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Investing in football players: Can you really make money from crowdfunding?

By: Richard Lenton

Having worked in and around the football industry for well over a decade, I’ve met more than my fair share of agents – or people purporting to be them. Some of these characters have been terrific people with genuine values. Some, though, haven’t had the first clue what they were doing. And some of them, I can honestly say, have been the most unscrupulous individuals I’ve had the misfortune of crossing paths with; the type of people who would slice off their grandmother’s finger in order to take her wedding ring to the pawn shop. Okay, I’ve gone too far (just), but you get the picture.

So, when I was contacted by a crowdfunding platform which gives football fans the opportunity to invest in promising players, I was sceptical to say the least. Having coached in remote parts of West Africa, I know all about young lads being flown to Europe for trials and then being left to fend for themselves on the streets without a penny to their name once their dreams of becoming a football star are shattered.

The move of David Luiz from Benfica to Chelsea netted millions

However, serial entrepreneur Hugo Castro, the co-founder of Venture FC, insists not only that his organisation is above board, but that it also offers fans an investment opportunity with a difference – something exciting that could potentially yield rich rewards.

Explain the concept of Venture FC.
The time when only the rich could invest in football is over; with Venture FC, anyone with 50 euros will be able to invest in football players. We are a crowdfunding platform where the football fans will have the power to invest in football players and have a share in their economic rights. They will also have the chance to build their own portfolio of players if they want. We will scout the best young players available, feature them on the platform and open up registrations for investment from our users.

When you hear the term “economic rights of a footballer”, alarm bells ring. We remember Premier League club West Ham United being fined heavily a few months after they signed Argentine superstars Carlos Tevez and Javier Mascherano in August 2006. Why is Venture different?
There’s a very bad public image of this business, especially because of that deal. There was real confusion as Tevez and Mascherano’s economic rights were not bought out 100 percent by West Ham. Had that been the case then there would not have been an issue. Economic rights is banned by the English Football Association who say a player cannot have any third-party owners. UK clubs have to own 100 percent of the player (as do clubs in France and Poland). They are obliged by the laws of the game to buy outright all third-party ownership of a player they are transferring to their club.

So give us an example where this has been done properly.
The move of David Luiz (main picture) from Benfica to Chelsea. It was all above board and it also netted around £5.25m to his third-party owners. Fellow Chelsea players Ramires and Oscar have also had levels of third-party owners. Therefore, if you invest in a player with us and they move to the UK, then you can earn a return on investment (ROI) just like Davis Luiz’s investors. Third-party ownership needs more regulation and we are here to help establish a more transparent and trustworthy way to conduct business.

How does it affect the selling club?
For a lot of poorer clubs, if they need to improve one of their star players’ contracts for instance, bank loans are completely out of the question since they cannot bear the risk involved in football. With third-party investments, the clubs are raising money through shares on a future transfer, but that enables them to keep the player for a longer time than expected and help the club reach success. Hence the example of Neymar; if his Brazilian club Santos FC didn’t sell some shares in his economic rights then the club wouldn’t have been able to keep him for such a long time.

Why should I become an investor?
If you’re a football fan you’ll be the first to know who is on the verge of hitting the spotlight. You’ll have the chance to prove your scouting skills and possibly earn a lot of money. You can double your money if all goes well. First average returns in this kind of business are around 60 percent with a low correlation to economic downturns. And one of the things we also do is support the work of non-governmental organisations that use football to take kids out of poverty, violence or extreme environments.

Barcelona and Brazil superstar Neymar netted investors enormous returns
Barcelona and Brazil superstar Neymar netted investors enormous returns

 

So you categorically state that it’s above board?
Yes. This is a platform made by and for football fans. We love the sport so we don’t want to do anything that could harm it. We will not infringe FIFA regulations that state investors cannot hold such a significant percentage of economic rights that it can grant them influence towards the club and/or player’s will. We will be investors, period. We will not move players around and use clubs as incubators like what happened with Tevez and Mascherano.

Are there any other similar schemes?
FanTex is doing something similar in the US, but they are asking you to invest in the possibility of American football players to generate revenues themselves (either via salary or endorsements) rather than transfers, which is what we will be doing.

Would I get a say in which players I can invest in?
You’ll have a page with each available player, his status, valuation, history, reports, videos, amount raised so far, goal and minimum amount, market trends and how much ROI the player can potentially generate. You pick the ones you want and pay via credit card or PayPal (for bigger investments we are preparing other payment methods). After that you’ll be updated regularly about players you’ve invested in. At first we will act as curators, scouting interesting players with a lot of potential who have the highest chance of delivering an excellent ROI. Apart from that you are on your own, meaning you are free to invest in one player, two or 10. But in the long run we want our users to say what players they want to invest in and we will try to deliver.

Have you enlisted experts to identify players with talent?
We have scouts in Brazil, Ghana and Nigeria. Me and my team (Palmer Ofori and Mac Lackey) have extensive expertise in football and are currently helping our scouting team as well.

Which countries do you focus on in terms of talent?
Definitely Brazil where you have the best quality/price ratio, but also Africa, especially Nigeria and Ghana. Also, there are very good young players in Portugal, Spain and Eastern Europe.

Can you give us an example of the money that can be made by investing in economic rights of players?
Sure. In February 2009, Neymar was valued at roughly a million euros. He was sold for 50 million by July 2013. If you invested 1,000 euros (0.1%) in his economic rights in February 2009, you would have got 50,000 after he was sold. Mind blowing isn’t it?

How many players do you have on your books?
We are closing some deals and expect to have 10 players max for our first batch when we officially start trading in May of this year. We want to have premium content on our platform so when a player is featured you can be sure that he is really good.

 

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