Can I Negotiate with Myself? Football Agents & Multiple Representation
Currently, multiple representation is very common in the football world. The term refers to an instance where the agent represents more than one party in a transfer negotiation: at least two out of the selling club, the buying club and the player themselves. These agreements may occur in order to simplify a transfer deal by directing it through a single negotiator. The agent may have a particularly good relationship with each of the clubs and knows or represents the player involved. A multiple representation agreement may result in larger payouts to the agent, but the clubs are not forced to use this method, they may choose to do so in order to successfully acquire a player they desire.
In this week’s episode of the blog, I will discuss the changes that FIFA are proposing that will restrict multiple representation to no more than one particular scenario of dual representation. I will explore the legal and ethical implications of multiple representation and consider how the regulator will be able to handle some of the challenging situations that may arise despite the changes in regulation.
At the moment, FIFA’s regulation of agents, that came into force in 2015, gave some guidance but delegated the policing of agents to the individual national football associations. For example, the FA in England or the DFB in Germany have been responsible for setting out their own clear regulations surrounding the legalities of an agent engaging in multiple representation. The practice of multiple representation of up to all three parties has been possible during this time and has offered big opportunities to agents who could receive remuneration from the player, the buying club and the selling club in a single transfer.
The transfer of Paul Pogba from Juventus to Manchester United in 2016 is the most publicly well-documented case of multiple, tripartite representation. In order for the agent, in this particular case Mino Raiola, to have legally acted as the agent of all three parties, he must be in compliance with the multiple representation regulations of the English FA and the Italian FIGC. To been seen as adhering to these regulations, he was required to have lodged his representation agreements with the FA as well as obtaining written consent from all three parties accepting the issues of multiple representation. Prior to this, both clubs and the player must have been made explicitly aware of the inevitable conflict of interest that would arise as a result of acting on behalf of each interested party as well as disclosing the terms of representation and the fees that he was entitled to from each contract. The FA referred to this as the ‘duty of disclosure of the full particulars’ of each agreement to the others in order to fulfil the obligations of transparency demanded under the regulations for multiple representation. As long as the agent is not concealing information or could be accused of misrepresentation then no rules are being broken.
At this point you may be asking why there is an issue with multiple representation if the practice is legal under the regulations of a football association. FIFA is proposing changes because of a number of issues that arise from such transfers. There are ethical implications surrounding conflicts of interest as well as legal difficulties, separate from football legislation, such as tax problems. In order to analyse the effectiveness of FIFA’s proposals in solving these problems it is important to understand exactly what FIFA intends to change. The suggested new regulations concerning representation are outlined below:
- An intermediary should only perform his/her services on behalf of one party. There is only ONE exception to this rule (2)
- The agent can legally act on behalf of the individual player and the engaging club ONLY if the following criteria is met:
– Both parties are made aware of the conflict of interests that will arise as a result
– The details of both contracts, including the terms of service and the terms of remuneration are fully disclosed to each party
– Both parties have the right to seek independent legal advice on the matter
– The player must have a preexisting representation contract with the agent, lodged with the National Association
- This means that the agent is not entitled to simultaneously represent the buying club and the selling club; the selling club and the player; nor ALL THREE PARTIES
First and foremost, the primary purpose of these new regulations would be to prevent instances where the agent is able to represent all three parties. The regulators are also aiming to minimise the conflicts of interest that would occur in dual representation agreements. They have suggested these changes as a sign of intent to achieve the fundamental principles that must be met in order to improve the football industry. As I discussed in last weeks episode of the blog, it is important for FIFA to increase the transparency of agents in football. Instead of relying upon National Associations to make their own judgements on dual representation, FIFA wants to harmonise and coordinate the regulations to create a more robust and consistent system. The new regulations would incur sanctions and penalties if they are violated, and if the agent is found to have committed a ‘misconduct offence’. Penalties would include punishments such as loss of remuneration for the agent from affected parties.
The ethical foundations behind the new regulations are centred upon the conflicts of interests. When an Agent signs a representation agreement, they are obliged to fulfil the fiduciary, contractual duty of acting in the best interests of the party that he or she represents. For example, representing the buying and the selling club would be prohibited by the proposal as there is an obvious contradiction in trying to negotiate the lowest price for the buying club whilst pursuing the highest price possible for the selling club. By representing the buying club and the player, these conflicts might not be as prominent and has become an established system used by agents and clubs especially in the United Kingdom. However, once an agent is responsible for more than one party, there is an ethical dilemma in being able to satisfactorily act in the best interests of both parties within a dual representation contract. Even though FIFA would rule out the possibility of the most contradictory relationships, there is still a level of difficulty in achieving the best for the player and the buying club. This would become evident when an agent is trying to achieve the highest salary possible for the player whilst also trying to minimise the expenses for the buying club that they are also representing.
A challenge that FIFA might face is the possibility of parties finding ways around the system. For example, ‘party switching’ is currently a prominent issue in German football. This is where an agent will terminate their contract with a player just before a transfer and then act on behalf the buying club instead. The player then declares that they did not use an agent in the transaction. FIFA will prevent this by capping the commission of an agent to only 3% if acting on behalf of the buying club. To maximise their commission to 6%, the agent must have an acceptable dual-representation agreement. This will have a positive effect on the transparency of the agency industry, especially in the German market.
There are many other instances that FIFA must consider for their proposals to be ethically and legally sound. How would they regulate scenarios such as if three agents represented the buying club, the selling club and the player in a single deal but each of these agents were part of the same agency firm? There seems to be a conflict of interests and a valid legal question to be raised here, but they are officially independently registered agents so would seemingly comply with FIFA’s rules around multiple representation, despite working for the same company.
What about when an agent represents the player, the buying club and the coach of the buying club? How does this create conflicts of interest?
Another legal consideration that FIFA must make is how this new system will affect tax payments. Players and clubs are taxed differently. In many cases the club will pay the 3% commission owed to the agent by the player on their behalf. The player is then shocked when they are taxed on this payment that was paid by the club. In the future, it will become more commonplace for the agent to be paid directly by the player. FIFA might find a way of regulating this by introducing a minimum income threshold that places the responsibility of agent remuneration on the player. It must be ensured that their new proposals do not allow for clubs to place the tax burden of agent commissions onto the players without their knowing.
In conclusion, the proposals of FIFA to completely ban the ability of a single agent to represent the buying club, selling club and the player is a move in the right direction. They are showing an admirable desire to solve the problems around conflicts of interests and unethical practice. Attempting to create universal regulations on the matter shows promising intention to increase the transparency and legality of agents in football. The theoretical foundations for these improvements will be in place but it remains to be seen as to whether they will be practically successful and effective as solutions. In my opinion, it is important to prioritise the education of agents and club officials to encourage them to fully understand conflicts of interests and other issues that may arise from dual representations. Perhaps in the future the best option may be to completely restrict representation to a single party. However, this is easier said than done and FIFA would have to find a method of enforcing the law and appropriately sanctioning the agents that break such laws or try to find alternative, ethically questionable methods of multiple representation.