Sanjay Nijran

By John Sinnott

The Premier League's third-party ownership rules are "not legitimate", says a leading sports lawyer.

Jean-Louis Dupont helped Jean-Marc Bosman change the law in 1995 to allow players to move for free at the end of their contract.

And he believes the rule that requires top-flight clubs to fully own the economic rights of a player is illegal.

A Premier League spokesman said members wanted to avoid problems experienced with the rule in South America.

The idea of shared ownership - where a club might own 50% or more of a player with the remaining percentage owned by a third party - is common in the rest of the world, particularly in South America.

The Premier League ban on third-party ownership was introduced at the start of the 2008-09 season to protect the "integrity of competition" following the Carlos Tevez affair.

West Ham were fined £5.5m by the Football Association in 2007 after signing Tevez and Javier Mascherano and allowing the Media Sports Investment company to keep certain rights to the players.

That season, Tevez scored at Old Trafford to help keep the Hammers in the Premier League, leading to a long legal battle with Sheffield United over compensation for the Blades' relegation.

The prohibition on third-party ownership also applies to all Football League clubs and last season QPR were fined nearly £1m for breaching regulations in the 2009 signing of Alejandro Faurlin.

Dupont believes a legal challenge to the rule would have a "very, very good chance" of winning.

He told BBC Sport: "I have observed the Tevez case and the rule in the UK.

"I'm not convinced restrictions to that business are legitimate. Third parties would own rights of players and have an interest in the potential benefit of transferring a player from club A to club B.

"We are in a typical case where, in order to avoid the disease, you kill the patient. If you kill the patient, there is no disease - but there is no patient either.

"The main principle under EU law is the freedom of enterprise, where the restriction is the exception. You should start with the principle rather than the exception."

In Portugal one notable third-party owner is the Benfica Stars Fund, which is run by that country's biggest bank Banco Espirito Santo.

And Dupont posed the question of what the difference is between a club using a third-party owner and going to a bank for a loan to buy a player.

He said: "This is a typical sports federation over-reaction. There are reasons for a federation to be careful when you see third parties investing in football but it does not entitle them to over-react to cancel the freedom of somebody.

"The rule is not proportionate. The objective is to protect the game - the ethics of it."But to achieve that you cannot just say 'no' to third parties. It's clearly excessive. What is the difference between having a fund [third party] buying a player and a bank doing it?"

Lawyer Guy Thomas said: "It's fair to question whether the Premier League rules on this could be shown to be restrictive.

"If a claim was made and a restriction shown then the Premier League would need to justify its regulations.

"A fight like this needs a spark - and few choose to enter litigation without a potential payday. The next time the holder of an economic right is forced to sell their interest to a Premier League club, the spark might arise if both sides cannot agree on what those rights are worth."

However Sanjay Nijran of Smithfield Partners argued that the leagues could be successful in any bid to retain the ban on third-party ownership.

"The football authorities would attempt to justify this rule based on 'competitive balance' and it has been shown in both case law and by the European Commission that 'competitive balance' is vital for sport and is a factor which separates it from normal industry.

"On this basis, it is likely that the European Court of Justice and European Commission would be able to objectively justify this type of rule."

A Premier League spokesman said: "The clubs decided that third party ownership was something they did not want to see.

"It raises too many issues over the integrity of competition, the development of young players and the potential impact on the football pyramid - it was felt the Premier League was in a position to take a stand on this.

"No-one wants to see what has happened to club football in South America repeated over here."

By Ben Wyatt, Gary Morley and Tom McGowan

Updated 1204 GMT (2004 HKT) October 5, 2011

A landmark ruling which could change the way top-level European football matches are broadcast and sold by television companies was made on Tuesday. The European Court of Justice said that soccer fans have the right to watch sport franchises, such as the English Premier League, on a range of European broadcasters rather than solely via the rights holder designated for each national territory. The court said in a statement: "A system of licenses for the broadcasting of football matches which grants broadcasters territorial exclusivity on a member state basis and which prohibits television viewers from watching the broadcasts with a decoder card in other member states is contrary to EU law." Since its launch in 1992, the Premier League has sold exclusive match rights to a small number of television networks per national territory, a business model which has seen it become one of the richest in the world -- generating an estimated $5.3 billion in income, according to British newspaper The Guardian. Can football chants ever go too far? But the ruling -- in response to a long-running case by BSkyB against a British pub landlady who broadcast a Greek match feed -- now means that consumers could buy decoder boxes from satellite broadcasters from other nations, at a cheaper price, to watch the games they are interested in. BSkyB, which paid a combined $2.73 billion with ESPN to be the main rights owner for the Premier League in the United Kingdom, saw its share price drop 3% on news of the statement. "It will have implications for how rights are sold across Europe in future, which we are considering," a Sky spokesman told CNN. "As a broadcaster, it will remain our aim to secure high-quality content for our customers based on the rights available to us." The ruling's effect could be far reaching if the value of football rights were to be diminished. The large amount paid to the Premier League has seen record amounts of prize money given to top-flight English clubs such as Manchester United and Arsenal -- finance which has subsequently been used to build new stadia and attract some of the world's best players. "This could drive a coach and horses through Sky's business model for broadcasting of Premier League matches," according to Stuart Adams of intellectual property law specialist Rouse, based in London. "There is every prospect they will find fewer people willing to pay for licenses to broadcast Premier League matches if for a little effort they can get the same pictures via a cheaper overseas feed. When the deal is re-negotiated with the Premier League it will be very interesting to see how the numbers change. "And if they are markedly reduced, of course, that will have a direct impact on clubs' revenues and therefore their ability to buy and pay the salaries of top talent. That in turn could lead to yet more polarization between the haves and the have-nots of the English game." The English Premier League said it would release a statement shortly. Sanjay Nijran, a sports lawyer for Smithfield Partners based in London, told CNN it could affect future revenues for sport franchises across Europe. "Any broadcasting rights holder that intends to license rights will be bound by this ruling, it appears they will not be able to limit exclusivity to national borders and consequently the value of these rights could be limited. They may have to look for other models," Nijran said. "We're not sure but we would imagine the Premier League would possibly be considering a pan-European license to sell the same broadcasting rights to the continent." But it could mean that football fans in Europe are able to pay less to watch the matches they want. "Currently top-level football is sold to a host broadcaster in each European Member State, you have only one choice of provider through which to watch the match. Now, this ruling allows you to watch on the same terms as any other person across Europe," added Nijran, who is representing suppliers of satellite television decoders over the issue. "What this gives the consumer is choice because through increased competition they are able to choose cheaper providers." However, the ruling could have a detrimental affect on English lower-league football, Adams told CNN, as it would circumvent the ban on Saturday afternoon matches being broadcast live -- a regulation which is supposed to protect smaller clubs. "This would have a huge potential impact on clubs' pricing policies as they are likely to have to reduce prices at the turnstile in order to continue to attract crowds," Adams said. "While this is an issue for Premier League clubs, it is likely to be much more acute for lower-league clubs who are far more at risk of reduced attendances in these circumstances. Such clubs are also more reliant on revenue generated at the turnstiles. "If the net result of this is more football on the telly for fans to watch, and less money for clubs to lavish on the salaries of their top players, I think most of us would be overjoyed. But if we also see smaller clubs go out of business as a direct consequence, I'm not so sure that football fans will be cheering quite so loudly."