Background & Overview of the new FIFA Football Agent Regulations
On 16 December 2022, the FIFA council approved, and explicitly set out the guidance for, the FIFA Football Agent Regulations (FFAR). The FFAR were adopted following lengthy consultations with various stakeholders of the beautiful game, as well as football agent organisations. One of the main reasons for its implementation was to promote, what FIFA deemed, a more comprehensive transfer process.
The FFAR’s stated aims are to promote transparency, fair representation, and ethical conduct throughout the transfer system and its respective processes. The key points to note are as follows:
- Licencing requirement for agents: agents can only obtain a licence after successfully passing the FIFA agent exam and the payment of the annual licence fee of US$ 600 (GBP 480).
- Agents are no longer able to represent parties on opposite sides of a deal, with the exception being the representation of both a player and the club interested in buying (or loaning in) that player.
- Various caps on fees:
- The agent acting for the engaging club or player is capped at 3-5% of the player’s annual remuneration;
- Permitted multiple representation (per point 2 above) is capped at 6-10% of the player’s annual remuneration; and
- An agent acting for the selling club is capped at 10% of the total transfer compensation. - Market monitoring systems will also see agents needing to disclose various details surrounding their ongoing business conduct. The disclosure will take place via a new market monitoring and clearance platform, prescribed by FIFA. The goal is to facilitate the enforcement of the FFAR, which is governed by Articles 21 & 28 of the FFAR.
While the new licence requirement regime had already entered into force on 9 January 2023, with much criticism over its length and difficulty, the core substance of the FFAR will become effective on 1 October 2023. A copy of the published online version can be found here.
Criticism & Opposition
Unsurprisingly, football agents immediately condemned the FFAR and a number of legal challenges commenced throughout the European continent, including the Court of Arbitration for Sport (CAS), as well as at various domestic courts in the Czech Republic, Germany, the Netherlands and Spain. In addition, the FA also released a statement on 19 July 2023 confirming that arbitration proceedings had also been commenced within the UK.
Amongst these entities, were the European Football Agents Association (EFFA) and Pro Agent who sought an injunction against the new regulations.
The basis for these actions hinged primarily around the notion of a non-compliance with European competition law and abuse of a dominant market position, with many arguing that FIFA is attempting to control and restrict the influence of agents. Interestingly, and more so coincidentally, the basis for the legal actions has the same focal points in principle as the recent ECJ ruling on the European Super League. Details surrounding the basis of these actions can be found in one of our previous articles, here.
It is no secret that, within the modern game, football agents play a pivotal and decisive role in the world of professional football. One could speculate that many clubs wouldn't even have access to, and be able to recruit, high profile players without the services provided by agents, given the global growth of the sport, as well as the celebrity status of many footballers.
However, the commission-based fees that football agents are now receiving for facilitating transfers can be monetarily exponential. In turn, there seems to be significant scepticism over standards within the football agent industry, with a number of extremely high profile cases that don't need to be rehearsed here. For context, the total fees generated by agents in 2022 for facilitating international transfers was a gargantuan US$ 622 million.
An intervention by the Regional Court of Dortmund
Initially, FIFA focused on the supposed unethical business practices that agents have allegedly engaged in and asserted that the FFAR was birthed to "ensure integrity and functioning of the transfer market". This promise of integrity allowed FIFA to argue that the FFAR is exempt from the application of competition law under Article 101 of the Treaty on the Functioning of the European Union (TFEU). The ECJ had also gone a step further by introducing a test, known as the Meca-Medina Test, which determines whether regulations can be exempted from competition law, such as if they serve a legitimate purpose and / or whether they are necessarily related to the pursuit of such purpose.
The Regional Court of Dortmund unexpectedly stated that the FFAR would fail to meet the exemption criteria and therefore did not qualify as "sporting rules" as it relates, in majority, to "economic activities". Further, the court also stated that an exception to Article 101 TFEU cannot apply based on the principle of the autonomy of sports associations, which does not apply regulation on third parties beyond the association members (i.e. agents). On these bases, the German Court issued an interim injunction prohibiting the implementation and enforcement by FIFA.
FIFA filed an appeal against the German Court whilst awaiting the important decision from CAS.
The CAS Decision and the pending ruling of the ECJ
The Professional Football Agents Association’s (PROFAA) was one of the other parties that brought a claim against FIFA following the release of the FFAR. On 23 July 2023, the CAS published its decision, confirming the validity of key provisions of the FFAR and FIFA’s regulatory authority to regulate the activity of football agents.
FIFA released a statement that read:
"The award represents the first in-depth legal assessment of the legality of the FFAR by an independent panel of renowned experts….. The award confirms FIFA's position that the FFAR are a reasonable and proportionate regulatory measure that help to resolve systemic failures in the player transfer system."
Many different parties commented on the recent decision, such as The Football Forum (TFF), an association of national football agent bodies, which explicitly stated that the CAS ruling does not apply to its members. They went on to further state:
"TFF wishes to stress that the CAS arbitration was initiated following a specific agreement between PROFAA and FIFA and that the relevant award has no binding effect for agents around the world but is a matter between PROFAA (and its members) and FIFA."
It is safe to say that most interested parties will now keenly await the ECJ's decision before a conclusive and universally binding ruling is given.
PROFAA stated that it was “extremely disappointed” by the CAS ruling saying it would affect the livelihood of thousands of agents. The president of PROFAA stated that the group “will continue to support any and all litigation against these regulations, specifically the introduction of a commission cap.”
Conclusion
Whilst it comes as no surprise that the EFFA and PROFAA attempted to block the implementation of FFAR, it always seemed inherently unlikely the CAS would conclude that anyone other than FIFA had regulatory authority over the activity of agents as well as the creation and enforcement of the regulations. There have also been reports of various other agent bodies now claiming that the PROFAA had no authority to bring the claim against FIFA in the first instance! It is clear, on any analysis, that the dispute has had a ripple effect across many stakeholders in various positions across European football.
The only common consensus thus far is that domestic courts are eagerly anticipating the decision of the ECJ. Until such time as the ECJ provides a ruling, and specifically one in favour of the agencies opposing the regulations, FFAR is due to be implemented and enforced from 1 October 2023.
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