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FIFA’S NEW AGENTS REGULATIONS: WHAT TO EXPECT AS CLUBS AND AGENTS?

Current and Previous Situation:

As we mentioned in our previous briefing articles, FIFA has announced that in the near future it will establish the FIFA Agent's Chamber to deal with disputes involving agents. Although it is not yet clear when the Agent's Chamber will become functional, the fact that a first-degree judicial body will be formed for disputes involving agents, which previously fell directly under the jurisdiction of CAS, clearly shows us that the importance of agents in todays football system is increasing day by day.

In addition, FIFA announced that it will bring further new applications and regulations for agents, apart from the Agent's Chamber. This regulation, which was brought to FIFA’s agenda for the first time in 2018, took its final form, at least for now, as the “FIFA Football Agents Regulations” (hereinafter shall be referred as “FFAR”) with three different drafts in November 2020, July 2021 and December 2021. In October 2022, the third and (so far) final draft is expected to be approved by the FIFA Council. If the FIFA Council approves, between November 2022 and May 2023, agents will be required to obtain a license under the new regulations. In the timeline stipulated by FIFA, we expect the FFAR provisions to come into effect in the 2023-24 football season. (For detailed information about FIFA Agent's Chamber, please see our article "Introducing the Agents Chamber and What to Expect”).

What should we expect from FFAR?

Six new principles will be adopted according to the FFAR provisions. These six principles are as follows:

  • Prohibition of multiple representation;

  • License subject to eligibility requirements and CPD;

  • Caps on commissions;

  • “Client pays” principle;

  • Specific rules related to minor players; and

  • Enforcement

Worldwide License Requirements

There are four conditions foreseen for football agents to be licensed under the FFAR. In accordance with these conditions;

  • The licensee must be a natural person. This means that it will not be possible to obtain a license as an agents company, however, there is no obstacle for natural person agents who have obtained more than one license to come together and establish an agents company.

  • Certain personality traits must meet FIFA’s expectations. A person with a criminal record will not be able to get an agents license.

  • In the examination to be held on football regulations, an agent must show at least 80% success. This exam is expected to be held twice a year.

  • The agents are expected to continue their professional development and pay an annual fee to FIFA.

Prohibition of Multiple Representation: Each party shall have their own agent

It is prohibited by FFAR for an agent to represent more than one party and provide management services for more than one party during any transfer or transaction. It should also be noted that any other agent associated with the agent representing one of the parties is also prohibited from representing another party in the same transaction. For example, two different agents working in the same company or two brothers working as agents representing different parties of the same transaction are prohibited when according to the regulations.

As part of a transaction or transfer, agents cannot represent:

  • The former club and the football player;

  • The former club and the new club; or

  • all parties

Example: Club (2) transfers player (X) from Club (1). It is not possible for the agent (A) to represent (1) and (X) at the same time, or (1) and (2) at the same time, or (1), (2) and (X) at the same time .

With the sole exception of multiple representation, it is possible for agents to represent the new club and the player at the same time, provided they have the prior written and express consent of both parties. Where an Agent acts on behalf on the new club and the individual in the same transaction, the new club may pay up to fifty per cent (50%) of the total service fee due

Example: Club (2) transfers player (X) from Club (1). It is possible for Agent (A) to represent Club (2) and (X) at the same time. However, in this case, if the service fee to be paid to the Agent (a) is USD 100,000 in total, Club (B) will be able to pay (A) a maximum of USD 50,000. The remaining amount must be paid by (X) to (A)

Caps on Commissions

Since the limitations on the commissions to be paid to the agents include different regulations, it would be more explanatory and appropriate to explain through an example:

Example 1: Club (2) transfers (X) player from Club (1) and Club (2) pays (X) a gross wage of USD 200,000 or more.

  • Club (1) will be able to pay a commission up to 10% of the transfer price to its agent.

  • Player (X) will be able to pay his agent a commission of up to 3% of his gross income.

  • Club (2) will be able to pay its agent a commission of up to 3% of the gross income it will pay to (X).

Example 2: Club (2) transfers (X) player from Club (1) and Club (2) will pay (X) less than USD 200,000 in gross wages.

  • Club (1) will be able to pay a commission up to 10% of the transfer price to its agent.

  • Player (X) will be able to pay his agent a commission up to 10% of his gross income.

  • Club (2) will be able to pay its agent a commission up to 5% of the gross income it will pay to (X).

 

We also feel the urge to mention the Law No. 7405 on Sports Clubs and Sports Federations (hereinafter shall be referred as “New Sports Law”), popularly known as the “New Sports Law, published in the Republic of Turkey Official Gazette on April 26, 2022, which is widely discussed debate topic in the Turkish sports law legislation. As we take a quick look at the New Sports Law, the question of commission limitations for agents will come to the fore. It should be noted that the New Sports Law has set different rates and amounts for commissions to be paid to agents, than FFAR does. In this case, due to the mandatory nature of the provisions of the New Sports Law, in terms of transfers that are subject to Turkish legislation, the limits will be determined by the provisions of the New Sports Law instead of the provisions of FFAR.

How are the Commissions Paid?

The service fee, commission or fee for any other service to be paid to the agents shall be made after the closure of the relevant registration period and in instalments every three (3) months for the duration of the negotiated employment contract.

If the player transfers to another team before the end of the contract period, the agent will not be entitled to the remaining installments. With this regulation, it is aimed to prevent the agents from trying to earn more income by making a large number of transfers of players they represent, by receiving a cash fee from each transfer. Accordingly, it will not be possible to change this provision in favor of the agent with a contract to be concluded between the parties. However, considering that the purpose of the relevant provision of FFAR is the protection of clubs, it seems theoretically possible in our opinion and in line with the purpose of the provision to decide that the fee to be paid to the agents will be paid in more installments than stipulated in the FFAR.

Example: Club (2) transfers player (X) from Club (1). Club (2) will pay (X) a total of 1.2 million Euros in 12 monthly installments of 100,000 Euros. The payment date of the first 100,000 Euro installment is July 1, 2022, and the payment date of the last 100,000 Euro installment is June 30, 2023.

Since (X)'s gross salary is more than 200,000 USD, the commission that the agent (A) representing (X) can receive will be 36,000 euros, 3% of 1.2 million euros. Since (A)'s receivable of 36.000 Euros will be paid quarterly and during (X)'s contract, it will be paid in 4 installments of 9.000 Euros. (X)'s contract starts on 1 July 2022 and ends on 30 July 2023. Therefore, the 9,000 Euro installments payable to (A) must be paid in October 2022, January 2023, April 2023 and July 2023, respectively. If (X) transfers to another team at the end of January, (A) will not be entitled to the installments payable in April 2023 and July 2023.

“Client pays” principle

Any payment to be made under a representation agreement must be made exclusively by the party represented. It is prohibited by FFAR for the represented party to authorize another third party to make any payment.

As an exception to the represented party pays principle, if the transferred player's gross salary is less than $200,000, the player is allowed to authorize his new transfer club to pay his agent. Conditional payments will not be taken into account when calculating whether the player's gross salary is less than 200,000 USD.

Enforcement of FFAR Provisions and Sanctions

Of course, with practice, it will be possible to see whether the regulations and restrictions brought by the FFAR provisions will be circumvented and to what extent the rules will be respected. However, when we consider the tools that FIFA intends to use, it seems possible to conclude that they are already quite determined to prevent possible violations.

Undoubtedly, one of FIFA's most important weapons with terms of enforcing FFAR provisions will be the FIFA Transfer Matching System (“TMS”). With the records in TMS, it is aimed to avoid circumvention of FFAR rules. One of the first methods that comes to mind is to conclude other contracts such as "scouting contract", "consulting contract" and to circumvent the commission rates together with the income to be obtained from these contracts or the rule that each party is represented by a different agent. Any contract that will be uploaded to TMS in the  previous or next 12 months of the date of transfer, will be monitored by FIFA in order to prevent such violations. Of course, in order for this system of FIFA to work, it is of great importance to ensure that every contract concluded by the parties is uploaded to the TMS. We hope that we will see how these contracts will be monitored by FIFA in the near future.

Apart from TMS, it is aimed that the transfer fee in the contracts uploaded to TMS reflects the truth, with the FIFA Clearing House application and the payment of training and solidarity fees through a system controlled by FIFA. (For detailed information about FIFA Clearing House, you can refer to our article “Clearing House: The New System for Training Compensation Payments from FIFA”, currently only available in Turkish.)

Of course, one of the most important factors for a rule to be a deterrent and to be complied with by the parties is the sanctions to be applied in case of violation. In this context, apart from fines, agents will risk losing their licenses if they do not comply with the FFAR provisions. As for clubs and football players, we anticipate that sanctions that will have serious consequences such as monetary fines or bans from tournaments will be imposed by FIFA. However, in order to make definitive comments on the sanctions, it would be appropriate to wait for the final version of FFAR to be approved by FIFA and the publication of said version.

Conclusion and Comments

Although FIFA's announcement that it will bring many regulations, especially FFAR and Agents Chamber, for agents, caused intense criticism by the agents that it would reduce their revenues, in fact, FIFA accepted the agents as one of the stakeholders of the football industry with the new regulations. Despite the fact that the regulation of the legal status of agents and they becoming subject to certain professional regulations may cause loss of income in the short run, they should be considered as developments that will increase the prestige and reputation of the agents in the long run.

Even if the regulations are predominantly restrictive for agents, in essence, the professional entrance examination and licensing system will prevent players and clubs from being represented by people without any experience and knowledge, and agents will become some sort of a monopoly on representation in the football industry.

However, with the new regulations, we also think that agents should protect themselves on some issues. Chief among these is the need to protect themselves from the possibility that the player will contract with a different agent while the employment contract is in progress, as the agents will receive their commission in quarterly installments for the duration of the player's contract. In order to overcome this, we believe that it would be appropriate to make an "exclusivity agreement" with the players for the duration of the contract signed in terms of the relevant transfer. In addition, if two different contracts are signed in order to avoid some financial obligations, which are applied from time to time in the Turkish football industry, since the agents will receive a commission over the contract uploaded to the system, they encourage the parties they represent to make a single contract that reflects the actual price and fees, because fees stipulated under the uploaded contract will be of great importance for them to be entitled to commission.

With the publication and implementation of FFAR, the developments in this area will be followed by us. In the coming days, we will share our detailed information and opinions about the application with you.

 

For more information, please contact:

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