Saturday, July 19, 2008

Trading in Brazilian Soccer

A Brazilian investment company that trades in that country's soccer-rich talent -- appropriately called Traffic -- signs players to its stable and then loans them out to Brazilian clubs that pay their salaries and exhibit their skills. The payoff comes when the players are recruited by European clubs, which could pay millions -- and even tens of millions -- of dollars in transfer fees. The problem with this model is roster instability because the Brazilian clubs cannot control the players' longevity with their teams, and also creates the potential for collusion, because the investment firm could strengthen or weaken clubs simply by reassigning players. Still unanswered is whether these investment firms run afoul of soccer rules prohibiting third-party ownership. But for the moment, this model is working for Brazilian soccer, because most clubs cannot afford to carry the full burden of acquisition costs, salaries, and bonuses that they would otherwise incur.

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http://www.nytimes.com/2008/07/19/business/19soccer.html?pagewanted=1&_r=1&adxnnl=1&ref=sports&adxnnlx=1216469120-au29S3JWfgvade8RyWftIA

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