April 24 (Bloomberg) -- A group of Brazilian soccer clubs say a proposal that would outlaw the sale of player transfer rights to investors will threaten the finances of South American teams.
The 21 clubs sent an open letter protesting the plan to FIFA as the sport’s global ruling body starts considering a ban on so-called third-party ownership programs. European soccer group UEFA says it’ll halt use of the technique if no action is taken by FIFA.
“The ban -- as proposed by UEFA -- could impact the finances of the Brazilian and South American clubs negatively, as well as the flow of the international transfers of players between South America and Europe,” the letter states. “The Brazilian and South American clubs cannot remain silent in relation to this adverse scenario, otherwise they will once again be affected by an unilateral and sudden change of rules.”
Most clubs in Brazil sell the transfer rights of players to investors as a way to raise money and strengthen their squads, according to Daniel Cravo, a lawyer representing Porto Alegre’s Internacional. About 90 percent of players in the country’s top league “are somehow linked to investors,” according Jochen Loesch, president of international business at Traffic Sports.
Traffic has invested more than $75 million in the rights of about 60 players since it was founded in 2007.
UEFA president Michel Platini and English Premier League Chief Executive Officer Richard Scudamore oppose the sale of players’ rights. Scudamore said the practice is similar to “indentured slavery.”
Cravo disputed Scudamore’s characterization, saying some players invested in their own transfer rights.
“The claim that this is player slavery is just a fallacy, it’s not true,” Cravo said by telephone. “The player is in control of his destiny.”
Corinthians, Sao Paulo and Atletico Mineiro were among several clubs that didn’t sign the letter to FIFA, Cravo said, adding they didn’t give a reason.
“Maybe they don’t want to take sides,” he said.
Soccer is split over whether action should be taken against player investment, which has mushroomed since emerging in South America in the 1990s. Although banned in France and England, the practice is now common in Europe as clubs look for alternative funding amid the continuing economic crisis. Funds say they are stepping in place of banks, and their arrangements should be seen as loans.
In the letter, the teams said Daniel Lorenz Pereira, legal adviser to Portugal’s Futebol Clube do Porto, was present at an April 4 meeting in Rio de Janeiro where the clubs behind the document held their first discussions. Lorenz Pereira has lobbied UEFA, which says it’ll ban co-owned players from its club competitions from 2014.
Portugal is Europe’s most-active market for third-part deals. Eighteen-time Portuguese champion Sporting Lisbon has sold stakes in all but four of its 28-member roster.
The Brazilian opposition group says it has formed a four-member commission “to discuss the matter with competent authorities” and will meet again on May 2 in Sao Paulo.
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