Football agent regulations – what’s the current score?
Further to our article in late September 2023 we bring an update as to the current state of play of regulations governing football agents in England and Wales.
Background
As explained in our previous article, in attempt to reform the regulation of football agents, the new FIFA Football Agent Regulations (FFAR) came in to force on 9th January 2023. FFAR replaced the existing regulations on working with intermediaries. The main changes that FFAR sought to introduce were:
- from 1st October only natural persons licensed by FIFA may perform football agent services. In order to be licensed such individuals must pass an exam (unless grandfather rights apply) and pay a fee;
- agent fees will be capped (between 3 to 5% of the player’s annual remuneration where the agent acts for the player or buying club, 6 or 10% of the player’s annual remuneration where agent acts for both the player and buying club, or 10% of transfer compensation when acting for the selling club) depending on nature of agent’s client(s) and value of deal (the Fee Cap Rule);
- payments would be made on a pro-rata basis every three months (rather than in lump sums at the conclusion of a transaction)(the Pro Rata Payment Rule);
- agents would not be able to represent multiple parties in one transaction (such as a player and a club). However, an agent may represent a player and a buying club (but not the selling club) in the same transaction where both parties have given their prior written consent (the Dual Representation Rule);
- players would be required to pay their agents directly via the “client-pays” model – previously clubs could pay on the behalf of the player (which gave rise to benefit-in-kind tax issues)(the Client Pays Rule);
- corporate agencies cannot themselves perform football agent services – only natural persons (that is, individuals) can do so; and
- players could represent themselves, notwithstanding any restriction in the representation agreement which would be deemed null and void.
National implementation of FFAR in England and Wales
FFAR was to apply to football agent services with an international dimension – that is transfers between countries or representation agreements with an international dimension.
Additionally, FFAR required member associations to implement and enforce national football agent regulations by 30th September 2023 to govern football agents within its territory and apply to all representation agreements without an international dimension (i.e. domestic arrangements). Such national regulations were required to be consistent with FFAR.
The Football Association of England had intended on implementing the FFAR by way of the National Football Agent Regulations (NFAR). However, the FA had to postpone the introduction of NFAR for a period of time awaiting the outcome of legal challenge pursued – see below.
The Football Association of Wales also introduced its own agent regulations which have been in force since September 2023.
Legal challenges in England
In June 2023 it was announced that a number of football agencies had commenced arbitration proceedings pursuant to Rule K of the FA Rules to challenge the English FA’s implementation of the NFAR would breach the Competition Act 1998 (being primary legislation governing competition law in England and Wales) on the basis that:
- (i) it would prevent, restrict and/or distort competition in the UK;
- (ii) it constituted an abuse of a dominant position by the FA and/or;
- (iii) it would be an unlawful restraint of trade.
The decision of the arbitration proceedings were published in November 2023 and dealt a major blow to the implementation of FFAR and NFAR as the tribunal ruled that if certain elements of the NFAR was implemented by the FA then this would breach the Competition Act 1998, and therefore be unlawful. In particular, the Fee Cap Rule and Pro Rata Payment Rule were deemed to breach the Competition Act 1998 and could not be justified (but the Tribunal did not deem the Dual Representation Rule and Client Pays Rule to breach the Competition Act 1998 and therefore could continue).
Legal challenges elsewhere
As stated in our previous article, the implementation of FFAR has been challenged in several jurisdictions, mainly on the basis that FIFA do not have a mandate to regulate the activities of agents in the relevant jurisdictions.
In particular, the FFAR has been subject to challenge in Germany, where the Mainz Regional Court has made a referral for preliminary ruling to the European Court of Justice (ECJ) which was followed by the Dortmund Regional Court issuing an injunction against FIFA and the German FA on 24th May 2023 preventing them from implementing certain elements – including the Fee Cap Rules, Pro Rata Payment Rule, Client Pays Rule and Dual Representation Rule – of FFAR in Germany pending the outcome of a referral to the ECJ. That injunction remains in place and will do so until the ECJ delivers its judgment – it is unknown when this may be and it could be a considerable period of time until it does so.
FIFA's u-turn and current status of FFAR
On Saturday 30th December 2023, just before the winter transfer window was due to open on Monday 1st January 2024, FIFA published Circular 1873 (the Circular) announcing that in order to comply with the requirements of the injunction (made in May 2023, some eight months prior to the Circular) there would be a temporary worldwide suspension of the FFAR rules affected by the injunction – including the Fee Cap Rules, Pro Rata Payment Rule, Client Pays Rule and Dual Representation Rule – and that all member associations temporarily suspend the equivalent provisions from their national regulations which implemented FFAR.
As such, whilst FFAR and national regulations remain in force to a large extent (including the requirement for all agents to be registered with FIFA), certain provisions within both FFAR and the applicable national regulations are currently suspended are not enforceable.
As such, at least in the relatively short term future, multi-party representation continues to be allowed and agents can represent multiple parties in a transaction (not limited to just one or two) and there is no restriction meaning that clients must pay the agent’s service fee (and as such a club can pay such fees on the behalf of a player).
However, agents will still need to be registered with FIFA (which includes having passed the FIFA Agents Exam).
Current status of football agent regulations in England
Following the arbitration decision, the FA published its NFAR on 21st December 2023 with a view of them coming in to force on 1st January 2024. They did not include the Fee Cap Rule or the Pro Rata Payment Rule which the tribunal had deemed to be unlawful.
However, following FIFA’s Circular, the FA published a further version of its NFAR on Sunday 31st December 2023 (transfer window eve!) highlighting in grey those provisions which were temporarily suspended in accordance with FIFA’s Circular.
The NFAR came into force on 1st January 2024 and can be found here.
As above, at least in the relatively short term future, multi-party representation continues to be allowed and agents can represent multiple parties in a transaction (not limited to just one or two) and there is no restriction meaning that clients must pay the agent’s service fee (and as such a club can pay such fees on the behalf of a player).
Current status of football agent regulations in Wales
As the Rule K arbitration was determined under the English FA’s rules and named the English FA and FIFA as parties, the decision is binding on the English FA and FIFA only and is not binding on the Football Association of Wales. However, as the substance of that arbitration ruling addresses competition law applicable to both England and Wales this may also cause issues to the national regulations which are currently in force in Wales since September 2023. They continue to include the Fee Cap Rule and Pro Rata Payment Rule, the rules which the Rule K arbitration deemed to breach the Competition Act 1998.
Additionally, FIFA’s Circular has further changed the position and some elements of the FAW’s agent regulations may need to be similarly temporarily suspended.
The FAW has confirmed that, as a result of the Rule K arbitration and FIFA’s Circular, they are circling back on their own national regulations and any consequential changes will be communicated as soon as possible.
Comment
December certainly saw a lot of action in relation to the implementation of FFAR and national agent regulations across the globe. This may cause uncertainty and confusion as to agents’ obligations and limitations during the current transfer window. The football world eagerly awaits the ECJ’s decision in due course, but this may be some time away. In the meantime, it is likely that the current state of play will continue and that the provisions which are currently suspended will remain so for some time yet.
Should you require advice on football agents regulations or any transactions, then please contact Tomos Lewis or Dov Katz.
Share:
