Can Football Expect a 'Tidal Wave' of Agent & Player Disputes?
19th February 2023
Whilst there are many issues and questionable areas with the
new FIFA Football Agent Regulations (of January 2023) that draw the attention, if
not ire and criticism of many (not just agents), there is one key area that is currently
being somewhat overshadowed by the more headline grabbing issues of ‘caps’ and ‘consultation’.
Yet the matter which this article looks to address is one
that doesn’t solely affect agents but will also inevitably affect players, managers/coaches
and indirectly clubs and other football participants/stakeholders.
The Likely Outcome: A Tidal Wave of Disputes and Acrimony
Whilst it is believed that the intention behind the regulatory change is that of greater transparency and addresses potential ‘conflicts of interest’, the outcome of which isn’t only less transparency but ultimately many more disputes between football agents and their clients, such as players and coaches/managers.
The level of disruption and mistrust that could be generated between various football participants from this regulatory change is clear to see, and whilst football already has numerous dispute mechanisms in place (e.g. arbitration), these can be somewhat complex, slow and notably expensive for the parties in dispute. Even with the addition of FIFA’s new ‘Agents Chamber’ to address agent related disputes, this will seemingly only have limited capacity and solely address agent disputes of an international dimension.
Subsequently, the dispute resolution mechanism that will help settle the raft of inevitable disputes between football agents and players (plus managers/coaches and clubs) will be mediation.
Sentinel Football Mediation services was established to address football disputes such as these, and thus offer football agents, players, clubs and coaches/managers a means to resolve such disputes (if not repair relationships) in a timely, cost effective and confidential manner – rather than the more costly and limited offerings of litigation and arbitration.
FIFA's Change to the Football Agent Regulations
The particular regulation to which to draw attention to, is ‘affectionately known’ as ‘Article 14, Paragraph 2’, which states:
So, in essence it could be said that on first glance there is, nothing wrong with this regulation in its ‘pure’ form. The intention of FIFA and the regulations is good, and to those who are unaware of the previous regulations/allowances, most would draw the same conclusion. It makes the relationship between agent and client (whether player, manager/coach, or club) very clear; the client pays the agent ‘directly’ for the service provided to them.
In most industries and agent related environments and workplaces, this is the accepted practice; for the client to pay the agent as the service provider. The problem however arises in football due to the common practices that went before and the regulations that allowed for other parties (i.e. the club) to pay the fee to the agent on behalf of the client (i.e. the player).
The Debate of the Player Paying Their Agent
Now the matter of who pays the agent is one that is very much open to debate and has been lamented over for many years. Many in the media along with a vast number of football supporters voice the often misinformed opinion that players should pay their agents, something which many would wholeheartedly agree with.
Yet this debate in itself has been somewhat skewed over the years, as even when a club pays the agent, it is ‘on the players behalf’, for services rendered to the player by the agent; and not as some believe to be a case of the club paying the agent for services to the player out of their own ‘coffers’ (or shouldn’t).
For the purposes of this article; the matter is referred to in terms of how it is dealt with within the United Kingdom (UK, i.e. England, Scotland, Wales and Northern Ireland) just to keep things simple; as it is accepted that the tax treatments, laws and football industry practices around the world will vary.
To clarify things, the payment to the agent by a club for services to the player (as the client) is in most cases a payment from the player (albeit indirectly). As such, this has been common practice for many years in football, and is acceptable to (and preferred by) agents, clubs, players alike and permissible under the regulations of the likes of The FA and FIFA, as well as the UK tax authorities (HMRC).
Common in Many Professions, But Subterfuge in Football?
Yes, questions are quite rightly asked as to whether this method of payment is on occasions for some, nefarious purpose that arguably benefits one party or another, whilst disadvantaging someone else.
Yet from first hand experience, whilst some agents may well accommodate the player (client) paying them directly, it is accepted as easier for all involved (club, agent and player) for the payment to be made to the agent by the club ‘on the players behalf’.
In most cases, the amount paid to the agent for services rendered to the player is currently permitted, either by a direct deduction from the players salary or paid to the agent on the players behalf as ‘a benefit in kind’. Such a payment is declared (in the UK) to the tax authorities on the ‘P11D’, somewhat in a similar way in which an employer in any industry may make payments on behalf of the employee to a third party as a taxable ‘benefit in kind’ (e.g. a company car, accommodation as part of their employment agreement). All such payments are openly declared and available to be scrutinised by the parties to the transaction should they so wish.
Trouble Causing Tactic or The Aim of Transparency & Fairness
The football agent industry is very suspicious of the intentions of the football authorities (both FIFA and national associations) in a seeming intention on increased ‘transparency’ when it comes to agent payments, and also the heightened publicity of payments to agents generated by the same authorities.
Some, including those in the football agent fraternity have labelled it as intentional ‘trouble causing’ and ‘rabble rousing’ with the ultimate goal of destabilising the relationship between players (as the client) and their agents. One of the first ‘triggers’ for this was the (re-)introduction of a national regulation by the English FA making it an obligation for intermediaries (agents) to provide (on request) an invoice/declaration detailing all payments they received in regards to the player.
Adding to this mistrust, the new regulation (Article 14.4) announced by FIFA in January 2023 regarding direct payments from client to agent (i.e. “The service fee due to a Football Agent shall be paid on an invoice basis”) will only heighten the suspicions of agents and their animosity with the Football Authorities.
The Outcome – An Awakening and Likely Disputes
As already stated, it is a firm belief that the imposition of such a regulation as ‘Article 14.2’ will lead to inevitable disputes in the football world, mostly between players and agents. Such disputes will likely have ‘knock on’ effects for clubs and others, such as; disrupting transfer activity, affect the atmosphere within teams, drag clubs into such disputes and generally cause unnecessary and unwanted distractions.
The change will no doubt be a ‘wake-up call’ to some players as to what they pay their agents (and for what), in having to pay them directly and/or on seeing an invoice from the agent for such services. Given the fact that some players are under the illusion that they don’t actually pay their agents (as they believe the club does) because they don’t directly make any payment to the agent, this change will be quite a surprise to them when having to pay the agent directly from their own finances (net), on multiple occasions, over the course of a playing contract.
It should already be clear to most players what they pay their agents; firstly, from the details in their playing contract (with their club) and their representation agreement (contract) with their agent(s). And secondly, it would be hoped that they are also seeking independent advice from an accounting and tax professional, who would seek to clarify such deductions and payments from their salary.
The key fact is that come the implementation of this new regulation (primarily 14.2 and 14.4), there is likely to be a huge increase in disputes between football agents and players. This may be down to pure confusion over such payments, late payments, incorrect payments or a realisation and questioning as to what the player (client) is actually paying the agent for. This is, however, somewhat irrelevant, as a dispute will be a dispute. Subsequently any such disputes will likely be pointed in the direction of FIFAs ‘Agent Chamber’ or national football association dispute resolution mechanisms such as ‘Rule K’ arbitration (with the English FA), depending on the circumstances of the dispute.
Both of these courses of action for dispute resolution often take time and come at great cost to the disputants, and as in most football related disputes, even litigation through the courts is not viable. As such, the belief is that the only realistic route of settlement for such disputes is through mediation, as it is confidential, quicker and more cost effective; whilst also providing a higher likelihood of maintaining a positive working relationship between agent and client thereafter.
Sentinel Football Mediation Services provide such mediation services to players, agents, coaches/managers, clubs and other football stakeholders in such disputes. Added to this, Sentinel Football Mediation are specialists in football agent disputes with a long standing knowledge and understanding of the football agent industry, so as and when such disputes do arise, Sentinel is on hand to provide support.
FIFA Football Agent Regulations (Jan'23) : Article 14
Article 14: Service fee – general principles
1.
A Football Agent may charge a service fee to a Client as agreed in a Representation Agreement.
2.
Payment of the service fee due under a Representation Agreement shall be made exclusively by the Client of the Football Agent. A Client may not contract with or authorise any third party to make such payment.
3.
The only exception to the principle in paragraph 2 of this article is when a Football Agent is representing an Individual and their negotiated annual Remuneration is less than USD 200,000 (or equivalent), not counting any conditional payments. In such cases, an Engaging Entity may agree with an Individual to pay the service fee for that Transaction to their Football Agent in accordance with the Representation Agreement.
All of the following conditions must apply:
a) The service fee payment made by the Engaging Entity on behalf of the Individual shall not affect the fiduciary duty of the Football Agent to the Individual. It must also not create any dependency or subordination of the Football Agent towards the Engaging Entity.
b) The service fee payment made by the Engaging Entity on behalf of the Individual must be no higher than the agreed service fee in the Representation Agreement between the Individual and Football Agent.
c) The Engaging Entity may not deduct any service fee payment made pursuant to paragraph 3 of this article from the Individual’s Remuneration.
4.
The service fee due to a Football Agent shall be paid on an invoice basis.
5.
A Football Agent is entitled to receive a service fee only if the fee corresponds to the services stipulated in advance in a Representation Agreement, and the Representation Agreement is in force at the time at which the relevant Football Agent Services are performed.
a) Where an employment contract has a duration longer than the associated Representation Agreement, a Football Agent may receive a service fee after expiry of the Representation Agreement as long as the Individual’s negotiated employment contract is still in effect, and provided that this is expressly agreed with the Client in the Representation Agreement.
6.
Payment of any service fee shall be made after the closure of the relevant registration period and in instalments every three months for the duration of the negotiated employment contract.
7.
Only the Remuneration actually received by an Individual shall be subject to the payment of a service fee, calculated on a pro-rata basis.
8.
Where a negotiated employment contract is less than six months in duration, payment shall be made in a single instalment at the expiry of the negotiated employment contract.
9.
A Football Agent may not receive a service fee when engaged to perform Football Agent Services relating to a minor unless the relevant player is signing their first or subsequent professional contract in accordance with the law applicable in the country or territory of the member association where the minor will be employed.
10.
Where a Football Agent acts on behalf of an Engaging Entity and an Individual in the same Transaction under article 12 paragraph 8 a) of these Regulations (permitted dual representation), the Engaging Entity may pay up to 50% of the total service fee due.
11.
A Releasing Entity shall pay a service fee to a Football Agent following receipt of each instalment of the transfer compensation due to the Releasing Entity. The Releasing Entity shall duly inform the Football Agent of any such instalments received.
12.
A Football Agent is not entitled to receive any service fee not yet due deriving from a negotiated employment contract where:
a) the Individual transfers to another Engaging Entity before the negotiated employment contract expires; or
b) the negotiated employment contract is prematurely terminated by the Individual without just cause and the Football Agent still represents the Individual at the time of that termination.
13.
All service fee payments to Football Agents shall be made through the FIFA Clearing House in accordance with the FIFA Clearing House Regulations.
a) If the FIFA Clearing House Regulations do not regulate service fee payments to Football Agents when these Regulations enter into force, payment shall be made directly to the Football Agent until such time that the FIFA Clearing House Regulations regulate service fee payments.