FIFA's Transfer Matching System brings much-needed transparency
FIFA's new Transfer Matching System will help fight fraud and money laundering
For international transfers both the buying and selling club require full disclosure
New system doesn't apply to transfers between clubs in same domestic league
When it comes to change, FIFA likes to move in baby steps. (Which might actually help explain why those who want to see instant replay introduced will probably have to wait a few hundred years, but that's an argument for another time.) Sometimes though, those steps -- "baby" as they may be -- are in the right direction. Count the new Transfer Matching System (TMS) as one of those times when FIFA gets it right.
It's hardly "revolutionary" or "historic" (two adjectives that popped up in FIFA's news release) but it will help bring some much-needed transparency to transfers. Right now, whenever a player moves from one country to another, FIFA has to approve the paperwork. Except that basically consists of a couple faxed documents, which usually get rubber-stamped as a matter of course. From Oct. 1, for a transfer to take place, clubs will have to electronically submit some 30 different documents and bits of information, from a player's history to his contract to crucially listing every payment and bank transfer that takes place. And -- here's the interesting bit -- both the selling club and the buying club will have to input all the information. If the numbers don't match, the transfer won't go through and FIFA will withhold clearance until the matter is cleared up.
"This is a historic moment for football," said FIFA president Sepp Blatter. "TMS is a relatively simple online system but it will have a tremendous impact on the international transfer of players."
Blatter added that it will help fight money laundering and fraud, while adding transparency to the system. I'm not so sure it will quite go that far, but it should help at least keep a record of who went where, for how much and how the transfer was paid.
Why does it matter? Because too often huge sums of money change hands without any kind of oversight. Talk to any agent or club official and they'll probably regale you with stories of backhanders, tax evasion and offshore accounts.
Some of it may be downright bribery. Club A wants to buy Player X from Club B, there are often (at least) three agents involved. A selling agent (let's call him A1) employed by Club B, a buying agent (A2) who works for Club A and the agent representing Player X (A3).
In some cases, you'll have a string of others guys (A4 through A whatever number you care to choose) who act as intermediaries.
What do all these people do? Some of them genuinely bring people together and mediate and are crucial to a deal happening. Others exist solely to take their slice and make sure people are "taken care of." Like, for example, the general manager of Club A, who has to approve the offer. Or his counterpart at Club B, who has to agree to sell. Stories of these kind of shenanigans abound yet they're almost impossible to track. TMS should help.
Of course, it's still a "baby step." For a start, TMS only covers international transfers. Domestic ones are still the domain of individual leagues and oversight varies tremendously. At many Football Associations, the compliance department consists -- at best -- of a guy with a phone and a shoestring budget. And that's the way people like it.
At least now, there's an (electronic) paper trail. At least to some degree. If TMS says the fee is $10 million and a club's owner sees that $12 million leafs the coffers, he may ask which agents were paid and why. And that's a good thing.
The fact that contracts can also be scrutinized is also a plus. It should put an end to the ridiculous practice of hiding payments under something called "image rights" one of the oldest tricks in the book.
How does the "image rights" ploy work?
Let's say Player X wants to make $2 million after tax. And let's assume tax and contributions are around 50 percent. This means Club A would have to fork out around $4 million to satisfy Player X's demands. Enter "image rights," which is basically the right to exploit a player's image commercially, say by selling calendars or using his image to attract sponsorship.
Club A might agree to pay Player X $3 million, which is $1.5 million after tax, plus another $500,000 a year for the image rights. Except these image rights don't go to Player X. They'll go to, say, Player X Image Rights Corporation, based in some offshore tax haven and set up by Player X's agent. This "image rights" company is basically a sham, 100 percent owned by the player. But it's a neat and convenient way to make sure the player earns his $2 million a year after tax, while saving the club money, as it only needs to fork over $3.5 million ($3 million for the playing contract and $500,000 for the image rights), a saving of $500,000 for Club A.
This business has been going on for years, largely without any kind of oversight. The brutal reality is that there are no more than a few dozen players whose image rights are worth anything significant. Yet the number who have image rights totaling in the hundreds of thousands -- if not millions -- a year is huge.
Nobody blows the whistle on this practice because it's not in anybody's interest to do so. Nobody, that is, except for the tax man and, to be fair, in recent years, there has been a crackdown in some countries.
Yet without access to documents and information, it's very hard even for the tax folks to investiage properly.
TMS should help in that regard. But, while they're at it, why not go all the way? Why not make all this information public? Why not have total transparency? Let's find out who makes what and how much he cost. It seems to work fine in U.S. sports, where all salaries and transactions are public, why not do the same in soccer?
The stock argument offered up by clubs is that this information is sensitive and amounts to a competitive advantage. If another club knows exactly how much you pay your players, then they have an edge in negotiations.
But, in fact, it's a bogus argument. For a start, if everybody knows everything about everybody else, the playing field is level. Nobody has an advantage. And, secondly, even now, the information is hardly private. Any agent will tell you exactly how much his client earns if he thinks you can get him a better deal elsewhere.
Again, though, don't hold your breath. Turkeys don't vote for Christmas.
Transparency -- real transparency, of the kind that helps ward off fraud, corruption and thievery -- is a long way off in soccer. But maybe, just maybe, TMS is a small baby step away from the darkness and toward the light.
Heck, these days it's better than nothing.