Major European clubs and anonymous investment funds are fighting across cities, countries and continents over football’s new gold – talented minors.
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.
Investment funds involved in “child trading” have a vast number of people connected to them. Most often, however, the outer links in the chain are straw men, while the true owners are hiding in tax havens such as the Cayman Islands.
Sport Executive has found several indications as to who actually controls this fast growing business – either in a collaboration or individually. But there are many other players in this field. For legal reasons, we have chosen not to disclose the names of the owners. Sport Executive is familiar with a number of the actors on the market:
The international football politician:
The man feels just as at home in the murky alleys as he does in FIFA’s presidential palace in Switzerland. Even Sepp Blatter does not want to interfere with what he does. If he falls, Blatter will fall with him. He and his children own or co-own investment funds on the Cayman Islands and the British Virgin Islands and have a long line of bank accounts in Switzerland.
The regional football politician:
The man – or men – are the owners or co-owners of a number of investment funds. As far as Sport Executive can tell, they collaborate with the international football politician. The individuals are located in South America.
The Arab sheikh:
A number of investment funds are based in the Middle East. They are controlled by wealthy people or a dictator state with a passion for football and a desire for more power in the world of sport. They have heavy investments in European football and in FIFA’s more curious and shady business section.
The nouveau riche Russian:
They know all about the dirty game from the battle over the values left after the fall of the Soviet Union. They have transferred these skills to a new Wild West – international football and the football trade. Most of them already have interests in European football.
The soldier of fortune:
He just needs to make some dough. He could be a coach, an agent, a manager of a football academy or just a fortune hunter. He typically owns only small parts of an investment fund, but is an important player in locating the talent. Always locally or nationally based. Often he has contacts in the grey areas of the business.
The football player:
Several European star players have invested in the funds. This means that European football faces the grotesque situation that one player could actually own a player from another club. As far as Sport Executive has learned, however, the players in question own only small stakes in the funds.
This article is based on the investigations by the Danish online magazine, Sport Executive, which for more than a year has followed the international trade of under-age players.
Source: Play the Game
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Read the first article in the series, “Thousands of children have already been traded” April 9, 2014, on the trade of children in football.
“FC Barcelona sanctioned for buying child players,” January 5, 2015