Particular attention paid to ‘Conflicts of Interest’, Working with Minors, Transparency, Compliance, Sanctions & effective Regulations at National Level.

NOTE :

Please note this information and the subsequent analysis does not emanate officially and/or directly from FIFA, but from various sources who have been able to relay the outline of discussions and subsequent proposals thus far.

The initial summary proposals from FIFA’s stakeholders committee on their proposal for the changes to football agent (intermediary) regulations and the enhancements to the processes of the FIFA TMS (transfer matching system) demand its own article. So, in follow on from the proposals centred around the TMS here is my analysis of the proposals from FIFA in terms of the other suggested changes in regards to agent regulations.


Proposed FIFA Football Agent regulatory changes Focus on the ‘Rights & Duties’ of Clubs, Players and Agents


Conflicts of Interest

As I wrote about in a previous article on the problems with Football Agents and Agency activity along with the possible solutions, conflicts of interest were identified as a large problem even to the extent where it justified an article of its own on the subject.

There is no doubt that the potential for ‘conflicts of interest’ involving football agents is quite likely, but is this any different to many other industries or is it simply highlighted in football given that we have a lucrative business overlapping with a sporting competition? What I would also say is – how have such conflicts of interest developed in football; is it based on the regulations failing to manage such conflicts or the steps taken by some to manipulate the situation for their own benefit? My personal perception is that it is a combination of the two.

The first step that FIFA is proposing in addressing the issue is to prohibit agents, agencies or associated companies from holding a stake in a club (worldwide) and this is a welcome step in terms of the clarity, given that some cross-border issues exist whereby agents can own an interest in a club depending on the territory and/or limited based on a % shareholding.

However, despite this being in my opinion a welcome step I don’t believe it will 100% address the issue as shareholdings and thus influence, may still be evident through interconnected company structures, holding companies and creative investment funds. Subsequently FIFA and the football authorities need to be clear with regards to declarations of potential influence and as such any applicable sanctions for blatant breaches of the regulations.

Whereas FIFA have taken a feasible step in addressing the matter of agents owning an interest in a club, I don’t believe they are being as pragmatic with regards to suggesting the prohibition of an agent providing other services to a club (e.g. marketing, consulting, scouting). The suggestions are that (i) agents who act for a club in a transfer are prohibited from being remunerated by the same club for other services in the same year, and (ii) agents which have been remunerated by the club for performing other services are prohibited for acting as an agent for the same club in the same year.

Although the matter that FIFA appear to be trying to address here is sensible, the manner in which they are addressing it isn’t so pragmatic and at best a ‘restraint of trade’, and at worst a measure that will push such activities ‘underground’. As such surely the encouragement to make open declaration of such payments and services via an enhanced TMS mechanism is a far better approach and provides for greater transparency.

On the ‘reverse’ of this FIFA are also proposing that “Club Officials are prohibited from holding a stake in an agency organisation”, and as such I do believe this to be a thoroughly welcome step in addressing some conflicts of interests that exist. However, I would question whether this goes far enough, and whether the matter of relatives of club officials working for agents/agencies (and vice-versa) should also be declared, and addressed reasonably as with that of shared business interests (non agency) between club officials, players and agents. These too are an area of concern for a potential ‘conflict of interest’ if not a means to exercise influence and transfer unsolicited remuneration.

FIFA seem to be proposing a somewhat more reasonable approach when it comes to agents who operate as part of an agency, in allowing for such activities if they are declared and proof given that the services provided are proved to be independent of player transfer business. The question remains why a similar approach cannot be made towards all agents in the services they provide to clubs, rather than prohibit such activities for some and not for others.

A large area of conflict of interest when it comes to football agents is without doubt that of TPO (third party ownership), and as such it is an area I believe does need to be addressed but not by an approach of prohibiting anything that can even remotely be connected to a third party interest. As such FIFA seems to be proposing that an agent cannot hold a stake of whatever nature in the economic rights of a player including any share of a loan or transfer fee. Whilst I again agree with what FIFA seem to be trying to achieve here I have for many years maintained that part of the reason initial agents fees are so high is that an agent is not permitted to earn in relation to the future success and performance of the player as it is a non-guaranteed sum.

As such I do believe that rather than prohibiting the agent holding such an interest, FIFA would be better served in allowing for this and putting in place certain conditions that encourage the agent to declare such interests and to play a proactive part in the players career that is rewarded but not to the detriment or loss of either the player or the clubs involved (e.g. a capped percentage of the profit on the next transfer fee).

In the proposals FIFA has also suggested the prohibition of “consideration of any nature by an agent to any club official, player or club employee” (and those parties accepting them), but I would argue that this has always been part of the regulations whether from FIFA or some national associations. But the problem has been the actual enforcement and the imposition of sanctions that are comparative to the offence and a true deterrent.

In relation to the above measure regarding club officials, FIFA is also proposing a similar measure prohibiting “consideration of any nature by an agent to any member of a player’s family, including employment thereof”. However, this in itself is to be questioned and needs clarity, given that FIFA have added the caveat of “unless under certain prescribed circumstances”; surely such a clear conflict of interest and matter open to potential bribery is prohibited or not?


Working with Minors

There is no doubting the protection of minors is a priority for the likes of FIFA and the national football association, hence I was a little surprised to see the limited nature of the proposals by FIFA on such a matter.

However, the 2 key proposals from FIFA in regards to minors relating to agent regulations are in my opinion reasonable measures. However, I do believe further thought needs to be given to both, and further clarity be given to make them more widely accepted and viable.

The first aspect covered in FIFAs proposals is that “if the player is a minor, the player’s legal guardian(s) shall also sign the representation contract” with the agent, however this was already common practice in many territories beforehand.

The second element is the one that will no doubt meet with more resistance (as it has before) from agents; and that is the proposal that players and/or clubs “are prohibited from making any payments to such intermediary if the player concerned is a minor”. The proposal in itself is nothing new and although the sentiment is in my opinion correct, the overall application isn’t totally fair or practical given the limitations on the term of the representation agreement for the agent being a maximum of 2 years, and that a player can sign a professional contract or command a transfer fee before they turn 18. As such, a feasible solution in my opinion would be to allow the extension of the representation agreement for an additional 2 years from the players 18th birthday on the basis that the agent has met their obligations under the agreement with the player when they were a minor.


Rights and Duties of Players

For me this is a troublesome area to address as it has been neglected for so long, and in itself comes one underlying issue – how much onus should be placed on the players in terms of agent regulations and who is responsible for ensuring players are informed of these obligations? After all, isn’t it the duty of the football authorities and the agents themselves in protecting and acting in the best interests of players?

From my own experience the knowledge amongst some club officials of agent regulations and agent activity is minimal, so is it any surprise the knowledge of most players on the subject is largely non-existent. And therefore the rights and more importantly any duties placed on players education and awareness is key, and as such FIFA, the national associations and the player unions (provided they don’t have a conflict of interest as agents or an agency themselves, as in England with the PMA), need to do more to raise awareness before putting unnecessary onus on the players.

In terms of the proposals from FIFA all 5 are reasonable, BUT only if the players are aware of their responsibilities and have a basic understanding of agent regulations and licensing, which I would say currently a very large proportion are not.

Firstly, by FIFA proposing that should the player seek independent legal advice in regards to a transaction (or football related matter) they ‘shall not make use of the services of any legal representative of the agent or any person recommended by the latter’, this in itself is a sensible measure. However, there are some initial stumbling blocks here: (i) are players aware of the need to seek independent advice? (ii) a mistrust of agents by legal advisers for fear of losing the client to another agent/lawyer, (iii) national associations and player unions surely should provide roots to suitable and independent legal advisors, (iv) not all players can afford suitable advisors, and (v) the often specialist legal knowledge required.

The second proposal from FIFA again seems sensible, but is it practical given the current situation, knowledge level and the history of the regulations? In placing the responsibility on the player that they “must” ensure the agent representing them registered the relevant mandate contract with TMS, the player first has to be aware of the need to do this and then who to check it. As it stands I doubt most players would have the notion to do this, or know how to actually check it (i.e. through the national association given that players don’t/won’t have access to TMS). Plus there are reportedly many cases of agents not ‘lodging’ representation agreements with the authorities which have gone un-addressed for many years. This in itself is related to another of FIFAs proposals, in that, “a player must only deal with an agent who is appropriately licensed” to which similar questions arise as to knowledge of the obligation and how to achieve it, especially given that previous licensed agent registers have often been inaccurate, out of date and sometimes even inaccessible.

The other proposals from FIFA in terms of the ‘rights and duties of players’ centre around player payments to agents in that the “player must pay the applicable commission to the agent in a timely manner in accordance with the terms of the pertinent representation contract”, and that the “player must pay the commission to the agent via the clearing house established by the football governing bodies”. For many reading into this topic for the first time these will seem perfectly reasonable proposals that are fair and logical, however for those who have operated in the industry for an extended period of time, past experience will cause some hesitation in openly welcoming these proposals.

Whilst many agents will welcome the proposal to their commissions having to be paid in a timely manner they will have some reservations about the clearing house, especially many of those who have dealt with the ‘clearing house’ operated by the FA in England, where the processes have led to late payments and confusion over payments, and even legal action in challenging the system. If the system is proficient and provides means for agents, clubs and players to be kept informed of the payment process and that transactions are dealt with in a timely manner, I think it will be welcomed by those who operate legitimately, whilst also leading to greater transparency.


Rights and Duties of Clubs

I won’t spend too long on the proposals from FIFA in terms of the ‘rights and duties of the clubs’. Suffice to say many of these proposals currently exist if not existed in some form in the regulations prior to 2015.

The proposal of providing a ‘Key Terms Document’ to the player (transaction details such as parties involved, terms, agent commission) prior to a proposed transfer is perfectly reasonable, given that it follows a standard format that is not confusing to the player, and again the player is given time to consider and/or seek independent legal advice (should they wish to do so).

The other proposals I will draw attention to are those that (i) “a club must only deal with an agent who is appropriately licensed” and (ii) that the “club must play the applicable commission to the agent in a timely manner in accordance with the terms”. Again, in my opinion these are proposals to be welcomed. However, from past experience such proposals were (and arguably are) part of regulations for an extended period and the question is why do they need to be reiterated? The reason being that although nothing new, such regulations have never been adequately enforced and any such sanctions have not been effective, and as with all these proposed regulation changes if they are not enforced and the sanctions not adequate there is no point in the regulations!


Right and Duties of Agents

I am sure there are many agents who would happily see regulations without a section addressing the duties of agents and as such happily sacrifice the ‘rights’ whereby they would accept a ‘wild’ market with no regulations to operate how they wish. Yet what I would say is that a large proportion of agents would welcome a professional and legitimate industry in which to operate, observing regulations and undertaking their duties which in turn gives them rights and protection as legitimate football participants.

Under the proposals the first thing that draws my attention is the ‘right’ of the agent “to see a resolution of the matter by arbitration within the relevant framework established by the football governing bodies” should their representation contract be ‘disrespected’. Now this on the face of it seems reasonable but if applied in the wrong manner will be more of a ‘restriction’ than a ‘right’, in that football’s arbitration mechanisms don’t always fit with all dispute given the cost of such and the time it can take to resolve such matters. As such special dispensation needs to be given for less costly and less complex disputes to be resolved through an applicable legal process or court outside of the football framework.

In terms of the many duties proposed for agents, this is a bit of a mishmash of the good, contradictory and seemingly unnecessary. The first two duties could be argued to contradict one another unless FIFAs proposals somewhat covertly suggest the prohibition of duality (dual representation for club and player); as these state “when acting for the player, to act exclusively in the best interest of the player”, whilst “if applicable, when acting for the club exclusively in the best interest of the club”.

The proposals also state that the agent is to “disclose all conflicts of interest and disqualify himself from any given transaction when such a conflict, whether perceived or actual, exists” – which to me is confusing as (i) there is no clear distinction as to what is a conflict of interest, (ii) is the agent to breach their contract with a client and thus their fiduciary duty on disqualifying themselves, and (iii) why the need to declare if they are then required to disqualify themselves. Surely a more pragmatic approach would be to declare prior to the transaction and then receive permission from the authorities in a timely manner, and the authorities review the transaction for conflicts of interest thus promoting greater transparency.

Understandably the proposals cover two aspects in regards to incentives and commissions being passed to third parties, however these in themselves are not exactly clear and come with perceived caveats. The first of these being that the agent “shall not pay on commissions in respect of agency work to non-licensed individuals or other agents who have not been disclosed on the transaction documents”, which in itself has always been inferred in the regulations. However, in regards to employees of the agent who undertake no-agent activity, this can become an onerous task to declare and regulate should the authorities not be able to definitively define what is and is not ‘agency activity’ (a problem they have had before).

In regards to inducements the proposals state that and agent “shall not cause any payment, inducement, gift or other benefit to parent, relatives or lawyers of a player or any official or lawyers of a club which they represent or seek to represent to a maximum value of X (e.g. USD$200)”. I accept that FIFAs committee are probably trying to be amiable on this aspect by looking to implement a limit, but does this not muddy the waters in terms of the valuation on an inducement/gift or indeed the time-frame in which multiple items can be given? Although I am largely against total prohibition in many areas, this is one where a total prohibition on such activity is needed not to restrict but just to give clarity to all recipients.

As I mentioned in the previous article the proposal for open-license terms on the condition of agents undertaking periodical CPD is a welcome and progressive proposal from FIFA. Therefore making the proposal that it is a duty of the agent “to undergo the e-learning modules on an annual basis and any further education determined by FIFA to be relevant to maintain the professional standards required to be licensed under the system”, is again an acceptable proposal on the basis that costs to agents for this are minimal, the system is fair and that all measures are  taken to tackle manipulation of the tests and cheating.


Transparency Disclosures

It is obvious that transparency is key to FIFA nowadays and as such it is no surprise that the proposed changes to agent regulations hinge somewhat on this aspect.

Therefore, the proposal that “agents and clubs shall be required to disclose/report all commissions received (for agents) and paid (for clubs) as well as transaction details on an annual basis through TMS/DTMS”, is to a greater extent a understandable measure. However, where I would question the wording of this proposal is – is this requiring clubs and agents to undertake additional declarations on an annual basis in addition to the proposal for information submitted on a transactional and ongoing basis? With my experience in the IT industry surely the development of the TMS/DTMS to collate the transactional, registration, licensing and clearing house (payment) data will be providing a mechanism for the clubs and agent to see an annual report which they can approve and sign off or amend rather than have to duplicate data that has already been submitted ?


Compliance

Compliance (as with sanctioning) are areas I think are key in addressing many of the issues in regards to football agent activity, purely on the basis that in my opinion the reason why this has spiralled somewhat out of control is that participants weren’t compliant with previous regulations as the enforcement and sanctions were unsatisfactory.

As such with the perceived proposals to greatly enhance the TMS/DTMS this should allow for greater transparency and compliance from legitimate agents, and subsequently allow for FIFA and the football authorities to more accurately monitor compliance, with the proposal that “’flags’ will be visible in the system”.

From past experience I would agree that not all sanctioning bodies (such as national associations) are effective or efficient, and although this is not always down to the resources and staffing they have available, the proposal from FIFA that “the relevant sanctioning bodies should be appropriately staffed to ensure that they can fulfil an investigatory function” should again be a welcome proposal.

However, as I said earlier, the matter of staffing and resources is not always the cause of a lack of efficiency, effectiveness and compliance, but as an independent consultant pointed out to me previously when reviewing the governance of a National Association – ‘their failings are not down to a lack of willing or resources, but a lack of knowledge, ability and understanding’. Sadly, for some time the regulation of agents by national associations is some way down the priority list and as such, if anything is needed from FIFA it is the clear message that national associations (and other sanctioning bodies) have a duty to uphold the regulations adequately and effectively, otherwise they can expect heavy sanctions themselves. The final proposal from FIFA under the section on compliance is that of establishing “an independent investigatory chamber dedicated to investigations”. Although on first glance this seems to be a positive move, it does raise more questions than answers with the current lack of detail. For example, how independent will it be, what will it investigate, what sanctions can it impose, and will it add unnecessary cost and delays to those matters being investigated?   


Sanctioning

You will not find me disagreeing with FIFAs initial proposals on sanctions, as for a long time I have viewed these as largely ineffective, disproportionate if not totally lacking on matters relating to agent activity. Therefore the proposals by FIFA at this stage to levy “stronger sanctions over players, clubs and agents bearing in my mind the importance of efficient and viable enforcement” and “sanctions against players, clubs and agents for any breaches of the relevant provisions” (with a specific focus on inducements made to 3rd party player associates), are to be welcomed.

However, as I have stated before if these sanctions aren’t applied effectively and fairly both globally by FIFA and nationally by the national football associations, it will undermine the regulations as a whole


Implementation of Regulations at National Level

If FIFA’s proposals are genuine in their attempt to better regulate football agent activity then it must address the discrepancies and inequalities caused by a fractured regulatory system between different territories, and this is not solely the fault of the national associations but was compounded by FIFA in 2015 when the old regulations were abandoned and the regulations between territories/countries and their respective national associations became even more fractured due to a mix of complacency and confusion.

FIFAs proposal to ensure that “matters of a domestic nature to be dealt with by the member associations while matters with international dimension will be dealt with by FIFA” make perfect sense. However, where FIFA must be active to ensure this proposal is workable (unlike previously), is to ensure that the national associations carry out these duties in an adequate and effective manner, and provide a mechanism whereby participants can raise their concerns and complaints with FIFA directly in a timely manner; rather than before where agents have reportedly largely been ignored.

As such FIFAs proposal that they “will establish regulations, which lay down global and binding rules which will be mirrored at national level, subject to them being compatible with national law” is a positive sign, however will be ineffective if FIFA don’t enforce this proposal and sanction those associations who don’t act and/or are not efficient in upholding the regulations.