• Kyle Winquist

FIFA is Cracking Down on Agents


[1]


After leading soccer agent Mino Raiola’s insurmountable 49% share in Paul Pogba’s $131,340,000 transfer from Juventus to Manchester United back in 2016, FIFA began turning its attention towards restrictions, or lack thereof, surrounding agents.[2] Now, despite a detrimental financial impact from COVID-19, clubs were reported to have paid $653,900,000 total in 2021 for agent fees alone, four times more than in 2015.[3] This seemed to be the tipping point for FIFA. In response to the exponentially growing market for agent fees, FIFA has proposed restrictions relating to football agents and their compensation.[4]


Extensive consultation between players, agents, clubs, leagues, and stakeholders has led to a variety of proposals.[5] One main restriction and two other smaller restrictions have been proposed: an agent commission cap of 10% on a player’s transfer fee and 3% on a player’s weekly wages, a mandatory license requirement, and the creation of a clearing house in which all agent commissions must be filed.[6] According to FIFA, this is necessary to “increase transparency, safeguard player welfare, improve contractual stability and ameliorate professional and ethical standards.”[7] The proposed restrictions are part of a much larger reform implemented by FIFA to “protect the integrity of the system.”[8]


I. Caps on 10% of the Transfer Fee and 3% of the Weekly Wages


While all of the proposals will have an impact on the way in which agents are compensated, FIFA’s most impactful proposal is similar to the hard cap structure implemented in the NFL and the NBA.[9] Despite a soccer agent’s commission being based off a player’s weekly wage as opposed to their yearly salary like the NFL and the NBA, this hard cap structure aligns with the current NFL and NBA models where an agent may receive no more than 3% of a player’s yearly salary.[10] Similarly, FIFA is proposing that agents cannot obtain more than 10% of a player’s transfer fee and 3% of a player’s weekly salary.[11]


Until now, soccer agent restrictions have been relatively loose and left to individual national soccer associations (CONCACAF, UEFA, etc.).[12] Implementation of FIFA-mandated regulations would alleviate the burden of navigating various domestic regulations but could also bring into question serious anti-competitive legal concerns.[13] A 10% agent commission cap on transfer fees and a 3% agent commission cap for weekly wages could unfairly prejudice agents representing lower-league players.[14]


FIFA’s ‘Intermediaries in Internationals Transfers 2020’ report showed an average agent commission of 17.3% for transfer fees of less than $500,000, compared to an average of 5% for transfer fees valued at more than $5,000,000.[15] Typically, the higher the transfer fee, the higher the weekly wage and vice versa. Therefore, universal caps on football agent compensation could significantly decrease the potential income for agents representing lower-league players while potentially doubling the income for agents of upper-league players. Ultimately, agents of lower-league players could be driven out of business, resulting in a consolidation of power among agents of extremely valuable players.[16]


II. Mandatory License Requirement


In 2015, FIFA decided to do away with a previously required license.[17] Now, as a part of their newest proposed restrictions, they plan to reintroduce it.[18] Given the responsibilities of soccer agents, these agents have tremendous power and influence over their clients. This is only enhanced given the short playing careers of many professional footballers. Thus, equipping agents to effectively represent their clients in the best way possible should be of top priority. FIFA has recognized this and plans to implement various education measures as well as a requirement for continuing professional development to obtain a license.[19]


III. Commission Filed through a FIFA Certified Clearing House


The third major proposed restriction is the enactment of a clearing house in which all agent commissions must be documented.[20] The clearing house will feature a variety of functions allowing for increased transparency and the monitorization of compensation for agents.[21] Additionally, this will ensure compliance with national and international financial regulations.[22] Once fully functioning, the clearing house will serve as a one-stop-shop for all agent compensation information.


FIFA claims all their proposed restrictions are “sensible, reasonable, rational, proportionate, and necessary to protect the interests of players and the wider interests of football”.[23] However, despite such certainty, FIFA’s proposed restrictions have been met with harsh criticism, most notably from the agents themselves.[24]


Johnathon Barnett, agent for Welsh superstar Gareth Bale, recently stated:


"These rules have been written by people who have no idea what an agent does. They have no idea other than what people speculate about agents. When they say it’s to help players, they are talking out of their backsides. There certainly aren’t any of my players who would rather be represented by FIFA than by us."[25]


Barnett, in combination with Mino Raiola (Paul Pogba’s agent) and Jorge Mendes (Cristiano Ronaldo’s agent), are striving to “protect the interests of professionalism and the rights of agents and, as a consequence, of players.”[26] Barnett further added “if FIFA insists on doing what they insist on doing at the moment, obviously there’s going to be a lot of litigation flying around.”[27]


Barnett’s comment could be alluding to a 2006 landmark case regarding the regulation of player agents, Piau v. Commission of the European Communities. In Piau, Laurent Piau, a French football agent, brought a complaint against FIFA’s Players’ Agents Regulations.[28] Piau objected to numerous portions of FIFA’s restrictions, arguing FIFA inhibited fair competition amongst agents and thus violated European Union Competition Law.[29] The European Court of Justice held FIFA’s restrictions, such as a mandatory license system the introduction of professionalism and morality (issues raised by Piau), do not eliminate competition and are sufficiently justified because they impose only qualitative instead of quantitative restrictions.[30]


Now, the question is whether the same conclusions apply to FIFA’s new proposal. Wouters v. Algemene Raad van de Nederlandse van Advocaten, another important case surrounding restrictions of competition law in sport, developed a test to help decipher whether certain restrictions are justified.[31] The overall context, legitimacy of the objectives of the regulations, and whether the restrictive effects of the restrictions are inherent and proportional to the objectives, are factors to be considered.[32] If the goal of these restrictions is to protect the players, like FIFA has stated, are regulations surrounding their agents inherent and proportional to that goal? If litigation were to ensue, it is likely this will be a decisive issue.


In conclusion, the new restrictions proposed by FIFA have received both applause and criticism. While some say restrictions are necessary, others claim it is an inhibition of rights. With the restrictions becoming effective sometime this year, litigation may be looming over the heads of soccer’s governing international body.




References:

[1] Getty Images, (June 3, 2016) “Fifa Headquarters Raided: Swiss Investigators Seize Documents and Electronic Data in Criminal Probe” Retrieved from: https://www.independent.co.uk/sport/football/news/fifa-headquarters-raided-swiss-investigators-seize-documents-regarding-world-cup-bidding-scandal-a7063776.html

[2] Score and Change, (Dec. 16, 2021) “FIFA to Implement a 10% Cap on Agent Fees” Retrieved from: https://w ww.scoreandchange.com/fifa-to-implement-cap-on-agent-fees/#:~:text=FIFA%20plans%20on%20capping%20agent,fairer%20and%20more%20transparent%20system.

[3] Wauters, J. (March 30, 2020) “The FIFA reform package on football agents: ready for regulation or looking for litigation?” Retrieved from: https://www.whitecase.com/publications/alert/fifa-reform-package-football-agents-ready-regulation-or-looking-litigation

[4] Score and Change, supra.

[5] Wauters, supra.

[6] Score and Change, supra.

[7] Wauters, supra.

[8] Id.

[9] Gentile, M. (June 28, 2018) “The Average Sports Agent’s Commission” Retrieved from: https://work.chron.com/average-sports-agents-commission-21083.html

[10] Id.

[11] Score and Change, supra.

[12] Norton Rose Fulbright (Feb. 29, 2021) “Going full circle: FIFA’s plan to re-regulate football agents” https://www.nortonrosefulbright.com/en/inside-sports-law/blog/2021/02/going-full-circle-fifas-plan-to-reregulate-football-agents

[13] Id.

[14] Id.

[15] Id.

[16] Id.

[17] Score and Change, supra.

[18] Id.

[19] Norton Rose Fulbright, supra.

[20] Id.

[21] Id.

[22] Id.

[23] Id.

[24] Wauters, supra.

[25] Eurosport, (March 31, 2021) “Johnathon Barnett, Mino Raiola Ready to go to War With FIFA Over Proposed Cap on Agents’ Fees” Retrieved from: https://www.eurosport.com/football/jonathan-barnett-mino-raiola-ready-to-go-to-war-with-fifa-over-proposed-cap-on-agents-fees_sto8199894/story.shtml

[26] Id.

[27] Id.

[28] Martins, R. (Jan. 2009) “The Laurent Piau case of the ECJ on the status of players’ agents” Retrieved from: https://app.vlex.com/#vid/634501381

[29] Id.

[30] Id.

[31] Wauters, supra.

[32] Id.