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SBD Global/May 9, 2013/Finance

Brazilian Government Considers Legislation Banning Sale Of Player Transfer Rights

The Brazilian government "is planning to propose banning soccer teams from selling player-transfer rights to investors, a key source of revenue for many of the country’s cash-strapped clubs," according to Panja & Colitt of BLOOMBERG. The plan "is part of a wider bill that will be sent to Congress" to improve the financial state of Brazilian football. Lower house sports Committee Workers' Party member Vicente Candido said that "clubs have unpaid tax debts" of about 4B reais ($2B). A group of 21 Brazilian teams "have joined to fight any ban on so-called third-party ownership plans," which allow investors to loan clubs money in return for a stake in the future transfer rights of players. FIFA said that "it is discussing rules to stop the growth of the practice around the world." UEFA has said that "it will wait to see what FIFA decides, and if that body fails to introduce a ban, the European group will do so." Sao Paulo-based Traffic Sports int'l business President Jochen Loesch said about 90% of players in the country's top league "are somehow linked to investors." Traffic "has invested more than" $75M in the rights of about 60 players since it was founded in '07. Although banned in France and England, "the practice is now common in Europe as clubs look for alternative sources of income" (BLOOMBERG, 5/6).

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