Jorge Mendes is reclining on a sofa in the lounge of the Hotel Villa Magna in Madrid's central boulevard, Paseo de la Castellana, next to two mobile phones and the type of Louis Vuitton wash bagsome of the players he represents carry around. He is wearing a dark-blue suit and tie. He smells of aftershave and has applied pomade to his dark hair. After chatting with an acquaintance, he stands up and beckons a white-haired 60-year-old man on the other side of the lounge to come over. The older man, who is wearing a green tweed jacket, walks over and asks Mendes what he would like. It's Luís Godinho Lopes, the president of Sporting Clube de Portugal.

Sporting is part of football's aristocracy in Portugal. Lisbon is largely split between Benfica and Sporting, the reds and the green-and-whites. The team Godinho Lopes now presides over had collected 18 domestic league titles over the last 80 years and had never been relegated from the first division. In the Madrid hotel, all Mendes needs from him is confirmation of an anecdote from when Ronaldo was a teenager at Sporting; Godinho Lopes then returns to the other side of the grand lounge to resume his conversation with a female Asian company executive. He is trying to secure a stadium naming-rights sponsor to ease the club's perilous finances. That it is he who comes over to Mendes is indicative of which of the two men is most powerful.

Mendes's ability to broker deals between the best players and the richest clubs, plus his sideline in the transfer-rights business that began with a bet on the teenage Diego Costa, meant that he had become extremely wealthy. Between 2008 and 2014, Mendes distributed €45.3 million in dividends to himself, Sandra (who he married in 2015) and nephew Luis Correia, who organizes endorsement deals for his clients. The dividends came via Dublin-based Gestifute International. Gestifute, which followed companies like Google to Ireland for tax reasons, paid a 12.5% tax rate there, half what it would have paid in Portugal, saving Mendes more than €5 million.

In contrast, Sporting had racked up losses in 13 of the 14 previous seasons, and was more than €375 million in the red. To raise money, Lopes had sold stakes in the transfer rights in all but one of the club's 70 senior and junior squads to Mendes's Gestifute, the CAA fund managed by Peter Kenyon and Leiston Holdings, an investment vehicle managed by Pini Zahavi. Godinho Lopes had effectively pawned all the family jewels and there was nothing left to raise money. The situation was so desperate that the club couldn't even afford to pay its latest €500,000 electricity bill and was three months late with player wages. While Atlético Madrid leveraged credit from some of the same hedge funds to take the club to the Spanish league title and Champions League final, Sporting's performances were worsening. It finished seventh in the domestic league in 2013, its worst showing in its 107-year history. A few weeks after his chat with Mendes in Madrid, Godinho Lopes gave up on his quest to turn the club around. He stood down from his post. Bruno Carvalho, a genial and chubby 42-year-old, was elected by Sporting's members to replace him. He immediately entered negotiations with Sporting's bankers, Banco Espírito Santo and Banco Millennium, to restructure the team's crippling debt.

Sometimes he worked through the night with his staff to draw up a business plan that the banks would accept. The banks were sympathetic to Sporting but Portugal was in the second year of a bailout repayment programme and its financial institutions were being examined closely by the European Union, the European Central Bank and the International Monetary Fund, the triumvirate known as the Troika. Carvalho was called in to see Ricardo Espírito Santo, the reclusive 70-year-old president of Banco Espírito Santo. In a meeting at the billionaire banker's office in Lisbon's tree-lined main thoroughfare Avenida Liberdade, he told Carvalho that they both urgently needed to find a solution. “The Portuguese banks said to us nobody in Portugal would let Sporting die – it has a family of 3 million supporters – but the Troika can kill all of us,” Carvalho said. Carvalho knew that he would have to lay off dozens of staff.

The wealthy banker could hardly criticize the way Sporting had sold off stakes in player transfer rights. His bank had earned €400,000 in management fees by setting up a fund allowing Lisbon-based Benfica to do the same as Sporting. The fund had acquired the rights of 12 Benfica players, including Brazilian defender David Luiz, with investors' money. Among the investors was billionaire José Manuel “Joe” Rodrigues Berardo, a colourful character who had made his fortune in gold and diamond mining in South Africa and then enlarged it in the stock market. Berardo had acquired one of the world's most expensive private art collections, with works by Pablo Picasso and Andy Warhol. He decided to put €1 million into the fund of Benfica, the club he supported and had once tried to buy.

On a spring day in 2013, Sporting president Carvalho accepted an invitation to have lunch with one of the investment funds his predecessor had worked with. He met Nelio Lucas at the Solar dos Nunes restaurant in Lisbon's Rua dos Lusiadas. The traditional wooden-beamed eatery has blue-and-white porcelain tiles on the wall below framed newspaper cuttings about famous visitors. For both men, it was a chance to get to know each other.

Lucas looked like a younger version of his compatriot Jorge Mendes: white teeth, slick black hair and immaculate clothing. In fact, he was the protégé of Pini Zahavi. He had worked for eight years for the Israeli's Soccer Investments and Representations (S.I.R.), which bought transfer rights for a group of wealthy Eastern Europeans. Lucas would run errands for Zahavi, who was in his 60s. “I owe a lot to him,” Lucas said. In 2004, Zahavi had arranged for Lucas to help his friend Jonathan Barnett, the London-based player agent, take control of marketing and transfers at Portuguese club Beira-Mar. It was an unsuccessful venture that ended after one season with relegation to the second division, but Lucas gained a reputation as bright and hard-working.

Still in his early 30s, Lucas had decided to strike out on his own. Instead of operating ad hoc out of five-star hotel lobbies like Zahavi, he planned to have his own office and an aggressive business plan to invest the money of some of the Israeli's circle of acquaintances. He soon found a major client: the family of Tevfik Arif, a Kazakh property developer.

Arif, a former Soviet Union economist, had built a chain of hotels in Kazakhstan and Turkey after the collapse of Communism and, went on to develop the 46-storey Trump Soho hotel and condominium in Manhattan after securing a licensing agreement with American magnate and now US President, Donald Trump. Trump's name and contacts had “been very helpful to us in opening some doors,” Arif said in 2007, when the building was launched. Trump attended the launch with his daughter Ivanka.

Another of Arif 's associates was Fettah Tamince, the chief executive of the luxury Rixos hotel chain who was a powerful and well-connected businessman in his native Turkey, with assets in the British Virgin Islands. Rixos had hotels from the Swiss ski resort of Davos, where business leaders hobnobbed every January, to the Egyptian beach holiday strip of Sharm El-Sheikh.

Arif had settled in New York, buying a pad in Port Washington, an exclusive enclave on Long Island sprinkled with yacht marinas and golf clubs, near where F. Scott Fitzgerald's The Great Gatsby is set. He sent his son, Arif Arif, to an American university and then to head up a family office in London.

The Arifs called the enterprise Doyen Capital and hired traders to buy and sell commodities including uranium and oil. Lucas was appointed as chief executive officer of a sister company, Doyen Sports.

Flashing a welcoming smile as they met for the first time at the Lisbon restaurant, Lucas told Carvalho how he was looking forward to deepening the relationship with Sporting and could help put the team back in the virtuous circle of winning titles and generating cash from prize money, sponsorship and ticket sales. At first the Portuguese club's new president did not give his lunch meeting with Lucas much thought, but over the coming months he would keep coming back to it.

Lucas's job was to acquire the transfer rights from clubs in Spain and Portugal, like Sporting, who were being refused credit by banks. He was given a vast expenses account that allowed him the use of a private jet. He also moved into an £18 million mansion in a gated road in London's Hampstead district. The property had a three-car garage and indoor swimming pool.

Lucas had a friendly manner that disguised a sharp eye for detail and a quick temper. As a public speaker, he was excellent: eloquent and comfortable speaking in English, Portuguese and Spanish. He charmed football club owners with his manner and promise of easy credit, which he said was bankrolled by wealthy investors and backed by some of the world's biggest financial institutions. The sum of $100 million for the Doyen investors was “a little drop in the ocean”, he said.

Lucas, a one-time modelling agency scout, enjoyed mixing with football people in the VIP boxes of the world's most famous football stadiums, even if it meant long spells away from his young family. He regularly updated his WhatsApp profile picture with him standing alongside Pelé and other football royalty. His status, however, remained unchanged: “Always Available for a Good Deal!” For French daily Libération he posed for a picture standing astride the roof of Doyen's Mayfair office in a navy suit, sporting designer stubble and looking moody, with the London skyline at night behind him.

As Lucas was travelling back and forth from London to southern Europe, racking up €80 million of deals, Bruno Carvalho was still trying to restructure Sporting's debt with the Portuguese banks. The more he and bank executives sought a way forward in negotiations over the club's debt, the more they kept encountering roadblocks over the deals with the investment funds. The contracts were all lopsided in favour of the funds, triggering payouts to investors at regular intervals, according to Carvalho. “If we went left we would have to pay 10 million euros, and if we went right we would have to pay 20 million euros,” he said. Doyen always came out a winner, in fact, in its deals with clubs. It negotiated to, at the very least, get its money back plus interest of 10% per year. That was a satisfying return on investment for Doyen's wealthy investors at a time when most banks were offering less than 1% interest to their clients.

Carvalho invited Lucas, executive Peter Kenyon and Pini Zahavi on separate occasions to his offices to discuss his problem, and try to find a solution with the investment funds they represented. All three appeared sympathetic and said they would go back to their board of directors for guidance. But, according to Carvalho, they did nothing. “The time was running out, I had to finish the restructuring,” Carvalho said. “They said they would help but nothing was happening. It was like a horror movie. We were alone.”

Carvalho's mind kept returning to his lunch date with Lucas. “What I saw in the agreements was something that only defended one side: the funds,” Carvalho said. “The funds were saying: I will give you money that will make you stronger and stronger but in reality it was killing the club.” In one deal, Doyen had acquired 75% of the transfer rights of defender Marcos Rojo for €3 million, but the contract stipulated that Doyen must receive at least €4.2 million in return over the course of his five-year contract. If another club offered €8 million for Rojo and Sporting didn't want to trade him, Doyen Sports could claim up to €6 million.

Carvalho said he wanted to retain the Argentine player because he was a key member of the squad but, according to a statement published on the club website, Lucas sent him a text message one day saying the defender would “make trouble” if he wasn't transferred. Lucas, in a phone interview, denied that he made such a threat. On 5 August 2014, according to Carvalho's version of events, Lucas turned up unannounced at Sporting's stadium with Southampton football club executive director Les Reed, Rojo's agent Carlos Gonçalves and lawyer Gustavo Galasso.

With many of Sporting's directors out of town on holiday amid sweltering heat in Lisbon, it fell to the youngest board member Alexandre Godinho to welcome them into an air-conditioned meeting room for talks about signing Rojo before the transfer window closed a few weeks later. Lucas did not introduce himself to the young director as working for Doyen, and spoke only in English, Carvalho said in a phone interview with the authors. Lucas “never pretended to be someone else”, according to Doyen's court submission. Godinho reported back on the meeting to the rest of the board. Following the talks, Southampton offered €17 million to sign Rojo.

However, three days later, Manchester United's executive vice-chairman Ed Woodward lodged a higher bid of €20 million by email, copying in Lucas on the message. On paper, that fee would give the hedge fund Lucas represented €15 million, a 400% return on its investment two years earlier, and Sporting €5 million. Carvalho felt that the club with a yellow lion on its green crest was losing out. “If you are fearful, you act like a sheep, you are not a leader,” Carvalho said.

Carvalho sent a letter on headed Sporting paper by courier DHL to Doyen saying that the club was rescinding all its agreements with Doyen, citing the influence Lucas had on Rojo's transfer as violating the terms. “It was Doyen who was promoting and forcing this transfer, violating his (sic) duty to respect Sporting's independence in transfer related matters,” Carvalho wrote. He refused to pay Doyen Sports its €15 million share of the deal.

Ruling on the dispute, the Court of Arbitration for Sport dismissed Carvalho's complaint and ordered Sporting to pay up. It found that the club had “willingly and consciously” agreed to sell 75% of Rojo's rights to Doyen and even sought the hedge fund's help to secure a transfer for the Argentine player and other squad members.

Aside from Sporting, another top-line European team had been caught short by the financial crisis and was pulled into a scandal that involved Doyen. FC Twente, based in the Dutch town of Enschede, where Grolsch beer is made, had caused a stir by winning the 2010 Dutch championship. The success came on the back of a cash injection from local businessmen Joop Munsterman, who had worked his way up from menial jobs to become chief executive of a local newspaper group and had turned his attention to the small club near the border with Germany. He hired former England coach Steve McLaren and spent more money than usual on player recruitment.

Munsterman, who was in his 50s, liked to play his guitar after getting up in the morning and one of his favourite tunes was Bruce Springsteen's Working on a Dream. The song he strummed while sitting on his bed became the theme tune of Twente's title push against the decades-long dominance of Ajax Amsterdam, PSV Eindhoven and Feyenoord.

Now the cards I've drawn's a rough hand, darling

I straighten the pack and I'm working on a dream.

He finished a speech to fans with the last phrase of the chorus line and on the penultimate day of the season, against 14-time champion Feyenoord, the stadium resounded with the words of the song. The next week, Twente won the first league championship in its 45-year history. Munsterman, who had recorded the fans singing the Springsteen tune, sent a tape to the American singer who sent him a note back saying: “Sometimes dreams come true.”

Munsterman doubled the size of the club's stadium to 24,000 seats, adding 50 sky boxes and a restaurant, and attracted fresh investment from Aldo van Laan, the heir to a tinned-meat company, who had ploughed more than €10 million of his fortune into the club. But then the financial crisis hit, and when Twente failed to qualify for the UEFA Champions League, VIP ticket sales in the sky boxes that had been worth millions for games against Milan's Internazionale and Tottenham Hotspur dried up. Twente could not keep up with payments to finance the refurbishment of the snazzy stadium. Banks shut down their credit lines to the club.

Munsterman and Van Laan turned to Doyen for a lifeline. “We had no-one else we could go to,” Van Laan said. “The banks would not help us anymore.” The club sold stakes in the rights of seven players to Doyen Sports in exchange for €5 million in cash. The agreements were revised and approved by the Koninklijke Nederlandse Voetbalbond (KNVB), the Dutch football federation, which did not have any rules preventing such deals.

The Netherlands, like the UK, was a conduit for agents or investors to route profits from transfer-rights deals because of tax-efficient company laws. When Atlético Madrid signed Radamel Falcão from Porto in 2011, almost €1.8 million of the fee was sent to the bewilderingly named Natland Financieringsmaatschappij B.V., which did not have to disclose its shareholders under Dutch law. Its parent company was affiliated with Broward Capital Inc. in the British Virgin Islands. The percentage the investors paid to the Dutch treasury was less than €180,000 before the money was routed offshore.

In another transaction that year, Italian club AS Roma paid Amsterdam-based company Orel B.V. €1.6 million as part of Erik Lamela's transfer from River Plate and furnished Martijn Odems, who works at the same address in the Dutch city, with a further €3.2 million according to a financial statement by Roma. Odems, who had become a player agent six weeks before according to FIFA's public records, declined to comment – not that he was obliged to – on why he and Orel had shared in 40% of Lamela's transfer fee, when we contacted him by phone to ask for more details.

While such operations were within the rules, Van Laan had made one infraction: crucially, he had not disclosed some of the details of the transfer-rights agreements with Doyen to the KNVB. In November 2015, the terms of one deal were posted on a mysterious website called Football Leaks that had started to flood the Internet with contracts involving Doyen and football clubs that appeared to have been hacked from the Internet server of its legal advisor. The website gained even more attention when it leaked the contract between Real Madrid and Tottenham in the 2013 transfer of Gareth Bale. The deal showed that the transfer fee was €100 million, significantly more than what Real had told journalists it was.

For transfer compliance officials, the Football Leaks website was a useful tool according to FIFA's Mark Goddard, who said it showed the “wheeling and dealing” in the market. The Dutch federation was intrigued by the new information it had received about the agreement between Doyen and Twente. “The contract published seems to differ from what we know,” KNVB spokesman Hans van Kastel told the Reuters news agency. While the KNVB did not immediately specify what the violation was, it appeared that Twente had allowed Doyen too much control over transfer decisions. Van der Laan quit as president as the investigation got underway. Munsterman, the guitar-strumming Bruce Springsteen fan, had bailed out of the stricken club earlier in the year.

Although the football authorities in Portugal and Spain had a long history of being lenient with clubs over their finances, the KNVB has a reputation for being unforgiving. The Dutch federation had some of the strictest licensing rules in world football. That was perhaps part of the Dutch Calvinistic heritage that today co-exists with the marijuana cafes and brothels of liberal Amsterdam – and the low-tax companies that distribute dividends offshore.

The Dutch are cautious with their money, shunning purchases on credit. Some 97% of payments in the Netherlands are with debit cards. In the same way, Amsterdam-based Ajax, which won the last of its four European Cups in 1995, had spurned transfer market speculation, even as it fell behind richer Spanish and Premier League teams in the continental pecking order.

In 2015, Premier League chief executive Richard Scudamore noted that its smallest club Burnley now earned more than Ajax, because of the English championship's booming television deals. As Burnley took out high-interest loans to sign players, Ajax continued to work within its means, hoarding more than €100 million in the bank and relying on youth-team recruits to bolster its first team. According to a 2014 report by S&P Capital IQ, Ajax had the best credit rating in a survey of 44 leading teams, just ahead of Arsenal.

FC Twente's strategy of speculating on the transfer market cast it as the black sheep of Dutch football. So it looked like the club was heading for some bad news, and so it proved. After ruling that it had “deliberately misled” the KNVB's licensing committee, Twente was banned from the Champions League and Europa League until 2019, and, according to a federation executive, its very existence was now hanging by a thread.

The KNVB stopped short of stripping Twente of its licence, instead relegating it to the second division for the 2016–17 season. With substantially less television revenue at that level, Twente's hopes of meeting its debt payments and surviving were still slim. But there was a final twist. Twente filed an appeal, and a few days before the verdict was due raised the stakes by declaring it would have to file for bankruptcy if relegated. It was the strongest card team executives could play. Fearing it would be responsible for pushing the club out of business, the Dutch federation finally broke with its hardline approach at the last moment and let Twente stay on in the top division.