Marc Edelman recently posted on the subject of Sports Agencies representing both Players and Ownership. Conflict-of-Interest or Common Sense? Mark asked. The same question is pretty much on the European agenda at the moment. The new FIFA Players' Agents Regulations are currently being discussed by sports regulating bodies and even the EU has taken an interest in the issue. General perception is most soccer deals in Europe are made in the following manner: an Agent is approached by, or approaches a, club regarding an offer for a player and his prospective transfer. Somewhere along the line, club and agent discuss payments to be made to player (salaries, bonuses, etc.) as well as payments to be made to agent (commissions, fees or other). In the end, the player seldom pays anything to his agent and clubs pick up the tab for the representational work undertaken by the agent on behalf of his client. In fact, I don’t think most players would react well to an agent presenting an invoice for his services, which is testimony to the current state of affairs and to the amount of work to be done in terms of avoiding conflict of interest.
1. Illegal Payments and Dual Representation
FIFA Players’ Agents Regulations (which are superseded by National Law on the subject but are basically accepted by Football Associations all over and can be regarded as the legal framework when dealing with agency issues, hereinafter the “Regulations”) set forth that "[t]he contract shall explicitly mention who is responsible for paying the players' agent's fee, the type of fee and the prerequisite terms for the payment of the fee" (article 12.3). In addition, the Regulations establish that “[o]nly the client engaging the services of the players' agent, and no other party, may remunerate him” (article 12.4).
The foregoing provisions do not preclude agents from being engaged and remunerated by clubs. In fact, article 11.4 of the Regulations clearly states that an agent has the right “to take care of the interests of any club which requests him to do so”. In this case, the agent “shall be remunerated for his services by payment of a lump sum that has been agreed upon in advance”, as per Article 12.9 of the Regulations.
A holistic interpretation of both articles 11 and 12 necessarily concludes that agents must be remunerated by the party they are representing while they must represent only one party in any given deal. However, available evidence suggests this is hardly the practice amongst European licensed agents. Illegal payments (known as Bungs in the UK) and dual representation threaten to become established traits in the trade. Ian Blackshaw, a distinguished law professor, reports that an investigation into the bung allegations commissioned by the FA Premier League in 2006 and lead by Lord Stevens undertook the review of all 320 Premier League transfers that had taken place since January 2004. Lord Stevens identified 39 transfers as requiring further investigation, while one unnamed football manager submitted that the figure should be multiplied 4 or 5 times.
The FA has been very reactive to the troubles of agency and a transfer clearing-house has been put in place, requiring clubs to submit a declaration of payments form, provided by the FA, to the Registrations departments along with the player's contract, registration form and, where necessary, transfer form. In turn the transfer funds must be forwarded to the Finance department where they are then checked and cleared to the authorized banks and only after this process can the registration be finalized. Other Associations have taken no such measures and we can only guess that Lord Stevens would have had a lot more work had he looked into transfers all over Europe.
Let's take the example with which I started this post. That same agent has two offers for his player: club A has submitted a proposal of USD 500.000 and an agent fee of USD 100.000. Club B on the other hand, is offering the player USD 350.000 whereas the agent gets USD 150.000. Guess who will end up securing the player’s signature? This may be a touch to simplistic, but it illustrates the bottom-line.
2. Cross Ownership and Conflict of Interest
Globalization has changed the face of Soccer, and in no other area is this more apparent than in ownership of players’ transfer rights. 20 years ago players’ transfer rights were the clubs exclusive property. With much more significant amounts of money coming into the sport, and with many clubs struggling to balance their accounting sheets, we’ve reached a point where clubs, individuals and funds are owners of players’ transfer rights. Nowadays, a club wishing to engage the services of a player is likely to have to negotiate the transfer with an investment fund.
This has opened up the door for obscure situations. Club managers, directors and agents are sometimes the people behind these funds. Again, how can club managers be expected to act in the club’s interest if they have a personal stake in a deal? How can an agent faithfully represent the interests of a player when his own personal interest in on the table?
Current Regulations are silent on this matter but the word is the new draft Regulations will contain provisions specifically addressing the issue. But there is no point in having legal provision if there is no monitoring of compliance.
Control seems to be the ominous solution. People need to go on record as to their status in any given transfer and cannot be afforded the chance to represent themselves and third parties at the same time. It all sounds a bit draconian. But can anyone truly disagree with the assumptions and suggested solutions?
2. Cross Ownership and Conflict of Interest
Globalization has changed the face of Soccer, and in no other area is this more apparent than in ownership of players’ transfer rights. 20 years ago players’ transfer rights were the clubs exclusive property. With much more significant amounts of money coming into the sport, and with many clubs struggling to balance their accounting sheets, we’ve reached a point where clubs, individuals and funds are owners of players’ transfer rights. Nowadays, a club wishing to engage the services of a player is likely to have to negotiate the transfer with an investment fund.
This has opened up the door for obscure situations. Club managers, directors and agents are sometimes the people behind these funds. Again, how can club managers be expected to act in the club’s interest if they have a personal stake in a deal? How can an agent faithfully represent the interests of a player when his own personal interest in on the table?
Current Regulations are silent on this matter but the word is the new draft Regulations will contain provisions specifically addressing the issue. But there is no point in having legal provision if there is no monitoring of compliance.
Control seems to be the ominous solution. People need to go on record as to their status in any given transfer and cannot be afforded the chance to represent themselves and third parties at the same time. It all sounds a bit draconian. But can anyone truly disagree with the assumptions and suggested solutions?
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