Football has become a billion dollar industry with astronomical turnovers. An increasing number of people want a part of its glamorous world of money, power and honour, dazzling billions of people around the world.
This is why a war is raging in the football industry – a fight across streets, cities, countries and continents. Everyone wants a part of the future gold of the industry – the talented minors.
The major European clubs have for decades tried to vacuum the market, with scouts centrally placed in more or less every village across the globe.
They do so in spite of football’s own rules.
This way, they make sure they get the best talents before the other clubs. And it is also the way they secure the rights to a new Lionel Messi or Cristiano Ronaldo. It is, after all, cheaper to secure a 15-year-old José – even several Josés – than a 21-year-old Neymar.
The motives are very human. Some parents see it as a way out of poverty or simply as a way to survive; other parents see a unique chance for their sons. Agents and other soldiers of fortune simply want to make money. And the clubs – well, they want to develop a greater talent pool in order to make it in the hard-nosed competition and to minimise expenses while increasing profits.
Competitors in the market
But now the major European clubs have gained a serious competitor in the ever-expanding market. Previously, the clubs only had each other to fight, but today a new, serious player has joined the field, namely the anonymous investment funds. Like the clubs, they also have scouts placed in central locations, mainly in South America, Central America, Asia and Africa. And like the clubs, they purchase the rights for the ‘talented minor’ – and then go on to sell them to the clubs or the clubs ’satellite academies’. They have plenty of funds to play with.
The Danish magazine on sport and society, Sport Executive, has for more than a year followed the movements of the investment funds in the new, flourishing football market. Sport Executive has spoken to politicians, football leaders, coaches, players and people with extensive knowledge of the football industry in basically every part of the globe – from South America to Asia. All investment funds involved in this kind of trade operate under anonymity.
A number of companies led by straw men all lead to one parent company located in well-known tax havens, such as the Cayman Islands, British Virgin Islands or Qatar. This is the case for every single investment fund Sport Executive has been able to locate in the market. This also means that the owners in fact cannot be named, as tax havens not only secure the companies freedom from taxes but also anonymity – that is, no information about the owners and no demand for accountability. But the players in the desirable market are well known.
Based on the conversations Sport Executive has had with experts on the football industry, it can be concluded that the owners of the anonymous investment funds are most likely a conglomerate of Middle Eastern plutocrats with other big interests in football, nouveau riche Russians with extensive experience in the rules of the grey market from the ‘clean up’ after the fall of the Soviet Union, international and regional football politicians, true soldiers of fortune with criminal contacts and event-established European football stars.
Football’s arms race
The entry of investment funds with great financial reserves has created an ‘arms race’ in one of the grey zone of football – child transfers. The increased competition in the market forces both the funds and the clubs to look for even younger talents. This means that boys are being bought younger and younger. A few years back, the talented minors that were bought by the clubs were typically between 12-15 years old, but today the attention has shifted to the 9-12-year-olds. They are cheaper – and they fall outside FIFA’s radar, the International Transfer Certificate. On the other hand, the risks are greater.
“There is a lot of money involved in obtaining the great talents and the clubs are in fierce competition with the so-called ‘investment funds’, so the clubs simply search for younger and younger talents. The clubs are chasing the young boys in order to beat the investment funds to it,” explains Mads Øland, board member of the World Players Union, FIFPro.
He predicts that the ‘war’ will only escalate in the coming years:
”Take the example of FC Barcelona’s purchase of Neymar. They wanted him for years. He ended up being extremely expensive for them, because the investment funds had to have their cut of the profit. And the funds’ cut is several hundred percent. It was the worst scenario imaginable for FC Barcelona,” argues Øland.
“In other words, you pay top price to all the traders of the world, and you do not even know how good a player will be. This is why both clubs and investment funds want even earlier access to the food chain in order to reap the benefits. In the example with Neymar, FC Barcelona lost a potential profit, “ Øland states, and finishes:
“It will end in disaster at some point…”
The investment funds in the international football market are now so powerful that, according to a study by KPMG, at least 1.100 top players in Europe are now owned by third parties, while in Brazil, this is the case for around 90 per cent of all players in the top divisions.