Third Party Ownership: First Order of Business

My white paper is about the practice of third party ownership in the game of soccer and the need for it to be eliminated.  Third party ownership is when an outside investor purchases a stake in a player’s economic rights.  Once that player is transferred, the third party owner get his percentage worth of the new transfer fee. For example, I could purchase a 50% stake in a player in Brazil for $1 million.  After a couple of years of performing well, he could be transferred to another team in Europe for a transfer fee of $4 million.  Since I have a 50% stake, I would receive $2 million dollars of the $4 million.  My initial investment of $1 million has grown by 100% and provided me with superior returns.  This sort of trading of a player’s value is interesting, but it causes trouble for the sport.  Recent controversies and new rules being implemented have put the practice on the chopping block, and I am recommending UEFA, Europe’s governing body of soccer, should be the first to ban the practice outright.  The allowance of third party agreements does not support the integrity of the game, and puts the sustainability of teams, clubs, and competitions in jeopardy.  If you are a soccer fan, this paper will inform you of some of the behind the scenes issues with third party ownership you probably never knew existed.  You will also be able to learn about some of the new financial regulations occurring in Europe and some of the implications they may have.  Overall, third party ownership is a controversial practice that seems to benefit some upfront, but causes more harm in the long run.

Kiva Donation- Helping a Budding Manager in South Africa

I thought I owed it to the class to at least tell you where my $25 Kiva donation went to.  I’ll take you through my thought process first.  I figured I would look to donate within the category labeled “Education” because we are all college students in a class together.  I figured we would want to promote the idea of education.  That narrowed it down to a few students looking for loans to help them pay for classes.  I then read a few of their stories and decided that Siboniso was the choice for me.  He is a Business Management student of the Maharishi Institute.  I thought that many of us in the class are management majors so we could relate to him.  He is also looking to work in the finance department for Anglo American, which I personally related to because I want to work in finance as well.  Here is a picture of Siboniso:



Here is also the story of Siboniso from the website:

A loan of $2,050 helps Siboniso to pay for one year tuition fees and living expenses at the Maharishi Institute.

Siboniso is a Business Management Student of the Maharishi Institute. Siboniso is 21 years old and was asked the following questions by a staff member of the Institute:

What do you study at the Maharishi Institute and what classes do you enjoy most?

“I am currently studying a business degree at Maharishi Institute. The classes that I enjoy most are Higher States of Consciousness because they help to connect with the inner being.”

What are your goals after graduation?

“My goal after graduating is to work for Anglo American in the Finance Department then start my own warehousing and logistics company. I would like to work within the city of Johannesburg so that I don’t travel much.”

Tell us about your background.

“I was born and raised in Katlehong, east side of Johannesburg. I stay in Katlehong and I have four brothers and one sister. My father works at Afrox as a part-time driver and my mother works as a consultant for Old Mutual. I am not married and I don’t have any children or kids.”

What do you do in your spare time?

“In my spare time I like to read and cook because I love cooking and if I’m not doing those two, I also like to search for something on the internet.”

How will the Kiva loan change your life?

“The Kiva loan, for me it will do some significant changes both in my life and studies. Firstly I know that I will get to school or I will be able to go to school every day no matter what and secondly the Kiva loan will give me an assurance that my tuition is secured and covered.”

If you want to see the actual profile, just click here.  You can donate more if you feel like.  Our small, yet heartfelt donation helped achieve more than 1% of his donation needs.

Recycle Batteries, Get “Charged” Less

For my 60-second idea I wanted to approach a small aspect of a large problem.  In today’s world, we are facing a rather large pollution problem.  Within the problem of pollution, battery disposal is an issue that we face, and a lot of people are not properly disposing of their batteries.  It is common knowledge that people use a TON of batteries throughout their lifetime.  From TV remotes, to Xbox controllers, to clocks, all the way to flashlights, we use batteries of all different sizes each and every day.  There are already battery collection stations around the world, but I find there to be a lack of incentive for people to actually travel to them and dispose of batteries properly.  My solution is to create a battery drop off station that also prints out coupons for the size battery you just dropped off.  It would separate the batteries placed into it like a coin machine does, and then prints out small coupons for you to use at participating places.  If you drop off a AA battery, a AA battery coupon is spit out.  After all, if people are disposing of batteries, they are most likely going to need to buy more, so what would be better than saving the environment while scoring a deal on something you need every day.

The cool part about these machines is that they would be powered by the batteries being dropped of.  It is in uncommon knowledge that a lot of batteries that are considered dead, still have a considerable amount of energy in them.  To spit out the small coupons would require little energy, and as people place the batteries in the machine, the little energy needed to throw out a coupon could be powered, at least partially, by the batteries being dropped off.  It would function (hopefully) like this energy seed lamp that uses “dead” batteries:

Energy Seed

In order to ensure there is no issue with this system, a small backup energy source should be installed in the machine as well.  Battery pollution is a hard thing to prevent because people do not directly see the negative effects of throwing batteries in the normal garbage, and they seem to have a thought process of out of sight, out of mind.  If we give an incentive, more people are willing to participate in the proper disposal.  The kicker….each machine would have information on it that explains the importance of proper battery disposal.  This would also aid in raising awareness and possibly help with the problem of battery waste.  With the right partnerships with companies who are looking to show responsibility, this project could significantly reduce the amount of batteries improperly disposed.

Third Party Ownership in Soccer: Fair or Foul?

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:

  1. Act only on maxims which you can will to be universal laws of nature.
  2. Always treat the humanity in a person as an end, and never as a means merely.
  3. 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.

Dear Diary…Today The F*ckin’ Cell Phones Crapped Out

April 3rd, 2013

6:45 AM: I am awakened by a bright flash that seems to illuminate the morning sky.  What the hell was that?  I immediately reach for my iPhone to check for what happened.  Shit.  My phone doesn’t even turn on.  I go to my roommate’s room and his phone doesn’t work either.  I now realize my worst fear has come to fruition….all cell phones are now just useless pieces of plastic.  My first class isn’t for another 3 hours so I decide to sleep a little and see if the phones work when I wake up.

10:01 AM:  I awake in a panic.  I overslept and now I’m late for class.  How did that happen?  Oh yeah, my alarm was set on my phone and that’s dead.  I rush to class and apologize to the teacher, but as I look around the class there are at least 6 other students not here yet.  Halfway through the class I get bored as hell.  I can’t check my Facebook, Instagram, Wall Street Journal, Snapchats or Tinder, so I resort to doodling small pictures of animals in ironic situations.  My first picture is of a lion (lyin’) swearing to tell the truth, the whole truth and nothing but the truth.  Next to him is a cheetah (cheater) telling a woman he is in a loving relationship with his wife and refuses to commit adultery.   My entertainment is short-lived and now I have to pay attention again.

11:00 AM: Class ends and I am hungry.  I told my friends I would meet them at the Bison at 11:05, but I have to meet a Professor really quick uphill.  I get to the Bison at 11:21 (I got distracted by some chick on the walk over and had a 5 minute conversation).  None of my friends are at the Bison.  I reach into my pocket to give them a call…..damn, I forgot. I decide to grab a table near the TV which is currently airing LIVE with Michael & Kelly, and try to change the channel to ESPN but the damn remote never works in that place.  After 10 minutes of waiting, my friends never show up.  I end up ordering my food and eating alone as I watch Michael Strahan make a fool of himself.  The same girl that I saw on the walk over now sees me eating alone and watching this show…I feel embarrassed.  She giggles directly at me and looks over to her friends to point me out.  They all laugh.  Awkward and alone, I wish I had my phone to act like I actually had friends I was talking to.  Instead, I put my jacket around the chair next to me, a couple used napkins and my drink infront of the other seat, and my backpack on the back of the last seat, making it look like my friends have stepped out for the moment but will return shortly.  At 11:45 I see my friends walking by and I asked them what happened.  They told me they waited but never heard from me, so they went upstairs to the cafe…after all, it was blackened beef salad day and they couldn’t resist.

12:02 PM:  We are walking back to our downtown house when someone brings up the TV show Full House.  “What was Uncle Jesse’s band’s name again?”  This question haunts me because it is on the tip of my tongue but I just can’t recall.  I wish I had my phone to give a quick Google search, but that option is out.  Now I have the unsettling feeling in my head (you know exactly what I’m talking about) and NEED to find this answer.  The next half hour is spent in deep thought, but I’m coming up empty.  Well, my day is now ruined.

3:37 PM:  I get in my car to drive to an obscure store out in the country in search of a birthday gift for my mother.  Somewhere along the way I must have taken a wrong turn.  I am now in a random Pennsylvania town with absolutely no idea of how to get back home.  At this point I usually breakout the Maps app, but just like every other problem I had durung the day, I don’t have my phone.  Now I have to ASK for directions and write them down on a piece of paper (which I don’t have so I end up using a page from the owner’s manual).  On my way home, I have to continuously look down to read the directions.  Out of nowhere, a telephone pole jumps directly into my path (or I drifted off the road…the details are still being worked out) and I have to swerve like a madman to avoid it.  I hit a ditch and my front axel gets ruined.  My car is totaled and I am SCREWED.  I stumble to the nearest gas station to find a landline and contact my house.  I get to the phone but realize I haven’t memorized a phone number since I got my cell phone.  My house number was recently switched and I never took the time to commit it to memory.  Why would I when it was saved in my phone and on the Cloud?  Turns out I have no way of calling my house so I give up.  After an hour of waiting, I finally get a taxi company to bring me home from this distant land.  I go to pay the man and the price is higher than expected.  I want to check my bank statement before I overdraft my account to pay for this, but I can’t because I can’t access internet on the go and I don’t remember my password because it’s saved on my phone.  So I use the card anyway because I don’t have cash and ‘whaddaya’ know, I overdraft.

8:08 PM: I go out for few drinks with my buddies.  My one friend gets WAY too intoxicated and decides he is going to dance on the bar.  Well I want to document this so I have blackmail over my friend for years to come, but realize I can’t because my phone also doubles as my camera.  This one is just going to have to be a memory, and I am not a fan of that.  He’s lucky this time.  After a few more drinks I begin to fraternize with the lady-folk.  One gives me her phone number just in case the phones start working, and like a fool I put the napkin in my pocket.  An hour later my drunk friend spills his Irish Car Bomb on my lap and I lose this chick’s number.  Damnit.  I don’t even remember her name.  I feel like an idiot and now I have no shot of even facebooking this fine young lady.

11:59 PM:   I am laying in my bed…alone…drunk.  I feel like I could use some company this evening, so I go to my phone to send the classic late night text, “You up?”  Well, I can’t do that.  This sucks.  All day I have had problems and not a single one was solved.  OH SHIT! It was Jesse & The Rippers!  That was Uncle Jesse’s band’s name.  Well at least one problem was solved.  My life is miserable without my phone.  I pray that when I wake up the phones work again.  As for now, goodnight cruel world.

Sustainability Curriculum – As Interesting As It Sounds.

I decided to attend the 1 PM sustainability talk about curriculum (because that was really the only one that fit my schedule) and I will admit I wasn’t really entertained or amused on the subject matter.  The talk basically lasted an hour and was about the new curriculum that Bucknell would put in place in order to get this idea of sustainability across to the students.  It started off with one professor talking about the new requirements for engineers, and how they would need a sustainability class in 3 different categories.  The students would also have 3 free electives to pursue other areas of interest, or to increase their course load on sustainability if they chose to do so.  The talk then transitioned into Professor Hiller talking about sustainability and the management program, and some of the courses to be offered to the students that has a focus on sustainability.  After that was a talk on Bucknell in Nicaragua, and then a sort of summation and wrap up.  At first I thought the talk could have been interesting as they talked about the importance of sustainability to Fortune 500 companies and how a heavy majority issue sustainability reports annually, but then it took a turn towards Bucknell curriculum and it became immediately uninteresting.  I feel as though the seminar was more for current professors than for students.

Our discussion in class afterwards was where my thoughts were when we said that people who are interested in sustainability will pursue these opportunities on their own, and they shouldn’t really have to be forced to take classes on it.  I know I took a class on sustainability and really didn’t find the material to be interesting, personally.  I was okay with taking one course on it, but would NOT want anything else in my curriculum on that material.  I feel like having 3 courses required for sustainability is overkill, and would not be enjoyable for those students who do not want to have a career associated with it.  People who are actually interested in the subject matter will be the ones who will sign up for these classes, and they shouldn’t really be mandatory.  I know I am a management major, but finance interests me so I used my available course space to take classes that I liked.   I think people who like the topic of sustainability would chose to form their curriculum around that interest as I have around finance.

Leaving the seminar I was glad I was a senior and wouldn’t have to take these courses as a requirement.  As a liberal arts school I have already had to take courses I had no interest in (like 2 lab sciences) and wouldn’t want to add more classes to that list.  I think there are other ways to get sustainability into the school.  They could offer more clubs, more classes (but electives, not mandatory), more seminars, or anything that is informative without changing the curriculum.  I understand the importance of the topic, but I don’t see its importance so much at a collegiate level.  A lot of the learning you experience for your career is done on that job, and I find that a lot of things learned in college are eventually lost on kids because it is more theoretical than practical.  Classes help prepare students for work load, time management, listening, oral presentation skills, and many other valuable areas of development, but specific knowledge that will be used on the job is more so learned ON the job.  It should be interesting to see how the new proposed curriculum pans out at Bucknell, and how the students respond.