An analysis of The FA Football Agents Regulations and the RFU Regulation 8 (Agents) – Part 2

Published 16 January 2014 By: Charles Maurice

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In this two part blog, Charles Maurice reviews The Football Association’s (“The FA”) and the Rugby Football Union’s (“RFU”) agent regulations. In part one, Charles highlighted the similarities between the regulations and in part two he goes onto look at the subtle differences between them. 

 

And subtle differences…

It is the subtle differences between the two regimes which are most interesting though and, in my view, are a good indicator of where the sports stand in terms of sophistication of regulatory monitoring, which in themselves may (or may not) be a direct result of different financial pressures.

A notable difference is around remuneration – the RFU Regs (RFU Reg 8.7) note that the principal for whom the agent acts is ultimately responsible for paying the agent its fees due under the representation agreement between them, but that this payment may come from a third party on the principal’s behalf, with no restriction as to the identity of such third party. The FA Regs1. are considerably more restrictive on this issue, and a player’s liability to its agent for agent remuneration is payable only by the player or the relevant club, and in the case of the latter only if (i) the player and the club properly fulfil the applicable tax law requirements in relation to such payments; and (ii) the payments are made through the FA’s designated accounts.

This picks up one of the main themes of The FA Regs, that of transparency of action and accountability through proper reporting, ideas which, whilst present in the RFU Regs, are not picked up to anywhere near the same level of detail and perhaps represent an area for future review as a result. Football agents, clubs and players are fundamentally obliged to disclose to The FA the level and nature of the remuneration payments that flow between the parties and The FA Regs contain obligations for such remuneration amounts to be recorded in the accounts of a club (where relevant).

As above, payments from a club to an agent discharging a player’s remuneration obligations under a representation agreement must be made through The FA’s designated account, with such fees only to be released on lodging of the related representation agreement and related bank details with the FA. One can imagine that this administrative burden was not imposed lightly, and appears to be a direct attempt to regulate the flow of monies between parties in response to some high profile instances of behind the scenes dealing2. The reporting and disclosure obligations are quite onerous as a result, particularly when one considers that under The FA Regs, an agent is obliged to disclose to The FA the full details of any and all remuneration or payments of whatever nature in connection with a regulated transaction (player transfer etc) within five days of completion of such transaction3 and provide an itemised statement of all remunerations received from a particular player to 30 November of each year4. The obligation on clubs is no less thorough and clubs have to make public the total remuneration they have paid to agents on or before 30 November of each year. This is further than many other industry regulators go and for an unincorporated agent entity (i.e. the agent as a sole trader), goes further than the general public accounting obligations imposed on them by law. That this audit-style arrangement is not present in the RFU Regs is an interesting point – one might argue that the FA Regs take a particularly ‘belt and braces’ approach here and that some of the underlying obligations in both regulations give enough transparency in themselves, but advocates of this type of express reporting would (rightly, in my view) say that unless there is an express obligation for the details of all of an agent or club’s dealings in this area to be disclosed, then the same level of transparency certainly won’t be reached on some form of implied basis.

Leaving aside disclosure and financial reporting (which itself could be the subject of a lengthy article), one other interesting concept which is present in The FA Regs but not in the RFU Regs is the concept which introduces an embargo on acting for a particular club in connection with a particular player, where the same agent has represented that player in the previous two transfer windows or the period in between or since5. This is subject to player consent (i.e. the player can otherwise give its consent in this scenario, subject to set boundaries), but is a way of trying to deal with the inevitable conflict of interest that follows. Cynically, it is easy to imagine a scenario in which player consent is obtained as a result of the circumstances (in fact, the conflict might work in the player’s favour in some cases), and these instances need to be policed from a financial disclosure perspective (i.e. remuneration should not be able to move in more than one direction). The provisions also extend to, and deal with, instances where an agent might have a right of ownership over a player’s commercial rights and act to prevent the agent from acting for a club negotiating with the player at the same time. Again, this concept is not explicitly addressed in the RFU Regs, and there is technically nothing to stop an agent acting on behalf of a club acquiring a player that the agent has represented in the recent past, provided that the agent discloses this prior relationship. On the one hand, this may just be how business is done (everyone is happy with a cosy arrangement, provided that all is disclosed and the underlying principle that the agent is under a general duty not to bring the game into disrepute), but there does seem to be scope for a player revealing the proverbial ‘crown jewels’ to their agent in one transaction only to have it used against them in future.

The final point is the separate regime in The FA Regs, which deals with family members representing players6. The representation of players by a “Registered Close Relation” is allowed, provided that (i) there is a subsisting close relationship between the player and the representative; and (ii) no payment is made to the close relation by the player, or by or to any other party directly or indirectly in respect of them acting in the capacity of agent for the player. For these purposes, the close relationship is construed narrowly and is defined as a player’s parent, legal guardian, person with parental responsibility, sibling or spouse. Given that the Registered Close Relation undertakes to comply with the FA Regs, the impact of this distinction is a subtle one and centers, for the most part, around the automatic right for such persons to become registered as an agent for the purposes of representing their related player, potentially bypassing the ‘fit and proper’ persons elements of the agent registration requirement in the process. Whether that is an issue will obviously depend on the facts, but it seems a stretch to suggest that this element should not apply simply because an agent is also Ronaldo’s dad at the same time. Perhaps the point here is the no-payment element of the test – where there is a payment to the close relation (direct or indirect and which would include payments from clubs), this would bring the close relation outside of the scope of the close relationship test and would make full registration a requirement (and subject to the usual rules). Whether this works in practice is likely to depend upon proper disclosure and here we alight back on the same point – the regulations in both sports are vulnerable to being rendered ineffective if the agents themselves don’t want to play the game: whilst it might be obvious what an indirect payment looks like, if that indirect payment becomes suitably difficult to trace (through whatever means), then it is not hard to see how the rules become moulded to suit, especially in scenarios where it may be difficult to establish whether a close relation is actually acting in a representative capacity at all. Whilst simpler, the RFU Regs don’t make this distinction (i.e. everyone has the same requirement if they want to become an agent) and the world is a more black and white place as a result, although one suspects that the addition of a few higher profile relatives (a la Ozil family) into the game might eventually force the introduction of a similar distinction.

 

Author comments:

The above is obviously a short form look at both sets of regulations, and both do, to a degree, spell out what is at least a detailed intent of how the relevant governing bodies are trying to deal with this somewhat controversial area. I would be interested in hearing reader’s views on any of the above or the rules in particular, perhaps specifically whether anyone considers that the RFU Regs are likely to need to catch up with a growing sport and what the key catalyst for any such change might be.

 

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Author

Charles Maurice

Charles Maurice

Charlie is a senior associate at Stevens & Bolton LLP and specialises in the sports, media and entertainment sectors. Charlie advises on a wide range of sporting issues and has particular experience in the motor racing and football industries. 

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