In 2013, the EU Commission commenced production of a report to provide an overview of the process of transferring players in different sports. Due to the rapid expansion of the football transfer market a further report was commissioned focusing on the transfer of players in football. This report was released in March 2018.
This article summarises the findings of the recent commission report in respect of Football Intermediaries.
FIFA Regulations on Working with Intermediaries (“RWI”)
The report focuses mainly on the RWI. On 1 April 2015 the FIFA RWI was introduced substantially changing the existing FIFA’s Players’ Agents Regulations.
The RWI was introduced to tackle what FIFA perceived to be three issues concerning the role of players’ agents:
1. according to FIFA, approximately 70% of football international transfers occurred without the use of licensed players agents;
2. lack of transparency in respect of transfers concluded by licensed agents;
3. irregularities in respect of the roles and financial obligations of club representatives and players’ agents.
The RWI were aimed at providing more transparency through full disclosure of payments related to transfers and any conflicts of interests that may arise.
The RWI also implemented a number of minimum standards that the national associations need to enforce as well as offering guidance on the registration system, fees and companies registering as Intermediaries.
The report does recognise criticism of the apparent de-regulation and the new RWI (even citing the author of this article in doing so). In particular, it has been argued that many individuals will abuse weaker registration mechanisms to deceive footballers, particularly younger players and/or those in countries where corruption is widespread.
A major criticism is the proposed remuneration cap, namely that Intermediaries should only be paid a fee equal to 3% of a player’s gross basic salary. The report cites harmonisation issues arising from the recommended remuneration cap, as different associations are able to choose whether to include the rule, creating potential unbalances within the Intermediaries’ working conditions in different European countries. Further, the cap could breach EU Competition Law. There is a case lodged at the Regional Court of Frankfurt by Firma Rogon Sport Management against the German Football federation dealing with precisely this issue.
The RWI also outlawed payments to an Intermediary if the player concerned in the relevant transaction is a minor. This measure has been opposed by many Intermediaries. The report highlights that this could lead to a situation where Intermediaries essentially stockpile players, signing as many young players as possible in order to make future profit; discarding those that “don’t make it”.
The report also references that the two-year maximum length of representation contact has been abolished by the RWI (although this has been upheld by most national associations).
National Basketball Players Association Regulations Governing Players Agents (“NBPA Regulations”)
Interestingly the report provides the NBPA Regulations as an example of good practice that football could follow. Given the specificity of the agents’ role in transfers, both FIFA and NBPA regulations aim to establish a regulatory framework for the agency industry. The report cites potential shared practices and enforcement processes between the two sports.
The NBPA Regulations aims to create a “uniform standards of conduct and fiduciary responsibility applicable to all certified Player Agents” and is more stringent involving a mandatory licence that also requires agents to:
1. have completed a four-year accredited university or college course or alternatively to substitute that attendance with relevant negotiating experience;
2. perform an investigation into the agent’s background; and
3. be approved by the NBPA.
The final point is particularly significant as the NBPA is the union for professional basketball players. Successful applicants must also pass a written exam to become NBPA approved. Finally, agents can only apply for licences during a specified time window.
The report concludes that it does not think that the RWI has resolved the issues that FIFA sought to rectify and proposed the following recommendations:
1. Make the 3% voluntary cap on Intermediary fees mandatory for all the transactions, or in case of potential non-compliance with the European Law, making the cap mandatory over a certain threshold;
2. Dividing the payment of the Intermediary fees into different instalments to be paid along the duration of a player’s contract, with a view to incentivising contractual stability;
3. Consider a centralised mandatory licensing system, following the example of the NBPA system for agents in US basketball. The system should also include a uniform mechanism for the legal proceedings and sanctions.
The report’s recommendations (especially in respect of the NBPA Regulations) are interesting as they imply that a reversion to the previous FIFA Player’s Agents Regulations would be more desirable.
Transparency and irregularities in respect of financial obligation, are issues that have continued since the incorporation of the RWI. There is some force in the argument that certain aspect of the RWI have only made matters worse.
The RWI handed much of the ‘power’ back to national associations to police their own intermediaries and this has led to a legal gap, as intermediaries are no longer able to seek recourse before the FIFA Player Dispute Resolution Chamber (“PRDC”). The PRDC no longer has the jurisdiction to deal with international disputes between intermediaries and many argue this has left intermediaries vulnerable to exploitation.
The 3% cap is unrealistic and in the author’s view it will never be introduced. As outlined in the report it is unlikely to comply with European Law and in practise intermediary fees are (as with transfer fees) driven by market forces. Basically if you really want to sign a player, you may have to pay the intermediary a little more!
The EU Commission’s report recommends that intermediary fees are paid over the length of a player’s contract. In practice this already occurs as fee instalments are usually due and payable after the conclusion of a transfer window. As with the amounts of commission payable, the length of time for payment is also a negotiation tool driven by market forces.
The NBPA Regulations are sensible. A central licencing system should in this author’s opinion be reinstated. Formerly agents were licensed with FIFA before being registered with each national association (exaggerated further by the RWI). The number of international transfers increases season on season and it only seems sensible for there to be a central FIFA licencing (or at least a confederation licence (UEFA, CONCACAF CAF etc..) system.
The report also recommends that intermediaries pass an exam. Formerly FA licensed Agent’s had to pass a notoriously difficult exam, but this obligation was removed by the RWI. Some associations (such as in Spain) do require intermediaries to pass an exam, again showing a reversion back to the old FIFA Player’s Agents Regulations. Similarly, the Belgian association has reinstated a pre-RWI requirement that intermediaries need to take out professional indemnity insurance.
Whilst the commission’s report is useful, its suggestions are unlikely to alter the current transfer system in respect of Intermediaries. Many appear to be a little unrealistic in practice or a reversion back to the position pre-RWI (which FIFA will vehemently oppose).
The report is an important read for those interested in the football transfer market and covers hot topics including youth development and financial fair play. You can read a copy of the report here
If you are an intermediary, club official or player seeking advice in respect of a football law issue please do not hesitate to contact our specialist football lawyer David Seligman on: