European Body to Close Loophole That Hurts Premier League Teams

European clubs that sell stakes in players’ transfer value to outside investors may not be able to count that revenue when trying to pass new financial control tests set by soccer’s regional governing body.

UEFA is considering restricting the funds from clubs’ official filings after complaints from the English Premier League, which said its teams are at a disadvantage because they can’t sell players to so-called third-party owners, Andrea Traverso, the ruling body’s head of club licensing, said in an interview today in Istanbul.

“We are investigating this idea to neutralize the effect of third-party ownership,” Traverso said, ahead of his organization’s annual congress tomorrow.

The top three clubs in Portugal -- Benfica, Porto and Sporting -- raise millions of dollars by selling part of the rights to future transfer fees and the practice is spreading to Spain and Turkey as teams are refused credit by banks. Benfica, the biggest and most successful club in Portugal, got 44 million euros ($58 million) from the rights of 24 players sold since 2009 to a fund managed by Banco Espirito Santo SA (BESNN), according to club filings.

Traverso said an UEFA committee will make a decision on how third-party ownership should be treated in its financial fair play accounting following a meeting next month at its Nyon, Switzerland headquarters. He said under the current plan, clubs that sell players who are shared with outside investors can only book the income once the player is sold.

Punishment

UEFA is pushing for teams to break even and will allow owners to cover a maximum loss of 45 million euros for the 2013- 14 and 2014-15 seasons together before eventually lowering the figure down. Clubs risk sanctions including transfer embargoes, reduction in squad places and even a ban from the elite Champions League if they don’t comply as the governing body tries to introduce fiscal discipline into a sport where the top 665 clubs had an accumulated loss of 1.6 billion euros in 2010.

The Premier League outlawed third party ownership in 2007 after West Ham breached its rules by signing Carlos Tevez and Javier Mascherano on loan when they were part-owned by other companies.

The practice threatens the integrity of competitions, reduces the flow of transfer income into the sport and has the potential to exert external influence on player transfer decisions, league spokesman Nick Noble said. FIFA, soccer’s ruling body, allows third party ownership as long as investors have no say over when players can be bought or sold.

Concerns

“We are encouraged that UEFA shares our concerns in this area and is considering the possibility of outlawing the practice for clubs competing in its competitions,” Noble said in an e-mailed statement.

Earlier today the European Union said it backed UEFA’s financial control measures, with vice president of the European Commission and competition commissioner Joaquin Almunia saying he fully supported the aims which are “ essential for clubs to have a solid financial foundation.”

To contact the reporters on this story: Tariq Panja in Istanbul via London at at tpanja@bloomberg.net.

To contact the editor responsible for this story: Christopher Elser at at celser@bloomberg.net

Bloomberg reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.