FIFA’s new Regulations on Working with Intermediaries explained

Published 27 August 2014 By: Jonathan Himpe

FIFA’s new Regulations on Working with Intermediaries explained
In this article Jonathan Himpe will explain the new Regulations on Working with Intermediaries and highlight the most important differences with the current Players’ Agents Regulations.

New Regulations for players’ agents as from 1 April 2015

After widespread discussions and lengthy consultations, the new FIFA Regulations on Working with Intermediaries will finally come into force on 1 April 20151. The new Regulations will supersede the FIFA Players’ Agents Regulations and abandon the current licensing system for players’ agents: all existing licenses will lose validity with immediate effect and shall be returned to the associations that have issued them2.
 
The thread of the new Regulations is no longer to regulate access to the activity of players’ agents, but instead to provide an overarching framework for a better control of the activity itself by laying down (new) minimum standards and requirements and by installing a registration system for intermediaries who represent players or clubs in the conclusion of employment contracts and transfer agreements3.
 

The difference between intermediaries and players’ agents 

The new Regulations define an ‘intermediary’ as [a] natural or legal person who, for a fee or free of charge, represents players and/or clubs in negotiations with a view to concluding an employment contract or represents clubs in negotiations with a view to concluding a transfer agreement4.
 
As from the first reading of the abovementioned definition, it already becomes clear that the concept of an intermediary is much broader than that of a players’ agent5:
  1. the new Regulations provide that also legal persons can act as intermediaries (whilst under the old Regulations players’ agents could only be natural persons);
  2. intermediaries offering agency services free of charge are also explicitly targeted by the new Regulations (whilst the old Regulations were only applicable when a fee was paid);
  3. also the core activity of the intermediary is defined more broadly, namely as ‘representing’ players and/or clubs in their legal relations (instead of simply ‘introducing’ the contracting parties to one another).
 
Furthermore, intermediaries will no longer be required to hold a license, which until now was only issued by the national associations after having passed a tough multiple-choice examination6. Also the requirement to obtain a professional indemnity insurance (or, alternatively, a bank guarantee) is abandoned7. Some critical voices have already expressed their concern that such reforms may not be in the players’ best interest8.
 
Finally, the requirements that the intermediary must have an impeccable reputation9 and may not hold a position as an official, are maintained10.
 

The registration system for intermediaries

For the sake of transparency, a registration system for intermediaries shall be put in place at member association level, whereby intermediaries shall be registered each time a player or club engages the services of an intermediary when concluding an employment contract or a transfer agreement11. Registration is equally required in the event of renegotiation of an employment contract12.
 
As an indispensable part of the registration procedure, all intermediaries will have to complete a mandatory Intermediary Declaration which will then need to be submitted to the association of the club with which the player signed his employment contract13. If, in the event of a transfer agreement, the releasing club engaged the services of an intermediary, that club shall also submit a copy of the Intermediary Declaration to its own association14.

 

By signing the Intermediary Declaration, the intermediary confirms, amongst other things, the adherence to the applicable statutes and regulations of FIFA and those of the confederations and member associations when carrying out its activities.
 
If no declaration is submitted, players and clubs risk to be sanctioned on the basis of their obligation to act with due diligence in the selection and engaging process of intermediaries. In that respect, Article 2(2) of the Regulations on Working with Intermediaries clarifies that due diligence means that players and clubs “shall use reasonable endeavours” to ensure that the intermediaries sign the relevant Intermediary Declaration and the representation contract concluded between the parties. Note that players and clubs shall not be liable to sanctions by the mere fact of not submitting an Intermediary Declaration (as would be the case under a strict liability rule), but only if they were acting negligent.
 

The representation contract

Before the intermediary may commence its activities, the main points of its legal relationship with the player or club must be recorded in writing in a so-called ‘representation contract’15. Just like the Intermediary Declaration, the representation contract must be deposited with the association when the registration of the intermediary takes place16.
 
Under the old Players’ Agents Regulations each representation contract had to contain certain minimum details: the names of the parties, the duration and the remuneration of the players’ agent, the general terms of payment, the date of completion and the signature of the parties. The new Regulations extend these minimum requirements by adding that the representation contract must also specify the nature of the legal relationship (e.g. a service, a consultancy, a job placement or other kind of relationship), the scope of the services and the termination provisions17.
 
The new Regulations no longer provide a (non-mandatory) standard representation contract in the annexes. Equally, they no longer stipulate that the representation contract shall be valid for a maximum of two years18.
 

Payments to intermediaries

As concerns payments being made to intermediaries, the Regulations on Working with Intermediaries undoubtedly provide for a stricter approach:
 
  • in an attempt to provide for an overall rationalisation of fees paid to intermediaries, the new Regulations set – as a recommendation – a limit of 3% of the agreed player’s basic gross income (for the entire duration of the relevant employment contract) or of the eventual transfer fee paid (in the event of conclusion of a transfer agreement)19;
  • furthermore, the new Regulations prohibit any payment to intermediaries when the player concerned is a minor20;
  • also payments to intermediaries related to any interest they would hold in any transfer compensation or future transfer value of a player are explicitly prohibited by the new Regulations21; by doing so, FIFA seeks to ensure that payments to be made by one club to another remain within the club circuit instead of moving on to intermediaries.
 
Similarly to the old Players’ Agents Regulations, any payment for the services of an intermediary shall be made exclusively by the intermediary’s client to the intermediary, unless the player – after the conclusion of the relevant transaction – gives his written consent for the club to pay the intermediary on his behalf22. In any case, the payment must be in accordance with the terms of payment agreed between the player and the intermediary in the relevant representation contract.
 

Disclosure and publication

Another innovation of the new Regulations is that players and clubs will be required to disclose to their associations the full details of any and all agreed remunerations or payments of whatsoever nature that they have made or that are to be made to an intermediary23.
 
The member associations, from their side, will be required to publish annually at the end of March:
  1. the names of all intermediaries they have registered;
  2. the single transactions in which they were involved; and
  3. the total amount of all remunerations or payments actually made to intermediaries by their registered players (on a consolidated basis for all players together) and by each of their affiliated clubs (on a consolidated basis for each club individually)24.
 

Conflicts of interest 

Prior to engaging the services of an intermediary, players and clubs must ensure that no conflicts of interest exist25. As a general rule, no conflict of interest would be deemed to exist if the intermediary discloses in writing any actual or potential conflict of interest and obtains the express written consent of all parties involved prior to the start of the negotiations26.
 
New is that players and clubs will be entitled to engage the services of the same intermediary within the scope of the same transaction27. To that end, the player and the club concerned shall give their express written consent and shall inform in writing which party (player and/or club) will remunerate the intermediary.
 

Sanctions

The responsibility for the imposition of sanctions on any party under their jurisdiction violating the applicable provisions lies with the member associations28.
 
Moreover, associations have the obligation to publish accordingly and to inform FIFA of any disciplinary sanctions taken against any intermediary (note that a literal reading of the new Regulations seem not to prescribe the publication of disciplinary sanctions taken against players or clubs)29. The sanction imposed by the member association can be extended by the FIFA Disciplinary Committee to have worldwide effect30.
 

Conclusion

By abolishing the current licensing system and installing a registration mechanism as from April 2015, the new Regulations on Working with Intermediaries can be considered as an earthquake in ‘agent world’. Licensed agents will no longer benefit from a protected status and will need to be prepared to compete with thousands of new agents entering the market. Also, a revision of the standard contracts used by players’ agents will be indispensable in order to be compliant with FIFA’s new minimum standards.
 
Written by Jonathan Himpe

 


This article has been published in its original form as submitted and has therefore not been through LawInSport's editorial process. The views expressed in this article does not necessarily reflect the views of LawInSport.

 


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Author

Jonathan Himpe

Jonathan Himpe

Jonathan Himpe is an attorney-at-law based in Antwerp (Belgium), who’s expertise lies mainly in the field of tax law and sports law. He regularly advises football players and their agents across a broad spectrum of sports law issues and, in case of litigation, represents them before court and/or (sports) arbitration panels. Jonathan is also a member of the Disciplinary Committee of the Flemish Taekwondo Union.

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