Players' agents: past, present ... future?

• Author: Martins, Roberto Branco

After the well-known Bosman case, the European labour market in professional football changed substantially. Due to Bosman the 3+2 rule (1) was repealed and the payment of transfer sums at the end of a players' contract was found to be illegal in the territory of the European Union for internal EU transfers. (2)

Since the abolishment of the limitation of the number of foreign EU players there has been an immense influx of foreign EU players in EU domestic leagues. Eventually, also many non-EU players began to be employed by EU clubs due to the lower acquisition and salary costs of these players as compared to EU players. Due to the elimination of out-of-contract transfer sums players could receive higher sign-on fees and players' salaries rocketed. A shift occurred in the duration of employment contracts from short-term contracts to longer-term contracts as clubs attempted to keep players on now that they could leave a club without any difficulty. Longer-term contracts also ensured a surrogate "transfer sum" in the form of damages for preliminary breach of contract if players left before the contract was fully served. If one adds to all these elements the fact that football players are, in general, relatively young high-skilled workers acting in a sector that operates under the magnifying limelight of the global media and the fact that many clubs are financially dependent on (international) transfers of players, the outlines of a truly idiosyncratic international labour market clearly emerge. (3) It is due to these aspects that the profession of players' agents has evolved over the past twenty years into an activity that is carried out by thousands of persons worldwide. Nowadays players' agents play an indispensible role as the link between players, associations and clubs. They are the oil that keep the wheels of international football in motion.

In this contribution a short overview is given of the way in which the profession of players' agent has been regulated throughout the (recent) years. This overview is followed by listing some of the indicators for the need to regulate the profession. Despite the regulations already in place, there have been many calls for still stricter regulation coming from stakeholders in international football, including the agents themselves, and from politics. The reasons for this development are also explained in this contribution. Subsequently, some recent actions that affect the future of the agent industry are described, namely a study into the activities of agents ordered by the European Commission and an early draft of FIFA regulations dealing with the activities of intermediaries. Finally, in the conclusion, a look is taken at the future: who can best ensure the sound regulation of a true football profession and guarantee the protection of professional agents, players and clubs against corruption?

FIFA Players' Agents Regulations

From the mid 1990s up to 2001 players' agents were granted a licence by FIFA to carry out the profession of players' agent. In those days, applicants had to take an oral exam that was carried out by employees of the national governing bodies. After passing the exam the only further requirements were the deposit of a CHF 200,000 bank guarantee and signature of a code of conduct, after which the agent could start carrying out his activities.

Due to the growing number of agents and the increase in the international movement of players a new licensing systems for agents was introduced in 2000 which entered into force in 2001. These 2001 regulations introduced the written examination and licensing of agents by FIFA was replaced by licensing by the national member associations. For this reason, the wording "FIFA-licensed agent" no longer applies since 2001 with the official wording now being "Agent licensed by (the national) FA". In order to avoid an overly elaborate description, below only the most recent version (2008) of the players' agent regulations will be discussed in broad terms.

The 2008 Players' Agent Regulations (PAR) determine that only licensed agents can carry out the profession. However, certain categories of individuals are exempted from the licensing requirement and may act as agents regardless: parents, siblings or spouses of players as well as legally authorized practicing lawyers are allowed to carry out the activities of an agent without falling under the jurisdiction of FIFA. Natural persons not falling under the exempted categories may only take the examination at their national association if they have an impeccable reputation and they may not, under any condition, hold a position as an official, employee, etc. at FIFA, a confederation, an association, a league, a club or any organization connected with such organizations or entities. After passing the examination (4) the agent further needs to take out liability insurance and sign a code of professional conduct before receiving his license.

The license is temporary and expires after five years. The agent then needs to take the exam again and if he fails the license is suspended until the exam is finally passed. Examinations take place once or twice a year on a date set by FIFA. (5) The agent is further obliged to conclude a written contract with the player he represents, meeting further formal requirements and for a maximum duration of two years. (6)

The agent is allowed to work for players as well as for clubs upon the request of either. In accepting such requests, agents need to avoid any (potential) conflicts of interest. In addition, the agent is a priori presumed to be guilty of inducing a player to breach his contract if the contract is breached prior to the contract's expiry and without just cause. (7) The burden of proof rests upon the player to establish that he is innocent in order to avoid a sanction. Sanctions that may be imposed upon agents for violating the regulations are a reprimand or warning, a fine of at least CHF 5000, suspension of the licence for up to 12 months, withdrawal of the licence or a ban on taking part in any football-related activity.

The regulations also include the rights and obligations of clubs and players. Clubs may only work with licensed agents and have to make reference to the agent in any contract that has been negotiated by the agent. (8) In the context of a player's transfer, clubs have to make sure that they pay agents by means of a lump sum only of which the amount has been agreed in advance. (9) If clubs violate these regulations they can expect to be warned or severely punished, with sanctions ranging from fines to deduction of points, transfer bans and even relegation to a lower division. (10)

Players that use the services of agents may choose to pay the agent by means of a lump sum or a fee on a yearly basis. The fee is based on a percentage of the annual income of the player. If no agreement is reached concerning the fee, the agent is entitled to receive 3% of the annual income of the player, including any sign-on fee. (11) If the player is responsible for a violation of the regulations he can be warned or punished by a fine of at least CHF 5000, a match suspension or a ban on taking part in any football-related activity. (12)

The need for regulation of the profession of agents

It is common knowledge in football practice that discrepancies occur in the international transfer business. However, problems directly involving agents rarely come before the relevant (international) football arbitration or dispute chambers. (13) Nevertheless, there are many sources that may serve to illustrate the type of problems connected with agent activity from which the need for regulation has become obvious. Below some snapshot examples will be given using different perspectives.

European Court of Justice

The European Court of Justice (ECJ), the highest court in the European Union, has dealt with the players' agent regulations in a case that was decided in 2005. (14) French citizen Laurent Piau filed a complaint against the PAR of 1995. Piau questioned the legality of the regulations and FIFA's authority to draft and implement these regulations. The ECJ was of the opinion that

"Thus the need to introduce professionalism and morality to the occupation of players' agents in order to protect players whose careers are short; the fact that competition is not eliminated by the licence system; the almost general absence (except in France) of national rules and the lack of collective organisation of players' agents are circumstances which justify the rule-making action on the part of the FIFA." (15) The Independent European Sport Review (2006)

The Independent European Sport Review is a study that was undertaken in the context of the EU dealing with the specific nature of sport in European Union law generally, and using football as a case study. The findings were published in 2006. The UEFA, the European governing body in football, has fully endorsed these findings. (16) The study made a strong contribution to the flourishing debate on the regulation of professional sport in relation to the application of EU law and freedoms. The review also focused on the activities and regulation of agents:

"Having analysed both the legal reasoning set out in the Piau case and also the practical operation of regulatory control of agents in the...