On 1 April 2015, the regulatory framework governing the conduct of Agents underwent huge change. The FA’s new RWI superseded the existing regulatory framework, called The FA Football Agents Regulations (FAR), and had immediate and wide reaching implications for players, clubs and Agents. This article focusses on some of the most radical, potentially contentious, and troublesome areas of change for those who were, and will be, affected by the regulations:
- The Intermediary;
- Representation contracts;
- 3% commission cap recommendation;
- Professional indemnity insurance; and
- Dispute resolution
One of the most radical changes implemented by the RWI is the revocation of the Agent Licence. Previously, a strict licensing system was managed by FIFA and the FA and licenses were only issued to Agents who passed a formal examination. However, under the RWI, an “Intermediary” simply has to register with the FA, pass a simple declaration based “Test of Good Character and Reputation for Intermediaries” and pay a registration fee.
Given the RWI were designed to protect the interests of players and minimise exposure to unlicensed Agency Activity, questions are being asked about whether a more relaxed registration process in this country is the answer. We only have to look at the problems experienced with the Fit and Proper Persons Test for directors and owners of football clubs, to remind ourselves of the issues that similar initiatives have caused. At the time of writing, there are over 1,000 FA registered Intermediaries.
Another interesting point to note is that ‘Legal Persons’ can now conduct Intermediary Activity and represent players and clubs. As a result, we are now seeing larger corporates, like accountants, lawyers and financial advisors entering the market and pitching for work from players and clubs which previously ‘should’ only have been handled by licensed Agents.
A serious concern, mainly for Agents, was that the RWI would immediately revoke the Agent’s Licence and effectively invalidate all representation contracts that existed between Agents, clubs and players. There was an opportunity to re-register existing representation contracts, but a number of players and clubs have exploited this to renegotiate the terms of the representation contract with their current Agent, or even terminate the relationship altogether.
The RWI require all new representation contracts to be lodged with the FA, including when representing minors free of charge. The contracts lodged should contain the entire agreement between the parties, including all obligatory terms. The maximum duration of a representation contract in England remains 2 years.
3% Commission cap recommendation
Arguably the most contentious change implemented by the RWI is the recommended 3% commission cap on the remuneration for intermediaries from a player’s basic gross income, for the duration of his contract, or the eventual transfer compensation if acting on behalf of a club. This is a significant difference to the previously accepted industry standard of 5-10%.
FIFA and the FA stopped short of imposing this 3% limit as a fixed cap over fears of anti-competitive behaviour. However, this has not stopped the Agents’ union body, Association of Football Agents, lodging a complaint with the European Commission on grounds of anti-competitive behaviour. We may yet see similar complaints in light of the FA’s RWI if players and clubs seek to insist on the inclusion in contracts of the 3% recommended commission entitlement.
Whilst many in the football world will see the commission cap recommendation as a positive element of the RWI, it may have serious implications for Agents who operate their businesses on smaller margins and larger overheads. When coupled with the more relaxed registration regime, the Intermediary market is likely to see a shake up as competition inevitably increases.
Professional indemnity insurance
It was a requirement of the previous FAR that Agents should have appropriate professional indemnity insurance in place. However, for reasons unknown, the full extent of the FA’s direction on professional indemnity insurance for intermediaries is to recommend, in a side note, that Intermediaries obtain appropriate cover. There is no formal mention of mandatory professional indemnity insurance in the RWI, which seems slightly alarming when considering the size of some professional contract payments and the relative laxity of the new registration criteria for Intermediaries (see above).
Under the FAR, any disputes between Agents, players and clubs were subject to arbitration proceedings governed by Rule K of the FA Rules. The FA could refer matters to FIFA who would also have jurisdiction to deal with cross-border disputes. However, under the RWI, regulatory governance and sanctions are managed and imposed solely by the FA. FIFA maintains a ‘supervisory’ role, and can decide whether a sanction imposed by a national association should be extended worldwide, but it has no jurisdiction to hear disputes concerning intermediaries.
In fact, the RWI are silent on the appropriate forum for dealing with disputes involving Intermediaries. The FA requires new Intermediaries to accept its jurisdiction and be brought under the regulatory defined ‘Participant’. However, many Intermediaries have rejected this concept, or at least reserved their position whilst registering under duress, in light of the AFA complaint to the European Commission. As a result, we may see a larger number of disputes, which will no doubt have their facts revolving around some of the issues highlighted in this article, being heard in national courts. This may be seen as a positive development as the confidentiality of arbitration will be removed and precedents may lead to greater consistency.
There are a number of other changes which have been implemented by the RWI which are beyond the scope of this article. However, the issues highlighted above are areas likely to give rise to concern and confusion. Whether you are an Agent, club or player concerned with the validity of your current representation contract, which may have lapsed on 1 April 2015; whether you or your business are interested in entering the market as an Intermediary; or whether you are a player, or a concerned parent, worrying about the quality of service and representation you, or your child, will receive, then we recommend you seek advice on your position.
DWF has a dedicated Sports Group who will be able to deal with all of your queries and we very much look forward to hearing from you. More information on the DWF Sports Group can be found here: http://www.dwf.co.uk/sectors/s/sports/This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.