On hearing the results and finding from a recent FA disciplinary hearing in respect of some (alleged) breaches of the agents regulations, this has prompted the writing of the following article to try and clarify that in a football related transaction, who is paying the football agent?

We must stress that this article is not about the specific case referenced in the FA hearing itself, but the comments reported to have been made by the player involved (indirectly), during the investigation. The players comments were as follows:

Interviewer :
Okay. How would you normally pay ######## as your agent?

Would normally the club pay on your behalf?
You don’t get involved in it.

Player :
Yes.
I’ve never been involved in that.

Interviewer :
The club pay on your behalf. It’s a benefit-in-kind to you.
So it doesn’t come out of your salary.
You don’t make any payments to him.

Player:
Well I’ve never made any payments to ###########.

I’m not going to start dishing money out if I don’t have to.”

Now looking at these comments the conclusion could be drawn that a player in such circumstances is well looked after and that he benefits from the arrangement he has with his agent and his employer (i.e. the club) in regards to the payments made to his agent and on the face of it he pays his agent nothing.

However from speaking to many players, similar comments to those above are not unusual, and as such some of the general issues surrounding such an arrangement begs the question as to whether a players interest are always being best represented, or in extreme situations does it actually lead to the player effectively being exploited without their knowledge.

 

Who Pays The Agent ?

It is not unusual for the club to pay the agent ‘on the players behalf’, this is usually as a benefit in kind and subsequently this should be declared on the P11D. However this is commonly misinterpreted by many players whether young or old and whatever level they play at, that the club is paying ….. THEY ARE NOT !

Although a player physically doesn’t write a cheque to the agent, the fact is in most cases THE PLAYER IS PAYING the agent. It may well be as a benefit in kind and the transaction is processed by the club, but this is subsequently still a deduction from the players basic salary.

 

Can The Club Pay The Agent ?

An authorised agent can be permitted to represent the player or the club, and subject to the regulations governing duality (dual-representation) the agent may be permitted to represent both parties, and subsequently get paid by both

………….. * the issue of duality in football (dual-representation) is a subject in itself.

However even in a situation where a club pays the agent, there are further questions to be asked if the agent may have originally been representing the player.

In any walk of life, if you are paying someone to represent you and represent your best interests, then why should there be a change to allow them to represent another party in relation to your interests. There are strong rules governing the legal profession on such matters, and subsequently we have to ask – to who does the representative have a ‘fiduciary duty’ and is there ‘a conflict of interests’ if they change who they are representing?

If another party is paying your representative (or service provider) doesn’t that arguably shift the responsibility of them representing your best interests to representing the best interests of the other party (or even arguably the interests of the service provider themselves).

To play ‘devils advocate’ on this, let’s consider the following (and arguably extreme) hypothetical scenario:

  • A business consultant is brokering the sale of a company for their client Mrs Z.
    As part of the agreement Mrs Z agrees to pay the consultant a % of the fee paid for the sale of the company.
  • Mr X, shows an interest in buying the company.
    Subsequently Mr X, Mrs Z and the business consultant come to an agreement that Mr X will now pay the accountants fees.
    Who does the business consultant now represent (who is their client) ?
  • If Mr X was to offer the business consultant a higher commission to get Mrs Z to accept a lower price or less favourable terms would this be right, ethical or legal.
    Ultimately if accepted, Mrs Z would be disadvantaged and exploited.

Now under the current regulations in football, there are certain measures in place to avoid such practices (e.g. referred to as ‘switching’) but that is not to say some cases MAY go ‘under the radar’ and one party may be disadvantaged and/or even exploited, let alone there be a breach of the rules and regulations.

 

Implications of Taxation and HMRCs Interest in Player Payments

Further to the rules and regulations of the football authorities, there are additional considerations to be taken into account with regards to payments to agents whether they be from players, clubs or both. And on such matters we understand the tax authorities are taking a great deal of interest in these payments and related arrangements and contracts.

If a payment is made by a club on behalf of the player as a benefit in kind it is taxable in the UK, and as such the tax is payable by the player on the payment as a deduction from their gross basic salary. However the tax authorities do take a great deal of interest in regards to the payment of agent’s fees in football where they may be seen to be irregular.

For example ; if a person is due to pay tax on a benefit in kind from their employer (e.g. an agents commission/fee), and then suddenly their circumstances change so that tax is not due as the benefit in kind, and is not being paid …… would that not seem irregular and worth investigating ?

Subsequently it is not incomprehensible to expect the tax authorities to start investigating cases where players pay their agents nothing (0%), and possibly where the club changes to pay the player’s agent, or even where duality exists and the share/split of paying the agents fees between player and club is considered disproportionate or even extreme.

The possible result of this may not only result in a breach of the football regulations, but also a breach of tax legislation and those parties involved (not least the player) having to repay the tax that was originally due and possibly interest and a fine.

 

Implications from Changes to the Agent/Intermediary Regulations

In light of the planned changes to be implemented by FIFA in April 2015 (and subsequently the National Football Associations) that will see the abandoning of the current agent regulations and licensing scheme in favour of a system of registered intermediaries, this has major repercussion for footballers (and football clubs) in terms of who represents them and how they are represented.

Not only has there been quite a shift with the new regulations to put more responsibility for intermediary activity (and the subsequent sanctions) at the feet of players (and clubs) in regards to the regulations, but the regulations actually state :

In the selection and engaging process of intermediaries, players and clubs shall act with due diligence. In this context, due diligence means that players and clubs shall use reasonable endeavours to ensure that the intermediaries sign the relevant Intermediary Declaration and the representation contract concluded between the parties.

So this further emphasises the responsibility for players to take more care in making sure their representatives are fulfilling their fiduciary duties to the player as the client and representing their best interests …. otherwise the player (and/or club) will arguably have to face most, if not all of the consequences.