The world of sports has been one of the most competitive arenas for hundreds of years. Nothing defines competition better than pinning two teams against one another on a field with diametrically opposed objectives, letting them showcase pure their athleticism in order to attempt to strategically achieve victory. The intense nature of competition within sport has led teams and clubs to resort to any legal means necessary to gain a competitive advantage over the others. The sport of soccer, commonly known overseas as football, is the most popular sport in the world, which even furthers the need and desire to become known as the most dominant team across all leagues. It is a wide held belief that teams that are better off financially have an advantage against smaller clubs that lack the funding to stay competitive. Teams with large budgets can actively recruit high-profile players, footing the bill with no problem. Smaller teams, on the other hand, may find it difficult to come up with the finances to purchase big name players, and as a result, cannot afford to remain competitive. It is this reason that many teams resort to certain financing techniques, one of which is known as third party ownership. I will delve into the details of this practice in this piece, and go into even further detail as to why it has become known as highly controversial. I will then look at the practice from differing ethical perspectives, explaining how each school of thought would view the concept of third party ownership.
Third party ownership in soccer is when an investor purchases a stake in the economic rights of a player in hopes that the player’s value will increase and provide a high return on investment when the player is transferred to a different club. To put it in easier terms, I will walk through the process that an investor goes through. Investors look for players in professional leagues that they view have great potential to grow in value. The investor then pays the club that owns the player a certain amount of money to receive a percentage stake in a player’s economic rights. For example, if I was interested in player X, I could pay his club $1 million dollars for a 50% stake in the player. Player X then has back-to-back seasons of superior athletic performance, and as a result, his value has skyrocketed. Now, in order for me to capitalize on my investment, player X must be transferred. A transfer occurs when the player is still under contract with his original club, and is then purchased by a different club for a certain transfer fee. Without a transfer, my initial investment disappears, and I make nothing. For argument’s sake, a new club shows interest in player X and the two clubs agree upon a transfer price of $5 million. Because I have a 50% stake in the player, I will receive $2.5 million of the $5 million, and the club who originally owned player X receives the other half. As an investor, I was able to grow my initial $1 million investment into $2.5 million by taking an active bet on the development of player X. The obvious question that comes next is why would a club agree to these terms? “Many clubs, particularly in southern Europe, are struggling to raise revenue and obtain bank loans following the 2008 credit crisis and resort to transfer investments for cash… Clubs get a quick infusion of money but sacrifice a bigger payday a few years later, when they negotiate the sale of the player and share the transfer fee with an investor” (Duff). As mentioned before, smaller clubs with financial limitations need to find creative ways to raise the appropriate cash to stay competitive. They can use this flow of cash to purchase other players now, without having to wait to transfer their current players. The investors in this situation are generally investment funds, corporations, or wealthy individuals, but even some sports agents have been partaking in this practice with their own players. “Some 15 percent of agents own stakes in players they represent, according to a survey of 269 agents by CIES” (Duff). The practice as a whole has been under scrutiny over the past few years, and some people and organizations have called for the prohibition of third party ownership across the world.
Before I dive into the ethical schools of thought on the practice, it would be helpful to understand why certain people view the practice as unethical and wrong to begin with. UEFA, the Union of European Football Associations, has been making their stance on the issue well known over the past few years, citing four main reasons they find the practice needs to be eliminated. First of all, it should be noted that the top division in both England and France have already made the practice illegal for clubs, but UEFA is calling for FIFA, the Fédération Internationale de Football Association, to ban the practice across all professional soccer. The first reason UEFA cites is that it is wrong to purchase the economic rights to a human being, and then to trade that person like an asset or stock. Secondly, conflicts of interest surely arise when investors own stakes in multiple players from various teams. There would be reason for these investors to use manipulation in order to achieve desired outcomes, and UEFA and FIFA both agree that the sport can do without manipulation. An additional reason third party ownership is being called into question is the practice facilitates a culture of multiple transfers and contract instability. Because money is only made when a transfer actually occurs, there is immense pressure for these trades to occur. The last reason UEFA cites is that it goes against the idea of financial fair play that FIFA is trying to promote (UEFA). “The risk here is that financial fair play will be fundamentally distorted because the clubs that use third-party ownership to defray costs will have an unfair advantage over those prohibited to do so—like English and French teams” (Marcotti). It is for these main reasons that many have deemed third party ownership a controversial and unethical practice, but looking at it from a few ethical perspectives, there could be some differing opinions on the matter.
Depending on the ethical mindset third party ownership is viewed from, it can be deemed either ethical or unethical. The conflicting views of consequentialism and ethical egoism versus Kantian ethics display the main differences well. Consequentialism “seemingly demands (and thus, of course, permits) that in certain circumstances innocents be killed, beaten, lied to, or deprived of material goods to produce greater benefits for others. Consequences—and only consequences—can conceivably justify any kind of act, for it does not matter how harmful it is to some so long as it is more beneficial to others” (Alexander). In basic terms, the ends justify the means. Ethical egoism determines “an act is morally right if and only if, of all available acts, it provides the greatest balance of benefit to harm for the person performing the act” (Humber, 18). Advocates of third party ownership could morally justify the practice through these two schools of thought. Those who oppose third party ownership could present an argument from a Kantian ethics perspective. There are three main categorical imperatives that Immanuel Kant presents and they are as follows:
- Act only on maxims which you can will to be universal laws of nature.
- Always treat the humanity in a person as an end, and never as a means merely.
- So act as if you were a member of an ideal kingdom of ends in which you were both subject and sovereign at the same time. (Bowie, 4)
The first two portions are the ones that reveal third party ownership as an unethical practice. Looking at the previous four reasons cited by UEFA, we can look at how each school of thought would view the issues at hand. Taking an economic stake in a human being as to grow personal wealth is the first item to look at. Consequentialists “specify initially the states of affairs that are intrinsically valuable—often called, collectively, ‘the Good.’ They then are in a position to assert that whatever choices increase the Good, that is, bring about more of it, are the choices that it is morally right to make and to execute” (Alexander). In this case the Good is available capital to keep them competitive, and allowing investors to purchase a percentage of a human being’s economic rights is just a means of doing so. Ethical egoists would look at this from the investor’s perspective and say that because the investor is able to purchase a stake in a player to increase their own wealth, the mere increase in personal capital makes the action ethical. The conflicting Kantian view is based on the second principle of which he forms his ethical thoughts. In this case, investors and clubs are not treating the person as an end, and are only treating them as a means. Using a person to gain capital is treating the person like an asset in a stock portfolio. It also seems to break the first rule. Theo van Seggelen, secretary-general of the International Federation of Professional Footballers, has been quoted as saying “‘there’s not any other profession in the world where investors can buy stakes in a human being’” (Duff). It would not be acceptable to own the rights to someone in a universal context, and when combined with the idea that investors and clubs are using a human for financial growth, it is clear that a Kantian ethicist would view this practice as unethical. The idea of conflicts of interest and manipulation occurring as a result of third party ownership is also looked at differently between the schools of thought. Once again, consequentialists and ethical egoists would determine the manipulation and conflict of interest as merely a byproduct of creating better financial positions. Kantian ethics would think otherwise. Right now, third party ownership is legal in most leagues, and “FIFA [says] that investment of a third party is now only illegitimate if and when the ‘third party has the right to influence the club’s choices in employment and transfer-related matters’” (Downie). Investors can claim they have no influence over transfers, but looking into the contracts they have with clubs proves otherwise. Some contracts can be structured in such a way that the “investment may automatically switch to another player if a contract expires on [the investor’s] footballer, and teams may pay a penalty if they don’t move an athlete before his contract ends” (Duff). The fact that a team could incur a fee when not transferring a player undoubtedly seems like influence over a club who is already in a poor financial situation. When it comes to agents owning stakes in their own players, they too are faced with a conflict of interest because they may attempt to force a transfer when it may not be in the best interest of the player. Once again, Kantian ethicists could view the players being used as a means to an end. The last two reasons UEFA cites can be grouped together for argument’s sake. Creating contractual instability and going against the idea of financial fair play can be viewed in the same light from ethical perspectives. Once again the consequentialist and ethical egoist would not concern themselves with the semantics of the rules, so long as they are achieving their desired goal and improving their personal situation. Clubs want more money to stay competitive and investors want more money on their investments, and creating this unstable contractual environment while creating an unfair advantage is not in the basis of their decision making. From a Kantian point of view, third party ownership creates these outcomes, and these outcomes are not desirable outcomes for a universal law. Without contract stability, contracts could become an irrelevant practice that means nothing. A Kantian ethicist would claim “if a maxim that permitted contract breaking were universalized, there could be no contracts (and contracts would cease to exist). No one would enter into a contract if he or she believed the other party had no intention of honoring it” (Bowie, 5). This can be related to third party ownership because players are entering into contracts that rarely reach their expiration, and therefore seem irrelevant and self-defeating. A Kantian view would also see going against financial fair play could not be universalized. Giving yourself an advantage over others that cannot partake in the same process could not be a rule followed across all aspects of life, and therefore would break the categorical imperatives. Depending on which ethical perspective you choose to view third party ownership, you could view the practice as ethical in achieving a desired goal, or unethical in the process of which it occurs.
As the organizations within soccer debate this topic, it is important for them to view third party ownership through different lenses. It is a widely contested topic, and before any decisions on its legality can be made, all points of view should be taken into consideration. From a small club’s point of view, they may feel they need to practice it in order to keep up with clubs who naturally earn more money through ticket sales, endorsements, and television contracts. From other clubs’ perspectives, they may see it as an unfair advantage for teams to raise capital to purchase players they would not have been able to in the first place. The investors in this practice generally view third party ownership as a positive, hence their participation. They see the potential for high gains in short time horizons, and are not as concerned with the effect it has on the game of soccer. They simply treat the players as an asset in a portfolio. The players, like the clubs they play for, may have a conflicted view on the practice. For one, they could benefit from investors looking to increase their transfer value, and as a result they could benefit directly from the move. On the other hand, they may not want to be transferred to a specific team or at all, and could have their own agents pushing them in the wrong direction for the development of their career. In conclusion, third party ownership is a hotly debated issue that, depending on which ethical perspective is taken, could be deemed either ethical or unethical.