A Critical Review of FIFA’s ‘Working with Intermediaries Regulations’ 2015

Published 10 December 2014 | Authored by: Max Eppel, Jacob Miller

As is well known, FIFA intend to introduce their new ‘Working with Intermediaries Regulations’ (“the 2015 Regulations”) on 1 April 2015. The primary motivation in the introduction of these new regulations is that of ‘transparency’, according to FIFA Circular no.1417

That is, to ensure that every detail of every payment to every party involved in the transaction or negotiation is legitimately registered. FIFA claims that 70% of all transfers are conducted by unlicensed agents and regard this as a major problem for football1. In their pursuit to resolve this issue, FIFA has introduced the 2015 Regulations. As per Article 11 of the 2015 Regulations, the Players’ Agents’ Regulations of 2007 will be superseded.

The Commission Cap

Arguably the most significant change that FIFA is proposing, and undoubtedly one with which most agents / intermediaries will be concerned, is the way in which remuneration is structured. Article 7(3) of the 2015 Regulations recommends that the maximum an intermediary can claim from one transfer or negotiation is 3% from either the club, the player or both (with written consent as per Article 8) and 3% of the transfer fee. Typically, agents receive between 5 – 10% of their player’s gross income, so if this change were to be enforced it would be a seriously damaging shift for agents from a financial perspective. This provision is not without its legal issues. Although outside the scope of this article, it may be the case that FIFA’s recommendation to cap commission at 3% amounts to ‘price-fixing’ for the purposes of Article 101(1) of the Treaty on the Functioning of the European Union 2008 (“TFEU”). Additionally, this decision may also constitute an ‘abuse of a dominant position’ for the purposes of Article 102 of the TFEU. If either of these allegations prove correct, it is likely that the European Commission will find the provisions to be anti-competitive and therefore unenforceable. The Association of Football Agents (“AFA”) along with a number of English sports lawyers have lodged a complaint with the European Commission outlining these very concerns2.

As well as the legal issues with this provision, the recommended commission cap also presents practical difficulties. In the author’s opinion, although the clear objective from FIFA in introducing these regulations is transparency, it is foreseeable that a commission cap will lead to underhand, illegal payments so that intermediaries can maintain the level of compensation they already receive. Consequently, intermediaries will perpetuate the very problem FIFA intend to resolve by behaving in a manner that completely negates the primary purpose of the regulations – opaquely.

The Shift of Onus

There will be a significant shift of responsibilities onto clubs and players following the coming into force of the 2015 Regulations. Whereas previously, agents were liable to sanctions in respect of breaches, the 2015 Regulations place the onus of due diligence onto clubs and players, requiring them to use “reasonable endeavours3 in the selection and engagement of intermediaries. Initially, this seems to be a sensible idea: players and clubs will now, in theory, be in control of the legality of their own transfers and / or negotiations and, as such, will suffer the consequences when laws are not respected. However, it remains to be seen how severe the definition of “reasonable endeavours” will be. It is important, at this juncture, to note that the 2015 Regulations are only minimum standards to be imposed, and national associations will have discretion to introduce more severe provisions4.

Deregulation

Article 11 of the 2015 Regulations provides that the current licensing system will be abandoned, and all existing licenses will lose validity with immediate effect. Effectively, anyone without a criminal record (including fraud) and who is not an ‘official’ of the game will be able to register as an intermediary5. FIFA’s attempt to control the epidemic of unlicensed agents is, evidently, to dispose of licenses entirely. This solution will only serve to resolve the problem superficially. Ostensibly, a significantly greater amount of transfers and negotiations will be conducted by registered intermediaries. In this regard, it is arguable that transparency will be achieved; national associations and FIFA should have greater clarity in the information of the involvement of parties in a transaction or negotiation. However, deregulation also provides a platform for unqualified and potentially insalubrious individuals to exert an influence over football activities. The threat posed to the integrity of the game will heighten, and a ‘wild west’ free-for-all could feasibly take place between now and the near future, as current representation contracts are all in jeopardy of termination from 1 April 2015.

Many agents are concerned that without an effective screening process, the floodgates are likely to open to individuals who seek only personal and financial gain. The worry is that the standards of care provided to those players represented by the new intermediaries will pale in comparison to the experienced and qualified agents. This would not be in the interests of player welfare, and presents a foreboding issue as to the future of player management in football.

Reception

Understandably, football agents around the world have not reacted with great optimism towards the 2015 Regulations. Mel Stein, Chairman of the AFA, has predicted that the new provisionswill reduce football to a circus”, predicting that “corruption will be rife6. In the same vein, Alvaro Torres, a Spanish football agent, has compared abandoning the licensing system to “prostituting the profession7.

The concept of deregulation has certainly proved to be a controversial and unpopular facet of the 2015 Regulations: Dr Giambattista Rossi, a Research Fellow in Sport Management at Birkbeck, University of London claims that the “lack of restrictions... will have detrimental effects in football”, explaining that the actions of unqualified agents “may compromise the integrity of the game8. Dr Serhat Yilmaz of the University of Westminster echoes this concern in asserting that without the controls of the exam, “the lack of competency may contribute to infringements by intermediaries, which then may lead to unfair sanctioning of either players or clubs9. The overarching issue with deregulation centres around the concern that harmful individuals will be capable of affecting the game to the extent that players and clubs will find themselves responsible for detrimental actions from intermediaries over whom they have no control. In the same vein, football itself may suffer should these actions impinge the integrity of the game.

The future

It remains to be seen whether some, if any, of the provisions will be implemented at all. The European Commission is still yet to respond to the AFA’s complaint regarding the legality of the commission cap, and it should be reiterated that the 2015 Regulations are merely minimum standards, upon which national associations (such as the FA) can impose their own regulations. By way of a solution, the AFA have been forthright in proposing a model of self-regulation. Nick De Marco, a barrister who helped draft the complaint to the European Commission, suggests that self-regulation is “likely to be in accordance with European law... and could help ameliorate some of the most worrying elements of FIFA’s deregulation10.

Conclusion

In this author’s opinion, the 2015 Regulations would seem to indicate that FIFA is underestimating the importance of good agents in a player’s career. The current regulatory framework is in need of reform: greater controls over the transfer of monies are essential to rid the game of underhand, illegal payments. Moreover, stringent measures governing agents acting for players and / or clubs in transfers and / or negotiations are needed to ensure that representatives are relevantly competent and qualified. However, blanket changes matched with policies of commission capping and deregulation are inadequate solutions. FIFA needs to take greater responsibility for failing to enforce its own regulations effectively and, as such, should reconsider the plans to begin the process of the extinction of the football agent.

 

 

Related Articles

About the Author

Max Eppel

Max Eppel

Max is a barrister specialising in sports, commercial and employment law practising as a Partner and Head of Sports Law at McFaddens LLP. Prior to this, Max ran his own international football agency with offices in California and London.

  • This email address is being protected from spambots. You need JavaScript enabled to view it.
Jacob Miller

Jacob Miller

Jacob is a trainee at McFaddens LLP, having graduated from the University of Bristol in 2013. Jacob has a lifelong passion for sport, and has started his training contract assisting in the Sports Law and Commercial Litigation departments.

  • This email address is being protected from spambots. You need JavaScript enabled to view it.

Leave a comment

Please login to leave a comment.

Official partners 

BASL
Soccerex Core Logo
SLA LOGO 1kpx
YRDA Logo2
SAC logo LawAccord

Copyright © LawInSport Limited 2010 - 2018. These pages contain general information only. Nothing in these pages constitutes legal advice. You should consult a suitably qualified lawyer on any specific legal problem or matter. The information provided here was accurate as of the day it was posted; however, the law may have changed since that date. This information is not intended to be, and should not be used as, a substitute for taking legal advice in any specific situation. LawInSport is not responsible for any actions taken or not taken on the basis of this information. Please refer to the full terms and conditions on our website.