Federal rights vs. economic rights: the difference that every footballer should know
In South American football there is constant talk of "federative rights" and "economic rights". They are two concepts that appear in every transfer negotiation, in every contract, and at every board of directors. But most players — and many leaders — are not clear about the difference between one and the other.
And the confusion is not innocent: not understanding this distinction can cost you money, contractual freedom, and even the ability to play football.
In this article I explain what federative rights are, what economic rights are, how they relate to FIFA regulations (which uses different terminology), what changed with the TPO ban, and why every professional player needs to understand these concepts before signing any document.
- What are federative rights and where do they come from?
- What are economic rights
- The fundamental difference between both
- How FIFA translates these concepts into its regulations
- The prohibition of TPO (art. 18ter) and its impact
- Who can participate in transfer compensation
- Resale premium (sell-on fee) vs. TPO: the line that should not be crossed
- Practical examples for players, clubs and agents
- Why every player needs to understand this
What are federative rights
Thefederative rightsare, in simple terms, the right of a club to have a playerregistered in your squadand enabled to play in official competitions. It is the link between the player and the club before the corresponding federation (association).
When a club registers a player in its association – whether through a transfer, a first registration or a loan – that club "owns" the federative rights of that player. This means that:
- The player isenabled to playofficial matches with that club
- No other club can register the player without the CTI of the current association
- The club has the power to decide on the transfer of the player (always within the limits of the contract and regulations)
Federal rightscannot be sold or assigned to a third partythat is not a club. It is not a financial asset tradable in the market. It is a registration and sporting link: the player is registered in a club, period. When the player is transferred, the federative rights pass to the new club through the CTI procedure and registration in the TMS.
What are economic rights
Theeconomic rightsof a player are a different concept: they refer to the right toparticipate in transfer compensationwhich is generated when the player is transferred to another club.
In traditional practice (especially in South America before 2015), economic rights worked like this: a club registered a player (had the federation rights), butceded a percentage of the economic rightsto an investor, an investment fund, an agent or a third party. If the player was sold, the club receives a part of the transfer compensation and the third party receives the agreed percentage.
Example of the old system:An Argentine club registered a player and had 100% of the federation rights. But he had sold 30% of the economic rights to an investment fund. If the player was sold for USD 10 million, the club receives USD 7 million and the fund receives USD 3 million.
This system was banned by FIFA in 2015.
The fundamental difference
| Federal rights | Economic rights | |
|---|---|---|
| What are they? | The right of the club to have the player registered and enable him to play | The right to participate in the compensation generated by a future transfer |
| Who has them | Always theclubwhere the player is registered | Before 2015: the club, but they could be transferred to third parties. Since 2015: only the club (and exceptionally the player himself or previous clubs) |
| Can be transferred to third parties | No.Only transferred from club to club through the transfer procedure (TMS/CTI) | Banned since May 1, 2015(art. 18ter of the RETJ) |
| Nature | Registration and sports | Economic and financial |
| Equivalent in FIFA regulations | Registration (art. 5 of the RETJ) | Compensation for transfer (definition 35 of the RETJ) + prohibition of TPO (art. 18ter) |
Confusion between both concepts is frequent because in the daily practice of South American football they are constantly mixed. It says "has the rights of the player" without specifying whether it is talking about registration (federal) or economic participation in a future transfer (economic). And that ambiguity creates serious problems.
The TPO ban: before and after
Theart. 18ter of the RETJprohibits from May 1, 2015 what is known asThird-Party Ownership (TPO)—the ownership of economic rights of players by third parties.
The rule reads: "No club or player may sign a contract with a third party that grants said third party the right to participate, partially or totally, in the value of a future transfer of a player from one club to another, or that grants said third party rights related to future signings or the value of future signings."
What art. 18ter prohibits
- That an investment fund buys a percentage of the economic rights of a player
- That an agent receives a percentage of the future transfer as consideration for an investment (other than its regulated fees)
- That a club sells to a company the right to participate in compensation for a future signing
- That the player himself transfers his participation in a future transfer to a third party (if it was agreed upon as part of his remuneration)
What art. 18ter does NOT prohibit
That a club agrees with another club (the buyer) that, if the player is sold in the future to a third club, the first club will receive a percentage of that sale. Thisis not TPObecause both parties are clubs where the player was registered — they are not "third parties".
That a club promises the player a percentage of its own compensation for future transfers. The playeris not thirdon its own transfer. FIFA considers it part of the remuneration under the employment relationship with the club.
That an investor finances the club without the guarantee being a percentage of the economic rights of specific players. The arts. 18bis and 18terdoes not prohibit financing clubs—prohibit the investment from being secured with rights on player transfers.
Who can participate in transfer compensation
According to current regulations, only these parties can legitimately participate in the compensation generated by the transfer of a player:
| Part | Type of participation | Regulatory basis |
|---|---|---|
| Transferring club | Collect compensation for transfer (less 5% solidarity) | Definition 35 of the RETJ |
| The player himself | You may have an agreed percentage on your own transfer (as part of your remuneration) | Commentary on the RSTP (not "third party" in its own transfer) |
| Previous clubs | Solidarity mechanism (5%) + resale premium if agreed | Annex 5 of the RETJ + contract between clubs |
| Training clubs | Training compensation (if applicable due to age) | Art. 20 + Annex 4 of the RETJ |
Any other party seeking to participate in the transfer compensation is a “third party” and its participation violates art. 18ter. Since the implementation of the standard in 2015,17 clubshave been sanctioned by the FIFA Disciplinary Committee for violating the TPO ban.
What this means for players
You cannot "sell your federation rights" to anyone. They're not yours — they're the club's. When your contract expires, you are no longer registered and become a free player. There you can sign up for another club without any transfer.
If an agent, an investor or any other person asks you to sign a document assigning them a percentage of your future compensation by transfer, that violates art. 18ter of the RETJ. Don't sign it.
What you can do is negotiate with your current club so that, if they sell you, you receive a percentage of the compensation. This is part of your compensation and is legitimate. Include it in your employment contract with the club.
Practical examples
Example 1: The legitimate situation
An Argentine player signs a contract with a Super League club. In the contract it is agreed that, if the club sells him abroad, the player will receive the10% of transfer compensation. Two years later, the club sells the player to a European club for USD 5 million. The player receives USD 500,000 as part of his remuneration.All this is legal—the player is not "third" in his own transfer.
Example 2: The forbidden situation
An agent tells a young player: "I'll get you a club, but in exchange you give me 20% of your next transfer." A private contract is signed. When the player is transferred, the agent claims 20%.This violates art. 18ter—the agent is a third party and cannot participate in the transfer compensation. Agent fees are regulated by the Football Agent Regulations and have their own limits.
Example 3: The sell-on fee (legal)
A Colombian club sells a player to a Portuguese club for EUR 2 million. In the transfer contract between clubs, they agree that if the Portuguese club later sells the player, the Colombian club will receive the15% of future transfer compensation(sell-on fee). Three years later, the player is sold to an English club for EUR 20 million. The Colombian club receives EUR 3 million.This is legal— is an agreement between clubs (not with a third party) and the sell-on fee is expressly recognized in the RETJ.
Penalties for violating the TPO ban
The FIFA Disciplinary Committee may imposedisciplinary measuresboth clubs and players who sign contracts in violation of art. 18ter (section 6). Sanctions have historically included significant fines and, in serious cases, bans on registering players.
In addition, all TPO contracts in force before May 1, 2015 had to be registered in the TMS before the end of April 2015 (art. 18ter, par. 5). Failure to do so is in itself a punishable infraction.
Mandatory declaration in each transfer
Every time a transfer is processed in TMS, clubs must make astatement on the influence of third parties and on the ownership of economic rights(art. 10, section 4, g of Annex 3 of the RETJ). If TPO is declared to exist, the former club must upload the agreement with the third party to the TMS.
This declaration is a transparency and compliance tool that allows FIFA to detect and sanction violations of art. 18ter.
What every footballer should remember
- Federal rights= your registration in a club. The club has them. They transfer from club to club. They are not sold to third parties.
- Economic rights= the participation in the compensation for a future transfer. Since 2015, only clubs, the player himself and previous clubs (by sell-on fee or solidarity) can participate.
- No third party (agent, fund, company, individual) can have rights over your future transfer.
- If someone asks you to sign a document assigning a percentage of your future transfer to a third party,do not sign—is illegal under art. 18ter of the RETJ.
- The sell-on fee between clubs is legal. The percentage to the player on his own transfer is legal. Investment in the club without a guarantee on players is legal. Everything else is prohibited.
Related articles
- What is football sports law?
- RETJ explained article by article
- Player contracts: structure, clauses and common errors
- How the international transfer system works
- FIFA training rights: what they are, how they are calculated and how to claim them
- FIFA solidarity mechanism: complete guide with examples
- Soccer player rights: everything the club is not going to tell you
This guide is based on the RETJ July 2025 edition, the FIFA Manual on TPI and TPO in Football Agreements, and the Commentary on the RSTP. This guidance is informative and does not replace the advice of a sports law attorney.
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