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The challenge FIFA faces regarding third-party ownership

FIFA banned TPO last year and has handed out sanctions to several offenders.

On Tuesday, FIFA announced that it had punished four clubs for breaches of third-party ownership (TPO) rules. 

TPO, which became illegal under FIFA rules in May 2015, is the practice of a club selling a share in a player to a third party -- usually a fund or a wealthy individual -- which then cashes in when said player is sold on.

Using fictitious names, here's how a typical example might play out: Deportivo Ladrones agree to buy striker Carlos Craque from Fakechester Rovers for $2 million but, instead of putting up the money themselves, they only pay half the money and borrow the other million from a third-party investor called Mr. TPO.

Mr. TPO and Deportivo Ladrones agree that, if Craque is sold in the future, they will split the proceeds. And that's exactly what happens, two seasons later, when Craque joins Bayer Schnitzel for $4m. Deportivo Ladrones and Mr. TPO each get $2m.

FIFA banned the practice, under pressure from UEFA, for a number of reasons. TPO limits the choice available to players and clubs. The potential conflict of interest is huge, especially when there are close ties between an agent and a third-party owner -- or, as has happened, when they're one and the same -- as is the potential for money-laundering. And then there's the most obvious fact of all: Clubs stop being competitive entities and become vehicles for speculators.

Reporting on TPO is difficult for a number of reasons. It's not a captivating topic and, in any case, most clubs and agents jealously guard contract information. Take an interest in it from a journalistic perspective and you'll get plenty of whispers but very little concrete evidence.

And yet, TPO matters, at least to those of us who believe that clubs don't exist merely as vehicles to hothouse talent that is bought low and sold high. It matters because it distorts the transfer market and often bleeds money out of the game.

It matters because it can prevent players from making basic decisions, such as whether or not to extend a contract and which club to join, that most of us in "civilian" jobs take for granted. And it matters because the money that changes hands sometimes moves away from the usual financial channels between the selling and buying clubs.

That's the extreme end of TPO and there are plenty of people and organisations who argue that transparent and regulated third-party investment is hugely beneficial to the game.

In some countries, particularly those in South America, it helps keep plenty of lower division clubs afloat. Meanwhile, it was commonplace in Portugal for a long time and, in Spain, La Liga president Javier Tebas has lobbied to overturn the ban and replace it with some regulated form.

For a long time, much to the frustration of FIFPro, the International Players' Union, FIFA dragged their feet on TPO. When the ban was finally announced, in the fall of 2014, many viewed it with skepticism. Were FIFA going to be serious about enforcing it?

But FIFA back then was different from FIFA today. It wasn't facing criminal investigations in the United States and Switzerland and wasn't desperately conducting a self-audit to determine just how corrupt some of its former Executive Committee members had been.

Thursday's announcement was a grab-bag of TPO cases, illustrating how it can operate on any scale, big and small. Santos were sanctioned for entering into TPO agreements and not cooperating with an investigation.

(Neymar, whose "economic rights" were sold to two different TPO funds, one of which was linked to his dad, was probably the most famous TPO case to date, though that was before the ban.)

Sevilla were sanctioned for violating the pre-2015 rules, which allowed TPO but banned third-party owners from having any kind of influence over a player's transfers. It was a classic mealy-mouthed compromise, since it's often impossible to prove that an owner is influencing transfer matters, even though he would obviously have every incentive to do so.

FC Twente had already been found guilty of TPO in Holland, where the practice is banned, and their sanction is just further punishment: They had entered into a range of TPO agreements.

And then there's perhaps the oddest case of all: Belgium's Sint Truiden. They actually seemed to advertise their TPO and teamed up with a company called kickrs.net, which can best be described as crowd-funded TPO. They even have a neat video explaining how it works.

Obviously, these are very different situations. Sint Truiden's operation is chump change compared to the others. There's nothing sinister about it, other than the fact that FIFA deemed it illegal and, possibly, they didn't quite realize the implications of what they were doing. Some of the others, especially if you do some googling on the background, are a bit more disturbing.

FIFA's punishments ranged from "warnings" and "reprimands" to minor fines ranging from $60,000 to $208,000 and were of the "slap-on-the-wrist" variety. But one official familiar with the situation told me that this is pretty much a warning shot and, next time, offenders won't get away so lightly.

Time will tell, just as it will with so many other FIFA-related matters, whether they're for real. But what Wednesday's fines show, at least, is a willingness not to tolerate clubs flouting the rules right under everybody's noses.

It sends a message. And that's a start.

Cleaning up the mess of TPO and other forms of dubious transfer financing won't be easy. For example, two agents and a director of football told me they were aware of clubs using another stratagem to avoid TPO rules: They borrow money to pay for a transfer and secure that loan against the proceeds of selling the player they just acquired.

It doesn't take a genius to figure out that this is TPO by another name. If the player doesn't want to be transferred or opts to run down his contract to free agency, the club risk making a loss. Thus, the lender has every interest to make sure the player moves on.

The problem is that FIFA don't have the tools to deal with this on their own. They are not a law enforcement agency and can only examine the documents that clubs submit or which are leaked, which is how we found out about the deals between Twente and Doyen Sports Investments. 

FIFA can't subpoena witnesses. They can't access bank records. Even if they plan to do more than talk a good game, there's only so much they can do.

Maybe Tebas is right. Maybe there is a way to implement a highly regulated, legal form of TPO; perhaps one where nobody can own more than, say, 30 percent of a player and where everything about the player -- contract details, wages, terms of the agreement, etc. -- is in the public domain. At least that way, public pressure could be brought to bear on those who abuse the system.

Maybe full transparency is the price FIFA ought to charge for legalized TPO. Except that won't happen because there are far too many out there who have no interest in transparency, precisely because sunlight is the best disinfectant.

So, for now, FIFA looks set to continue playing whack-a-mole with third-party ownership and its related schemes. But at least it's a start.

Gabriele Marcotti is a senior writer for ESPN FC. Follow him on Twitter @Marcotti.

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