Spanish Soccer Will Challenge FIFA Ban on Alternative Financing

The Spanish soccer league will challenge FIFA’s ban on clubs selling the transfer rights of contracted players to investors, league president Javier Tebas said.

FIFA announced the ban on so-called third-party ownership last month, and Tebas referred to European Union rules on the free movement of capital in an e-mail yesterday without offering more details. A FIFA official said it had no comment on the matter. The prohibition takes effect on May 1.

European soccer clubs including Spanish league champion Atletico Madrid have turned to the arrangement since the financial crisis began in 2008, raising hundreds of millions of euros to fund transfers and player wages after banks stopped their overdraft facilities.

FIFA announced the ban after European ruling body UEFA and the English Premier League said third-party ownership was a danger to the integrity of soccer because investors could interfere with player trading. In 2008, the Premier League banned the practice after West Ham ceded control of striker Carlos Tevez to investment companies domiciled in the British Virgin Islands.

The wording of the prohibition appears to stop clubs securing credit from banks in exchange for player transfer fees owed to them, which is common practice in Spain and other European countries, according to Felix Plaza, managing partner of the sports and entertainment team at Madrid-based law firm Garrigues.

“It’s restrictive and goes against the free movement of capital” regulations in the region, Plaza said in a phone interview. “FIFA has gone past what is reasonable and it’s going to create problems.”

The FIFA official said he couldn’t comment on issues relating to the ban because “every matter has to be discussed on a case by case basis.”

Atletico Madrid CEO Miguel Angel Gil said in an interview last year alternative financing had allowed his club to compete with richer rivals including Real Madrid and Barcelona, the world’s richest clubs by sales.

Story via Bloomberg. Image: “Spain national football team Euro 2012 final” by Football.ua. Licensed under CC BY-SA 3.0 via Wikimedia Commons – http://commons.wikimedia.org/wiki/File:Spain_national_football_team_Euro_2012_final.jpg#mediaviewer/File:Spain_national_football_team_Euro_2012_final.jpg

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