INTRODUCTION
Almost a year after their announcement, the new
FIFA Regulations on
working with Intermediaries (“FIFA Regulations”) came into force on 1 April 2015. Their purpose is
to create a more simple and transparent system of regulation of football agents.
It should be noted, however, that the new FIFA rules enable every national football
association to regulate their own system on players’ intermediaries, provided
they respect the compulsory minimum requirements adopted. In an industry that
is already cutthroat, it thus remains to be seen whether FIFA’s “deregulation”
indeed creates transparency, or whether it is a Pandora’s Box to future regulatory
confusion.
This blog post will provide an overview of the
new FIFA Regulations on working with intermediaries and especially its minimum
requirements. Provided that
national associations are encouraged to “draw up regulations that shall incorporate
the principles established in these provisions”[1], three different national regulations
have been taken as case-studies: the English FA Regulations, the Spanish RFEF
Regulations and the Brazilian CBF Regulations. After mapping their main points of
convergence and principal differences, the issues that could arise from these regulatory
differences shall be analyzed.
FIFA REGULATIONS ON WORKING WITH
INTERMEDIARIES
The objective of the new Regulations, as explained in a blog dated from 3 July 2014, is no longer
to regulate access to the activity of players’ agents (now ‘intermediaries’),
but to provide a framework for a better control of the activity itself by
establishing minimum standards and requirements and by installing a transparent
registration system.[2]
The most significant change is that FIFA introduced a provision recommending
to cap the maximum remuneration an intermediaries should derive from an
individual transfer. Article 7(3) holds that the maximum commission payable to
an intermediary should be 3% of the player’s basic gross income (regarding an
employment contract) or 3% of an eventual transfer fee (transfer agreement).
Additionally, FIFA prohibits any payment when the player concerned is a minor.
These two restrictions have triggered a complaint of the AFA (UK Association of
Football Agents) before the European Commission. Moreover, in Germany, the
company Rogon Sport Management challenged the new DFB regulations for
intermediaries and won a partial victory in a preliminary ruling of the
Regional Court of Frankfurt.[3] They
argue that these regulations could lead to an infringement of the competition
law.
This issue will be developed in a different blog post later this week.
Another minimum requirement set by FIFA is the obligation for all intermediaries
to submit an Intermediary Declaration (Annex 1 and 2 FIFA Regulations) to the
relevant association. This is due each time an individual or a company wishes
to be registered as an intermediary with a national association, and also in
order to register a transaction in which he acts on behalf of a player or a
club. By signing the Declaration, the intermediary is supposed to be bound to the
FIFA Regulations, in addition to the regulations of every confederation and
association to which he is contractually related.
Furthermore it is stipulated that legal persons can also be considered ‘intermediaries’
under the new Regulations.[4] However,
they do not provide any criteria defining how the national associations are
required to register the legal persons acting as intermediaries.
The FIFA Regulations prohibit any payment to
the intermediary in connection with a transfer compensation (other than the
commission established in the Article 7(3)), training compensation and solidarity
contributions. Moreover, in accordance with provision 7(4) of the FIFA
Regulations, no compensation can be based on the future transfer value of a
player.
Another compulsory prerequisite at stake is
that the intermediary ought to be registered with the association where he desires
to provide his services prior to initiate any activity (Article 3(1) FIFA
Regulations). As will be highlighted below, this provision has important
practical consequences. Finally, FIFA no longer claims jurisdiction over
disputes that could arise between intermediaries and their clients or other
intermediaries. It entrusted the national associations to deal with these kind
of disputes. The national associations shall establish proper dispute
resolution mechanisms to hear these disputes.
NATIONAL REGULATIONS ON WORKING
WITH INTERMEDIARIES
With the objective of analysing how the different associations have
implemented the new intermediaries’ system, three different national regulations
will be compared: The FA Regulations on Working with Intermediaries, the RFEF
(Spain) Regulations and the CBF (Brazil) Regulations.
1. The FA (England)
The FA was the first association to publish new provisions regulating intermediaries
(”FA Regulations”). It should be pointed out that the new FA
Regulations are to a large extent similar to the former FA Agents
Regulations. For example,
the assignment or subcontracting services or duties, the definition of
interest, the dual representation standards and the payment to the intermediary
by the club on the player’s behalf as a taxable benefit were already included
in the former FA Agents Regulations.
Nevertheless, it is surprising that the FA Regulations do not require
the intermediary to submit an Intermediary Declaration, even though it is a
mandatory requirement imposed by the FIFA regulations. As stated above, national
associations, such as the FA, are required to implement and enforce these minimum
standards/requirements. It is not excluded that FIFA, based on Article 10 FIFA
Regulations, will “take appropriate measures if the relevant principles are not
complied with”.
The FA prescribes that all intermediaries are to undertake the so-called
‘Test of Good
Character and Reputation for Intermediaries’. By undertaking this ‘Test’, the intermediary
is asked to demonstrate his impeccable reputation and declares that he has not
been convicted for any offence related to his services as an intermediary.
The individual who wishes to register himself as intermediary with the
FA will have to pay a registration fee of £500 (around 690 €) for the first registration. However, this fee is
waived to those who were already ‘FA Registered Agents’ on 31 March 2015. Instead,
in order to remain registered as an intermediary, an annual renewal fee of £250
(around 345 €) will de be due.
Additionally, if the intermediary wishes to act on behalf of minors, he
must obtain a specific authorisation from the FA. He will need to provide the
FA with the ‘Disclosure and
Barring Service check’
(CRB check), which enables in
the UK to make better informed recruitment decisions by identifying candidates
who may be unsuitable for certain work, especially involving children, or an equivalent for non-English intermediaries.
Moreover, regulation B8 FA Regulations prohibits any approach to, or enter into
an agreement with, a player before the start of the calendar year in which he
turns 16.
Out of the three national associations analysed, the FA is the only
association that has provisions regarding the existing representation contracts
lodged with the FA before 1 April 2015. These contracts have to be resubmitted to
the FA within 10 days of the intermediary registering with the FA.
For the purpose of the representation contracts between a player and an
intermediary the maximum length will be two
years (regulation B10).
With respect to legal persons, the FA Regulations impose the obligation
to register the company/partnership by an individual already registered as an
intermediary. Moreover, any individual carrying out intermediary activities on
behalf of a legal person must be registered as well.[5]
Lastly, the FA adopted the same wording as FIFA in relation to the 3%
recommendation (C11 FA Regulations). However, the English football association
also published a statement (‘Intermediaries
Guidance Notes’) indicating
that this ‘recommendation’ is non-binding and that clubs and players are free to remunerate intermediaries
as they wish. It is clear that
this provision could generate doubts regarding the amount of the compensation that
the intermediary is entitled to. In fact, the 3% recommendation is
significantly lower than the 5-10% commission rates that licensed agents tended
to receive[6]. However,
with this statement, the FA is not precluding an intermediary and his client to
agree on a percentage higher than 3%.
2. RFEF (Spain)
As far as the RFEF (Spanish association) Regulations on working with
Intermediaries (“RFEF Regulations”) are concerned, they are the most in line
with the FIFA Regulations as compared to the FA and CBF Regulations. The
Intermediary Declarations are attached as Annex 1 and 2 at the end of the
Regulations. The registration fee for
the first registration as an intermediary in Spain is 861 €. Registration has
to be renewed on a yearly basis. However, it is yet unknown what the exact
costs will be for renewing the registration. Similar to the FA’s ‘Test of Good
Character and Reputation’, the RFEF provides a ‘Code of Ethics’ (Annex 3),
which has to be signed by the applicant. Furthermore, the maximum length of a
representation contract between a player or a club and an intermediary
is two years.[7]
Although the maximum length of contracts in England is also two years, it
should be kept in mind that the FA Regulations only refer to contracts between
intermediaries and players, not between intermediaries and clubs.
The most controversial aspect of the Spanish Regulations is the way that
the Registration Procedure (Article 4) is designed. The steps for becoming a
RFEF Intermediary are summarized as follows:
The
potential intermediary has to provide a written request addressed to the RFEF
General Secretariat (“Secretaría General”).
After the
application is declared admissible, the RFEF will grant the individual the
status of “Applicant”. Subsequently, the RFEF will convoke the applicant for an
interview and decides whether the Applicant is ‘suitable to advice’ clients on
the football market.
If the outcome
of the interview is positive, the Applicant must provide the following
documents: ID, VAT number (for legal persons), two pictures, CV, Intermediary
Declaration, the payment of the Registration Fee, return the former agent
license (if any) and the Code of Ethics.
Another interesting point is that the Spanish Regulations do not provide
any information on the intermediary’s remuneration. Bearing in mind that FIFA
recommends the remuneration to be 3%, it will be interesting to see the
consequences of the RFEF’s decision to disregard this recommendation.
This could be understood as an implicit challenge to the ‘3% recommendation’.
In practice, this omission has similar consequences than the solution
adopted by the English FA. In short, FIFA’s recommendation is treated as a soft
advise rather than a binding legal standard.
3. CBF (Brazil)
The CBF (Brazilian association) Regulations on Working with
Intermediaries (“CBF Regulations”), were approved on 24 April 2015. In order to
be registered as an intermediary, the individual must provide the Intermediary
Declaration attached in Annexes 1 and 2 to the Regulations. The registration fee
has not been published yet. The applicant should also deliver a declaration
stating that he has neither conflicts of interest nor a criminal record. Moreover,
the potential CBF intermediary is required to take out a professional liability
insurance for the amount of 200,000 ‘reais’
(around 60,000 €). Thus, the CBF, taking advantage of its right to ‘go beyond’
the minimum requirements imposed by FIFA, has introduced a feature of the
former Agents Regulations that the new FIFA Regulations had abandoned, i.e. the
professional liability insurance.[8]
Following the line of the FA and the RFEF, the Representation Contract
shall not last more than “24 months” (Article 11(3)). Given that the Regulations
do not state whether it refers to contracts with players or clubs, it can be inferred
that all parties are subject to this restriction. On the other hand, the CBF prohibits
in article 11(2) to extend the Representation Contract tacitly, a renewal in
writing is necessary.
The remuneration of
the intermediary is regulated in the same way as in the FIFA Regulations,
except for one detail concerning the transfer fee: in Brazil, the remuneration,
which should not exceed 3%, amount must be calculated on the basis of the “possible basic gross income for the entire duration of the
relevant employment contract” (article 19.III), instead of a share of the transfer
fee as envisaged by the FIFA, RFEF or FA Regulations.
Finally, Article 4 expands the scope of application of
these regulations to ‘international activities’, specifically “operations
regarding the negotiation of an employment contract or players’ transfer which have
effect in a different national association”. By means of this Article, an
operation which takes place out of the CBF jurisdiction has to be registered by
the ‘CBF Intermediary’ with the CBF. As a consequence, the CBF Intermediary
must register the operation with two federations: first, the national
association where the operation takes place, and second, the CBF, where the
only connection is the intermediary.
Table providing an overview of
the main requirements stipulated by the FIFA, FA, RFEF and CBF Regulations
|
|
FIFA
|
FA
|
RFEF
|
CBF
|
|
Intermediary Declaration
|
Yes
|
No
|
Yes
|
Yes
|
|
Test of Good Character (or similar)
|
No
|
Yes
Test of Good
Character and Reputation for Intermediaries (FA form)
|
Yes
Code of ethics
(Annex 3)
|
No
|
|
Registration Fee
|
No
|
Yes
-£500 (690 €)
-£250 (345 €): the following renewals
|
Yes
-861 €: 1st year
-Could
change the following years
|
-unknown-
|
|
Interview and other additional documents
|
No
|
Yes
‘Declarations,
Acknowledgments and Consents’ Form
|
Yes
Written request,
Interview, 2 photos, CV.
|
Yes
Criminal record,
copy professional liability insurance.
|
|
Maximum years Representation Contract with
Player
|
No
|
Yes
2 years
|
Yes
2 years
|
Yes
2 years
|
|
3% remuneration recommendation
|
Yes
|
Yes
|
No
|
Yes, but on the future wage of the player
|
CONCLUSION
The mandatory registration requirement for intermediaries with the
relevant national association, as stipulated by the FIFA Regulations, the FA
Regulations, the RFEF regulations and the CBF Regulations, leave room for a
wealth of legal uncertainties that will need to be clarified by football’s
governing bodies and the various courts (and also the EU Commission) called to
pronounce themselves on those regulations. Specifically, should an intermediary register himself
with every single association where he is supposed to act on behalf of his clients?
What would happen if on 31 August (summer transfer window deadline) a Spanish club
calls him to sign one of his players and he is not registered in Spain as an
intermediary?
Furthermore, every association has a registration fee to satisfy prior
to the registration of around 500 €. Taking into account the international
dimension of football and its transfer market, it could well be necessary for
an intermediary to register himself with a dozen of associations simply to
carry out his profession effectively. As a result, he would have to spend
roughly 6.000 € in registration fees on a yearly basis.
Subsequently, this could lead to an increase of the number of
corporations, which provide intermediary services. Indeed, the recourse to a
transnational agency employing a number of intermediaries registered with
different national associations would be a very efficient way to tackle this problem.
Thus, at medium long-term, at least at the international level, the new system
will probably not generate the chaos that some authors are predicting. In fact,
rather than opening the market to everyone, these requirements could well be a barrier
of entry for many intermediaries and might trigger a consolidation of the
market in a smaller number of bigger players. This has bad sides, less
competition, and good sides, more sophisticated players more likely to provide
quality services and to care about their long-term reputation. In short, we
predict that only the main ‘cowboys’ in the ‘wild west’ will be able to play by the new rules of the
game for football intermediaries.
[1] Nick de Marco, “The new FA Intermediaries Regulations
& disputes likely to arise”, available at lawinsport.com, 31 March 2015.
[2] Daniel Lowen, ‘A Guide To The FA’s Regulations on
Working with Intermediaries’ www.lawinsport.com, 17 February 2015.
[3] Handelsblatt, “Gericht
gibt Spielervermittler teils recht”, 30 April 2015.
[4] See FIFA Regulations
on Working with intermediaries: Definition of an intermediary, page 4
[5] Appendix II FA Regulations
[6] UEFA ‘Club Licensing
Benchmarking Report 2012’, page 54.
http://www.uefa.org/MultimediaFiles/Download/Tech/uefaorg/General/02/09/18/26/2091826_DOWNLOAD.pdf
[7] Article 8(4) RFEF Regulations
[8] Article 5(e) CBF Regulations