What is third-party ownership?

Sam Allardyce on Wednesday sought to explain how he had landed in the middle of a sting by the Daily Telegraph newspaper, leading to his departure as England manager by mutual consent after just 67 days, and one match, in the job. 

"On reflection it was a silly thing to do. But just to let everybody know, I sort of helped out somebody I've known for over 30 years and it was an error of judgment on my behalf," Allardyce told reporters outside his home in Bolton, northern England. "I've suffered the consequences. Entrapment has won on this occasion and I have to accept that."

The disgraced England boss said that he was contractually sworn to silence and could not elaborate, saying he was heading abroad to take a time-out from the game. Asked if he would one day return to management, he replied, "Who knows?" 

What Allardyce called "entrapment" was a meeting set up by reporters posing as businessmen from the Far East who were purportedly interested in investing in football players using the now-outlawed system of third party ownership, or something similar. The former Bolton, West Ham and Sunderland manager said that the rules could still be circumvented, saying that some club managers were "doing it all the time." 

What's third-party ownership? 

Third-party ownership (TPO) used to be an important cog in modern football's monetary machinery, especially in Latin America and European countries like Portugal that frequently import young Brazilian or Argentine stars.

The practice involves a third party - it could be an agent, a company, an investment fund, or an interested individual - purchasing a financial stake in a player's economic rights, assuming that risk on behalf of the clubs, who traditionally "own" players under the financial model used in football.

TPO should not be confused with co-ownership between football clubs, when two or more teams share ownership of a footballer, a practice that's particularly common in Italy.

The third party's contributions - these could be money towards the transfer fee, help paying his wages, or both - are then offset against a share of any future transfer fee when the player is sold. In some cases, third party contributions could be so significant that they would then control key future decisions like when the player should be sold, to whom, and for what price. 

Players who were once owned, in part, by a company and not a club include former Chelsea midfielder Ramires, Boca Juniors' Carlos Tevez, and Barcelona's Javier Mascherano.

Tevez and Mascherano brought the practice into the spotlight in England in 2006, when both players transferred to London club West Ham from Corinthians in Brazil for undisclosed fees. Back then, TPO was legal in English football but with an important caveat: third parties should not be able to "materially influence" key decisions within the club, for instance by triggering a star player's sale.

The Argentine superstars left Upton Park - Mascherano bound for Liverpool and Tevez for Manchester United - within a year. The economic incentive for the third parties could not have been clearer, West Ham was a stepping stone, a way to bolster the players' perceived values in front of an English audience before they moved to larger clubs for the kind of transfer fees Corinthians could never have commanded.

By 2008, the English FA had outlawed TPO altogether; world soccer's governing body FIFA followed suit worldwide last year after commissioning a major investigation into TPO. UEFA's former and current presidents, Michel Platini and Gianni Infantino, have both likened the practice to "modern-day slavery." 

Does anybody defend TPO?

Yes, especially those who profited from it in the past! 

Israeli football agent extraordinaire Pini Zahavi explained the classic argument in favor when speaking to newspaper The Observer in 2006, putting forward a simple case of diversifying risk when investing in young players with an uncertain future.

"In England they don't understand it at all. It's easier to buy a player who you are unsure about for 10 million pounds if you are sharing the risk with a partner," Zahavi said. "Now, if the player becomes top-drawer and is sold for 30 million, then of course you may feel stupid only to own half. But if the player turns out to be merely average or a failure, if he cannot even be sold, you will say, 'Fantastic, the disaster was not only mine.'"

Similarly, businessman Kia Joorabchian described TPO as "a way of bringing outstanding players to clubs that would not be able to afford them ordinarily." He even argued that it can therefore boost competitiveness within a league and help out poorer teams. 

How can TPO survive despite the bans? 

The video footage released by The Daily Telegraph does not conclusively show how Allardyce believed that the moratorium on third-party ownership could be circumvented in England. However, suspicions that agents have found ways around the ban are nothing new - and Allardyce focused on the importance of working with player agents in the footage that was published.

"You get a percentage of the player's agent's fee, that the agent pays to you, because he's done that new deal at that club again," Allardyce said, pointing out that with contracts now worth as much as 30 to 40 million pounds, a cut of the agent's fee can still be a lucrative sum. "You've done a deal with the agent where you get 5 percent of the agent's fee, which is massive for about two hours work, like."

Other ways agents are thought to have dodge the TPO ban include buying shares in a club, then claiming a share of a transfer fee when a player is sold, or by nominally loaning money to a club, which is then repaid with interest representing the cut that would have been doled out under a TPO arrangement.

At one point, when asked about the possibility of arranging transfer "bungs," Allardyce theatrically put his hands to his ears and said, "I haven't heard that, you stupid man!" 

"You can't pay a player, you can't pay a manager, you can't pay a CEO," Allardyce elaborated. "It used to happen 20-odd years ago, 30 years ago ... You can't do it now, you can't do it now, don't ever go there." 

The scandal hit Allardyce and the English FA particularly hard given their histories. The FA, along with the Dutch association and to a lesser extent the German DFB, had been at the forefront of the rebellion within FIFA, urging world football's governing body to clean up its act and publicly disavowing former FIFA President Sepp Blatter.

Allardyce, meanwhile, had been investigated for financial impropriety during his career as a club manager and had been the focus of another investigative expose, by the BBC's Panorama, in 2006. No charges were ever filed, however.

The upshot: England now has its shortest-serving manager in history, and its only boss with a 100% win rate - a rather unimpressive 1-0 in Slovakia this month.