The head of Portugal’s stock market regulator is forcing soccer teams to illuminate the sometimes opaque world of player transfers.
Carlos Tavares, chairman of the Lisbon-based Securities Market Commission, suspended trading in Benfica shares in August until the country’s biggest club disclosed more information about the $11 million trade of goalkeeper Roberto Jimenez to Real Zaragoza. He has banned investment funds that bet on players’ transfer rights from employing soccer insiders such as agents to avoid conflicts of interest.
Tavares, a former economy minister, is taking teams to task amid a boom in the sale of transfer rights in Portugal. Investors have bet about $90 million since 2009 that 47 players who have contracts with Benfica, Sporting Lisbon and Porto will be traded, according to the teams’ annual financial statements for the two years through June 30, 2011.
“He’s been active in pressing clubs to disclose information when they don’t want to,” said Joao Duque, president of the Higher Institute of Economy and Management in Lisbon. Publicly traded teams are concerned unlisted rivals will gain a tactical advantage if they know all their transfer dealings, said Duque, who wrote a 2005 study of share-price performance by Porto and Sporting.
Player trading “often functions in a context of opacity” and sometimes involves money being paid “under the table,” the Brussels-based consultancy KEA published in a report last year for the European Commission. There were $2.2 billion of trades in the last European offseason, up 30 percent from a year earlier, according to a report published Sept. 8 by Barcelona-based marketing agency Prime Time Sport.
“Everybody wants to know that there aren’t backroom deals going on,” said Emma McClarkin, a British member of the European Parliament, in a Dec. 6 interview. “There is a need for fiscal clarity.”
Portugal’s league is a springboard for talent with the most successful players moving onto the richer English Premier League or Spain’s La Liga. Investors can negotiate with teams to buy a stake in players’ transfer rights and share any revenue when they are traded. It’s becoming more common as banks rein in lending to clubs.
Tavares, 58, served as a minister in the government of Jose Manuel Barroso, now the president of the European Commission, and also worked as a banker at Banco Santander SA. He’s just as rigorous with other industries he regulates and isn’t singling out soccer, Duque said.
On Aug. 3, he lifted the suspension of Benfica shares after the Portuguese club disclosed Zaragoza, which is in administration, paid 1 percent of the fee and the rest of the deal was funded by a parent company of the Spanish team’s owner Agapito Iglesisas. In May, Tavares fined Sporting 25,000 euros ($32,710) after it was late in disclosing information about the hiring of a new coach.
Benfica spokesman Ricardo Maia didn’t reply to an e-mail request for comment and several calls to Sporting’s offices went unanswered. Tavares wasn’t available for comment.
In another deal made clearer by filings to the regulator last year, Kia Joorabchian, an Iran-born investor who says he owns the rights of “80 to 90” players around the world, made a 6 million-euro bet on half the transfer rights of Benfica midfielder Ramires through London-based company Jazzy Ltd., six weeks before the Brazilian player joined Chelsea for 22 million euros. Joorabchian earned an 83 percent return, according to Bloomberg calculations.
Joorabchian declined to comment because of a confidentiality agreement with Benfica, his spokesman Paul McCarthy said.
Lisbon-based Money manager MNF Gestao de Activos employs two people who used to work in soccer to advise the 3.8-million euro Soccer Invest Fund it manages after the stock market regulator banned insiders from advising funds, says MNF director Antonio Aranha.
“There can’t be any conflict of interest this way,” Aranha says. “It’s a good system.”
The fund’s money comes from a single client, Aranha said. Tavares also oversees Benfica’s 40 million-euro All Stars fund and a 15 million-euro Sporting fund, both managed by Banco Espirito Santo SA.
To be sure, other funds that do business with Portuguese clubs aren’t regulated by Tavares because they are based in the U.K., Channel Islands, Luxembourg and the Netherlands. The finances behind many transfers involving clubs remain obscure and open to conflicts of interest, Kern said by telephone.
‘A Lot of Deals’
Atletico Madrid registered the acquisition of defender Julio Alves from Rio Ave of Portugal on Aug. 29, according to the Spanish league website. Two days later, the Spanish club said it traded him to Turkey’s Besiktas, which in turn said it bought 50 percent of his transfer rights for 3.1 million euros. It’s not clear who owns the other half.
“We do a lot of deals: some work, others don’t,” Atletico sports director Jose Luis Caminero told reporters Sept. 7. “We don’t want to say everything we are doing.”