Third-party ownership of footballers has become increasingly prevalent in South America, particularly in Brazil and Argentina. The financial limitations of clubs from the continent have been exploited by businessmen and organisations who purchase part of the rights to a young player. They help finance their new acquisition’s expenses in return for a portion of any future transfer fee. But does the benefit of short-term lucrative financial investment outweigh the potential windfall to be received from a big-money move?

Businesses and investors have been buying up the rights to some of South America’s brightest young talents for years. With many of the continents clubs plagued by financial difficulties, holding onto young talents had become extremely difficult. Many could not even be taken on if the club could not afford it. Third parties therefore spotted a gap in the market and began effectively investing in footballers.

In 2004 Kia Joorabchian, the man responsible for bringing Carlos Tevez and Javier Mascherano to West Ham United, purchased Brazilian club Corinthians under the name of Media Sports Investments. The company possessed partial or whole rights over a number of footballers and they brought them all to Brazil, also sanctioning the record-breaking move for Tevez. It propelled the Timao to the national title in 2005, something that would not have been achieved given the clubs previous financial state. However the relationship fell apart two years later with the Sao Paulo club being relegated and several arrest warrants being issued for money laundering, echoing the rapid progression of Colombian football in the late 1980’s that was fuelled by investment from the country’s drug barons.

This, perhaps, is the most devastating example of what third-party investment can do to a club. Those in favour however argue that such deals allow clubs to purchase players they previously could not, offering a lucrative financial injection that has the effect of creating a more level playing field. It can also enable a team to cash in on some of their younger players. But this can also be destabilising, forcing clubs into a cyclical exiguous existence whereby they must keep selling portions of players as they lose out on huge amounts of their transfer fee.

Ganso has become one of the icons of the current Santos team but he has had 45% of his economic rights sold to the firm DIS. His relationship with the club soured as the playmaker was linked with a move to rivals Corinthians, a transfer largely believed to be pushed by the DIS. They wanted the player to move in order to get another pay-out before his inevitable move to Europe.

There is little doubt that Ganso would have been happy to stay at his current club, but at the same time he could not openly contradict the organisation who he, in part, works for. When he eventually leaves the club the Peixe will receive just over half of the fee for one of their prized assets, leaving them little room to replace him and thus far the worse off.

The case showed the conflict between footballing and financial motives than can arise due to third-party investement but fortunately in this case Ganso remained at his club. But non-sporting agents will not always act in the interest of the footballer. They are profit-maximising organisations that are only interested in financial betterment.

The view in South America is that third-party ownership is perfectly fine as long as it does not influence matters on the pitch in the form of issues such as match fixing. The fact is that it has become so deeply engrained in the continent’s footballing culture that to outlaw it would cause huge problems. Clubs would not be able to afford to buy back the rights already sold so it could not be done retrospectively. For many the short-term benefits of revenue are far more important as it enables them to stay afloat, without it a number of clubs could face financial ruin.

To phase it out would have to be a long-term project aimed at the restructuring of the majority of clubs on the continent, as well as the relation to their players. The outlawing of third-party investment in the Premier League affects the teams less due to the huge amount of revenue generated in the sales of TV rights as well as sponsorship. In South America this source is significantly smaller and so players must be sold to make money.

Football on the continent has suffered from financialisation as third-party ownership has encouraged teams to live beyond their means, something endemic within modern finance. The point of no return has been passed. Without a single source of investment willing to purchase the rights back for all the players on a club’s books, removing external investors from the game would now only serve to destabilise the game.

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