Whilst the world of football has been focussing on pressing matters such as COVID-19, the abandoned European Super League creation, and the impending European Championships, attention appears to have diverted from the proposed reforms concerning football intermediaries (commonly known as agents).
FIFA and regulatory reforms
For background here, the FIFA Council approved a number of regulatory reforms concerning the business of football agency in October 2019. These reforms include a proposed cap of fees that an intermediary could levy for arranging a transfer between clubs, a clearing house for transfer fees, and a mandatory licensing system for all registered intermediaries. The bare bones of these proposals have been approved and FIFA is now considering how best to turn these proposals into binding regulations. This is anticipated to be announced by the end of this year.
As player transfer fees continue to increase, this has had a knock-on effect on the commissions of many top football intermediaries. The likes of Jorge Mendes (agent to Cristiano Ronaldo and Angel Di Maria among others) and Mino Raiola (Paul Pogba and Zlatan Ibrahimovic) are now household names, enjoying in some cases a parity of profile with the players they represent.
What are the proposals?
Maybe the most notable proposal is the cap intended for commissions that an agent can earn through player transfers, with the cap expected to work as follows:
- Intermediary for selling club: commission capped at 10% of the transfer fee
- Intermediary for buying club: commission capped at 3% of player’s salary
- Intermediary for the player: commission capped at 3% of player’s salary
- Intermediary for player and buying club: commission capped at 6% of player’s salary.
This represents a departure from the position under FIFA’s 2015 regulations which gave indicative but non-binding caps. The regulations allowed each national governing body to set its own caps, although many have not done so. A fair concern here would be how these caps could affect intermediaries representing players in smaller markets and clubs, where agency commissions tend to represent a larger proportion of the transfer value. Whilst an intermediary would expect to make a fortune out of a minute percentage of Kylian Mbappé’s next move, they would be likely to take a larger cut of a lower league player’s fee.
FIFA has plans to reintroduce a formal licensing regime
In addition, FIFA has announced plans to reintroduce a formal licensing regime with an aim of improving professional standards in the industry. The proposals have not set out how they will do this but one would expect increased education requirements and professional development obligations. Given the potential brevity of a player’s career, intermediaries can have a great deal of influence over their ability to manage their finances and affairs during their playing career and to plan for their non-playing future. These regulations may be seen as a positive change to the industry but it is important for all players to seek proper professional and financial advice during their playing career to ensure that they are planning adequately for this.
FIFA’s further proposals
FIFA has further proposed that all intermediary commissions be paid through a FIFA Clearing House. This is part of a wider drive towards increased transparency and oversight in the transfer process. Many of us will recall the corruption allegations and inquiries brought against FIFA recently so any efforts to increase and improve transparency will likely be well received. The ultimate goal with the Clearing House is to ensure that all transfer fees are recorded and automated by FIFA. The amount that could clear through such a clearing house is anticipated to be in the region of £400 million per year.
FIFA has spoken positively about these proposals in public and does not appear to have many concerns regarding pushback from intermediaries. FIFA’s chief legal officer demonstrated this when he told reporters (in relation to the proposals): “if we can’t agree with the agents then we will move ahead, we are committed to this.”
As things stand, these proposals remain just that. FIFA is currently consulting overdrafts, which will soon become regulations. What is clear is that the business of football agency will become a more bureaucratic business if and when the regulations come into force. This could be a positive for players and clubs, driving transparency and professional standards. However, it could have unforeseen effects on intermediaries currently conducting their business. In particular, those intermediaries servicing smaller markets and players in less financially lucrative leagues may be disproportionately affected by the commission caps and increased compliance and development costs. To that end, it is essential that all intermediaries take advice on these regulations if and when they come into force.