The Falcao situation?

Discussion in 'Sports' started by seabs, May 19, 2013.

  1. Yeah my brain is fried at this one and all the talk of 3rd party ownership. I read this post on Reddit (it has sources not just opinions at the bottom) and it just made it slightly more confusing, Athletico claim to own him outright but he's still listed on the third party ownerships website for example.

    It's a good write up but I really can't get my head around why this is an issue in the English game.

    You have probably all already seen that Falcao is destined for Monaco. There were a lot of rumors about a potential move to Manchester United, Chelsea, Real Madrid and others - so why does he end up moving to Monaco?
    The answer is because of the complicated third-party ownership involved with Falcao. There was a very similar situation with Hulk when he moved to Zenit.
    To explain this, we need to take a step back and first see how third party ownership works. Those in England would have previously seen this topic as it reached prominence when Carlos Tevez and Javier Mascherano signed for West Ham United. Here were two stars from Argentina signing for a club in London who were struggling to stay in the top flight. The controversy lead to West Ham paying compensation of £18M to Sheffield United, and lead the FA to ban third party ownership.
    But third party ownership is still alive and well on the continent. It is most often applied with South American stars making the jump across the Atlantic to Europe. The way it works is that investment groups will purchase the registration rights of an upcoming player. This is sometimes done while the player is at a club, and sometimes as part of a transfer.
    For eg. one scenario would be that a 16 year old star in South America would be approached by an agent and asked if he wants backing with marketing and making it big in Europe. These deals usually involve paying the player a better salary, hooking him up with a better agent, better management, sponsorship deals etc. If and when the player agrees, the third party owners will then go to the club he is registered to and negotiate to buy his registration rights - either all of or part of.
    The player is then in the hands of the management and third party ownership group, who manage every aspect of his career from that point on. That usually involves paying him a larger salary on top of his club salary, placing him in clubs where he will get more exposure, etc.
    The other way third-party ownership happens is that the investment group finances a transfer for a player. For eg. Porto want to sign a player from Brasil but don't have the funds, they would approach an investment group and have them stake 50-60% of the deal in return for the players registration rights.
    The investment group make all of this upfront investment with the hope that at some point in the future the player proves himself, becomes a star, and can then exit at a very large valuation.
    Some examples: Tevez and Mascherano were placed into West Ham by their investment group as a way of getting them more exposure. It worked out well in both cases as Liverpool purchased Mascherano (buying out the investment group and giving them a good return) and City eventually ended up buying out Tevez - albeit via Manchester United (who never owned the entirety of his transfer rights).
    Back to Falcao. He was purchased by a third-party ownership group as part of his transfer to Porto. They bought 55% (likely more) of his transfer rights, supplemented his salary while he was paying at Porto and then moved him to Atletico for the purpose of getting him more exposure (likely with an eye on moving him eventually to Real Madrid). During the time Falcao was there, the investors were supplementing his wages again (infact paying most of them) and working on negotiating his big move which would see them cash out.
    Porto's financials show the following for the Falcao transfer:
    sale of 60% of the economic rights of the player Bolatti to the entity Natland Financieringsmaatschappij B.V., on July 2009, by the amount of, approximately, 1,500,000 Euro, (transaction perform under the acquisition process of 40% of the registration of Falcao)
    There is another section where it is disclosed that they sold another 5% option in Falcao, and another section where it is disclosed that there is an option for a third party to purchase a further 10%.
    The same filing shows that Porto only owned 45% of Hulk.
    What is more interesting is who is involved in the Falcao ownership. The group is called Doyen Sports and it was founded by Jorge Mendes (most famous as Ronaldo's agent, but an infamous player agent who is involved in a lot of third-party deals) and Peter Kenyon (former Chelsea chairman).
    On their website they have a page for Falcao and you can also see the other players listed. Falcao, like Hulk, ended up in a situation where there was so much invested in him that it would take a lot of money for the investors to see a return (known as being highly leveraged). They were paying his salary for a few seasons, had floated Atleti some money to keep them alive (they got some shirt sponsorship in return) and had made the initial investment when he first transferred.
    Falcao ends up moving to Atletico in a 40M move - despite Atleti the previous season stating that they had to clear players out because of their 220M euro tax bill with the Spanish government. What this ended up being is a 20 + 20M deal. 20M never gets paid because its just the third-party owners paying themselves, and of the other 20M only 18M is owed by Atleti, who take an option of paying in two 9M installments (they were late on the first one, they only paid 2.5M and defaulted to the point of Porto threatening to sue and taking the issue up with FIFA). End situation is that around 60% of the rights are with the Doylen group. It also appears that while Falcao was at Atletico that Doylen took an option for a larger stake in him since Atleti were late on their payments. Something weird happen which involved Doylen taking a sponsorship. Either way, they had the majority stake and Atletico had no say or control of the player. For all purposes it was nothing more than a loan with Atletico having a small stake in his registration rights.
    The president of Atletico Madrid continuously insisted that they own all the rights to Falcao, but this simply isn't true.
    Falcao is on a wage of 10M euro per year, and the return the investors wanted is 60M euro in transfer fee. This narrows down the list of potential clubs that can buy you out to very few. Atletico had no say in where Falcao goes, they had an option in the winter transfer window, but that expired. The owners needed their return and they were going to get it one way or the other.
    The list can be narrowed down to PSG, Monaco, Real Madrid, Chelsea and City. City aren't making large investments any longer, PSG have their fix of strikers. Of the remaining three, it is apparent that Real Madrid didn't want to pay up the 60M + 50M in contracts for Falcao (for whatever reason). Apparently Chelsea matched the 60M clause but to pay Falcao the 10M per season in wages would involve a total gross salary of 300k+ per week, which just isn't manageable.
    Chelsea also have the issue of not being allowed to directly purchase a player from a third-party owner (apparently this is what turned ManU off a move) so it would have required a two-step sale with Falcao going to one club outright and then to Chelsea. Apparently with the David Luiz transfer on the same day he moved to Chelsea Benfica bought out the entirety of his rights from third-party owners (so you can summize that Chelsea gave them the money to buy out that deal so that they could purchase 100% of Luiz directly from Benfica, thus avoiding the third-party rule in England).
    With all of these factors you end up with only one target: Monaco. They have the 60M to pay out the investors, they have the funds to pay his wages of 10M per year and better yet they have no income tax so they don't have to supplement the gross.
    So in the end Falcao is moved around Europe by his investors with the only goal of making a return for them. He has little to no say in his final destination because of a deal he agreed to years ago while he was still in South America.
    Links and further reading:
    edit part that I missed which some people might not know - Monaco were purchased by Russian billionaire Dmitry Rybolovlev, the 79th richest man in the world. Similar MO to the Al Thani's at PSG except he is investing as an individual, rather than with the backing of a state.
    When he bought the club in December 2011 they were bottom of the second division in France. He rescued them that season and has now seen them promoted back to Ligue 1.
    Edit some more links, this time from UEFA, who have strong words against third-party ownership (but it still goes on):
    This is why, as asked below, Atletico insist in public statements that they own 100% of Falcao - they don't want to risk any potential clampdown from UEFA.
    edit further, thanks for the reddit gold, and all the messages and responses. really wasn't expecting it.
    Spammers If you find anybody online ripping this post off, like this guy (bookieinsiders) please report them as spam.

    Source and credit to Reddit user nikcub.
  2. I don't know :((

    It seems to be to fund his move to Porto from River Plate Peter Kenyon and that Mendes guy (CR7's agent) bought 60% of his registration which remained when he went to Madrid, they're in the shite financial so couldn't fund it themselves. The 40m Madrid paid for him was actually 18 to Porto with the rest waived by the owners to keep their stake in him. This was supposed to be paid off with two 9m payments a year but they missed it so conveniently the company owned by one of the Falcao investors became Atheltico's sponsors and they paid it after Porto threatened to report the deal to Fifa for the missed payment. Since the FA banned 3rd party ownership he has to go to Monaco to buy his registration out right or the club would need to give Athletico the money to buy the stake back to sell him. My head exploded trying to explain that, fuck this deal is complex.
  3. Falcao will leave this year, he's going to play in Italy next season
  4. Also his salary was partly funded by the group apparently, it's similar to why Hulk went to Russia.
  5. Doubt any club could afford him tbh.
  6. He's leaving to monaco. 90% done..If not to madrid but madrid would have to pay 75 Million euros
  7. Lmao wtf

    Seems horrible. Poor Falcao. Third party ownership is basically retarded, and I am glad it was rid of in this country.

    Don't worry, after you sell Ronaldo to United you can afford Falcao.
  8. Madrid would pay more because of complicity or something like that...
  9. Fuck Falcao. Cavani is way better. It is easy to score in La Liga and Europa League but it is hard to score in Seri A. Enough.
  10. Lmao what? WHAT?

    The Italian league isn't even the third strongest league in Europe. It's disgracefully poor. Cavani isn't even close to Falcao's level bro.
  11. Bajeebuz I'm still confused :cry:
  12. Well Seri A is a tough league, and it's defenders are good. It may not be a good league but it's hard to score there. And La Liga... It's all about attack mostly. So it's easier to score.
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