A guide to the FA’s Regulations on Working With Intermediaries
Published 17 February 2015 By: Daniel Lowen
The implementation of FIFA’s Regulations on Working with Intermediaries1 (the “FIFA Regulations”) on 1 April 2015 signals the biggest transformation of player and club representation in the history of professional football.
The Football Association (“The FA”) has become the first national association worldwide to publish its supplemental regulations and, in this article, Dan Lowen (founder of www.footballintermediary.co.uk - a website dedicated to explaining the new regulatory regime) will examine the FA Regulations on Working with Intermediaries.2
The FIFA Regulations will bring an end to the system of licensed players’ agents that will have been in place for nearly 25 years.
FIFA first began regulating the activities of players’ agents in 1991, making modifications to the regulations in 2001 and 2008. At the 59th FIFA Congress in 2009 however, FIFA announced that an in-depth reform of the players’ agents system was necessary in order to address several shortfalls within the licensing system.3 Five years and an extensive consultation process later,4 a revised proposal was ratified by the FIFA Congress on 11 June 2014. The FIFA Regulations are set to come into force on 1 April 2015.
Gone will be the concept of the licensed football agent: those individuals who have passed a rigorous exam, taken out professional liability insurance and been issued with a five year licence by their national association. In its place will be a new concept: the “intermediary” – a status open to most, whether individuals or legal entities, without the need to study for and pass an exam and with no insurance necessary. Intermediaries will be free to represent players and clubs regardless of their experience or knowledge of football’s rules and regulations.
The provisions of the FIFA Regulations are beyond the remit of this article.5 In summary however, players and clubs will be free to choose whoever they deem fit and proper to represent them in relation to employment contracts and transfers. The chosen intermediary must register with the relevant national association and meet a set of minimum criteria, namely having an impeccable reputation, not being an ‘Official’ (as defined in the FIFA Statutes) and having no contractual relationship with leagues, associations, confederations or FIFA that could lead to a potential conflict of interest.6
National Associations’ supplemental rules
Whilst Article 1 of the FIFA Regulations requires associations to implement and enforce its provisions, they expressly reserve associations’ rights “to go beyond these minimum standards/requirements”.7
On 5 February 2015, The FA became the first national association to publish its own supplemental regulations, the FA Regulations on Working with Intermediaries (the “Regulations”).8 Other national associations will no doubt be considering The FA’s stance as they look to implement their own national rules.
At first glance, the Regulations appear to be based closely on the existing FA Football Agents Regulations9 (the “Agents Regulations”). Indeed, whilst a handful of provisions introduce mandatory rules from the FIFA Regulations,10 the new Regulations derive for the most part from the Agents Regulations they will supersede (on 1 April 2015).
This is a notable feature of The FA’s new system. Whilst FIFA points out that “only 25 to 30 per cent of all international transfers are conducted via licensed agents”,11 that is not the case in England (or certain other countries). The reality is that the largest European national associations (as well as certain others) have regulated agents’ activities fairly effectively, having spent many years putting in place systems in order to do so. It is therefore unsurprising that, in the face of significant mandatory changes imposed by FIFA, The FA has where possible sought to retain many of the principles enshrined in its Agents Regulations.
Upon closer inspection, it becomes apparent that The FA has in fact made subtle changes to certain rules transposed from the Agents Regulations. In some respects, it has sought to streamline the rules, whilst in others it has widened their scope or adapted them to reflect what The FA perceives to be the reality of football transactions.
The next section of this article provides a brief summary of the main points of the Regulations. It is not a comprehensive guide, but rather outlines the main concepts to inform the subsequent analysis.
Summary of the Regulations
There are several defined terms of note in Appendix I to the Regulations:
An “Intermediary” is any natural or legal person (as per the FIFA Regulations, companies can be Intermediaries) who carries out or seeks to carry out Intermediary Activity and has registered with The FA.
The definition of “Intermediary Activity” is extremely broad: “acting in any way and at any time, either directly or indirectly, for or on behalf of a Player or a Club in relation to any matter relating to a Transaction…”.
“Transaction” means “any negotiation or other related activity, including any communication relating or preparatory to the same, the intention or effect of which is to create, terminate or vary the terms of a player’s contract of employment with a Club, to facilitate or effect the registration of a player with a Club, or the transfer of the registration of a player from a club to a Club (whether on a temporary or permanent basis)…”.
Turning to the substantive regulations, one of the most significant question marks surrounding the Regulations was whether or not The FA would claim jurisdiction over intermediaries, particularly given FIFA’s devolution of responsibility for intermediaries to national associations. The introduction to the Regulations states that they are “binding on all Participants and all Intermediaries”, the implication being that Intermediaries do not fall within the definition of a ‘Participant’ in Rule A of The FA’s Rules of the Association (“The FA’s Rules”).12
However, The FA’s stance appears to be that Intermediaries will in fact be Participants. This author understands that the intention is that the definition of Participants in The FA’s Rules will be updated to include Intermediaries following The FA’s AGM in May 2015 and the introductory wording cited above is merely a stopgap; as such, Intermediaries will fall under The FA’s jurisdiction and are subject to all of The FA’s Rules (including, for example, the rules on betting), rogue Intermediaries can be sanctioned by The FA and disputes involving Intermediaries can be resolved before an FA arbitral tribunal under Rule K.
The introduction to the Regulations also expressly states that in the event of a conflict between it and the FIFA Regulations, the Regulations take precedence.
Regulation A – General Principles
Players and clubs may only use and pay Intermediaries who are registered with The FA and with whom they have signed a Representation Contract (as defined in the Regulations and discussed further below) in relation to Intermediary Activity. Natural and legal persons will be free to register with The FA from 1 April 2015 via an online system, which will also provide a portal for the submission of all relevant documentation (including the Intermediary Declaration required under the FIFA Regulations13).
Matters must not be arranged so as to conceal or misrepresent the reality and/or substance of any aspect of a Transaction – more on this later.
A key feature of the Regulations is that players are free to engage whoever they want to represent them – no party can make a Transaction subject to or dependent upon a player’s agreement to use a particular Intermediary.
Regulation B – Representation Contract
There is no longer a need for a player to be advised to seek independent legal advice prior to signing a Representation Contract (of course, few players ever actually did so). An Intermediary cannot carry out Intermediary Activity without first signing a Representation Contract with a player or club, which must be submitted to The FA via the online portal within 10 days. A Representation Contract must contain the Obligatory Terms of The FA’s Standard Representation Contract, which has yet to be made public but which will be significantly shorter than the current FA template for agents,14 and the parties will be free to agree such other terms as are consistent with the Regulations.15
As per the Agents Regulations, the Representation Contract must contain the entire agreement between the parties in relation to the Intermediary Activity. Accordingly, it will not be permissible to ‘parcel up’ contractual rights and obligations into numerous different agreements or collateral contracts. The rules regarding the assignment or subcontracting of Intermediary Activity are also broadly equivalent to the position under the Agents Regulations.
Whilst FIFA decided against imposing a maximum duration on representation contracts in the FIFA Regulations, The FA has retained the principle of a maximum duration from its Agents Regulations – under the Regulations, a Representation Contract with a player cannot exceed two years. That maximum duration does not however apply to Representation Contracts with clubs (though clubs would rarely wish to enter into a Representation Contract in excess of 2 years). It remains to be seen how The FA will treat an overseas intermediary’s representation contract with a player, which may extend beyond two years, when a player moves from an overseas club to England.
Regulation C – Remuneration
The remuneration provisions in the Regulations resemble closely the position under the Agents Regulations. It was mentioned above that certain provisions mirror the Agents Regulations but are adapted to reflect the reality of football transactions. A case in point is the acknowledgement in Regs. C1 and C2 that an Intermediary can be remunerated by the club or player for whom he acts either in accordance with the Representation Contract or, alternatively and as is often the case, the relevant paperwork submitted to The FA at the time of the Transaction.
Unsurprisingly, given the benefit in kind provisions under UK tax law,16 the ways in which a player can discharge his liability to his Intermediary in Reg. C2 mirror the provisions of G5 of the Agents Regulations ((i) paying directly, (ii) the club making deduction(s) in periodic instalments from the player’s net salary, or (iii) the club paying the Intermediary on the player’s behalf as a taxable benefit). As under the Agents Regulations, all payments by clubs to Intermediaries other than deductions from a player’s net salary must be made through The FA’s designated account.
Commission when acting for a player remains calculable on a player’s Basic Gross Income (as set out in the Player’s employment contract) and an Intermediary’s entitlement after expiry of the Representation Contract will continue for as long as the relevant employment contract remains in force. Intermediaries, like agents before them, will be prohibited from passing any remuneration directly relating to Intermediary Activity to any other person (other than Intermediaries subcontracted in accordance with the Regulations).
There are two provisions regarding remuneration that stem directly from the FIFA Regulations and which are arguably the most controversial aspects of the new Regulations. First, players or clubs are prohibited from making payments to an Intermediary if the player concerned is a minor (i.e. under 18). Secondly, the Regulations implement FIFA’s recommendation that players, clubs and Intermediaries may adopt a commission rate of 3% of the player’s Basic Gross Income for the entire duration of the relevant employment contract (or 3% of the transfer fee paid if the Intermediary is engaged to act for a club to conclude a transfer agreement) – described in the Regulations as “benchmarks”. These highly divisive provisions are discussed further below.
Regulation D – Disclosure and Publication
The FA’s ability to publish the names and registration numbers of all Intermediaries reflects the current position under the Agents Regulations, as does its ability to publish any disciplinary or other decision under the Regulations. The FA is also entitled to publish a list of every transaction in which an Intermediary has been involved and the total consolidated amount of all payments made by each club to Intermediaries (requirements of the FIFA Regulations).
Regulation E – Conflicts of Interest
The FA has permitted dual representation for many years and it is unsurprising that The FA has transposed the player consent procedure from its Agents Regulations into its new Regulations, with one notable difference: under the Agents Regulations, a pre-existing representation contract with a player was required before an agent could also act for the club. Under the new Regulations, a pre-existing Representation Contract with any party will allow the Intermediary to represent another party or parties in a Transaction, subject to obtaining the full written consent of all involved in the form prescribed by the FA from time to time (the procedure for gaining informed consent also applies where Connected Intermediaries wish to act for more than one party to a Transaction).
As with the Agents Regulations, an Intermediary cannot have an interest in a club (which under Reg. E4 means owning more than 5% or being in a position to exercise significant influence over the affairs of a club); likewise a player, club, club official or manager cannot have an interest in the business or affairs of an Intermediary or his/her organisation (owning more than 5% or being in a position to exercise significant influence over the affairs of an Intermediary)– the definition of “an interest” is in fact broader than under the Agents Regulations.
As expected, an Intermediary cannot have any interest in the registration right, transfer compensation or future transfer value of a player, a prohibition that is carried over from the Agents Regulations (as was inevitable given FIFA’s prohibition of third party ownership17).
Intermediaries, players, clubs, club officials and managers will also be subject to similar duties of disclosure regarding conflicts of interest as exist under the Agents Regulations. In essence, any agreement or arrangement, whether formal or informal, that exists between an Intermediary and a player, club, club official or manager must be disclosed to The FA and the written consent of all parties involved in a matter must be obtained if there is any actual or potential conflict of interest.
Regulation F – Breaches of the Regulations
In light of the fact that Intermediaries fall under the jurisdiction of The FA, any breach of the Regulations will amount to Misconduct under The FA’s Rules and will be dealt with by The FA Regulatory Commission.
Regulation G – Miscellaneous
Under the transitional provisions, existing representation contracts (signed before 1 April 2015) will remain valid and an Intermediary may conduct Intermediary Activity if they resubmit it within 10 days of registering with The FA.
Appendix II – Registration of Intermediaries
An applicant will be required to satisfy The FA that they have an impeccable reputation, by confirming in the online application process that they meet the requirements of The FA’s Test of Good Character and Reputation for Intermediaries. The test will be published by The FA by 1 April 2015 and is likely to be similar to the existing test of good character and reputation under the Agents Regulations. As per the FIFA Regulations, an intermediary is likely to be deemed to have an impeccable reputation if amongst other things “no criminal sentence has ever been imposed upon them for a financial or violent crime.”18 The requirements of the test are on-going, so Intermediaries will be required to notify The FA (within 10 working days) of any change in circumstances relating to the requirements of the test.
The registration lasts for 1 year and is renewable each year upon the payment of a fee. The Regulations expressly prevent a player or Official from registering as an Intermediary (the former is possible under the FIFA Regulations by virtue of players falling outside the definition of an Official).
In order to enter into a Representation Contract with a Minor, or with a club in respect of a Minor, an Intermediary must obtain The FA’s authorisation to deal with Minors. The FA requires a DBS Disclosure (formally CRB check) and, if The FA grants authorisation, it will remain valid for 3 years. Notably, only natural persons (not legal persons) can conduct any Intermediary Activity in relation to Minors. As per the Agents Regulations, an Intermediary cannot approach or contract with a player before 1 January of the year of his 16th birthday.
Appendix III – Legal persons
Only a natural person already registered as an Intermediary can register a legal person as an Intermediary and, importantly, Intermediary Activity on behalf of a legal person can only be carried out by natural persons registered as Intermediaries.
Changes from The FA Agents Regulations
The most obvious change brought about by the new system is the end of the examination procedure and five year licences. But there are other profound changes in the new system that may be less apparent. (To avoid duplication, the 3% recommended commission cap and the changes to the rules governing the representation of minors are discussed not in this section of this article, but in the section below entitled ‘Contentious issues’.)
The standard form Representation Contract under the Regulations will be considerably shorter (though parties will be free to agree more comprehensive terms) and there is no requirement for independent legal advice prior to signature.
Intermediaries vs Authorised Agents
Whereas under the Agents Regulations ‘Authorised Agent’ was an umbrella term, covering licensed agents, registered overseas agents, registered lawyers and registered close relations, there will no longer be a distinction between those classes of representatives. Anyone representing a player or club will need to register as an Intermediary and will be treated the same under the Regulations.
The concept of the ‘exempt solicitor’ is also absent from the Regulations – lawyers acting for players or clubs must be registered Intermediaries unless they are only providing ‘Permitted Legal Advice’ (the definition of which is the same as that which appears in Appendix 1 to the Agents Regulations).
Relatives fall outside of FIFA’s Agents Regulations and are prohibited from receiving remuneration under the FA Agents Regulations. Under the new Regulations, relatives will be entitled to remuneration for their representation services in the same way as any other Intermediary.
For the first time, companies may enter into Representation Contracts directly with players and clubs. Player representation agencies are likely to look closely at their representation arrangements in light of this possibility, though only natural persons registered as Intermediaries will be able to carry out Intermediary Activity on behalf of a company registered as an Intermediary.
The Agents Regulations require agents to respect the exclusivity of representation contracts and prohibit approaches to players and clubs under contract with other agents (save in limited circumstances). There are no such provisions in the new Regulations. The FA will, it seems, no longer police breaches of exclusivity. Instead, the author understands that if multiple Representation Contracts exist, which both/all purport to confer exclusivity on the Intermediaries, The FA will merely inform the parties of the issue and let them resolve it one way or another.
It may be that this leads to an increase in the number of disputes between Intermediaries, or between Intermediaries and their clients, as Intermediaries will no longer refrain from signing Representation Contracts with players for fear of breaching rules governing exclusivity. If a player or club enters into a Representation Contract with a second Intermediary in breach of an exclusive Representation Contract he/it has with a first Intermediary, the first may have a breach of contract claim against the player/club and, potentially, a claim against the second Intermediary for inducing the contractual breach.
As noted above, parties are required to not conceal or misrepresent the reality of any matters in relation to a Transaction (Reg. A3). This provision is borne out of Reg. C2 of the Agents Regulations, which applied in the context of dual representation and conflicts of interest. The FA has widened the application of this principle to the Regulations as a whole.
Interestingly, the ‘anti-shadowing’ provisions under the Agents Regulations (Regs. C9 – C11), which prevent an agent from acting for a club in circumstances where The FA deem him/her to actually be the player’s agent, are absent from the new Regulations. The FA will instead rely on the general ‘non-concealment’ principle to discourage Intermediaries from claiming to represent a party other than their actual client. It will be left to The FA to investigate cases where it suspects that the representation arrangements have been misrepresented – it remains to be seen how proactive The FA will be in this regard.
Dual / multiple representation and Connected Intermediaries
As noted above, the Regulations afford Intermediaries more freedom when seeking to represent more than one party to a Transaction and/or allowing the involvement of Connected Intermediaries in a Transaction. Furthermore, The FA will not actively police the parties’ compliance with the dual / multiple representation rules. Whereas under the Agents Regulations the requisite paperwork under the player consent procedure is required to be submitted to The FA, under the Regulations it will be left to the parties to ensure compliance with the Regulations.
Disclosure / publication
The FA has enhanced powers of publication, including the ability to publish a list of every Transaction in which an Intermediary has been involved.
Various aspects of the new system are more contentious than others. A few of those are discussed below.
3% recommended commission cap
The legality of the recommended commission cap is the subject of the Association of Football Agents’ (“AFA”) outstanding complaint to the European Commission. It remains to be seen whether the European Commission will find the recommended cap to amount to price-fixing and therefore an infringement of Art. 101(1) of the Treaty on the Functioning of the European Union 2008 (“TFEU”),19 or an abuse of a dominant position for the purposes of Art. 102 TFEU. It seems likely that if the AFA’s complaint were successful, The FA would simply strip the offending provisions out of its own Regulations. However, in electing to implement the 3% recommendation before the European Commission has resolved the complaint, The FA is potentially leaving its Regulations open to legal challenge.
Critics assert that whilst the 3% cap (or “benchmark”) is a recommendation and not mandatory, the likely practical effect is that some players and clubs will refuse to pay more than that level of commission,20 which is significantly below the 5-10% commission rates licensed agents tend to receive on average at present. In certain transfers, 3% would make the Intermediary a handsome sum. But paradoxically, it may be that those lucrative transfers are in fact the ones where Intermediaries receive higher percentages (often borne out of a club’s desire to secure the services of a sought-after player and willingness to therefore offer better terms than other clubs).
On the other hand, the less high-profile deals may see the parties refusing to pay the Intermediary more than the 3% recommendation, because they are able to do so (for example where a lower league club may know that the player has few, if any, other options and can therefore dictate the terms of the Intermediary’s remuneration). This could leave the Intermediary with an even smaller slice of what, in the lower profile deals, may be an already meagre pie, which may disincentivise some Intermediaries from wishing to act on such deals. This, in turn, could result in a drop in the quality of representation services provided.
The restriction on payments to Intermediaries in respect of minors is another contentious aspect of the new Regulations. By way of example, a 17 year old could sign a 3 year employment contract with a club on £5,000 per week, earning over £750,000 during the contract, and yet the Intermediary cannot be remunerated regardless of the part they played in securing the contract. It remains to be seen whether that restriction prevents payments being made after the player reaches the age of 18 if the relevant employment contract was signed when he was a minor. If payments can indeed be made following the player’s 18th birthday, the restriction becomes less objectionable.
Suitability of Intermediaries
A further issue, set against a background of public concern about corruption in football, is that the new system potentially opens the door to inappropriate persons becoming involved in player representation. The FA’s Test of Good Character and Reputation for Intermediaries is yet to be published, but fears that the self-certification of an Intermediary’s impeccable reputation will not sufficiently protect players from inappropriate or unscrupulous individuals are likely to remain.
The agents’ exam constituted a functioning barrier to entry and ensured, in FIFA’s own words, “the appropriate training and standard of players’ agents”.21 With the removal of that ‘filter’, there is a real risk that players may end up being represented by individuals or corporate entities that do not have the knowledge, experience or attributes to represent their clients to an acceptable, let alone optimal, standard.
Critics of the FIFA Regulations will no doubt point to the fact that the two most controversial provisions introduced by FIFA – the 3% recommended cap on commission and the restriction on payments in respect of minors – have been transposed directly into The FA’s Regulations. The outcome of the AFA’s complaint to the European Commission, and the effect that has on The FA’s stance on those most controversial provisions, is keenly awaited by all interested parties.
However, when one acknowledges that to a certain extent The FA’s hand was forced by the changes driven through by FIFA, The FA’s Regulations do appear to go some way towards allaying fears expressed about the new regulatory system (not least by imposing restrictions on those who can contract with minors and limiting the duration of such contracts).
It is interesting to note just how closely the Regulations resemble The FA’s Agents Regulations. In the author’s opinion, that is understandable. If a system akin to that administered by The FA under the Agents Regulations had been replicated and enforced throughout FIFA’s other 208 member associations, football’s world governing body may have been less determined to make sweeping changes to the regulatory landscape.
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Dan Lowen, Level Law
Dan is a sports lawyer who is recognised as a leading adviser in the football industry. He has over 15 years’ experience advising players and agents on all aspects of their careers. For advice on choosing an agent, or if a player, family member or agent has any questions arising out of this article, Dan’s contact details can be found at www.level.law