Can a lawyer be part of a cheaper and more creative solution to player representation?

Published 21 December 2011 By: Iain Taker

Official figures released by the Premier League of the fees paid by its 20 clubs payments to agents over the last year show that £71.8m was spent between 1 October 2010 and 30 September 2011. 

In addition the recent case of Proactive Sports Management Limited v Rooney, the levels of commission ‘earned’ by agents for arrangement of contracts (in this case image rights) returned to the public spotlight (for an analysis see this article). 

Wayne Rooney, when 17 signed an eight year contract with Proactive under which an eye watering 20% of his earnings were paid to his agency.  

This article looks at why players are prepared to pay such vast sums to an agent and whether there is a better and more financially prudent alternative for players.  

Why do players have an agent?

Before looking at whether there is a viable alternative it is necessary to understand why players traditionally employ an agent:

Maximise financial rewards during their career

There is little doubt that amongst the majority of players a significant driver of having an agent is a wish to maximise financial rewards across their career.  This can be shown by the breadth of off the pitch agreements entered into by players e.g. boots, computer games, sports clothing labels and soft drinks.  Player’s careers are often short and therefore there is a finite number of lucrative contracts that they will have an opportunity to benefit from.  

Access to the agent’s network of contacts

Part of the appeal of an agent is the network of contacts that they have access to, for instance clubs or potential sponsors.  Through this network it is possible to create such opportunities and, by having a firm grasp of the player’s valuation, ensure financial incentives are maximised.  As the agent is paid a commission on the money he brings in for his client there is an incentive to obtain as financially attractive deal as possible.

Sign of being ‘good enough’

There is a significantly high drop out rate of young players.  Therefore players are keen to explore any additional advantage they can achieve. An agent acts as a ‘full time’ liaison between the club and the player who will help push the player’s abilities (hopefully) both on and off the field.  Some players employ an agent in order to ‘prove’ they are a success and that those without one are in turn unsuccessful, which in an industry populated by strong masculine egos is not a situation many feel comfortable to deal with.  In addition a number of players without agents will Register on the recommendation of a team mate which in turn perpetuates the importance of the correct agent.

Support

Support is often an undervalued reason why players sign, and stay, with an agent. The constant contact and encouragement from someone other than parents and family members should not be overlooked.  This coupled with the agent often handling a number of aspects of the player’s life such as travel, accommodation and personal issues helps make the player feel more secure and valued which boosts confidence and can have a positive effect on performance. 

What is the alternative?

While very much in the minority at the moment there are high profile examples of players (or former players) who have not tread the path of using an agent.  There are two main alternatives that are currently used to varying levels:

  1. Self/family representation (e.g. Paul Scholes, Gary Neville and Nicolas Anelka); and
  2. Professional legal representation (e.g. Roy Keane and Niall Quinn)

In my opinion there is however an additional version of the professional legal representation that could and should be developed which will provide the vast majority of benefits of an agent with a significantly reduced price. 

The proposal is to have a dynamic team of specialists who look after a player’s representation.  This would take the form of a commerical lawyer, specialist marketing firm and a day to day manager/personal assistant.  

Lawyer’s role

The lawyer would only be employed at times of negotiation and drafting of contracts.  The lead lawyer would be the official representation of the player but would in term liaise with lawyers covering aspects including employment, intellectual property and tax as applicable.  The lawyer would be paid either per hour or on a set fee basis as occurs in a traditional law firm. The player would only be tied up to the individual contract (a new representation contract would be lodged with the FA prior to negotiations commencing) and therefore unless the lawyer provided a satisfactory service they would not be retained.

Marketing specialist’s role

In addition to the lawyer there would be a specialist marketing firm employed, and paid a set fee, on a per case basis.  The player (or his representative/manager) would put out a tender to the relevant specialists dependent upon the sponsor they were looking for e.g. sports clothes, computer game.  By having an option to employ a different marketing specialist for different aspects they would be paid upon their successful placement rather than on a full time retainer.  Under this system the marketing specialists would have a greater understanding of the market they were targeting and could provide the player with tailored advice and access to the necessary contacts.  The firm would not be tied to any one particular agency and therefore could become a specialist in a (or many) industries and advertise their services to all players.  

Manager/personal assistant’s role

By having a separate manager/personal assistant to take care of day-to-day matters the player could ensure that they are able to continue to focus on their game.  The personal assistant could solely work for the player, if necessary, or work for a number of players with the salary being split between them.  In line with the rationale for the lawyer and the marketing specialists, the personal assistant would solely focus on the areas that they are used to providing, with maximum benefit for minimum outgoing.  

Where necessary they could hire other specialists such as a social and digital media specialist.

Under the current FA regulations a player may only sign a two representation contract and therefore even players with existing arrangements can look to renegotiate or more to an alternative solution with relative ease.

This article will now look at two separate examples of why this type of arrangement could work.

 

Finance

Beneficial to the player

Example: Player is offered £1m per season over 5 years for a boot manufacture deal.

Assume

  1. Agent is on a 5% commission level
  2. Lawyer(s) charge £10,000
  3. Marketing introductory fee £10,000

 

Party

Agency deal

‘Lawyer deal’

 

 

 

Player

4,750,000

4,980,000

Agent

250,000

0

Lawyer

0

10,000

Marketing expert

0

10,000

Sponsor (pays out)

5,000,000

5,000,000

Player receives per month

£79,166

£83,333*

 

* Player would receive £63,000 in the first month and then £83,333 for the remaining 59 months

The financial difference can best be stated as the equivalent percentages taken by the advisers/represenatitives:

  1. Agent – 5%
  2. Lawyer and Marketing (combined) - 0.4%

Therefore in order to justify the agent’s commission they would need to obtain a significantly higher overall package.  The marketing experts would serve the same networking purposes and estimation of market value and the lawyer would undertake the negotiation and drafting role.  It is also important to note that the majority of agent’s would have to employ a lawyer for the negotiation stages anyway as they are not qualified legal advisors. 

Beneficial to the club/sponsor

Players are aware that in order to maximise their benefits it is important to retain an on-going and professional relationship with the club and/or sponsor.  It is highly probable that lawyers are likely to be well received by clubs and sponsors.  This is because the higher level of accountability faced by lawyers and the decrease in the amount of disruption caused by ‘leaks to the press’ and ‘unauthorised agents’ for example.  

In addition the contracts will be negotiated by the club’s (or sponsor’s) lawyer in any case, by having the same people undertaking the commercial and legal discussions there is a reduced number of hours required and misunderstandings that occur.  Due to the implementation of the new UEFA Financial Fair Play Rules clubs will welcome a situation where for a lower cost to themselves they can effectively offer the player the same take home package, due to the reduction in third party fees.  

Marketing

There are significant marketing benefits offered under the proposal than are available with a solitary traditional agent.   The player would not be tied into using any single marketing firm and therefore can seek to approach those that best suit his requirements.  It would be possible to approach say three marketing firms who have links with the main sporting goods brands to ascertain the feasibility of entering negotiations with their clients.  The player would therefore receive access to a significantly wider, and arguably better, network of contacts which in turn would ensure the best possible deal would be forthcoming.  As the marketing firms would be specialists in their field they would know what financial package would be on offer to a player, ensuring that the player has realistic expectations as to what they can request. 

Under the scenario where a sports marketing firm is employed on an ad hoc basis it would be possible to speak to an individual whose sole job was to have access to, or lobby, those individuals capable of making such decisions.  The difference would be rather than an agent having to know people in each different area (ie sports drink, clothing, computer games etc) you would simply hire a firm (or individual) who was the best in that aspect.  In order to incentivise the marketing firm it would be possible to set a fixed payment which corresponds to the deal signed by the player (e.g. £10,000 for a deal under £1m per season, £15,000 for up to £1.25m etc).  As the firm would only be paid (either in part or in full) upon the successful signing of a contract they would not raise unrealistic suggestions to get the client in. 

In order to bring greater  transparency and accountability to this market I would propose, over time, that the marketing firms would be contained within a central registry which was approved by the PFA (for example) and where players experienced unprofessional service the marketing firm would be warned and then removed from the list.  As players are likely to wish to use approved firms the industry would in part be self-regulated. 

Could a lawyer do as good a job?

The first thing to remember is that the lawyer would need to be registered with the Football Association (see the Football Association’s website at https://www.thefa.com/TheFA/RulesandRegulations/Agents/FAAgentsList) and have an exempt solicitor terms of representation contract with prior to acting on the player’s behalf.  This contract must be lodged with the FA within 5 days of it being agreed or at the time of registration of a transaction or contract negotiation (whichever is the earlier).  During their time of representing a player the lawyer (like a licensed agent) is bound by the rules of the FA and FIFA and in particular the FA’s Football Agents Regulations (www.thefa.com/TheFA/RulesAndRegulations/Agents).  In addition the lawyer is also bound under the Solicitors Regulation Authority’s Code of Conduct.  Under which the lawyer (or their firm) is required to hold professional indemnity insurance.  This ensures that the client is protected in the event of any negligence claims brought against the lawyer or where client money has been misappropriated.  In addition to civil and criminal proceedings which can be brought (if applicable) the Solicitors Regulation Authority has the power to fine, suspend or strike a lawyer from the roll. 

When reviewing whether a lawyer could replace an agent it is important to remember that they are unlikely to perform all the tasks that an agent may cover.  The lawyer should only be appointed as and when legal and business negotiations are to take place or the player requires professional advice.  As the lawyer is only retained on a contract-to-contract basis they are only paid a fee for the work they do and not an on-going retainer.  Lawyer’s are used to dealing with complex negotiations without the personal incentives/conflicts that occur when commission payments are involved.  As a lawyer they are duty bound to help provide the best service for their client, based upon the client’s wishes.  Should the player not be happy with the cost or service then they are free to move to a different lawyer for the next contract. 

It is highly likely that a specialist lawyer can add additional value to the contract through areas such as intellectual property rights and tax structuring, which in reality may more than pay for the cost of employing them to negotiate the contract in added value.  In addition a large majority of agents have little or no formal legal training and therefore will have to revert to a lawyer to draft aspects of the agreement anyway which may indirectly result in two lots of costs being incurred by the player.  By cutting out the middle man the player will ensure that their personal wishes remain paramount and handled in a professional manner without the potential conflicts that can arise where the person negotiating a contract has a vested interested one way or another.  

The use of other specialists would result in the player getting the best all round protection and representation.  This is coupled with the support of clubs and sponsors over the use of lawyers to agents.

Conclusion

The increasing use of a team of specialists opposed to the use of an agent is highly likely particularly due to the maximum two year representation contracts.  Players may seek to use an agent to launch their career and then switch to the more sophisticated representation solution proposed above once they are more established.  In today’s games the attraction of money is undoubted and few players would turn down the opportunity to maximise their financial rewards, without having to do anything differently.  

The player can utilise a significantly wider support and representation system by employing different specialists as and when they are required.  In the meantime they will have their day to day affairs looked after by a professional personal assistant.  Clearly a number of players have long existing relationships with agents and the advantages of having an agent, particularly at the start of a career are compelling, and unlikely to be changed in the short term. 

Iain Taker is an associate at Kemp Little and a Registered Lawyer under the FA Football Regulations you can follow him on Twitter @iaintaker

Author

Iain Taker

Iain Taker

Iain is a lawyer at Kemp Little LLP who specialises in commercial and sports law. You can follow him on LinkedIn or on Twitter (@iaintaker). An example of work Iain has been involved in is the recent shirt manufacture agreement between Warrior Sports and Liverpool.