The key changes being the (re)introduction of an examination and licensing system, a cap on agents’ fees, and limits on multiple representation.
Given the significant impact that the new regulations will have on the football industry, it is vital that everyone working in the football industry are fully up to speed on the forthcoming changes.
John Shea outlines some of the key changes coming into force in order to ensure that you are ahead of the game.
A copy of the new FIFA Football Agent Regulations can be accessed here.
When will the new regulations enter into force?
The new regulations will come into force in two stages.
The provisions regarding becoming a football agent, including the requirement for agents to pass an exam and obtain a licence, will enter into force on 9 January 2023 however there is a transition period as the remainder of the regulations relating to acting as a football agent, including the obligation to only use licensed football agents, the cap on agents’ fees and limits on multiple representation, will not enter into force until 1 October 2023.
Therefore, the summer transfer window in 2023 will be the last transfer window in which the current regulatory regime will apply. Thereafter, all agents will need to be licensed before carrying out any agency activity and the new regulations will be fully operational except that it is understood the new rules on acting as a football agent will not apply to transactions involving representation contracts concluded prior to 16 December 2022 even if the transaction takes place after 1 October 2023. This would mean that the cap on commissions and limitations on multiple representation would not apply in those instances.
The FIFA Agent Regulations will govern the activity of football agents with an international dimension, such as transfers involving an international transfer of a player. In domestic cases, the activities of football agents will be governed by the regulations of the relevant national association who are obliged to implement regulations which are consistent with the FIFA Agent Regulations by 30 September 2023. National associations can only deviate from the FIFA Agent Regulations if there is a conflict with national laws and it should be noted that they can introduce stricter measures if they wish.
How will agents be licensed?
One of the main changes is the reintroduction of the licensing system for agents. Therefore, prior to conducting any football agent activity, all agents must:
- submit an application via FIFA’s online platform;
- successfully pass an exam conducted by FIFA and pay an annual licence fee of 600 USD;
- comply with certain eligibility requirements and with the continuing professional development (CPD); and
- Agree to abide and be subject to all FIFA regulations.
Agents can apply for a licence via the agent platform from 9 January 2023 however the exam will only be held periodically and applications to sit the exam will only be accepted during specific windows. The agent exam windows in 2023 are as follows:
- from 9 January 2023 to 15 March 2023 for the first FIFA football agent exam on the 19 April 2023;
- from 1 May 2023 to 31 July 2023 for the second FIFA football agent exam on 20 September 2023.
It is understood that agents who were previously licensed under the old 2008 FIFA Players’ Agent Regulations and were registered as an intermediary at a national association continuously since 1 April 2015, will not be required to take an exam. The exam will be delivered online at the premises of all member associations.
The FIFA licence will authorise agents to perform football agent services to clients on a worldwide basis.
FIFA licenses will only be issued to natural persons and only licensed agents can directly perform agent services or approach any potential client. This means that agencies cannot obtain a licence although agents may still conduct their business via an agency.
What are the eligibility requirements for agents?
A football agent must:
- never have been convicted of a criminal offence relating to: organised crime, drug trafficking, corruption, bribery, money laundering, tax evasion, fraud, match manipulation, misappropriation of funds, conversion, breach of fiduciary duty, forgery, legal malpractice, sexual abuse, violent crimes, harassment, exploitation or child or vulnerable young adult trafficking;
- never have been the subject of a suspension or disqualification by any regulatory authority or sports governing body for failure to comply with rules related to ethics and professional conduct;
- not be an official or employee of FIFA, a confederation, a member association, a league, a club, a body that represents the interests of clubs or leagues or any organisation connected directly or indirectly with such organisations and entities;
- in the twenty-four months before the submission of a licence application, not to have been found performing services without the required FIFA licence;
- in the five years before the submission of a licence application, not have declared bankruptcy or been a majority shareholder, director or key office holder of a business that has declared bankruptcy, entered administration and/or undergone liquidation; and
- in the twelve months before the submission of a licence application, not have held any interest in any entity, company or organisation that brokers, arranges or conducts sports betting activities.
The failure to satisfy any of the eligibility requirements will result in an agent being prohibited from sitting the FIFA football agent exam and their licence application being denied. If an agent fails to comply with these requirements at any time after being granted a FIFA licence, he/she may get his/her FIFA licence suspended or withdrawn.
What are the formal requirements for representation contracts?
A football agent can only perform football agent services for a client e.g. a player, manager or club, after entering into a written representation agreement with that client.
Representation contracts concluded prior to 16 December 2022 will remain valid until they expire and it is understood that those representation contracts will not be subject to new rules no matter when the transaction takes place. However, any new representation contracts or renewals of existing representation agreements concluded after 16 December 2022 must comply with the new regulations from 1 October 2023 and, if necessary, contractual terms will have to be varied in order to avoid possible sanctions. For example, the regulations state that only natural persons can enter into a representation contract with a client for the provision of services and so whilst an agent may conduct business through an agency, it seems at this stage that the common practice of representation contracts being in the name of the agency will no longer be permitted. Similarly, FIFA will not allow any claim for commission in excess of the relevant service fee cap even if it is based on a representation contract concluded between the 16 December 2022 and 30 September 2023.
Therefore, agents must now have the new rules in mind when concluding representation contracts going forwards and also review existing agreements concluded after 16 December 2022 to ensure that they are compliant.
Any representation contract must be in writing and contain:
- the names of the parties;
- the duration;
- the amount of the commission due to the agent;
- the nature of the services to be provided; and
- the parties’ signatures.
In addition, before entering into a representation contract with a player or a coach, all agents will be obliged to (i) inform the individual in writing that they should consider taking independent legal advice in relation to the representation contract; and (ii) obtain the individual’s written confirmation that they have either obtained or decided not to take such independent legal advice.
Representation contracts shall be valid for a maximum period of two years and any automatic renewal provision, or any other provision that purports to extend any term of the representation contract beyond the maximum period, will be null and void. Agreements concluded between agents and clubs will not be subject to a maximum duration.
Any clauses which limit the ability of an individual (i.e. a player or coach) to autonomously negotiate and conclude an employment contract without the involvement of an agent or penalises an individual if they autonomously negotiate and/or conclude an employment contract without the involvement of an agent will be null and void. This appears to prevent a fee still being payable to an agent in the event that a client represents himself in which case this is an important change for agents as it is currently standard practice to stipulate in representation contracts that a commission will still be payable in the event that a player negotiates a contract autonomously without the involvement of an agent.
An agent may only execute one representation contract with the same individual at any one time however multiple representation contracts may be concluded between agents and clubs providing they relate to different transactions.
Finally, the regulations allow for a representation contract to be terminated by either party if there is just cause to do so. “Just Cause” is rather vaguely defined as “when a party can no longer reasonably be expected, according to the principle of good faith, to continue the contractual relationship” and includes, but is not limited to, situations where the agent’s licence has been suspended or withdrawn. This change has the potential to lead to an increase in the number of disputes and issues. Firstly, the relatively wide and vague definition of “Just Cause” may lead to more instances of players looking to terminate their representation contracts with agents, especially if they are being tapped up by other agents. Also, the ability for a player to terminate their representation contract if an agent’s licence is suspended or withdrawn, creates a significant risk for agents in the event of any breach of the regulations. Many agents have been suspended under the current regulatory regime but, providing the suspensions were either short in duration or effective outside of a transfer window, it was unlikely that these suspensions would give players the right to terminate their representation contract. However, under the new regulations, players seem to have the right to terminate their representation contracts no matter how short or when any suspension takes effect which places a huge importance on agents to comply fully with the rules.
What are the rules relating to minors?
There is obviously fierce competition in the marketplace between clubs and agents to sign the best young talent at the earliest opportunity and a lot of the unscrupulous behaviour in the industry involves minors so it is no surprise that protecting minors is one of FIFA’s core objectives.
Agents are prohibited from approaching a minor and/or his legal guardian any earlier than six months before the minor reaches the age where they may sign their first professional contract in accordance with the law applicable in the territory where the minor will be employed. An agent must obtain written consent from the minor’s legal guardian before making any approach to the minor in question. Also, agents may not receive a commission for the representation of a minor unless the minor is signing his first or subsequent professional contract. This is a welcome change as currently agents cannot be remunerated when a player under 18 signs a professional contract.
Before representing a minor or a club in a transaction involving a minor, agents must first successfully complete the designated CPD course on minors and comply with any requirement to represent a minor established by the law applicable in the territory where the minor will be employed.
Any violation of the provisions on minors will be sanctioned with a fine and a suspension of the relevant FIFA licence of up to two years.
Can agents represent more than one client in a transaction?
One of the most controversial changes imposed by the new regulations is the restriction on multiple representation.
Currently, agents are permitted (subject to certain requirements) to act for multiple parties in a transaction. However, under the new regulations, an agent may only represent one client in a transaction save that an agent will be permitted to represent both a player and an engaging club. This means that agents can no longer act for all three parties in a specific transaction e.g. player, releasing club and engaging club or for a player and a releasing club in one transaction. It is also not possible to circumvent these restrictions through the use of other agents who work for the same agency or through other formal or informal arrangements between separate agents regarding the provision of services.
What is the cap on commissions?
The new regulations introduce a cap on fees that an agent can earn as follows:
| Client | Service fee cap | |
| Individual’s annual Remuneration less than or equal to USD 200,000 (or equivalent) |
Individual’s annual Remuneration above USD 200,000 (or equivalent) |
|
| Individual | 5% of the Individual’s Remuneration |
3% of the Individual’s Remuneration |
| Engaging club | 5% of the Individual’s Remuneration |
3% of the Individual’s Remuneration |
| Engaging club and Individual (permitted dual representation) | 10% of the Individual’s Remuneration |
6% of the Individual’s Remuneration |
| Releasing Entity (transfer compensation) |
10% of the transfer compensation | |
An individual’s remuneration is the gross financial compensation set out in a negotiated employment contract, which includes basic salary, any sign-on fee, and any conditional payments such as a loyalty or performance bonus. It excludes sell on fees in favour of the player and other benefits such as the provision of a vehicle, accommodation or telephone services.
When determining the relevant cap, it is important to note that the amount of remuneration to be considered excludes any conditional payments whilst the final amount of remuneration on which the commission cap is based does include conditional payments. It should also be noted that if the annual remuneration is above USD 200,000 (or equivalent), it is only the remuneration above that amount that is subject to the higher cap of 3% or 6%. For example, if a player’s annual total fixed remuneration is of USD 1,000,000, then the agent would be entitled to receive a 5% commission on the first USD 200,000 and a 3% commission on the remaining USD 800,000.
Engaging clubs may only pay up to 50% of the total commission due.
Transfer compensation includes all conditional payments but excludes any sell-on fees in favour of the releasing club.
Who can pay agents’ fees?
Another significant change is the introduction of the “client pays” principle which will prohibit clubs paying agents’ fees on players’ behalf unless their remuneration is below USD 200,000.
It is currently standard practice in many countries for clubs to pay agents fees on players’ behalf and so this will have a significant impact on the market involving the large number of players who earn in excess of USD 200,000.
FIFA perhaps believe that by forcing players (instead of clubs) to pay agents, this will naturally lead to a reduction in commissions payable, but alternatively this may simply lead to players seeking higher wages in order to compensate them for the additional outlay which they are currently not used to paying. This change may also to further disputes between agents and players.
Are there any restrictions as to when the commission due to an agent should be paid?
Payments of commission by an engaging club or a player/coach to its/his agent shall be made after the closure of the relevant transfer window and in instalments every three months throughout the duration of the negotiated contract.
Also, only the remuneration actually received by an individual shall be subject to the payment of a commission. This means, that no commission will be due to an agent if the amounts of salary due by the Club have not been paid to the player and an agent is not entitled to receive any commission not yet due where the individual is transferred to another club before the expiry of the negotiated employment contract.
In terms of commissions payable by a releasing club to its agent, the service fee is payable following receipt of each instalment of the transfer compensation due to the releasing club.
Are there any other important changes being proposed?
One of the key pillars of change when it comes to enhancing standards is increased transparency and so there will be requirement for all relevant documents involving agents e.g. representation contracts, to be submitted to FIFA and all payments processed via the clearing house so FIFA will know who is getting paid and what and many of those details are likely to be published by FIFA.
Finally, FIFA is going to introduce a specific chamber to deal with international disputes involving agents which is a move welcomed by all stakeholders because currently there can be difficulty in bringing and enforcing claims in certain jurisdictions and proceeding to the Court of Arbitration for Sport can be expensive and time consuming.
Conclusion
Whilst the new regulations are still subject to legal challenges being brought by agents’ associations and will not be fully effective until October 2023 at the earliest, it is nevertheless important for agents and clubs to be acquainted with all the changes so that they are fully prepared. In particular, most agents will be required to take an exam on the new regulations at some point during the next 9 months and so it is obviously very important for all agents to be fully up to speed in order to ensure that there are no difficulties with obtaining their licence prior to the main part of the regulations coming into force.
Also, players and managers are offered more protections under the regulations, but an additional key change is that most players and managers are now going to be responsible for paying their agent’s fee rather than relying on the current practice of their club paying the fee on their behalf. Therefore, it is also important for players and managers to be aware of their rights and obligations going forwards under the new regulations.
If you have any specific queries, please do not hesitate to contact John Shea.