Sam Allardyce: What is Third Party Ownership, The Rules & Alleged Misconduct

This week has got off to a bad start for Sam Allardyce with him being caught up in a newspaper sting which saw him being video-recorded meeting Asian businessmen (actually undercover journalists) to set up a £400,000 deal whereby he would provide advice on how to evade FA rules on third party ownership (TPO).

But what is all the fuss and what is third party ownership?

Third party ownership is where private investors invest in professional footballers by acquiring a player's economic rights - that can be full or part rights - and the investor can be an individual, company or fund, such as a hedge fund. The investor then benefits from transfer fees when the player is sold, rather than the club.

Third party ownership is outright banned by the FA and Michael Platini once referred to it as "slavery", however, it was (and still may be) popular across South America, with many clubs seeing the production of new players for transfer to Europe, their major income. Such clubs usually require investors to fund their player purchases and salaries. The investor, when it comes to sell, then makes a significant profit when the transaction is completed.  This practice has also been widely used in Portugal, Spain and Russia.

TPO was not always banned by the FA, however, and it first attracted attention in 2007 with the signing of Argentine internationals, Carlos Tevez, and Javier Mascherano, when they arrived at West Ham from Brazilian club, Corinthians. At this time, TPO was not banned but it did have restrictions in that an investor could not influence the club in which the player signed for. West Ham were found guilty of a breach of the TPO rules, in England, as they had withheld important documents over the ownership of both players. Upon determining the contracts, League bosses held that effectively the players did not have the right to decide their own fate regarding transfers and transfer fees. This was, therefore, a breach of existing rules which banned third parties from having any influence over the transfers of players. The damage? The club was hit with a £5.5 million fee.

TPO was banned, in England, following the West Ham case and the new rules were in place for the 2008/09 season.

Is this a case of misconduct and would dismissal be reasonable, in the circumstances? 

Allardyce, as England manager, is employed by the Football Association and as such is duty bound to follow their code of conduct. For Allardyce to be guilty of misconduct the act must have broken the trust and confidence between him and his employer, the Football Association. He has a duty to ensure that his actions, on and off the pitch, do not bring his employers, the FA, and indeed the game into disrepute. If the case meets the criteria above, then he could be summarily dismissed for gross misconduct, meaning notice need not be given.

One very important point to note, that has come out of the recording, is that Allardyce advised the 'businessmen' that the deal would hinge on the approval of his employer. Given that, Allardyce may contend that no such deal would have gone ahead without the FA's authorisation and rely on those particular comments, in the recording, as evidence of that. Regardless of that defence, being caught on video discussing how to evade FA regulations on TPO does him no favours and that may be viewed as a gross error of judgement which would warrant a disciplinary hearing, at the very least, however, given the details disclosed, thus far, dismissal may very well be a reasonable course of action.

IMPORTANT: This post is not intended to be a legal briefing, it is not intended to be a statement of the law and no action should be taken in reliance on it without specific legal advice.

Update: Sam Allardyce has now stepped down as England manager

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