Soccer Funds Say French League Approved Disputed FinancingAlex Duff
Three investment funds say the French soccer league has given them permission to give financing to teams in exchange for sharing a player’s transfer fee, a system that some sports bodies have frowned upon.
The model is a variation on so-called third party ownership, which the sport’s European ruling body UEFA objects to because of ethical concerns.
Executives at Manchester, England-based R2 Asset Management Ltd, Malta-based Doyen Sports Investments Ltd and Fairplay Capital Sicav SA in Luxembourg said they have the league’s consent to broker deals under which they can receive part of a player’s future transfer fee on top of interest.
French league spokesman Jerome Belaygue said in an e-mail third party-ownership remains banned in the championship. He didn’t immediately respond to a request for comment on the financial model of the three funds.
The funds are seeking to make a profit from the $4 billion European transfer market that increased sevenfold in value since 1995 as clubs such as Manchester City and Paris-Saint Germain racked up losses to chase success.
“The transfer market figures are terrific,” Laurent Pichonnier, a board member of Fairplay Capital, which is seeking to raise as much as 150 million euros ($193 million) to invest, said by telephone. “If you get one-third of the transfer, your return is booming.”
Third-party ownership allows investors to buy the trading rights to players from clubs. When the athlete is traded to another team, the investors get a percentage of the sale price. That has led to concerns they could push teams to move a player on to realize gains.
The French, English and Polish leagues are the only European championships to ban third-party ownership, according to a report by KPMG’s Spanish unit last year. Under the alternative model, the transfer rights aren’t assigned to the investment fund, Fairplay Capital board member Anthony Costard said in an e-mail.
UEFA didn’t immediately respond to a request for comment on such a method.
Using footballers as assets raises “ethical and moral” questions, UEFA general secretary Gianni Infantino said in a column last year, adding clubs could come under pressure from investors to move players on. Teams should rely only on their own funds to acquire players, Infantino added.
Of the 20 French first division clubs, only Paris-Saint Germain and Monaco weren’t interested in doing business with Fairplay, Pichonnier said, adding the fund aims to operate in Italy, Germany and Belgium. Clubs are open to alternative funding sources as banks are wary of lending to them because of teams’ poor financial performance, Pichonnier said.
‘On Same Page’
Fairplay, which would have no influence on the management of clubs, “is on the same page” as the French league’s financial regulator, which is known by its acronym DNCG, Pichonnier said.
Doyen Sports, which has done more than 100 million euros of such deals with clubs including defending Spanish champion Atletico Madrid, is working on its first with a French club ahead of the January trading window, Chief Executive Officer Nelio Lucas said by telephone.
R2 Asset Management, which has invested as much as 50 million pounds ($82 million) across Europe, has used the same model for some time in France, the fund’s CEO Ray Ranson said by phone.
The French league “realizes it’s a financial transaction and there is no ownership of anything,” Ranson said. “There is no influence on clubs.”
Man. United Trade
The English Premier League banned third-party financing in 2008 after it emerged West Ham ceded total control of forward Carlos Tevez to investors. The league hasn’t yet ruled on a request by Doyen Sports to approve the model that it intends to use in France, Lucas said.
In a May 2013 interview, Premier League CEO Richard Scudamore compared investors owning stakes in player transfer rights to “indentured slavery.”
Lisbon-based Sporting said on Aug. 14 that Doyen CEO Lucas had exerted “illegitimate pressure” on the club to trade Marcos Rojo after acquiring a 75 percent stake in the Argentine defender’s transfer rights, and met with other teams with a view to him being traded.
Sporting rescinded the arrangement and five days later agreed to trade him to Manchester United for 20 million euros. Lucas said the accusations weren’t true and Doyen is suing Sporting for breaking the contract.