Among the series of posts I’m focusing to this kind of financing transaction -TPOs / investment funds and economic-rights- in the world of professional football, I refer today, very briefly, the legal nature of the contractual structure through which is structured the financing of a TPO to a professional football club.
The involvement of TPOs or investment funds in buying players’ economic rights, responds to a need for financing the professional club and is grounded on a series of complex and mixed legal transactions on the basis of autonomy, but generally are in substance either (i) a full assignment of future credits (the economic rights), or (ii) a loan guaranteed on the right of future credit, that is, the above mentioned economic rights. These business bases may incorporate other clauses that make them complex.
Nevertheless, the most common type of operation responds to the assignment of future credits with financing characteristic purpose and that is generally accepted in Spanish law by doctrine and jurisprudence under the provisions of arts. 1526 et seq. and 1271 of Spanish Civil Code, by analogy with the sale of future thing or rei emptio sperata (very common in recent years in the field of public works). This implies that such contracts, analyzed from the perspective of our law just for intellectual effects, rise up the complex problematic itself of this type of financing transactions (for instance the complexity itself of the factorial contract -contrato de factoring-).
Happens that this type of contract requires the application of the bounds of sports law, beyond the mandatory rules and provisions of general application (eg. the Royal Decree 1006 regarding the labour relationship of professional football players -the respect of labor standards in Spain-), leaving aside the continuous interesting discussion of private and contractual effects due to breach of these rules. In this area is where the discussion of its regulation or prohibition is focused, so that now, as it is known, the principle of admission prevails to the limit of the prohibition of influence by the TPO in the decisions of the club funded, arising from art. 18 bis RETJ FIFA. In this framework, there are often terms in TPO’s contracts in which the investment fund is guaranteed by imposing a put option for the economic rights previously assigned to the club financed by the amount of the bid received for the club and rejected by this. Such Buy-Sell clauses in its various forms (put, call, drag alone, tag alone) have a specific problem from the perspective of the prohibition of influence, an issue that is being considered in the conflict Sporting Club of Portugal Doyen Sports, recently submitted to TAS.
From this point of view, is this type of clause a material infringement is a violation of the prohibition of influence ruled by FIFA, following art. 18 bis RETJ?
I will refer to this issue in further posts.