A guide to The FA’s new Intermediaries Regulations 2019-2020
Published 01 July 2019 By: Nick De Marco QC
The FA recently brought in various amendments to its Regulations on Working with Intermediaries1 and, on 29 June 2019 published guidance notes on them. In this article, Nick De Marco QC (of Blackstone Chambers) who advises the Association of Football Agents along with all the major football agencies, and who was involved in discussions with The FA about the new Regulations, discusses their meaning and likely application.
These new Regulations are not part of the much anticipated and controversial wholesale reform led by FIFA that we expect to come in for the 2020/21 season at the earliest; discussions are still on foot as to the content of those – which shall most likely see the return of a licensing system, as well as potentially provisions regarding agents’ remuneration.2
There are more modest, yet still important, changes in some of these new Regulations. Anyone involved in the football transfer market or agency business needs to carefully consider how new Regulations may affect their business. The new Regulations are already now in force and shall apply for the 2019-2020 season. Links to the new Regulations and recent Guidance3 are available on The FA website, here.4
Regulation A.7 provides that an Intermediary must always act in the best interests of the Club/Player for whom they act, and in accordance with their fiduciary duties. This obligation already exists in law; football agents already face losing their entitlement to commission if they breach their important fiduciary duties to their clients.5 Reg. A.7 means this can now also be a regulatory offence.
Notification of an "offer"
Regulation A.8.1 imposes an obligation on an Intermediary to notify a Player they represent of an “offer” (both orally and with written confirmation of the offer) within 24 hours of receipt of the offer. Some concerns have been raised about the practicality of this new Regulation. What exactly is an offer? What if the offer is received the day before the player is to appear in an important match, and has been made just to unsettle him?
The definition of “offer” is included within the Regulations, but it is not entirely clear. Following discussion, The FA have issued guidance confirming that it considers an offer should “set out the proposed terms of employment (including fixed or continuing remuneration and term)” and must “comply with any relevant rules and regulations, particularly regarding illegal approaches”. Therefore, a club phoning up an agent and asking if Player A is available for a transfer fee of £1 million and wages of about £40,000 per week would unlikely be an “offer”, and an Intermediary would have no duty under A.8.1 to inform the player of the approach. Only an offer which sets out the detail as to the important terms of employment should be regarded as an “offer” for the purposes of the Regulation. Clubs, players and agents would be well advised to insist that such offers are recorded in writing and clearly headed as an “offer of employment” so there is certainty for all parties.
Regulation B.8 imposes further prohibitions on agents approaches to Players under the age of 18. Agents are advised to read these regulations carefully. The overwhelming majority of recent FA proceedings against agents, often leading to substantial bans, involve breaches of the strict rules concerning working with or approaching minors. The main change to Regulation B.8 is the additions of sub-paragraphs:
(ii) which prevent an intermediary approaching a player between 1 January of the year of his 16th birthday and the date of his 18th birthday without the prior written permission of the player’s parents; and,
(iii) confirming that an approach includes approaching via various social media. Previously it had been necessary to obtain the parents’ consent upon signing a Representation Contract with a minor.
The additional requirement that consent must be obtained to even approach a minor appears onerous.
What if, having been introduced by an existing client to a young player who might be interested in finding an agent, the agent asks that player for his parents contact details so the agent can contain written consent to approach the player? Is that itself an “approach”? If so, the Regulation may be unworkable. It is unlikely the rule shall to be given such a wide and absurd meaning, but agents are well advised to keep a good written record (including saving What’s App messages etc) of all communications of this sort and to make sure they seek approval by a player’s parents in writing before speaking to the player about representing him.
Regulation C.12 has been controversial with many agents. It requires an intermediary to provide, within 30 days of the end of each Reporting Period (a calendar year ending 30 June 2019) each of their clients with an Annual Return showing all of the remuneration made by a player or club on a player’s behalf to the intermediary. While on its face this might appear a simple transparency requirement, unlike in other industries a football agent is already required to provide the player with precise details of all the commission they shall receive upon the making of every deal, and there are standard written forms that must be provided to and be signed by the player relating to each payment. The additional requirement to provide annual returns is thought by many in the industry to impose an additional, unnecessary, administrative burden on agencies. For example, if an agent has 40 players signed will they really be expected to provide this annual return every year for each player when every player already has the information? And to make matters worse, the Regulation suggests that a failure to provide the Return can amount to a breach and therefore misconduct.
It would have been more sensible to provide a player with a right to request an Annual Return (with a failure to provide one being a breach). Some agents have suggested that a Return is provided at the time the remuneration is agreed which incorporates words to the effect that such Return constitutes a Return for each subsequent year concerned by the remuneration, unless the player requests a specific Return in every year. Whether or not this might fall within the letter of the Regulation, it would appear to fall within its spirit, and charging an agent for misconduct for this type of thing would be a waste of The FA’s resources. Perhaps because of the continued controversy over the operation of this Rule, The FA’s guidance says that further guidance will be issued “in due course and ahead of the end of the Reporting period on 30 June 2020.” It is hoped such guidance can reflect a practical solution that does not impose an unnecessary burden on agents while maintaining the principle of transparency.
Agreements with other INTERMEDIARIES
Regulation D.5 states that an intermediary must disclose any agreement with another intermediary which purports to resolve disputes between them relating to a player or Intermediary Activity. There are two problems with this. First, it suggests that confidential settlement agreements made in legal proceedings (such as FA Rule K arbitrations and/or international arbitrations, perhaps under the Rules of the CAS) shall be required to be disclosed to The FA despite the parties agreeing to their confidentiality. That in turn may act to discourage parties settling disputes and lead to more costly disputes between them. Second, if the aim here is transparency (as the guidance suggests), why is it limited to agreements between agents? Exactly the same issues may arise in disputes between a club and an agent, or a player and an agent, but the rule does not then apply. That suggests an inconsistent approach which undermines the stated purpose of the Regulation. The guidance is useful in pointing out that “The FA is particularly concerned about agreements which include percentage of future fees”, and that might suggest it shall be more interested in investigating agents who settle disputes by apportioning future fees, as opposed to by agreeing to pay another agent who has a claim part of commission already received. In any event, agents shall now need to take careful legal advice about this point before settling any disputes.
Interests in economic rights
Regulation E.5 prohibits an intermediary from having any economic interest in relation to a registration or economic right of a player, other than when acting solely for a club in relation to the sale of a player when they can receive commission based on the transfer fee received (but only on future contingent payments). The new wording makes clear this includes a prohibition on receiving “payments contingent on the future transfer of a Player.” The wording clarifies but doesn’t add anything. It was already the case that an agent could not have a such a right given the prohibition on third party interests in a player.6
agreements with a club
Regulation E.8 (iii) requires a club to disclose any agreement “of any nature” it has entered into with an intermediary regarding the provision of services. It appears that the reason for this new regulation is a concern about clubs entering into “sham agreements” with agents so pay them agency fees disguised as something else. In various cases such arrangements have been described as scouting or consultancy agreements, entered into between a club and an agent/agency.7 However, there are also genuine commercial agreements made by agencies (some of which are not only involved in intermediary activity) and clubs. The disclosure of confidential commercial terms in such agreements may be unwelcome, but it is noted that this particular obligation falls on the club, not the agent. A club must disclose all such agreements and shall be in breach if it does not (club secretaries, in particular, need to make sure this is done in the future), but an agent shall not be in breach as the obligation does not fall on them
Regulation E.11 prevents sponsorship agreements being entered into between football agencies and clubs at higher levels (Premier League, EFL, National League and Steps 1 to 4). It means a football agent cannot sponsor a club at the highest level of the men’s game. The guidance is clear that it does not prevent sponsorship in women’s football (an agency could sponsor the “ladies’ team” of a Premier League club) and nor does it prevent intermediaries from purchasing commercial hospitality packages from Clubs.
It is important to recall that any breach of one of the Intermediates Regulations may be regarded as misconduct by The FA, leading to disciplinary proceedings, possible fines or sporting sanctions. Technical breaches, or those where no real harm has been caused, ought not to lead to charges or at least serious sanctions, and arguments about legitimate expectations, fairness and proportionality are likely to arise if they do. But all participants are best advised to avoid putting themselves in breach in the first place.
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Nick is rated a leading silk in Sports Law and is a member of Blackstone Chambers.
He has advised and acted for a number of sports governing bodies, athletes, most Premier League football clubs and many world-class football players in commercial and regulatory disputes.