“Wild West” or “Brave New World”? The new FIFA and FA Intermediaries Regulations

On 1 April 2015 FIFA’s controversial new Regulations on Working with Intermediaries (the “Intermediaries Regulations”)¹ are due to come into effect.

For critics, on the one hand, the implementation date on April Fool’s Day reflects their ill-conceived nature. For them, the new regulations will usher in the “wild west”² with everyone and anyone being able to become involved in agents’ activities.

On the other hand, for FIFA, the regulations are necessary, since the current regulations, the Regulations Players' Agents (2008),³ have not worked; 70% of global transfers do not involve licensed agents, average commission payments are 25% of the value of player transfer deals and, as a result, the system has not been as transparent as it should have been with some players being exploited.⁴

In light of those polarised views, this article proposes to consider more closely (i) changes in the new regulations; (ii) legal challenges; and (iii) likely disputes in the post-1 April 2015 brave new world?

The Intermediaries Regulations in English Football

There has already been considerable review,⁵ comment⁶ and analysis⁷ on the Intermediaries Regulations. Without detracting from those excellent contributions, this article has the relative advantage of coming after the Football Association (the “FA”) set out the applicable tests and provided standard form representation contracts alongside its own Regulations on Working with Intermediaries (made to facilitate FIFA’s Intermediaries Regulations).⁸

Acting as an intermediary

The new system modifies the focus from who can be an intermediary to how they operate. There are no longer the same restrictions on entry into the profession: exams and insurance. Instead, intermediaries must register ‘in the form as may be prescribed from time to time’⁹ by the FA. From now on, the sole barriers to entry will be “impeccable reputation”¹⁰ and conflicts of interest.¹¹

On 20 March 2015, the FA added to its website its “test of good character and reputation”.¹² The headline point is that one cannot be an intermediary with an unspent conviction for violence, a financial or dishonesty offence, or be subject of professional or financial disqualifications, including bankruptcy. Those in the industry will have noted similarities with the FA’s Owners and Directors Test (in particular the reference to “Disqualifying Conditions”).¹³ Unlike that test, however, the intermediaries test does not impose an obligation to self-report.

Legal persons will now also be able to act as intermediaries as well as natural persons. This will do away with arguments in future about whether or not a contract was void or unenforceable because it was entered into by an agency rather than the individual agent.

Drafting and disclosure of representation contracts

FIFA states that a core part of their intention was to increase transparency in the profession.¹⁴ To that end, the FA has set out a system of disclosing representation contracts within 10 days of execution,¹⁵ and where there has been any variation, novation, et cetera. Further, existing agents will be required to lodge extant contracts by 1 April 2015, or within 10 days of registration of the intermediary. It is not clear what the penalties for failure will be (save for the catch-all threat of misconduct proceedings under the FA Rules¹⁶). Similarly, it remains unclear what steps the FA are taking to ensure the confidentiality of the contracts that are lodged with them. A search of the Information Commissioner’s Office register reveals that the FA is registered as a Data Controller¹⁷ under the Data Protection Act 1998.¹⁸ It is unclear to whom the content of lodged contracts will be available.

The representation contract will also have to incorporate certain obligatory terms in a standard representation contract, just published on the FA website.¹⁹

Remuneration

The change that has grabbed the most headlines in the Intermediaries Regulations is the following:

"…as a recommendation, players and clubs may adopt the following benchmarks: (a) the total amount of remuneration per transaction due to intermediaries who have been engaged to act on a player’s behalf should not exceed…3% of the player’s gross income for the entire duration of the relevant employment contract "²⁰

A similar “benchmark” applies to intermediaries acting for clubs in relation to a player contract or a transfer agreement.

Notably, though, the FA’s new standard form contract does not refer to the 3% at all.²¹

Understandably, agents and their lawyers have baulked at the suggestion that a cap may be imposed on their remuneration. Certainly, that is how it was originally perceived, and a summary of the Intermediaries Regulations, still available on the FIFA website,²² refers to this as a “limit”. It was also described as a “limit” in FIFA Circular 1417²³ in April 2014. Similarly, the French translation of the present Intermediaries Regulations²⁴ describes the 3% in more mandatory terms. Though prefaced by saying the benchmarks are a recommendation, the translation of “benchmark” is, in French, “critères” or criteria. Similarly, where in English FIFA’s Intermediaries Regulations state that remuneration “should not” exceed 3%, the French translation says “ne peut exceder” or cannot exceed 3%. In short, the true status of the 3% is unclear.

Minors

The Intermediaries Regulations also provide that "[p]layers and/or clubs that engage the services of an intermediary when negotiating an employment contract and/or a transfer agreement are prohibited from making any payments to such intermediary if the payer concerned is a minor".²⁵

What it does not say is that no representation contract between an intermediary and a minor or club may contain a payment provision if, at any point during the life of the contract, the player is under 18. This presents agents and their lawyers, in our view, with three options for ensuring that they are remunerated for their work with minors.

First, the payment provision could be triggered at a time when the player reaches 18. The FA’s Intermediaries Regulations provide that the maximum duration of a representation contract is 2 years.²⁶ Accordingly, unless the minor entered into the contract on or before the day of his sixteenth birthday, a maximum-length contract would subsist until he had reached the age of 18. The payments could then be made.

Second, section C4 of the FA’s Intermediaries Regulations provides that the payment of agreed instalments can take place after the expiry of the representation contract where the life of the player’s employment contract subsists beyond the representation contract. This will be of use where the representation contract is for a duration of less than 2 years and/or at the end of which the player is still under 18.

Third, agents could seek to explore other options for remuneration. The new system does not apply to arrangements that cover image rights, sponsorship deals etc. There is nothing in the new system to prevent agents and clubs entering into scouting contracts and the like.

It is also important to note that a legal person registering as an intermediary cannot apply to deal with minors;²⁷ there will be specific disclosure and barring restrictions on who can.²⁸