Do “buy-sell” clauses in third party ownership agreements constitute undue influence under FIFA’s Art 18bis?

The recent situation involving the Doyen Sports investment fund and Sporting Lisbon in relation to Manchester United’s bid for Marcos Rojo provides another opportunity to consider some topical issues related to third party investment.

 The analysis is especially relevant because FIFA is currently discussing a new regulatory framework for these investments while UEFA continues with its campaign to ban the practice¹. Among the different aspects of the Rojo dispute (in particular the percentage owned by the fund and the relationship with the player) this article will examine the notion of influence and its relation with customary clauses often included in third party ownership (TPO) agreements.

FIFA’s regulation of TPO

Art.18 bis of the FIFA Regulations² states: “18bis Third-party influence on clubs.   1. No club shall enter into a contract which enables any other party to that contract or any third party to acquire the ability to influence in employment and transfer-related matters its independence, its policies or the performance of its teams.   2. The FIFA Disciplinary Committee may impose disciplinary measures on clubs that do not observe the obligations set out in this article.” This article was introduced into the regulations that came into force on 1 January 2008 as a direct result of the Tevez case³. Since then, clauses obliging a club to release a player in certain circumstances became void, and so disappeared from the typical TPO agreements and were replaced by new clauses that were effectively borrowed from the world of shareholders agreements.

The new breed TPO – “buy-sell” clauses

The "core"‎ of the TPO agreement is currently the "buy-sell" clause in its different forms (first refusal; drag along; shotgun; tag along⁴), tailored for the football industry. The most common clause states that in case an offer from a new club is received (sometimes any offer; sometimes an offer above a predetermined amount) and the investor wants to accept it, the club shall either accept the offer and transfer the player or buy the investor's share under the same terms of the new club's offer⁵. The aim of these clauses is to protect the investment without imposing undue influence on the club's transfer policies. Points 9 to 11 of Doyen statement from 13 August 2014 clearly refers to this⁶.