Football fans have often looked distastefully on the business conducted by football agents primarily due to the headline sums of money those at the top of the tree have amassed from moving players around the footballing world in what must be one of the planet's most lucrative games of chess. To cut these exorbitant commissions, amongst other aims, FIFA have now introduced a new regulatory framework governing the actions of football agents. This is unlikely to go down too well with agents and other stakeholders in the industry alike…

FIFA announced the approval of their long-awaited 'Football Agent Regulations' (the "Regulations") on 16 December 2022. The Regulations seek to restrict and regulate the activities of those who represent either players or clubs in player transfer or contract negotiations – often referred to as "football agents" or "intermediaries" – with the view of achieving FIFA's stated aims of "improving financial transparency" and "raising and setting minimum professional and ethical standards for the occupation of a Football Agent". A copy of the Regulations can be accessed here.

FIFA’s eminent concern centres on the present lack of regulation with regard to agents' activities. In 2015, FIFA decided to deregulate and replace the existing regulations with guidelines which allowed national associations greater leeway to determine whether agents were acting in accordance with these recommendations. This has led to the headline figures of agents reportedly taking home commission fees in excess of £40 million in some cases - such figures which will now be subject to the new cap on commission.

So, what are the key changes and who are the winners and losers? 

Central to the Regulations is the introduction of a mandatory licensing system, a cap on agent commission, and limits on multiple representation… but which stakeholders are in line to benefit or lose out from the introduction of these new rules?

• Agents - Losers
  • If you were to find yourself in conversation with a football agent on the topic of these new Regulations, you will likely be subject to a shaking head and long tirade of fury as to why they are wholly unjust… This may seem hyperbolic, but it doesn’t take much diving into the detail to find out why this is a common reaction. Succinctly put, the Regulations will drastically limit the commission that agents can earn on player transfers and contract negotiations in most cases to 5% of the player's remuneration for the first USD $200,000 that player earns and 3% of any remuneration earned thereafter. Gone are the days of agents taking home sometimes 10 times these figures. This is the primary reason why various agents and agent groups are threatening FIFA with court action which is likely to play out over the coming months (and years).
    
    
• Players - Winners
  • Whilst the cap on commissions spells bad news for agents, there will be many players that will likely be delighted. Simply put, more of their salary will remain their own – and not be taken away by their representatives. 
  • Albeit winners, there are obligations for players to be made aware of, including satisfying themselves that an agent is properly licensed and rules relating to counter bribery of any kind.
    
    
• Clubs and League Associations - Draw
  • Beyond the commission caps, the Regulations introduce a new licensing system for agents as well as a set of eligibility requirements. As part of this licensing system, prior to conducting any agent activities, agents must, amongst other eligibility requirements: have their application approved through FIFA’s new digital platform; must successfully pass an exam conducted by FIFA; pay a licence fee; and comply with continuing professional development requirements. Clubs and league associations should welcome the proposed new rules given the greater focus on ensuring that football agents are "fit and proper" persons thus providing a greater sense of credibility and professionalism to transactions.
  • There are also new rules on the representation of minors which seek to protect the players involved as well as clubs themselves. The Regulations mandate that young players (or their legal guardian) may not be approached by a club in the six months before they can legally sign their first professional contract in the country where the minor would be employed. A law-abiding club will be better protected from the much-maligned activity of "tapping up" young players and their parents which has blighted European football clubs particularly in relation to minors from out-with the continent.
  • The Regulations also put an end (in the vast majority of cases) to multi-party representation. Therefore, for the most part, gone are the days of an agent representing all of (a) the player; (b) the selling club; and (c) the buying club in a player transfer transaction. This should appease clubs with concerns over any potential conflicts of interest which could arise in such deals.
  • Nevertheless, football associations and clubs alike should be wary of the impact of the commission cap on the volume of player transfers. Some agents will likely push for an increase in transfer activity given this will be the only way of recouping some of the loss of income the Regulations will impose upon them. We could therefore see high-profile players moving on more frequently with clubs generally encountering difficulty in holding on to players for the longer term. Clubs and league associations who pride themselves on being able to attract the best players and therefore, more lucrative sponsorship agreements and broadcasting deals from those companies who want to be seen to be aligned with football's best, may soon see themselves suffer a hit to the pocket. 
  • Club sponsors will likely be paying close attention to how the Regulations affect future transfer activity, as they will want to ensure the finances they are pouring into clubs and league associations accurately reflect the exposure such organisations give to their brand. If players are moving clubs more frequently this could result in club sponsors doing the same. This may result in sponsors demanding higher degrees of flexibility in their sponsorship agreements.

When will the Regulations apply and what about the question of jurisdiction?

The Regulations will come into force in two stages. Provisions concerning the new processes for agents obtaining a licence entered into force on 9 January 2023. There is, however, a transition period until 1 October 2023 before the remainder of the Regulations, which generally relate to acting as a football agent and the obligations of agents and clients including the cap on agents’ commission and limits on multi-party representation, enter into force.

The Regulations will govern international transfers of a player. Domestically, the Regulations introduce an obligation on FIFA member associations to implement national football regulations which are consistent with the Regulations by 30 September 2023. Member associations can only deviate from the Regulations if there is a conflict with stricter mandatory provisions of the law applicable in that member association, and member associations can introduce stricter measures if they wish. It should be noted that FIFA reserves the ability to request a copy of any member association’s domestic regulations.

Final thoughts

Much remains to be seen about the financial and sporting impact that the Regulations will have. What is certain however is that agents will not be sitting around to see how things play out. Legal challenges are coming, and sponsors will be playing close attention to how an upcoming flurry of transfer activity alters the footballing landscape.

Given the impact that the Regulations will have on the football industry, and the proposed imposition of sanctions by the FIFA Disciplinary Committee on relevant member associations for violating the Regulations, those working in the football industry should get fully up to speed on the forthcoming changes. For more insights into the Media, Sport and Entertainment Sector, please see DLA Piper's blog MSE Today.