Third party ownership issue rears its head again
Ever since the Carlos Tevez affair exposed the controversial practice of third party ownership, English football has taken a zero tolerance approach to ensure no player in this country can be owned by anyone other than their club.
Although still prevalent on the continent, the Premier League and Football League require clubs to buy out any third parties which claim to own the economic rights in a player before their transfers are permitted here.
To prove the point the Football League has just charged Championship leaders Queens Park Rangers with seven breaches of FA rules for failing to notify the authorities of third party agreements involving midfielder Alejandro Faurlin.
The charges relate to the "alleged existence of an agreement between the club and a third party in respect of Faurlin's economic rights, and the alleged failure to notify the FA of that agreement before the player was transferred to play in England in 2009". If found guilty, QPR could be deducted points.
So it is a surprise, perhaps, to discover that a new investment fund has just been set up by the former Chelsea chief executive Peter Kenyon and Ronaldo's and Jose Mourinho's agent Jorge Mendes to invest in the economic rights of players.
The transfers of Tevez and Mascherano to West Ham in 2006 cost the club £5.5m in fines. Photo: PA
The Quality Sports Investments LP Fund is seeking a minimum of £1m each from 15 wealthy investors from America, Europe and the Far East.
The money raised would then be invested in one of two ways:
*By becoming a 'funding partner' with clubs with a pedigree for developing young talent in return for a share of any future returns when new players are sold.
*By investing directly in the contracts of certain players which, again, would lead to a return when the player is sold on.
A prospectus was sent out to rich individuals just before Christmas and it's thought Kenyon and Mendes, who will act as the official advisers to the fund, are already close to raising the money they need.
I have seen a copy of that prospectus and in it, Quality Sports Investments promises to make its backers an annual return of 10% for the three to five year life of the fund. The fund is also registered in Jersey to reduce tax paid by potential investors.
The idea is the first big football project involving Kenyon since his move to CAA Sports International, part of big Hollywood talent agency, Creative Artists. The prospectus says CAA Sports represents David Beckham, Jose Mourinho, Fabio Capello and Cristiano Ronaldo while its parent company acts for A-list stars like George Clooney, Oprah Winfrey and Brad Pitt.
The plan aims to cash in on the economic boom in the five big European leagues - England, Spain, Italy, Germany and France and in particular the biggest clubs in those countries.
Because third party ownership is outlawed in England, the fund will not be investing in clubs or players in the Premier or Football Leagues.
Instead the focus will be on teams in Portugal, Turkey and Spain where it is legal. The prospectus sets out the high returns which could be made from investing in Portuguese clubs like Porto, Sporting Lisbon, Benfica and FC Braga.
The document goes on to highlight the examples of Nani's transfer from Sporting Lisbon to Manchester United for €25m (£21.7m) in 2007/2008 and Tiago's moves to a number of clubs, including Chelsea, from Braga.
It should be made clear that nowhere in the document is there any suggestion that the fund will invest in English clubs or English based players.
And in follow up conversations Kenyon made it clear to me that the new fund will not break any football or regulatory rules.
I am told lawyers for the fund went to great lengths to ensure everything is above board and as it is registered in Jersey it will be subject to a greater degree of regulation than if it was registered in other, more secretive tax havens.
Kenyon added that any players sold to English or British clubs will be divested of their third party ownership at that point. But it follows that with English clubs making the most money, paying the highest wages and, in most cases, the biggest transfer fees, this scenario may happen quite a lot.
Given the nervousness around third party ownership in England, the football authorities will no doubt be watching Mr Kenyon's new venture very closely indeed.