CO-OWNERSHIP in Italian Football: Explanations & Examples

Co-ownership (“compartecipazione“ or “comproprietà”) is one of the most misunderstood practices in Italian football. With the exception of Portugal and some Latin American countries the system doesn’t exist anywhere else than the peninsula. Despite a simple core concept, the actual nuts and bolts of the agreements are quite complex and poor implementations have sometimes given the system a bad name (last Summer, Bologna director Stefano Pedrelli infamously made a simple but extremely costly mistake in the process of resolving the co-ownership of Emiliano Viviano, proof that the system is even confusing to some of those within calcio).

The Co-Ownership system is quite easy on the surface: two clubs agree to share ownership in a player (in Italian football, it is always split 50-50%). In this case, the player is similar to a traded corporation, with two different entities owning stock. The agreement creates certain rights and obligations to both sides.

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We’ll use an example where Roma owns a player named MARIO ROSSI, who has at least two years remaining on his current contract (another requirement of co-ownership negotiations), and Genoa is interested in the player. When the clubs agree to a co-ownership deal, they make a decision on where the player will spend the upcoming season. This can be at either club, or the two can agree to send Rossi to a third club on loan.

We’ll assume both clubs value Rossi at €5m.

There are three options:

1. Roma could sell half of Rossi on co-ownership to Genoa and keep him in Giallorosso. This is a way for Roma to raise some quick cash (€2.5m) and for Genoa to get a stake in the player. This isn’t terribly common except for cash-strapped clubs, unless Genoa agrees to pay a rather high valuation of the player.



2. Roma sells half of Rossi on co-ownership to Genoa, and the player goes to play with the Rossoblu. If there is no space for Rossi at Roma, this gives Genoa an extra player and a share in the latter. This is often used for young players looking to develop at mid-table clubs, or older players that the parent club (in this case, Roma) do not want to fully sell (perhaps they might be trying to raise the player’s valuation a bit before selling him fully, like Sergio Almirón at Bari).



3. Roma sells half of Rossi on co-ownership to Genoa, and the two clubs agree to loan him out to relegation-battlers Lecce. This is often the case for young players who are desired by both Roma and Genoa, but are not quite ready to play for either club. Both teams retain a share in the player, and he can develop elsewhere.

Regardless of which option Roma (and Rossi) chooses, the player’s contractual future remains pretty much the same. Rossi spends a full year at whichever club the two agree on.

Next Summer the two clubs discuss the player’s future, and again there are three scenarios that can result.

• Roma and Genoa can both negotiate on a fee for Rossi. Let’s say Rossi had a good season and is now valued around €8-9m: Genoa is interested in permanently owning the player and offers €5m for Roma’s half. If Roma accepts, Mario Rossi will then be fully owned by Genoa. If Roma rejects, it goes onto the following two options:
• Roma and Genoa can agree to delay making a final decision on Mario Rossi’s future, and renew the co-ownership for one more season. The clubs must decide together on where the player will spend his second season, in many cases, he simply remains where he was the season before. A player cannot remain in co-ownership for more than two seasons, making the delay option available only once after the first year.
• If Roma and Genoa cannot agree on selling Rossi or delaying the decision, they must “go to the envelopes” (“andare alle buste”).
  
  This is essentially a blind auction. Both clubs submit a blind bid to the FIGC proposing the amount they will purchase half of the player’s rights, by bidding on their valuation of the player. The side who offered the most gets the player and has to pay their bid to the other team. Given that Rossi had a good season, both clubs are likely to bid more than they originally valued the player two years prior.
  
  For example if Genoa bid €4.5m and Roma €4m, Genoa will win the auction and pay Roma €4.5m for their half of Mario Rossi’s rights.

The system is complex, but there is a clear motive behind it: compared to the more common LOAN model, it allows for sharing of both risk and reward between Italian sides.

Let’s say Mario Rossi is a talented young player starting out his career, set to be loaned out to a team battling relegation, e.g. Lecce. Such a team will usually play its best players, regardless of ownership. This means that if Mario Rossi is ready to start immediately, he will become an integral part of the Lecce squad because the latter is more concerned with avoiding Serie B than the contractual situation of its players.

However, if Rossi is still developing and is not ready to become a starter immediately, the Lecce coach may ignore him altogether for experienced older players, as the club will have no real incentive at developing him for Roma. Though rarer with teams battling relegation ( in most cases, such a club expects the player’s talent to shine through and will play him regardless), this situation is much more common with mid-table clubs, as these do put quite a bit of importance on the contractual situation of players.

For instance, let’s assume Genoa are such a club: a mid-table team sitting in 10th place and comfortably avoiding the relegation battle. Rossi is a great prospect, but is still rough around the edges. If Roma sent Rossi to Genoa in a straight loan, Genoa could spend all season playing Rossi but receive no more than short-term benefit (the player’s performance in the matches he’s used in), as he would return an improved player to Roma at the end of the season. If Roma sells Rossi to Genoa on co-ownership however, Genoa becomes a stakeholder in Rossi’s future.

Essentially, co-ownership aligns the two clubs’ interests (developing the player) and removes any kind of principal-agent issues. Both clubs then want the player to play often and play well, whether due to financial interest or sporting merits.

Back to our example, let’s say Rossi spent the last year at Genoa on co-ownership and did well: his valuation will have risen. If he’s become a critical part of the team, Genoa may choose to keep him and bid accordingly. If Roma wants him back however, Genoa will receive rewards for having developed the player. If Rossi is now worth €15m (compared to the €5m when he left), Genoa would now have a €7.5m share in a player that they paid €2.5m for originally.

So everyone’s a winner: the player (who developed and advanced his career), the original parent club (who had its player develop into a starter – should Roma want to buy him back – or into a more appealing item on the transfer market – should they decide to sell him for cash) and the club with which the player played with (Genoa can either make the transfer permanent, or get some of their money back for developing Rossi by selling their half back to Roma).

Should Rossi not have played well in the past year however, the burden would be equally shared between both clubs.

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There have been a lot of fascinating stories that have come out from the co-ownership system, a lot of failures, and successes. Sebastian Giovinco can arguably be considered a success of the co-ownership model. Lacking space at Juventus he was sent to Parma, initially on loan, though the Gialloblu had the right to buy half of his rights at the end of the year. Without this right, it’s unlikely Parma would have built their team around him or developed him in the way they did.

As it turned out, Parma purchased half Giovinco’s playing rights for €3.5m back in August 2010, and sold them back to Juventus earlier this week for €11m. Thus, for developing him, Parma has earned more than a double return on their investment. It cannot be repeated enough to critics of the co-ownership system that Parma would not have made the effort with Giovinco that they did, if there was no way for them to secure any kind of financial stake.

Other Juventus players whose co-ownership was negotiated this week include:

• Emanuele Giaccherini, purchased (50%) from Cesena for €3m last Summer and in full this week for €4.25m.
• Ciro Immobile, sold (50%) to Genoa last January for €4m and whose co-ownership was renewed (it is unknown if the forward will remain one more year on loan at Pescara, or play with Genoa).
• Stefano Beltrame, purchased (50%) from Novara last Summer and in full this week for 50% of the playing rights of Alberto Libertazzi.
• Leonardo Spinazzola, aqcuired on loan from Siena and whose right to purchase (50%) at the end of the season was exercised.

As more examples, back in 2004 Juventus sold Fabrizio Miccoli, Enzo Maresca, and Giorgio Chiellini each on co-ownership to Fiorentina, for €7m, €2.5m, and €3.5m respectively. The Bianconeri had the right a year later, to purchase Chiellini’s share back for €4.3m, which they exercised. Knowing Fiorentina was virtually bankrupt, Moggi went to the envelopes for Miccoli and Maresca, and signed the duo for a total of €2.4m. Juventus officially paid €2.39m for Miccoli, and a paltry €7,000 for Maresca, because Fiorentina offered €1.5m for Miccoli and €0 for Maresca. (That same year Fiorentina bid €0 for Martin Jorgensen as well, but as Udinese also bid nothing, the Dane stayed at the club he was playing at, Fiorentina!)

Bidding €0 is not totally unheard of for financially-strapped clubs. In the summer of 2011, Juventus had to resolve the co-ownership of Sergio Almirón with Bari, who were basically bankrupt. Initially sent on loan, Bari had signed the Argentinean for €2.5m in the Summer of 2010. With financial issues complicated by their relegation, Bari could not offer much and it seemed that his co-ownership deal would go to the envelopes. Bari however simply chose to give Almirón’s share back to Juventus for €1, and Juventus flipped him to Catania for €400k.

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The co-ownership system is thus a useful tool for Italian clubs, and like all tools it can be used correctly or improperly. If the destination is the wrong club, selling a talented player on co-ownership is just as foolish as loaning him. But in well-executed examples, co-ownership offers playing time to a youngster and a financial reward to a mid-table club depending on his performances, something a simple loan does not.