Much has been said in the last couple of days about the abolishment of an Italian peculiarity in terms of the football transfer market: co-ownerships.

Co-ownerships allow a club who owns 100% of a player, to sell half of it to another club, in such a way that said player is owned by two clubs with a 50% share each. The two clubs can keep this co-ownership for one year only, unless the player agrees to extend it another year (total 2 years). Then, the clubs can also decide to loan the player to a third club. Each club can sell its own share of the player to another team.

If, however, at the end of the two years the clubs still own 50% of him, they will have to find an economic agreement to solve the co-ownership, based on the market value of the player after the one (two) year(s) development. Should they not agree on a number, here come the envelopes: the two clubs write down a number in a sealed envelope, and the club who wrote the highest amount pays half of it (50%) and keeps the player.

Ok, if you think this is complicated, well you’re right. However, there is a logic behind all this. Actually two:

-          Share the risk on the investment between two clubs (we can argue that this can be an excellent solution if and when liquidity is scarce)

-          Incentivize the development of players, as the clubs who take them not only gain from their performance, but also from their re-sale (or, should they end up buying him out, from his development)

The Italian Federation (FIGC) decided to end this peculiarity, in order to harmonize the Italian system with the rest of Europe. Current co-ownerships can be solved within the next 12 months. It is still to be understood whether this move was just the first step towards a system in which third-party ownership will be the rule, rather than the exception. The recent deregulation of FIFA players’ agents goes in this direction: anyone will be able to represent football players freely, including investment funds. Should this be the case (and it most probably will be), we could ask ourselves: is this better than co-ownerships? Is adding new, external intermediaries to a system that loses money the solution?

An answer to these questions needs time. What we can evaluate right now is the winners and the losers of this epochal change.

And the Oscar goes to… Top Clubs and players. For different reasons, they are the categories which will benefit the most from this decision.

Top clubs What the FIGC did right here, is allowing them to improve their planning in terms of roster construction. Sure, they cannot capitalize on the many youngsters who are good, but not good enough to make it to their team and could have been sold to smaller clubs through co-ownerships. However, this system had become a way not to take decisions. They would “park” a player, and take time. But as the number of players increases, the focus that teams can have decreases.

Consider that in Serie A there are approximately 500 players (20 teams with 25 players each). Out of these, 164 are currently co-owned (including the capocannoniere of Serie A Ciro Immobile who was just sold to Borussia Dortmund, the enfant-prodige Domenico Berardi and the Colombian winger Cuadrado). This means an incredible 33%, one player out of three! On average, 8 players per team is owned by two clubs. Again, a third of the team. Given that the bureaucracy behind the system is also very heavy, top clubs can move their resources towards other, more strategic, aspects of the game.

Here, there, anywhere Being treated as a stock in the exchange market isn’t probably the best feeling. Players, actually young players, have had to accept the system without ever having a say. No wonder that many of these players have expressed their satisfaction. Says Lanzafame, former Juve player: “Players should have the right to play for one club, without having to travel as much as I did. Loans are the right instrument, rather than co-ownerships.” 

The logic behind the system was to enhance the development of a player. However, co-ownership often hindered such development, as young players, the ones more in need of stability, were forced to change their club more often than not, and were victims of the lack of planning of the clubs, who had no specific individual development program for them.

The loosers Smaller clubs are the most penalized by the decision, at least in the short-run. Capital gains off co-ownerships had become a significant voice in the income statement (€130 M in Serie A), and will now disappear completely. In other countries, most teams pay to get a player on loan. In Italy, not only did small clubs not have to pay, but they would get a share of the increase in value of the players. In addition, they might not have enough money to buy a young promising player on their own. The best example? The former “Emperor” Adriano: Inter sold 50% of him to Parma for €12 M in June 2002, and bought back the same, albeit stronger (and more expensive), player in January 2004 for €22 M. A 10 million capital gain in one and a half years from a player who also contributed with 15 goals to a very successful campaign for the Crociati. Not anymore. Several clubs, like Udinese and Parma, who have built their successful model also around co-ownerships, will have to rethink their strategy.

In the future, who knows, this might lead to a greater stability in terms of rosters and a better planning also for small clubs. Right now, many clubs will struggle to find some oxygen. Maybe not a bad thing though, as clubs in Italy (more than anywhere else) need to rethink their commercial strategies: will this be the sparkle to initiate change?