* Written by Sumedh Bhargav Niyogi.
Introduction
Top-tier European clubs have now transcended the realms of simply being local teams that represent their city or region but are now economic giants with fans from around the world. Vast amounts of money are circulated in the sport, which entails the willingness of clubs to outlay millions of Pounds on transfer fees to remain competitive and relevant. The numerous factors involved in a football transfer are the fees, the willingness of the player to move away and accept a new contract, and whether the process abides by the rules and regulations of FIFA and the regional football federation. This calls for the services of an agent or intermediary, as FIFA refers to them. These are people who represent players and, in some cases, clubs when it comes to various legal and professional matters. An agent will look to safeguard their client’s interests and find and negotiate deals for them, such as transfers and endorsements. Agents can be said to ensure that “the supply and demand for labour within football are met” and help players focus on football while dealing with the ‘off-the-field’ issues. [1]
This article will provide insight into the influence agents wield in the sport and what relevant governing bodies are doing to help curb this issue.
The Advent of Agency and Relevant Case Law
The concept of agency in football has existed since the very conception of professionalism of the sport in the early 1800s.[2] Along with the increase in popularity and commercialization of the sport, a crucial factor for agents' increasing use and influence was the landmark judgement of Union Royale Belge des Sociétés de Football Association ASBL v Jean-Marc Bosman[3], also known as the Bosman Ruling. The case had monumental effects as there was a change in the rules of rosters regarding the number of foreign nationals that were allowed. This meant that clubs could now field more EU nationals in their team, with no restrictions being applied to them. Clubs were willing to invest more in European talent. Clubs were more willing to conduct business on a much larger scale in the transfer market. ‘Global internationalization’ of the sport caused clubs around Europe to be more active in the market, which acted as a prime area of exploitation for agents to thrive. [4] This called for agents to have more power in the market.
The Bosman ruling also changed the functioning of football contracts. Before the ruling, clubs had more arbitrary power and could decide a player’s future even after their contract had expired. They could demand fees from buying clubs for players whose contracts had expired. These players were not allowed to move after the end of their contracts and were forced to be at the mercy of their previous clubs. The Bosman ruling ensured that players now had the right to move on for free after the expiration of their contract with their previous club. Clubs were free to negotiate a new contract with the player. Players could now negotiate with other clubs upon the last six months of their existing contract and could walk away for free at the end of that time limit. Agents could help players gain favourable contracts, which caused the need for the profession and its influence to grow.
Three other cases are fundamental to understand when dealing with the topic of the agency. Walrave and Koch[5] or Walrave was a case that provided the ruling that sport is subject to the jurisdiction of EU law only in matters regarding the economic activity. It provided the rule of “sporting exception” in EU law, ensuring that non-economic matters and “those aspects carrying economic effects but motivated by purely sporting interest”, fell outside the jurisdiction of EU laws. The next pertinent case of note is Deliège v Ligue francophone de Judo et disciplines Associeés Asb[6] or Deliège. This case provided the rule that selection criteria, amongst other certain sporting rules, cannot be deemed to be violating the EU laws of free movement of workers as they are “inherent in the conduct of an international high-level sports event.”[7]
The case of David Meca-Medina and Igor Majcen v Commission[8] or Meca-Medina completely went against the Walrave ruling when it said that simply because a rule is said to be sporting in nature, it cannot remove the scope of EU law on the person in question who is engaging in the activity, which was, in this case, competition law. The three cases come together to provide guidelines to determine whether the matter of regulation of agents comes within the purview of EU law, mainly under free movement or competition law. The first question is to determine the presence of economic activity, which is clear from the enormous transfer fees and commissions involved in the game that intermediaries deal with during employment. The second is to determine the sporting objectives of the contested rule. The third question is for the governing body to determine whether the issues relating to free movement or competition are so because of the inherent nature of trying to achieve their goals and not something unnatural. The last question is to determine whether the contested rule correlates to the goals needing to be reached.
Governance of the profession
After discussing the influence of super-agents on the game, it is essential to discuss how to make sure that the people who follow the profession are kept in check. It is crucial to ensure that these situations are strictly governed and kept under control to ensure that the practice is kept ethical and curb the amount of power these agents hold on the game. FIFA’s first attempt to impose regulations on intermediaries came in 1991 and 1994 with the introduction of the Player’s Agents regulation or PAR, followed by the 2001 and 2008 PAR. The 1994 PAR mandated that licencing was a must for agents issued by respective national football associations. To receive such a license, one was to go through an interview to gauge their understanding of the sport and the laws governing it. They were also required to match certain criteria, such as not having a criminal record and having to deposit a bank guarantee of 200,000 Swiss Francs (CHF). [9]
The 1994 PAR were a contentious topic which was contested by many, with the most significant being the complaint from French agent Laurent Piau[10], who highlighted three significant issues, stating that the need for licenses hindered access to the market, that the rules would cause discrimination between citizens of member states and that there were no legal remedies against decisions listed in the regulations. He contended that the 1994 PAR was in direct contrast to Article 56[11] of the Treaty on the Functioning of the European Union (TFEU), which focused on the freedom to provide service across the union. [12]
Article 165[13] of the TFEU talks about the sport along with education. The second paragraph, 4, focuses on promoting fairness and openness in sports and protecting athletes' physical and moral integrity. This can be directly linked to the intermediary issue. However, it is pertinent to focus on the wording of the article as in the 4th paragraph; it specifically states that it can take incentive measures, but it does not give the European Parliament and Council the power to harmonise or standardise the laws and regulations of Member States, further stating that these bodies can only provide non-binding recommendations to the member states and their associations. This means that while this Article is relevant to football agents, the Council cannot act as they do not have the jurisdiction to do so under this specific statute.
On 29th March 2007, a resolution[14] was passed by the European Parliament emphasising the need for the commission to assist UEFA in the regulation of agents, be it through enforcing stricter standards and criteria, deals to be made in a much more transparent manner, contracts to be harmonised to an extent and a more effective form of licensing for agents. [15]
Some of the issues with the regulations established in 2008 were that even though there existed a provision for the need for licensing, FIFA claimed that there was “inefficient licensing of players’ agents, resulting in the conclusion of many international transfers without the use of licensed agents.”[16] Transfers that were conducted through licensed agents were also not verifiable or transparent. [17]
On 17th June 2010, The European Parliament passed another resolution dealing with the issue of sports intermediaries. This resolution made it very clear in its wording that the problem would not be resolved by removing the need for Agents to be licensed by FIFA without providing an alternate solution to take its place to ensure adequate governance. It emphasized the fact that “strict standards and examination criteria before anyone could operate as a player’s agent”[18] would be required, along with transparency in dealings, more regulation in the transfers of minors and prohibition of conflicts of interest amongst others, mirroring the spirit of the resolution of 2007. [19]
FIFA then established a new set of guidelines in 2015, which referred to agents as intermediaries who no longer needed to have a license to practice but were necessary to be registered with the domestic football associations whose clubs they negotiated with. FIFA also recommended a cap on how much fees these intermediaries were entitled to collect as remuneration but did not enforce any such rule. [20] The set of rules introduced in 2015 had its own set of problems as this was the age in which the concept of super-agents came into its own, where agents had untold amounts of influence, as mentioned before. Gregory Ioannidis, in his article which speaks about football intermediaries and self-regulation, does extensive research on FIFA’s PAR introduced in 2015. [21] The paper showcases data that includes responses to a questionnaire from various football agents. This is invaluable information as this area of sports law was severely unregulated due to the nature of FIFA's rules in 2015. The questions included asking agents whether they understood FIFA's regulations on intermediaries, whether they had some knowledge about contract/employment law and other such questions about the regulations of FIFA. The data collected displayed disturbing results as it pointed out three factors:
The space was heavily unregulated and caused unfair, unethical, and unscrupulous practices to run strife. This, in turn, had a risk to destroy the reputations of intermediaries, players, and other stakeholders in the sport.
That the sport was increasingly only looked upon as a commodity and nothing more. Due to the lack of caps for monetary rewards, there is a diminishing of self-regulation and a drop in the sport's reputation as a whole. Involvement in the sport was only seen as a way to make money.
Lastly, the lack of appropriate punishment or sanction against perpetrators weakens the cause for autonomy and self-regulation, calling for a regulatory body like FIFA to establish stricter rules and to keep closer surveillance on the environment to curb the practices that agents were following at the time. [22]
This source helps provide a solid foundation for the claim that the rules needed to be rewritten to help ensure that football agents engaged in fair and ethical practices and maintained similar environments.
Articles 152-155 of the TFEU[23] speak about the need for social dialogue and the council has reiterated that this is a way to help resolve labour issues regarding sports. [24] a Social Dialogue Committee for European Professional Football has established in 2008 and in 2012 it concluded its first agreement on minimum conditions in player contracts. [25] In a meeting of the EU sectoral social dialogue committee for professional football in November 2017, where UEFA acts as an associate party and as the chair, with FIFPro Division Europe acting as the representative of the employees or athletes while the European Club Association (ECA) and European Professional Football Leagues (EPFL) acting as the representatives for the employers. The meeting focused on the rules introduced in 2015, highlighting many of the issues such as the implementation process, lack of improvement of transparency etc., while also suggesting reforms that could help with the issues faced by football with regards to agents, including a fee cap on gents, enhanced transparency, protection of minors and sanctions. [26]
Changes desperately needed to be made to the 2015 PAR, and that was precisely what is being done by FIFA today with the draft rules being introduced in 2020. These new regulations will help control agents and limit their activities to a reasonable scale rather than the obscene standards being upheld by the market in recent times being spearheaded by super agents like Mino Raiola and Jorge Mendes. Some of the new regulations will ensure that positive changes are afoot. The 2020 Draft PAR focuses on maintaining a more transparent approach to finance and professionalism. It talks about establishing a mandatory licensing system that can be gotten only by passing an exam, a feature from older regulations introduced by FIFA. It calls for maintaining high professional standards for the profession of intermediation and enforcing the reduction of business and transfers conducted through the conflict of interest, which can be explained through Mendes’ relationship with Wolverhampton Wanderers, where the owner of the club owns shares in Mendes’ agency firm, and this means that he helps the club in securing transfers with his clientele, almost conducting a deal where he represents all the parties involved. [27] The reforms also call for the introduction of two rules that will change the scape of the profession forever,
an effective dispute resolution system which is used to help solve issues between agents, players, and clubs. Although similar ideas have been put into practice in the past, FIFA aims to ensure that the new dispute resolution system is ‘efficient’ in nature. This may entail the establishment of separate tribunals to deal with these issues.
a proposed strictly enforced fee cap for agents. This would entail that: “
an agent acting for selling club – 10% of transfer fee;
an agent acting for buying club – 3% of the player's salary; and
an agent acting for the player – 3% of the player's salary. Under the single permissible scenario of dual representation, the cap on commissions will be set at 6% of the player's salary.”[28]
The fee cap will be competed against by the Association of Football Agents, who noted that these regulations cannot be accepted as it restricts their freedom to conduct business and that the regulations are “unlawful and anti-competitive.”. As mentioned before, Super Agents such as Mino Raiola, Jonathan Barnett, and Jorge Mendes have all threatened legal actions against such regulation. [29]
Conclusion
It is pertinent to note that there is an emerging trade amongst players to stop using the services of an agent when negotiating contracts, instead choosing to hire lawyers and negotiate with the clubs directly by themselves. A recent example of this phenomenon is Kevin De Bruyne’s contract extension in 2021 with Manchester City Football Club, where the player did not use an agent but rather hired independent lawyers to help draft and look over the new contract and hired data analysts to help determine his value to the team to understand his bargaining position when it came to his demands to sign a new contract. Although such a trend is emerging, there is a great need for the governance of agents as a vast majority of players and clubs still employ their services.
With these draft rules being implemented in 2022, these reforms would help ensure that the integrity of the sport would remain intact and would diminish the power that agents have when it comes to the sport and the transfer market. Agents play a significant role in the sport today. Still, all possible steps must be taken to ensure that they ethically conduct business to ensure that the name and integrity of the sport are not compromised. Football must be protected, and these amendments to the rules for intermediaries are a step in the right direction.
*The author is a law scholar from Jindal Global Law School, OP Jindal Global University, India.
(The image used here is for representative purposes only)
References:
[1] Richard Parrish and others, ‘Promoting and Supporting Good Governance in the European Football Agents Industry' (2019) <http://umu.diva-portal.org/smash/get/diva2:1392724/FULLTEXT01.pdf> accessed 19 November 2021.
[2] William Bull and Michael Faure, 'Agents In The Sporting Field: A Law And Economics Perspective' [2021] The International Sports Law Journal <https://deliverypdf.ssrn.com/delivery.php?ID=522065105106082109101005127103069096057025068011086037123103091023123117112127007028119028004057029100116100020066068117117002111035004047048068083069113020097104112059047066098101089125002029104104017083029098091103102070088031123097013120116100002115&EXT=pdf&INDEX=TRUE> accessed 19 November 2021.
[3] Union Royale Belge des Sociétés de Football Association ASBL v Jean-Marc Bosman (Case C-415/93) [1995] < https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:61993CJ0415&rid=1>
[4] Supra 2
[5] Case 36/74, Walrave and Koch [1974] ECR 1405 < https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:61974CJ0036&from=EN>
[6] Joined cases C-51/96 and C-191/97, Deliège v Ligue francophone de Judo et disciplines Associeés Asb [2000] ECR I-2549 < https://curia.europa.eu/juris/showPdf.jsf?docid=100863&doclang=EN>
[7] Supra 1
[8] Case C-519/04 P, David Meca-Medina and Igor Majcen v Commission [2006] < https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:62004CJ0519&from=en>
[9] Supra 1
[10] Case T-193/02 Laurent Piau vs. Commission of the European Commission supported by FIFA, Jur EG [2005] < https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:62002TJ0193&from=GA>
[11] Consolidated versions of the Treaty on European Union and the Treaty on the Functioning of the European Union (TFEU) [2016] art 56
[12] Supra 1
[13] Consolidated versions of the Treaty on European Union and the Treaty on the Functioning of the European Union (TFEU) [2016] art 165
[14] European Parliament resolution of 29 March 2007 on the future of professional football in Europe (2006/2130(INI)) Para 44
[15] Ibid.
[16] Supra 1
[17] Supra 1
[18] Ibid.
[19] Supra 12
[20] Supra 1
[21] Gregory Ioannidis, 'Football Intermediaries And Self‑Regulation: The Need For Greater Transparency Through Disciplinary Law, Sanctioning And Qualifying Criteria' (2019) 19 The International Sports Law Journal < https://link.springer.com/content/pdf/10.1007/s40318-019-00159-2.pdf>
[22] Ibid.
[23] Consolidated versions of the Treaty on European Union and the Treaty on the Functioning of the European Union (TFEU) [2016] art 152-155
[24] Supra 1
[25] https://fifpro.org/news/minimumrequirements-for-standard-player-contracts/en/
[26] Supra 1
[27] https://www.theguardian.com/football/2017/jun/19/jorge-mendes-wolves-influence-chinese-owners-signings
[28] Jasper Wauters and George Papaconstantinou, 'The FIFA Reform Package On Football Agents: Ready For Regulation Or Looking For Litigation? | White & Case LLP' (Whitecase.com, 2021)
[29] Simon Stone, 'Fifa Plans Agent Rules Despite Legal Threat' (BBC Sport, 2022) https://www.bbc.com/sport/football/59675235
Ed Aarons, 'We're Not Little Kids': Leading Agents Ready For War With Fifa Over New Rules' (The Guardian, 2022) https://www.theguardian.com/football/2021/mar/31/agents-ready-for-war-with-fifa-over-new-rules-raiola-barnett-football-forum accessed 23 January 2022.