As Brazilian football becomes more connected to the global market, the link between sports and tax regulation becomes clearer. The creation of Sociedades Anônimas de Futebol (“SAFs”) marks a major change in the Brazilian football scene. These corporate structures introduce a more professional and economically focused approach to managing football clubs, aligning more with international business practices.

Similarly, the recent overhaul of transfer pricing rules in Brazil represents a significant milestone in the country’s tax system. The new Brazilian regulations, aligned with OECD standards, emphasize the importance of the arm's length principle, which requires that transactions between related parties be priced as if they were between independent companies. This principle involves a detailed review of market conditions, industry trends, and the economic reasons behind each intercompany deal.

Transfer Pricing and Football

The arm’s length principle is now making its way into the football world, especially in Brazil, where transactions between related clubs – entities under the same corporate umbrella – are attracting attention. Brazil’s new transfer pricing rules, outlined in Law No. 14,596/2023, cover a broader range of intercompany activities — including transactions involving intangibles, business restructuring, and financial arrangements like intercompany loans. These regulations apply to all related-party transactions, and since FIFA’s definition of multi-club ownership (“MCO”) closely matches the Brazilian definition of related parties[1], football organizations should not be exempt from these tax compliance obligations.

The rapid growth of MCO in global football has created new complexities in financial transactions between related entities. According to UEFA’s 2023 research[2], more than 53% of top-division clubs worldwide are now owned by private parties. In over 90% of these instances, clubs operate as limited liability companies (“LLCs”) or joint-stock companies, highlighting their corporate nature rather than their traditional role as community-focused organizations. As financial structures change, the question arises: why should football companies be exempt from the same tax  frameworks that govern intercompany transactions in other industries?

Some of the biggest football clubs in the world, such as Arsenal (England), Chelsea (England), Manchester City (England), Inter Milan (Italy), Red Bull Leipzig (Germany), and Paris Saint-Germain (France), are examples of teams that are part of MCO models.

The City Football Group is an example of leader in the field, with 13 teams across the globe[3]: Manchester City, New York City FC (USA), Melbourne FC (Australia), Yokohama F. Marinos (Japan), Montevideo City Torque (Uruguay), Girona (Spain), Mumbai City (India), Sichuan Jiuniu (China), Lommel (Belgium), Troyes (France), Palermo (Italy), Bahia (Brazil) and Club Bolivar (Bolivia).

The exchange of players between these clubs should not be viewed just as internal transfers; they should follow the arm's length principle. This means that transferring a player from Girona-Spain to Manchester City, for example, should be priced comparably to how it would be between unrelated clubs. This involves conducting thorough economic analyses to determine fair market values for the transfers, documenting the reasoning behind the pricing, and ensuring transparency to prevent tax base erosion and profit shifting between jurisdictions.

Despite that, one of the most notable trends is the increasing percentage of intra-group transfers, where players are moved between affiliated clubs at prices that may not reflect fair market value — the arm’s length principle. Many of these transactions happen through loans or "free" transfers, effectively bypassing traditional transfer fees. The financial impact can be significant — these practices may enable the shifting of profits between jurisdictions and potentially reduce taxable income in higher-tax locations.

Regulatory Responses and Tax Planning

Recognizing the risk of market distortion, the Premier League (English national football tournament) has introduced stricter financial oversight through its Associated Party Transaction (“APT”) rulebook[4]. This framework requires clubs, their players, managers, and senior officials to get league approval before engaging in transactions with associated parties -  which include shareholders or entities with significant influence over the club. The league’s board reviews these transactions to ensure they reflect fair market value (“FMV”) and prevent financial manipulation. Recently, shareholder loans were also added to FMV assessments, acknowledging the potential for disguised financial support within MCO structures.

APT rules are related to global transfer pricing regulations, both aimed at ensuring financial fairness and preventing manipulation. However, while transfer pricing rules generally apply after transactions occur, allowing tax authorities to review and challenge them retroactively, APT rules serve as a proactive measure – requiring transparency before deals are finalized.

To comply with FMV or arm's length standards, transfer pricing legal frameworks require an analysis of comparable transactions. However, identifying comparable transactions in football transfers will not be easy. Player contracts vary widely depending on the club's negotiation power, player performance (goals and assists), injury history, age, and market potential.

Transfermarkt[5], a leading portal for player valuation, uses a sophisticated ranking system based on these factors. However, the inherent volatility and confidentiality clauses in player contracts make comparability challenging. According to this portal, a young player with growth potential is valued differently than an older player, reflecting different economic expectations. For example, Lionel Messi, 38, considered by many to be one of the best players to ever play the game, has a market value lower than Brazilian winger Estevão, 18, who is just beginning his football journey.

However, in the football context, not only the rights to player transfers but also any intercompany loans or business restructuring between clubs under the same corporate umbrella should now be subject to transfer pricing scrutiny. This ensures that these transactions are conducted in a manner consistent with market standards, preventing any manipulation that could result in financial or tax advantages for the involved entities, including a comprehensive economic analysis of transactions such as sponsorship deals and other financial agreements.

Transfer pricing concerns in football go beyond transactions between clubs and can also involve transactions between clubs and related companies. For example, if an MCO group that owns an agribusiness company sponsors a football club within the same group at a much higher value than it would pay to an independent third-party team, this could indicate a non-arm’s length transaction or FMV aimed at shifting profits or gaining financial advantages within the group.

A notable case in point is Eagle Football Holdings[6], controlled by John Textor, which owns Olympique Lyonnais (France), Botafogo (Brazil), Molenbeek (Belgium), FC Florida (USA) and recently sold its shares held in Crystal Palace (England). The company announced[7] that Eagle Football Holdings operates with a single cash pooling system, allowing any club in the network to access financial resources from others within the group. Such cash pooling arrangements between related parties are precisely the kind of financial transactions that fall under Brazil’s new transfer pricing rules and will likely be scrutinized by tax authorities in the near future.

Further highlighting the interconnected nature of these financial arrangements, Textor reportedly sought to use funds from the sale of his Crystal Palace shares to provide financial support to Lyon, which has been struggling financially. These cross-border financial flows illustrate the complex mechanisms by which capital is allocated within MCO networks, and why tax authorities may begin to examine intercompany financial arrangements in football closely.

The broader strategy of European clubs acquiring Brazilian teams is not merely about expanding their brand or winning titles; it's also encompassing financial maneuvers. Many clubs may use it for labor and tax planning purposes.

By the end of the 2023-24 season, ten of the 18 teams in the Belgian Jupiler Pro League were owned by foreign investors[8]. Belgium has become an appealing destination for developing non-EU players because of its relaxed work permit requirements, which are among the lowest in Europe. Players who might not qualify immediately for a permit in England — where regulations are stricter after Brexit — can gain experience and build their résumés in Belgium before moving to more competitive leagues. Additionally, Belgium’s favorable tax laws on player wages make it a cost-effective place for clubs to sign and develop talent before transferring them within an MCO structure.

Other clubs use this approach to identify and develop young talents in South America. These clubs often aim to transfer these players, trained in Brazil, to their parent clubs in Europe at a lower market value. This strategy is evident in actions like Bahia, owned by the City Football Group, acquiring the Uruguayan talent Luciano Rodrigues from Liverpool-Uruguay. The contract includes a release clause that allows Luciano to transfer to any of the clubs owned by City Group[9] for a lower-than-market price if he performs well in Brazil. Nevertheless, Luciano was recently sold to a Saudi Arabian club for a record fee of approximately €20 million[10], marking a major, lucrative transfer in Bahia’s history and highlighting how multi-club ownership structures can strategically develop and monetize talent across different markets while still navigating the boundaries of transfer pricing compliance.

Market Distortion Risks

The discrepancy in transfer pricing could potentially erode the Brazilian tax base by shifting taxable profits to countries like England or Belgium, thereby undermining Brazil's revenue collection interests. While there is uncertainty in applying the new transfer pricing rules in Brazil, similar ambiguities are visible worldwide. These uncertainties are especially significant in football transactions, which previously did not follow even the older regulations.

Nonetheless, adopting the new transfer pricing rules presents significant challenges for Brazilian football clubs, many of which have operated with minimal documentation and scrutiny in the past. Under the new regulatory framework, clubs may now be required to provide comprehensive transfer pricing documentation — such as the master and local files — if their interclub transactions exceed 15 million Brazilian Reais (BRL). This shift from a relatively lenient regulatory environment to one that demands detailed records imposes a substantial burden on clubs that may lack the infrastructure or expertise to comply.

Conclusion: A New Era of Accountability for Football

As tax authorities around the world tighten their enforcement of transfer pricing rules, football organizations operating under MCU structures might soon face increased regulatory scrutiny. Primary focus areas are likely to include:

  • Player Transfers: Ensuring that intra-group player transactions reflect market values rather than being used for financial engineering.
  • Cash Pooling & Financial Support: Examining interest rates on intercompany loans, advances, or financial assistance between related companies to ensure they adhere to the arm’s length principle.
  • Use of Intellectual Property: Evaluating how clubs monetize brand rights, image rights, and other intangibles within MCO groups.
  • Sponsorship and Commercial Deals: Examining whether related-party commercial agreements, such as sponsorships from affiliated companies, reflect true market value or are used to shift income across jurisdictions.

Football is no longer just a sport — it has become a multibillion-dollar global industry governed by complex financial systems. As MCO continues to grow, tax authorities and regulators will likely increase their scrutiny of intercompany transactions in this sector. Although transfer pricing rules have traditionally been considered irrelevant to football, the emergence of sophisticated intragroup financial arrangements — including player transfers, intercompany loans, and cash pooling mechanisms — means these regulations can no longer be overlooked.

For football enterprises operating within MCO frameworks, failing to comply with evolving tax rules could lead to significant financial liabilities, reputational damage, and regulatory penalties. The industry must understand that financial transparency is no longer optional — it is a vital pillar for maintaining the integrity of the modern football economy.