Sports Q&A: FIFA's new football agent regulations - what do you need to know?
27 June 2022
Agents are always an important topic in football and especially so at the moment as FIFA’s new football agent regulations are imminent and set to impact all stakeholders who work within the football industry. In this month’s Q&A, John Shea outlines some of the key changes being proposed in order to ensure that agents, clubs, and players are ahead of the game.
A. The final draft of the regulations is still being finalised but what we do know for sure is that the so called deregulation of agents introduced in 2015 is being removed and FIFA are now going to be taking a much more active role in the regulation of agents like they did before.
A number of important changes designed to enhance standards and protect players are being proposed including:
- The reintroduction of the licensing system and a requirement for agents to pass an exam as a prerequisite for obtaining a licence. Also, in order to maintain their licence there is going to be an annual requirement for agents to receive further education and continued professional development in order to raise professional and ethical standards;
- There will be certain eligibility requirements in order for agents to obtain a licence so agents with criminal offences, regulatory disqualifications or who provide false or misleading information will not be licensed to carry out agency activity; and
- Specific obligations on agents will be enshrined in the regulations so, for example, agents must act in their clients’ best interests and inducements and concealing of facts will be strictly forbidden.
Perhaps the most significant and controversial change however is the proposed restriction on multiple representation and the cap on agents’ commissions.
Q. In what way will multiple representation be restricted?
A. Currently, agents are permitted (subject to certain requirements) to act for multiple parties in a transaction. However, going forwards, FIFA are proposing to prohibit dual and multiple representation save that an agent will be permitted to represent both a player and an engaging club in a transaction subject to certain requirements. This would mean that agents could no longer act for all three parties in a transaction e.g. player, releasing club and engaging club or for a player and a releasing club in a transaction.
Q. How will the cap on commissions work in practice?
A. FIFA are proposing to restrict commissions to 3% of the player’s gross remuneration if acting for the player or engaging club and so the maximum an agent could earn if acting for both parties would be 6% of the player’s gross remuneration which includes basic salary, signing-on fees and loyalty or performance bonuses but excludes benefits such as provision of vehicles or accommodation. Currently, the standard commission that agents earn is 5% and sometimes up to 10% of the player’s gross remuneration and so this represents a significant change.
In terms of agents who act for releasing clubs, their commission will be limited to 10% of the transfer fee or, if no fee is payable, 10% of the player’s gross remuneration.
Q. Will there be tighter controls in relation to agents working with minors?
A. 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.
In addition to the changes already outlined, FIFA will be introducing specific regulations in relation to minors including:
- Before an agent can represent a minor or represent a club in a transaction involving a minor, they will need to complete a designated CPD course on minors. For those familiar with the current regulations here in England, this is akin to the additional authorisation which agents need to obtain from the English FA before being able to act;
- Approaches to minors will be prohibited until 6 months before they are able to sign their first professional contract and so for many countries the youngest a player could be approached by an agent will be 17; and
- Representation contracts for minors must be signed by legal guardians.
It should also be noted that whilst currently agents cannot be paid commission for transactions involving minors, it is being proposed under the new regulations that agents can be paid commission for transactions involving minors if it relates to the player’s first professional contract.
Q. Are there any other important changes being proposed?
A. Another important change is the proposed restriction on clubs paying agents’ fees on players’ behalf unless their remuneration is below $200,000. It is currently standard practice in many countries for clubs to pay agents fees on players’ behalf and so this could have a significant impact on the market involving the large number of players who earn in excess of $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.
Also, 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.
Q. How have the proposed changes been received?
A. Those working in the industry including agents, clubs, lawyers etc. are largely in agreement that the decision by FIFA to regulate agents again is a welcomed move and the feeling amongst many agents in the industry is that the reintroduction of the licensing system brings an element of credibility back to the profession.
Also, one of the problems which arose following the deregulation of agents in 2015 was the inconsistency between various national regulations and so those who work frequently on transactions taking place cross border, will no doubt welcome a uniform set of rules albeit national associations will still be permitted to implement more stringent measures if they wish.
However, on the flip side, the change which has caused the most controversy and one which is certainly not welcomed by agents is the proposed cap on commission and restrictions on multiple representation. FIFA claim that these changes are necessary in order to protect players by cutting out abusive and excessive practices, increasing contractual stability and avoiding conflicts of interest .
Agents on the other hand feel strongly that these proposed changes will have a damaging effect on their business and that despite FIFA’s claim to the contrary, the agents’ industry has not been properly consulted. Also, whilst FIFA’s objectives are well intended, in practice it is felt amongst many agents that these proposed changes will actually backfire. For example:
- Reducing remuneration may actually damage contractual stability as agents will be encouraged to move players more often in order to get paid plus lead to a decrease in the quality of services especially as the proposed cap could incentivise agents to work more for releasing clubs on transfers;
- Many are confused that an agent representing a releasing club is able to make more from commission than an agent who is acting on behalf of an individual player. Many take the view that this undermines the services of an agent who is there to act in the best interests of the player and offer a wider service of care to them;
- It will lead to the smaller struggling and effectively create a monopoly with the larger agencies dominating the market; and
- Ultimately, it will encourage more attempts to circumvent the regulations as some agents will no doubt find other ways to get paid and potentially in an unethical way which will damage the integrity of the sport rather than upholding it as FIFA intend to do.
Some agents feel so strongly about these proposed changes that they are bringing legal challenges in an attempt to prevent them coming into force. It is understood that there are legal challenges currently being brought in Germany as well as in England by the Association of Football Agents.
Q. When will the new regulations be introduced?
A. The new regulations were expected to come into force on 1 July 2022 but the implementation date has now been delayed, presumably due to ongoing consultation taking place between FIFA and the agents’ industry about some of the more controversial changes being proposed. In the author’s view, the new regulations will likely come into force on 1 July 2023 ahead of the 2023/2024 season. FIFA has confirmed that exam sittings will be available prior to enforcement of the new regulations so that agents can become licensed beforehand.
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