offer comes. And Doyen’s TPO contracts ensure that the right transfer offer will come. 

C.     Doyen’s double-game as an agent

In many of the ERPAs published by footballleaks one will find a provision indicating that Doyen has the right to act as an agent to promote the transfer of the player of which it owns a share of the economic right.[3] Doyen, which has intimate knowledge of the key legal conditions enshrined in the ERPA, is in a position to market the players to new clubs and force a transfer by disclosing (informally) the level of the ‘Minimum Transfer Offer’. The potential for conflicts of interests between Doyen acting as an investor and owner of a share of the economic rights attached to a player and Doyen acting as mandated agent to promote the transfer of the same player is obviously high. Nelio Lucas, who was and still is active as an agent, impersonates these ties between Doyen and the shady world of agents. His personal contacts in the milieu are well-known and have been instrumental to the success of his enterprise. Doyen’s unhindered double game as an agent and an investor is one of the reasons why TPO needs at least to be strictly regulated or even banned. When engaging in TPO deals, financially distressed clubs are basically handing over to Doyen the management of parts of their squad. Indirectly the player’s freedom is also impaired. Who can doubt that a club will be able to incentivize his player to leave if it needs him to do so due to Doyen’s financial Sword of Damocles pending over its head.

Conclusion: Thank you footballleaks!

Doyen’s business model is smart and has to be acknowledged as a cynical embrace of the intrinsic logic of FIFA’s transfer system. It plays on each club’s natural drive for grandeur and the propensity of the clubs’ management to throw caution to the wind to get there at least once. Doyen’s head, Nelio Lucas, is no criminal. There is no indication that he engages in match fixing or money laundering. He is a dead-set investor hunting for the grail: secure financial returns on investments. And he (with many others[4]) has found a way to play the transfer system to his advantage and to game irrational clubs and managers. This does not imply that this business model should go on, however.

Instead, it must be acknowledged that this extreme form of ‘financiarisation’ of football brings with it important risks for clubs. Not only football fans are sometimes (often) irrational, more dramatically the management of clubs are often acting irrationally when they take on huge financial risks to achieve short term sporting success. It must also be acknowledged that public authorities have the tendency, for right or for wrong, to bail out football clubs when they face financial troubles. Thus, in turn, raising the potential of moral hazard and free riding from the part of reckless investors. Finally, it is clear that the transfer market due to its intrinsic transnational structure and the role played by inter-subjective networks is prone to conflicts of interests, which are heightened when the ownership of the economic rights attached to a player are distributed in an opaque fashion amongst a set of different actors.[5] The problem must be understood as structural. New legal mechanisms must be devised to avoid that the transfer system is abused for the purpose of speculation and to ensure that clubs are not incentivized to have recourse to creative financing to achieve competitive balance. 

All this calls for strong regulatory intervention. But, can FIFA truly regulate a complex set of transactions that span a variety of jurisdictions? Personally, I doubt it.[6] It needs to simplify the market to better control it. The TPO ban is a form of simplification. Another option would be to use FIFPro’s current complaint against the FIFA transfer system in front of the EU Commission to reinvent the transfer system and put a negotiated end to the artificial commodification of football players’ contracts.

In any event, we would not have been able to discuss all of this without footballleaks. In a complex world where markets ignore borders and economic actors operate from opaque jurisdictions, exceptional actions are needed to supervise those transactions and ensure that the visible hand of the general interest supports the (sometimes truly) invisible hand of the market.


[1] This document is susceptible to being easily forged, as it is a simple excel sheet. Therefore, I crosschecked the data included on the excel sheet with Doyen’s ERPAs published on Footballleaks, which confirmed the likely veracity of the information provided in the map of deals.

[2] This is where the EU State aid rules might also come into play to protect the public purse. See R. Craven, ‘Football and State aid: too important to fail?’, International Sports Law Journal (2014) 14:205–217 and B. Van Rompuy & O. van Maren, ‘EU Control of State Aid to Professional Sport: Why Now?, Forthcoming in: A. Duval & B. Van Rompuy (eds.) The Legacy of Bosman. Revisiting the relationship between EU law and sport (T.M.C. Asser Press, 2016).

[3] See for example: ERPA Guilavogui, para.7 ; ERPA Ola John, para.10.6 ; ERPA Luis Martins, para 14.2 ; or ERPA Kondogbia, para.7.

[4] Numerous investment firms and agents/intermediaries relied on a similar business model. Footballleaks has released fewer documents as far as they are concerned, but see for examples: Gestifute; Gol Football Luxembourg S.A.R.L; Representaciones Internacionales Vijai SA; Quality Football Ireland Limited; Leiston Holding limited.

[5] The “opacity” of the transfer system was recently flagged by an excellent Harvard study: M. Andrews and P. Harrington, ‘Off Pitch: Football’s financial integrity weaknesses, and how to strengthen them’, CID Working Paper No. 311 January 2016.

[6] Andrews and Harrington (at p.99) believed before footballleaks’ releases “that the lack of knowledge about TPO affords it room to hide and that a general ban will force more ‘hiding’, which will limit opportunities to gather information about the practice and effectively regulate it in future.” Yet, I think FIFA would had a very hard time to create the transparent register they dream of, compliance with a duty to disclose would be extremely difficult to police and the case-by-case assessment of an incredible number of contractual arrangements would be needed. With the full ban FIFA reduces the administrative burden and partially externalizes enforcement to whistle-blowers (as footballleaks) and the press.

Comments (3) -

  • IR

    4/21/2016 6:35:40 PM |

    Good read, thanks for the coverage on Doyen. I'm just wondering if they (or other compnies) are still active in player investment at all since the TPO ban? e.g. are they attempting to make similar deals but restructuring contracts so that they comply with FIFA rules?

    • Antoine

      4/25/2016 10:06:55 AM |

      Thanks for your kind words. Doyen is still active in football (as an agent, image rights holder, or based on old TPO contracts from before the ban), but is apparently not engaging into new TPO deals (besides Seraing probably for the purpose of the legal challenge against FIFA's ban). It is also possible that they moved into traditional investment into clubs (or try to buy a club), but this is way more risky than TPO investment...

  • yeahbutno

    5/25/2016 2:48:41 PM |

    Good article.

    "(Getafe, Gijón, Sevilla or Valencia), which were unlikely (or at best uncertain) of ever participating in the Champions League."

    that part however.... Sevilla has already featured in the CL (and will next year) amd Valencia has been to finals in recent history...

Comments are closed