Case Study 2: The David De Gea Debacle.
Introduction:
In 2015 a deal between Manchester United and Real Madrid failed regarding David De Gea. The plan was for David to move to Spain with Keylor Navas coming the other way with some additional funds.
The reasons given for the failure of the transfer is that the paperwork was not submitted in time. This explanation appears to cover a multitude of sins and to get a better idea of what went wrong its worth reading Real Madrids statement on the matter:
“1. Manchester United didn't open any negotiations for federation rights over David De Gea until yesterday morning.
"2. Real Madrid, despite the difficulties regarding entering into an operation of this kind on the last day of the transfer window, Real Madrid agreed to start these conversations.
"3. When Manchester United opened this negotiation yesterday morning they did so with the plan to reach an agreement with Real Madrid player Keylor Navas so that he would join the British club this season and said that they are in contact with the player's representative.
"4. Real Madrid and Manchester United reached a quick agreement over the transfers of both players. After drafting the corresponding contractual documents with the goal of proceeding within the time frame of both the TMS of FIFA as well as La Liga, Real Madrid sent the contracts to Manchester United at 13:39 Spanish time.
"5. Manchester United replies with its comments eight hours later at 21:43 Spanish time, including small modifications. Because they were not major, all were immediately accepted by Real Madrid with the intention to register the player in both TMS and the Liga in time.
"6. Real Madrid, after getting the signatures of both De Gea and Keylor Navas, remitted the papers to the English club with the contracts signed at 23:32 Spanish time, and waited to receive the signed documents from Manchester United.
"7. Manchester United reached a final agreement with Keylor Navas' representative at 23:53 Spain time and it was at that time that the documents were remitted to player to be signed.
"8. Manchester United put the data regarding the David De Gea transfer into the TMS but not that of Keylor Navas at 00:00 Spanish time, while remitting to Real Madrid the signed transfer contracts at the same time. Real Madrid received that complete documentation at 00:02 and tried to access TMS but it was already shut down.
"9. At 00:26 Spain time, FIFA's TMS system invited Real Madrid to add the information about the player David De Gea due to the fact that England's transfer window remained open until today. Real Madrid, realising the eventuality of a contentious run for the player's transfer, decides to remit the contracts to La Liga, even knowing that the window for the deal had closed.
"10. Definitely, Real Madrid did everything that was necessary at all times to get these two transfers completed.” (1)
Summary of what went wrong:
From this lengthy explanation and reading around the event I've come to the conclusion that there were a few prominent dynamics that attributed to the outcome of this clusterf**k:
Problem 1: Multiple deals were in play and various parties on both sides were trying to process and collate a lot of documentation.
Problem 2: The signing of contracts between clubs and the uploading/inputting of information required for FIFA's TMS are separate processes and there is a room for mismatch of transfer status between physical contract and the TMS. (2)
Problem 3: The 1 hour difference between the Spanish and English transfer deadline's created an element of operational confusion that disrupted the process, once this was encountered the process appeared to be unable to complete.
The question here is how could a Blockchain based platform have helped here. Well let's address the points above 1 by 1 starting with Problem 2.
Problem 2: The signing of contracts between clubs and the uploading/inputting of information required for FIFA's TMS are separate processes and there is a room for mismatch of transfer status between physical contract and the TMS.
First let's address the second point which I think is the most pertinent.
"The signing of contracts between clubs and the uploading/inputting of information required for FIFA's TMS are separate processes and there is a room for mismatch of transfer status between physical contract and the TMS."
This problem is one that comes up in a multitude of industries where the status of an artifact exists in multiple systems and organizations. Operating on separate records of the same artifact includes unavoidable risk that the statuses of the artifact will at some point become out of line even if it just for a brief period while the ancillary records receive notice of the 'golden source's' status update.
In this case, with the impending deadline of the transfer window shutting the agreement the records of the TMS and Real Madrid become out of line at the critical moment.
On a high level the way that the FIFA TMS works is that one clubs submits details of the agreement that has been reached with their counter-party club. The counter-party club is then invited to submit corroborating information meaning the transfer is 'matched'. The clubs will then be able to work out the specifics of the deal i.e. salary demands with the player etc.
The timeline in this case went as follows:
As one can see from the chart, the TMS closed at 00:00 Spanish time during the period that the real world agreement and the status of the deal on the TMS were out of sync. In order to successfully submit a deal sheet which would allow both Real and Man U the time to complete the details of the transfer, Real Madrid had to submit documents from their side creating a match.
This problem is solved almost out the box by the SCTP, all one would have to do is add an integration into the FIFA TMS OR assume that, as the SCTP has factored in the approval of the governing body as a step of its process. In other words enable the responsibility currently placed on the TMS to be managed by distributed technology which is much better equipped to manage a problem like this. Either way the concept is straight forward the remove this weakness in the current transfer process:
Assume the Smart contract status forms a legal agreement between the clubs
Build in logic that states, on completion of a Transfer Offer Contract, the details will be sent to the FIFA TMS so there is no possibility of a lag, the status of the agreement between the clubs would be the status of the information on FIFAs TMS.
Let's go back to the Step 2 of the Player Transfer in the SCTP where Chelsea make the offer for Steven Gerrard and replace the parties with those relevant to this scenario.
Let's also add an integration into the TMS. An integration is essentially a piece of software that could take the information within a smart contract and feed it into another system. In this case it would feed to FIFA TMS the transfer information from the Transfer Offer Contract. The action of sending the information would be trigger by acceptance of the smart contract by Real Madrid.
This creates a situation where the second Man United accept Real's offer the TMS is updated, the caveat is that the information required to complete the smart contract should be sufficient to meet FIFAs requirement.
Problem 3: The 1 hour difference between the Spanish and English transfer deadline's created an element of operational confusion that disrupted the process, once this was encountered the process appeared to be unable to complete.
With regards to the third problem, by front loading the validation to the SCTP rather than the TMS platform you could remove this responsibility from the FIFA TMS and resubmit the contract details until the platform is up. So when the people at FIFA opened up the platform again the contract details would have been submitted successfully and Real would not have had to upload the documentation on invitation.
Honestly, this kind of sounds like a total cock up on whoever manages the TMS, it should have been open to Real Madrid but the fact that it wasn't meant that Real Madrid got cold feet and did not complete the transfer.
Problem 1: The 1 hour difference between the Spanish and English transfer deadline's created an element of operational confusion that disrupted the process, once this was encountered the process appeared to be unable to complete.
This is a difficult one because no matter what system is in place you can't make people make decisions in a more timely manor and there will always be an element of people taking it right up to the line.
I'm also making a hard assumption that in implementing the SCTP absolutely no concessions would be made by party involved in any legal or administrative process.
The distributed nature of data with a Smart Contract system does enable a huge potential to streamline this type of situation however.
Let's extrapolate out the concept of parties in the Transfer Offer Contract scenario. For a transfer offer to get approved there are a lot of parties who need to approve and a lot of information that needs to be collated. Imagine if all these parties has access to the key details of the agreement as it was evolving. When a proposal is made only the parties who needed to opine and agree would be able to see that piece of the contract then as those pieces of information were agreed they became visible to the wider audience of parties pertinent to the completion of the contact.
That's obviously a bit of rambling proposal but see below a visualization of this.
Although this example suffers from the simplification being even further from the details of the real world the concept is still valid. If all parties involved in the negotiation process could use the 'ledger' as a shared truth of the agreement, they would be able to see the agreement progressing as they work through the items they are progressing through. Lawyers, Accountants, Executives, Agents, Players could all be give appropriate access to the agreement so that the numerous moving parts could be collated in one place. Thus each item that gets agreed and ticked off the list takes all parties one step closer to the completed agreement.