The Endless War Against Agents: A Cap on Commission?

“No one likes us; we don’t care!”

This is a famous chant that used to be sung by Millwall supporters as a response to near constant criticism, from the press and the football governing bodies. Notwithstanding, this chant could easily be sung by football agents over the last couple of decades. Since the profession started being regulated by FIFA, agents have been painted as criminals. Greedy, dishonest and corrupt are some of the adjectives commonly used to define them. 

Although the profession exercises a huge influence in the international football world, agents are undervalued and often neglected by FIFA. For instance, the European Football Agents Association (EFAA), the most relevant representative body for European agents, is still not considered a stakeholder in the football family – even though the relationship between both entities has improved over the past years. Nonetheless, FIFA is constantly trying to tighten the rules against agents and such a position has been clearer than ever during this past decade.

The (Not So) Cold War: FIFA v Agents

2011: One of the main justifications for the de-regulation the Player’s Agents Regulations (“PAR”) and implementation of the new Regulations on Working with Intermediaries (“RWI”) derived from a statistic presented by FIFA at the EU Conference on Sports Agents in 2011. According to the statement of the former Director of Legal Affairs of the entity, “only 25-30% transfers are managed by FIFA licensed agents[1]. Since then, FIFA has been flirting with the possibility of reforming the whole agents’ system, which was effectively done a few years ago. 

And what was the practical result of such reform? Basically, national associations were left to pick up the pieces. Anybody with some cash in their pockets and the standard of “impeccable reputation” could be registered as an intermediary – i.e. no license or proof of expertise was required – consequently the profession was devalued and the quality of services provided decreased, and when that happens, clubs and players are affected directly. The Association of Football Agents (AFA) called this period following the reform as the “Wild West”.

Almost a decade has passed and the source of the 2011 research mentioned above remains a mystery. However if accurate, why has no club or player been sanctioned by FIFA for engaging unlicensed agents to intermediate/negotiate transfers? I mean, 70% of all transfers in the world is a considerable number of transfers to be engaged only by “exempt individuals” as per FIFA PAR.

2017: In 2017, super-agent Mino Raiola represented three parties in the transfer of Paul Pogba from Juventus to Manchester United. For the services provided, he received – or was entitled to receive – commission from each one of the parties, which amounted to around £41.3 million. FIFA started to criticise the possibility of an agent acting for more than one party in a transaction (the so-called “multiple representation”). 

This kind of approach has been frequently adopted by FIFA lately: focus on the 1% of the market and turn its back to the needs of the other 99%. It is evident that FIFA is only looking at the high-profile operations to justify their measures, even while understanding that this is not the reality of the industry.

2019: On 15 February 2019, the FIFA Football Law Annual Review 2018 was held in Zurich, in which FIFA compared the total payments to training clubs (namely solidarity contribution and training compensation) with the expenditure of agents’ commission. 

According to the latest TMS Reports, between 2013-2018 agents received a total sum of USD 2.14 billion as commission for their services, whilst training clubs have received USD 466 million as solidarity contribution and training compensation during the same period. Such data is being used as the main reason for a possible cap on agents’ commission.

“But wait, what is the correlation between payment for training clubs and commission for agents?” That’s exactly what the agents are questioning.

It appears that FIFA is always looking for a narrative as an excuse to impose limits and barriers for agents, relying on mysterious research, high-profile millionaire transfers (less than 1% of the market) and illogical data comparisons.

Cap on Commission – Is that the answer?

Today, FIFA acknowledges that it was a mistake to de-regulate agents in 2015. For that reason, the international federation appointed a Task Force to discuss and debate a brand-new reform for the whole system, bringing back some of the rules from the FIFA PAR 2008. Although most of the proposals seem beneficial and positive for the industry, the most crucial change proposed is a cap on the agents’ commission. The narrative to justify this possible limitation is to keep the money in the game. But would a cap on commission be good for the football transfer market?

As the FIFA TMS Report reveals a concentration of high commission paid to a small group of agents, the proposed cap is likely to push small agents out of business and may lead to an oligopoly in the agent market.[2] According to this data, the average commission tends to be lower when transfers fees are high. In terms of median percentage of the transfer fee for agents representing engaging clubs:

  • 16.6% of commission in transactions with transfer fees below USD 1 million;
  • 8.8% of commission in transactions with transfer fees between USD 1 million and 5 million;
  • 5.3% of commission in transactions involving transfer fees greater than USD 5 million.

It is possible to conclude that, in general, the percentage of commission is higher on smaller deals and lower in bigger deals. In this sense, the proposed cap may not work for the purposes of limiting the earnings of those powerful agents who control the market and are in the position to impose their financial terms on clubs and players through other ways (e.g. side commercial arrangements), but solely eliminate their competition (i.e. small agents).[3]

Why so angry?

FIFA is not the only entity that is – possibly – in favour of the commission cap. Other football stakeholders including UEFA, the European Club Association (ECA), FIFPro, and the European Leagues are of the opinion that agents are “disproportionately well-remunerated for their services”.[4]

Agents are service providers like any other, whose objective is to provide the best service possible for their clients. If there is someone willing to pay certain amount for a specific licit service, why restrict it? This is a competitive market, so the best service deserves to be better remunerated, without limitations.

In any free market industry, the ultimate goal is a satisfied client/consumer. For agents, the clients/consumers are clubs, players and coaches. If they provide a good service, they should earn more. If they provide a bad service, they should earn less – and probably lose their clients. 

The point is: overregulating often inhibits development. A cap on commission would result not only in more power to the richest agents, but also lead to under-the-table payments and a lack of transparency.

For the Good of the Game?

According to information provided by members of the Task Force, FIFA will publish the new regulations in the last trimester of 2019. The reform seems to include several positive aspects for the whole industry, but the mystery and uncertainty regarding a possible cap on commission persist.

The main question left is: is this fight against agents really “for the good of the game” or is this another narrative motivated by political reasons? Will this measure effectively achieve a legitimate purpose? Regardless of the answer for such questions, the EFAA already stated in letters: “if FIFA imposes a cap on commission, we are going to war”.

Udo Secklemann


Bibliography

[1]Marco Villiger speaking at the EU Conference on Sports Agents, 9-11 November, Brussels. Available at: http://ec.europa.eu/assets/eac/sport/library/studies/final-report-eu-conference-sports-agents.pdf

[2]FIFA TMS Report: Intermediaries in International Transfers 2018 Available at: https://www.fifatms.com/wp-content/uploads/dlm_uploads/2018/12/Intermediaries-2018.pdf

[3] Available at: www.lawinsport.com%2Fcontent%2Farticles%2Fitem%2Fre-regulating-football-agents-would-fifa-s-proposed-commission-cap-and-prohibition-on-dual-representation-work-in-practice

[4] Available at: https://www.uefa.com/MultimediaFiles/Download/uefaorg/FinancialFairPlay/02/53/09/85/2530985_DOWNLOAD.pdf

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