Third party arrangments could damage the future of football

Article source: Matt Scott -

Third party arrangments could damage the future of football

Following the recent purchase of Carlos Tevez, it has become apparent that Top flight football clubs in the Premier League are still using Third Party Arrangements to purchase the most expensive players.

These types of arrangements which effectively mean that the club will never actually own the player are very risky. The rules surrounding these types of arrangements have been tightened amid fears that the financing companies would have a hold of and be able to make changes to the contracts of the players.

Once such recent deal was financed by a football loan company. The selling club required 50% of the fee for the player upfront. Rather than give up a stake in the player the club took out a mortgage. The deposit payment was split equally between the two, the club and the financing company.

Much like a traditional mortgage, the burden of the loan lies on the purchaser. This is so, regardless of the value of the asset, which in this case happens to be a very valuable premiere league football player. The problems with mortgage financing, on the purchase of football players, lays not only during the length of the mortgage, but more so when their contracts near expiry or they retire. The club will have to pay the interest charges through out the life of the loan and a lump sum at the end.

Hammers Look for New Ground

West Ham United Football Club are currently in talks about a possible move to the Olympic stadium in Stratford. A feasibility study shows that the move in terms of conversion may cost in the region of £400m excluding demolition costs. Many experts believe that the best option, in terms of cost, for West Ham is to build a new stadium on the old Parcelforce site in West Ham itself.

Offshore Ownership of Premiership Clubs

Another problem, with regards to premiership clubs, lies with the fact that their ownership is often held offshore. This means that it can be very difficult for the Premiership executive to actually establish who, in the end, owns these clubs. The ownership of many clubs are held this way; it can also present problems for the tax collector in lost revenue as many of these offshore businesses are also created in tax havens like the British Virgin Islands. One such example is Portsmouth Football Club. One year ago the leagues Chief Executive Officer, Richard Scudamore, sought assistance from the treasury in establishing the ownership of such clubs. The league commented that its’ appeal to the top was targeted at clubs whose owners are unwilling to disclose ownership information.

Portsmouth Football Club is owned by a parent company registered in the British Virgin Islands call Midland Development (2004) Limited. Furthermore, the league stated that after a request Alexandre Gaydamak (the Portsmouth owner) disclosed the required information and that they were fully satisfied. This still does not provide the clubs fans, the ones who line the owners pockets, with any hard facts regarding the clubs ownership, but as the league are now satisfied who are the fans to complain.

Aegon’s Sponsorship Problems Revealed

Aegon, the 25 million pound sponsor of the Lawn Tennis Association is only now becoming aware of what their investment has bought them. Apart from the Artois Championship, the LTA owns the Davis Cup brand. However, at last weeks’ world group play off the Lawn Tennis Association could not fill the event. Despite a marketing effort aimed at 800 schools, the Lawn Tennis Association received little response and one 16 percent of the seats were taken up.