Will the FIFA Football Agent Regulations reform the role of the football agent for the better?

Posted: 01/03/2023

The first stage of the FIFA Football Agent Regulations 2022 came into force on 9 January 2023. The regulations will ‘govern the occupation of football agents’ and represent a wide-ranging reform to the way in which agents will work in football.

When fully implemented in October 2023, the most significant changes will be the re-introduction of a licensing system for football agents and the imposition of a cap on the commission that can be charged by agents. These regulations will change the way in which agents work with both players and clubs.

This article will set out the main changes being made and what agents and players need to think about.

Background

Prior to 2015, football agents were regulated by FIFA, which required that all agents should take examinations and be licensed by the local football associations. Those requirements were scrapped by FIFA in 2015 which felt that it lacked the resources to properly regulate the sector. Agents were re-branded as intermediaries and the new light-touch regulation in the FIFA Intermediary Regulations came into force on 1 April 2015.

It is now recognised by FIFA that this light-touch approach to regulation failed, and the new regulations represent a fundamental change in FIFA’s approach to agents.

The new regulations were approved at the FIFA Council in December 2022. They are designed to promote contractual stability and ensure that the conduct of football agents is consistent with the core objectives of the football transfer system. In particular, the regulations are intended to:

• raise and set minimum professional standards for football agents;
• provide for ‘fair and reasonable service fees’;
• limit conflicts of interest; and
• prevent the abuse of players.

Most of the requirements in the regulations will apply from 1 October 2023, but some of the training requirements came into force on 9 January 2023. The 2022 regulations can be found here.

New licensing requirements

The regulations impose an obligation on agents to pass an exam and obtain a licence to represent players or coaches. This obligation, which became law on 9 January 2023, is a re-introduction of the scheme which was removed by the 2015 regulations, so those with an earlier licence should not need to retake the examinations.

A licensed agent will be able to operate on a worldwide basis. There will be a transition period after the introduction of the regulations in January 2023, before agents become unable to operate without the licence. The requirement to use an agent with a licence comes into force from 1 October 2023.

Agents must satisfy the licensing authority as to their suitability to act as an agent, and there are strict eligibility criteria set out in the regulations. An agent’s criminal record, disqualifications, previous conduct in respect of professional and ethical rules, conflicts of interest and any financial difficulties (both professional and personal) will be scrutinised. An agent’s relationship with betting companies will also be reviewed before a licence is issued.

Conflicts of interest and minors

From October 2023, agents will not be allowed to act for all three parties (buying club, selling club and player) in a transaction as it is thought that this could give rise to conflicts of interest. Agents will still be able to act for both the player and the buying club in a transaction. The requirement on separate representation can no longer be avoided by getting two agents from the same agency working on different sides of the deal.

There are new rules seeking to protect minors, and agents will be prohibited from approaching a minor any earlier than six months before the child can sign a professional contract. Agents will however be able to earn commission for professional players under the age of 18, which is not currently permitted.

There will be a ’continuing professional development’ requirement for agents who wish to represent minors. Breach of the rules relating to minors is likely to be taken seriously by regulators and can result in an agent being fined and suspended for up to two years.

Cap on commission

There is a concern from some in the football industry that money is going ‘out of the game’ from clubs and professionals to agents, and the regulations set out that there will be limits on the commission payments that agents can receive from the transfer of players and from the negotiation of playing contracts. This decision is highly controversial (particularly with agents), and it is understood that it is subject to legal challenges on numerous grounds.

As things stand, however, the caps will be:

In respect of individual remuneration:

• For the first US$200,000 per annum earned:
  • 3% of the player/coach’s gross salary when the agent represents the player/coach or the buyer only; or
  • 6% of the player/coach’s gross salary when the agent represents both the player/coach and the buyer.
• Beyond the initial US$200,000 per annum earned:
  • 5% of the player/coach’s gross salary; or
  • 10% of the player/coach’s gross salary when representing both parties.
• When acting for the selling club, the agent’s commission will be capped at 10% of the transfer value.

Other changes

• Representation agreements between agent and professional will need to be sent to FIFA and payments effected via the FIFA Clearing House.
• Players earning more than US$200,000 must pay their agent directly. Current practice is that clubs often pay agents on behalf of their players, and it is thought that the personal act of paying agents may cause players to pay more attention to the amount of commission being paid.
• It is a standard clause in many agency contracts that players must pay commission to their agent even if they negotiate a contract themselves. However, the regulations declare that clauses which seek to either restrict the ability for an individual to choose not to use an agent, or, which penalise an individual if they do this, are null and void.
• There is also a clause for either player or agent to terminate the representation agreement for ‘just cause’. This is defined as ‘when a party can no longer reasonably be expected, according to the principle of good faith, to continue the contractual relationship’.
• FIFA will introduce a new dispute resolution forum specifically designed for international disputes involving agents.

Potential issues with the regulations

It is a fact that most player transfers and contract negotiations do not generate substantial revenue for agents. With the cap on commission set at such a low level, this could mean that players on lower salaries could see a reduced service from their agent so that the agent can act for many clients at the same time, in order to maintain current earnings.

The restriction on acting for all three parties could, perversely, result in more being paid to agents overall, as at least one more agent may need to be engaged.

As things stand, clubs typically pay a player’s share of their agent’s fee on behalf of the player as a taxable benefit, but this arrangement will now only be permitted for those earning below US$200,000. The requirement that the client pays the agent is intended to increase transparency but risks the client demanding more remuneration to pay for the agent’s fees, as this will be a new direct cost to many players.

The wording of the regulations is not entirely clear in relation to when a player may negotiate a contract without using his agents. They purport to render null and void clauses which ‘penalise’ an individual who chooses to negotiate a contract without the involvement of their agent.

A potential issue arises where a player concludes the terms of a deal that their agent has broadly set up. The agent may have made the introduction to the club and suggested general headline terms that would be acceptable to the player, only for the player to then decide they can conclude the specific terms themselves without using the agent. As things stand, there is no clarity on whether an agent is entitled to commission in these circumstances.

Similarly, termination for ‘just cause’ is likely to lead to litigation on what is meant by the term ‘just cause’ given its vague definition. There is already significant CAS and FIFA jurisprudence concerning the interpretation of ‘just cause’ in the context of Article 14 of the Regulations on the Status and Transfer of Players, and disputes before the new agent’s forum are expected.

Practical steps for agents, players, and coaches

It remains to be seen what will happen once the regulations fully come into force given some of the issues raised and the ongoing challenges by agent associations. However, it is advisable for those working in football to review agency contracts to ensure compliance with the regulations well in advance of October 2023.

In addition, anyone intending to operate as an agent who was not previously registered with their local association should make arrangements to take the necessary exams. There are specific windows in which an agent can even apply to sit the licensing exam, with only two exam dates provided currently for 2023. Accordingly, agents must book their exam as soon as possible to continue to act as an agent after the full regulations kick in from October 2023.

It should be noted that licences will only be given to people rather than a corporate agency. Therefore, every agent working at the agency would need to have their own individual licence.

If you have any questions from the issues raised by this article, please get in touch with our sports sector group.

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