A quick guide to the statutory and common law duties on sports agents
Published 12 February 2015 By: Andrew Nixon
Dave Nightingale, writing for the Sporting News many years ago, cynically said:
"Want to be an agent? Open your mouth and declare yourself one: you don’t need a law degree, you don’t need an education, you don’t have to have a licence – knowledge of sport is preferable but not mandatory."
"All you have to do is convince some professional athlete or would be pro that you can get a better deal for them than they could themselves. Voila - you are a member of the newest profession in the world."
Those were, clearly, simpler times. The agency relationship is an incredibly important one for the athlete: as such it is built on trust. Athlete agents perform a variety of functions, for example brokering and negotiating player transfers and contracts, activity that is typically regulated by governing bodies and federations. But it does not stop there: athlete agents also source and arrange commercial and sponsorship tie ups, as well as providing legal, financial and tax advice.
In my experience the majority of athlete agents perform vital roles for their clients. This might be down to years of experience or a vast network of contacts, which is hugely important as we are talking about exploiting very short careers, or it might be down to skills, experience and market knowledge from a negotiating perspective.
Notwithstanding this, a number of high profile transactions, particularly in football, and the revenue generated by agents from those deals, has led to growing concerns that some agents are charging exorbitant fees and that those fees are disproportionate to the services provided, and also that some agents are more interested in their own personal gain than the interests of their clients. As a consequence, the activities of athlete agents have come under considerable scrutiny by sports regulators and governing bodies. The sporting regulatory framework is, however, well known to most sports practitioners. I wanted, therefore, to provide a brief overview of how agents are regulated in addition to, and irrespective of, the rules imposed by governing bodies.
Common Law Duties
The common law definition of agency is as follows1:
“Agency is the fiduciary relationship which exists between two persons, one of whom expressly or impliedly manifests assent that the other should act on his or her behalf so as to affect his or her relations with third parties, and the other of whom similarly manifests assent so to act or so act pursuant to the manifestation.”
The existence of this fiduciary relationship is not contingent upon a contractual arrangement, and the range of duties bestowed is not exhaustive. Perhaps the most important duties relate to acting in accordance with, and not exceeding, express,2 or implied, authority,3 as well as using all proper skill and care,4 and to avoid conflicts of interest.
For example, an agent may not, without the consent of his principal, use information acquired through the principal/agent relationship in order to make a secret profit. More obviously, the agent may not acquire a benefit through breach of his duties to his principal. The case of Imageview Management Ltd v Jack5 is an interesting one in this regard, and in the context of the common law duties of an athlete agentgenerally.
In that case, an agent called Mike Berry negotiated a contract for Kelvin Jack, a Trinidad and Tobago international goalkeeper, to sign for Dundee United. A commission of 10% was agreed based on the player’s gross salary, but Berry also negotiated a side agreement without informing the player under which the club would pay him £3000 for obtaining the player’s work permit.
When the player found out about the side agreement he stopped the commission payments to Berry. Berry sued the player and the player counterclaimed for the commission already paid, and account of the secret profit. The Court found in favour of the player (and Berry failed in a subsequent appeal). This case not only involved a secret profit but a conflict of interest, such that the agent was only interested in moving the player to Dundee United, as opposed to any other club, because the side agreement was in place with Dundee United.
The fact is common law imposes high standards on agents in addition to, and irrespective of, any regulations imposed by sports governing bodies. This is an important point, and one that needs to be borne in mind by those who have expressed concerns about sports that do not regulate, or loosely regulate, the activity of athlete agents. As Lord Justice Jacob stated:
"An agent's own personal interests come entirely second to the interest of his client. If you undertake to act for a man you must act 100% body and soul for him. You must act as if you were him. You must not allow your own interests to get in the way without telling him. An undisclosed but realistic possibility of a conflict of interest is a breach of your duty of good faith to your client."
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Andrew Nixon is a Partner in the Sport Group at Sheridans. Referred to in this year's Legal 500 as a “very bright and talented sports lawyer” Andrew's practice focuses principally on regulatory, governance, disciplinary, arbitration and dispute resolution within the sport sector. Andrew's clients include governing bodies, sports clubs, sports agencies and individual athletes.