Could The Uncertainty of this Transfer Window Sow the Seeds of Confusion, Conflict & Disputes (with FFAR)

Could The Uncertainty of this Summer's Football Transfer Window with the New Football Agent Regulations Sow the Seeds of Confusion, Discontent, Conflict and Disputes?

17th June 2023

The previous article covered the notion that the summer football ‘transfer window’ in 2023 could be one of the most uncertain, not least as it falls in the middle of the introduction of the new FIFA Football Agent Regulations (FFAR). ( see : ‘The Summer of 2023 Could Well Be The Craziest of Transfer Windows – Particularly for Agents’).

The FFAR are scheduled to come into force ‘FULLY’ on October 1^st 2023 (having been approved by FIFA in December 2022), these regulations are still subject to various legal challenges, so only time will tell what the full impact will be not only in October but notably the weeks, months and years that follow.

A Volatile, Frantic if Not More Rapacious Spring and Summer than Usual for Agents

Even at the best and calmest of times, football agents have to be ‘on their guard’, as there will always be another ‘entity’ trying to unsettle or attain (‘poach’) their clients whether by ‘fair means or foul’. The simple fact is, for some considerable time (particularly since 2015) there have been more agents/intermediaries than there have been ‘higher end’ (dare I say, ‘profit yielding’) clients; resulting in a highly competitive, aggressive if not rapacious agent industry.

As such, the uncertainty caused by the way the FFAR have thus far been implemented has ‘thrown another spanner into the works’, with the reintroduction of the agent licensing system including the adjustment back to only ‘natural persons’ being approved as licensed agents and not also ‘legal persons’ (e.g., agencies/companies) as was the case under the past FIFA Regulations on Working with Intermediaries (RWWI).

Subsequently, it has been noticeable since FIFAs approval of the new FFAR in December 2022 that the volatility in the destabilising of agent-client agreements has been evident and the ‘poaching’ and unsettling of agent/agency clients has become even more prevalent as the market not only becomes more lucrative, but also competitive.

'Unlicensed Agents' (former 'Registered Intermediaries')

The first (and possibly the most obvious) aspect here is for those who may be unable to attain ‘FIFA Licensed Agent’ status under the FFAR by October 2023, either because they fail to meet the criteria or fail the agent’s exam. This would mean that they will not be able to undertake licensed FIFA agent activity after the 1^st October, and/or their existing representation agreements with their clients would arguably become null and void from the 1^st October 2023.

This is not to say that such individuals (or companies) are unable to operate in this summer transfer window as Registered Intermediaries under the 2015 RWWI (Regulations on Working With Intermediaries, it is my understanding that they absolutely are, and it is reasonable to think there are many hundreds (if not thousands) who still have to attain a FIFA Football Agents License for October 2023 (at the time of writing – June 2023).

However, from the 1^st October 2023 there could be a huge impact on the work such individuals undertake during the summer transfer window (and even before the window) as agent-intermediaries:

They are not permitted to undertake agency activity after the 1st October 2023 without a FIFA license under FFAR – so does this then draw into question the validity of their agreement/contract with their client (players, clubs, managers) on the terms and obligations of any such contract concluded after 16th December 2022 and/or 9th January 2023?
Some of these intermediaries/agents may have already had their positions undermined by others attempting to ‘woo’ their clients on the premise that the agent won’t be licensed from 1st October and the client is free to sign with them, noted from the fervour of some to identify others who failed the first FFAR agents exam in April 2023.
If the agent were to attempt to honour their obligations under the agreement after October 2023 they would be operating as an unlicensed agent and thus be subject to sanctions and possible exclusion from applying for a FIFA Football Agents License in the future.
If the agent’s client was to honour the terms of the agreement and make payment AND/OR use the services of the (now unlicensed) agent this would then raise another issue on the matter of the client breaching FIFA regulations and thus also make them liable to sanctions by paying an unlicensed agent or employing an unlicensed agent to provide ‘agent services’.
A big factor to also consider here are the legal implications, because if the agent-intermediary is an ‘unlicensed agent’ (under FFAR) post October 2023 – does this then mean they are permitted to undertake any legal action or recourse outside of FIFAs (and footballs) prescribed dispute resolution mechanisms and move straight to litigation through the courts etc, as they are no longer considered a ‘football participant’?

Like many others affected by the RWWI in this transfer window, this is not an easy situation for such agent/intermediaries, as whilst caught up in this confusion and trying to undertake agent duties for clients in the transfer window, they may also find themselves having to prepare for a crucial football agents exam on the 20^th September 2023, and their last chance to attain a license before 1^st October and the new regulations.

The result of this is of course disputes. Disputes between agents, disputes between players and agents, disputes between clubs and agents, disputes between managers and agents even disputes between players/managers and clubs.

The ‘Cap’ on Agent Commissions & Restrictions on Multi Party Representation

I couldn’t really get too far into such an article without mentioning the issue of the cap on agent commissions under the new FFAR, not least as I believe it will have a significant impact in this transfer window, both in the immediate and longer term. Without getting into the ‘rights and wrongs’ as well as the specifics of the cap, this again will seemingly have huge implications come the 1^st October 2023.

In effect the business transactions undertaken in this 2023 summer transfer window fall under the 2015 RWWI, meaning amongst other things (subject to national restrictions) there is no cap on the agent’s commissions, length of representation agreement, who pays the agent or indeed the restrictions on dual representation.
However as of the 1^st October 2023, this changes overnight in regards to all agent representation agreements concluded after 16^th December 2022, when all agreements will then have to be amended (or include a secondary set of clauses) to adhere to the FFAR in full; including the cap on agents fees etc.

The implications, complications and considerations from this could possibly generate an article of its own, not least as there are so many nuances and questions that may still need to be answered and problems addressed. Just some such examples are:

If a contract between an agent and a client doesn’t adhere to the FFAR from the 1^st October 2023, is the agreement null and void?
If a contract is honoured by any party to that agreement on terms and obligations (e.g. payments that exceed the cap, payments that aren’t permitted dual-representation) are they in breach of the FFAR and subject to sanctions?
With the ‘client pays’ model (see section below) the terms of the agreement may need variation as of the 1^st October 2023, as does who is permitted to make the payment changes, and for what.

(You are going to get used to the following sentence(s) in this article 😊) –

‘Client-Pays’ Model (Theory)

Whilst the notion of the ‘client-pays’ model from FIFA is something I consider to be a relevant (if not commendable) aspect of FFAR in theory, the implementation and execution by FIFA I still find questionable (as with many other matters relating to FFAR). Even to the point where since the release of the FFAR officially in January 2023, I believe there to have seemingly been some ‘slight of hand’ by FIFA with supplementary documents to the FFAR to possibly ‘move the goalposts’ a little on the aspect of the interpretation of ‘client pays’ to avoid criticism and complaints (although I would argue there is still seemingly some contradiction between the FFAR documents from FIFA on this matter).

However, this again is an important consideration in regards to the summer 2023 transfer window and the implementation of the FFAR ‘fully’ in October 2023, in a similar way to some of those aspects mentioned already. As such the party referred to as having the responsibility to pay the agent in any agreement finalised after 16^th December 2022, may arguably have to change after the 1^st October 2023 on the full implementation of the FFAR, so as to comply with the FFAR.

As such, some may get a ‘nasty surprise’ when the obligation to pay the agent suddenly falls to them, or some agents may even find themselves unable to get paid on agreements agreed some 9 months previously, based on the changes.

Agent or Agency Representation

Another thing to consider is the adjustment that agents and agencies look to make in terms of their fiscal considerations (if not cuts), should the capping of agent commissions and other restrictions come into force under FFAR (once all the legal challenges are concluded).

This gets a bit more complicated when we consider the adjustment under FFAR back to just ‘natural persons’ as FIFA licensed agents, whereas under RWWI, ‘legal entities’ (i.e. companies, agencies) were able to become ‘Registered Intermediaries’ (as mentioned previously).

In light of FFAR this has seemingly resulted in agencies understandably looking to move clients from agency-representation-agreements (as ‘legal persons’) to a hybrid nominated agent/agency arrangement (if not in place already); if not discarding agents all together or making them consultants to cut costs, but possibly keeping the clients through another (senior) agent.

However, this metaphorical ‘blade’, ‘cuts both ways’, as intermediaries (agents) may see an opportunity to secure the client with whom they have built up a relationship as their own client, rather than a client with their parent-agency/employer and arguably use this position as leverage to either secure better terms with the parent-agency, move to another agency (thus taking the client with them) or even consider ‘going it alone’ as an independent agent.

And whilst the primary assumption here is an increase in the disputes solely between agents (and/or agencies) –

…….. the result of this is of course a wider range of agent-activity related disputes. Not just disputes between agents, but also disputes between players and agents, disputes between clubs and agents, disputes between managers and agents even disputes between players/managers and clubs.

‘Legacy’ Contracts/Agreements and Their Long-term Impact

I haven’t yet touched upon representation agreements/contracts that agents/agencies concluded with a client prior to the 16^th December 2022 (when FFAR were approved), as to all intents and purposes these seemingly fall largely outside of the remit of FFAR and will largely be unaffected in October 2023 (and the summer transfer window), unless renewed or amended.

If an agent-client representation agreement was concluded in say November 2022, arguably most of the new provisions of FFAR would not be applicable until typically November 2024. Thus, the agreement resides in a ‘RWWI-vortex’ somewhat, unregulated and not impacted by such elements as the ‘cap’ on agent commissions and permitted dual-representation. And when we consider the fact that, in some territories representation agreements between agents/intermediaries and their clients have been permitted to have longer terms than that of 2 years, this term of seeming FFAR ‘untouchability’ for some is extended even further than November 2024 (as would be the case with a 2 year limit on the term of a representation agreement).

Some may argue it would take an agent/agency with psychic ability, a crystal ball or dare I say ‘insider information’ to establish representation agreements to bypass the impact of FFAR prior to December 2022, as FIFA had the hindsight to establish that the FFAR would have some applicability as soon as the regulations were approved. However, this is in my opinion simply not the case, as the mention of a ‘cap’ on agent fees and the more contentious elements of FFAR were spoken of and/or proposed by FIFA since 2018/19. As such if people think some savvy agents haven’t been wise enough to be renewing representation agreements with clients in the intervening period, then you vastly underestimate them.

Whilst there is some uncertainty surrounding what happens should the representation agreement/contract expire prior to client’s other contracts expiring (e.g. playing, commercial) or being renewed, amended etc – it is worthwhile considering that the implications of such, may well have an impact way beyond October 2023.

And just when we thought things couldn’t get any more complicated, let’s take the possibility of a playing/employment contract being signed by a player in the Summer 2023 transfer window, but their associated agent representation agreement being signed with their agent in November 2022. Therefore, it is seemingly possible for the term of that agents participation in that transaction falling outside of some aspects of FFAR, until the Summer of 2031 in the case a 8 year playing contract (not unheard of – e.g. Mykhailo Mudryk signing a reported 8½ year contract with Chelsea in January 2022).

** A subsequent after thought by myself whilst writing this article is that, some agents/agencies may even risk allowing ‘legacy’ agreements to run for as long as they can, so that they apply in the summer transfer window not just in 2023, but possibly even 2024. With the aim of allowing their representation terms to ‘escape’ some of the restrictions imposed by FFAR (e.g. no ‘cap’ on agent commissions).

However, with this huge reward also comes huge risk. Granted the larger agents/agencies are far more resilient to the attempts of others to ‘poach’ their clients, but in taking this risk, the more vulnerable agents may risk losing clients as the remainder of a representation agreement slowly dissipates.

Granted these aspects are all very nuanced and somewhat complicated, if not theoretical. But in combination with other factors (some of those covered above) –

……. the result of this is of course disputes. Disputes between agents, disputes between players and agents, disputes between clubs and agents, disputes between managers and agents even disputes between players/managers and clubs.

Do Measures Undertaken by FIFA Signal Imminent Chaos and Disputes?

So, with all of this in mind, are FIFA and the football authorities expecting chaos, confusion and disputes as a result of FFAR after the 1^st October 2023?

Whether you give FIFA credit for seemingly demonstrating some foresight with new dispute resolution mechanisms; such as the ‘agents chamber’ as part of the new FIFA Football Tribunal and the new

mediation panel (for which I have some considerable reservations and concerns, which I will cover in a future article), I think the resounding answer is YES – FIFA do seemingly expect disputes and problems as a result of the new FFAR.

The question is whether FIFA see the problems rather naively as ‘teething’ problems or longer-term issues, remains to be seen – but no doubt discontent, conflict and disputes will happen because of these changes. PLUS, it is worth noting that many of the measures FIFA have put in place, only cover transactions with an ‘international dimension’ ……… what happens to the huge number of other disputes?