The Details and Intricacies of a Representation Contract for Football/Soccer Agents
Last week, we journeyed through the process of finding and selecting the right agent for a youth player. We briefly touched upon the final stage of signing with an agent; the representation contract. However, this is a complex and important element in its own right and hence, this week’s blog is dedicated to helping you understand everything involved with representation contracts.
We will begin by outlining what exactly a representation contract is, before identifying the key clauses that should be considered when assessing a representation contract. Finally, and perhaps most importantly, we will address common issues that arise with representation contracts and how to avoid problematic commitments to agents.
The Representation Contract
Once a decision has been made as to which agent a player would like to sign with, the representation contract will be signed by both the player and the agent. The purpose of this contract is to create a legal and enforceable agreement between the parties. A contractual agreement of this manner stipulates different clauses for both engaging parties to act in adherence with and hence it is important to ensure it is favourable and agreeable for the player.
The representation contract offers an element of legal safety and security for each party. If the contract contains all relevant information and requirements, it prevents either party acting wrongly within the relationship. Breaching such a contract can lead to termination with just cause and hence, protects the player if the agent does not behave in a professional manner as the player can then exit the relationship. Alternatively, it provides an element of protection for the agent contained within the exclusivity clause and prevents the player dealing with other agents.
In most national football associations, there will be a template layout of a representation contract. However, agents and agencies are able to adapt the clauses and include any additional obligations specific to the work that they do. Nonetheless, the majority of a representation contract is universal and replicated in each country.
In the following section I will outline the most important considerations that should be made regarding individual clauses. For now, it is important to know that in the Agent Regulations, FIFA have published a required list of clauses that must be included within the representation contract. These must be incorporated into every version of a representation contract in any FIFA member association. However, national associations can then also include further clauses. Importantly, FIFA stipulates that the Representation Contract must detail and specify the legal relationship between the player and the agent. Therefore, the minimum clauses to be included must refer to:
- The names of the parties: Make sure these are spelt right!
- The scope of services provided: think about what the duties of the agent are, what services does the player need them to help with.
- The duration of the legal relationship: covered further below.
- The remuneration due to the intermediary: the level of commission owed to the agent.
- The general terms of payment: how the agent will be paid.
- The date of conclusion: it must be clear the exact date on which the representation contract ends.
- The termination provisions: how can the contract end and if it is premature, what reasons would constitute a just cause.
- The signature of the parties: remember that if the player is a minor, their legal guardians also need to sign the contract.
Important Clauses to Consider
There can be a variety of clauses within the representation contract that are part of the minimum to be included set by FIFA or additional clauses included legally under the National Association. Each one needs to be read and understood fully. In this section, we will highlight a handful of specific clauses that are the most prominent factors of a representation contract. They are the clauses that stipulate the financial commitments of the agreement and also the clauses that outline the obligations that the player is under whilst in the period of the contract. As the next section will develop upon, the player must ensure that they are not entering into an unreasonable, unfair or problematic contract. The following are the kind of clauses that may lead to this undesirable outcome and need to be properly assessed.
- Duration: In some national associations such as the UK, the representation contract can only be for a maximum of two years before requiring renewal. However, in some countries this is not the case and in some circumstances, two years may still cause issues if the player is unable to terminate a contract if it has been breached by the agent
- Termination: The player needs to be satisfied that there are exit clauses within the contract that allows them to leave the agent without penalty if certain situations arise, or breaches of contract occur or even when it comes to deciding against renewing with their current agent and changing to another. There must not be a clause that requires the player to pay an agent when leaving them or a similarly detrimental obligation.
- Exclusivity: This is a very important part of a representation contract for a player to be aware of. It will state that the agent must be solely and exclusively responsible for representation of the player in any agency activity. However, it is important that the contract allows for the agents to obtain mandates if there is an opportunity in another territory that another person is better suited to represent the player for. Significantly, some countries such as Germany, have banned exclusivity of representation for agents. This is a risky situation for the agents but means that the players are not restricted or bound to sole representation. It is important to note that agents based in Germany have found ways around this by registering their companies in different FIFA countries. This trend means that they can bind the player to exclusivity.
- Remuneration & Commission: An obviously integral clause to consider and make sure is favourable to each party is the commission owed. This will often be written with a percentage of a player’s gross or net salary that will be owed to the agent for their services. The player must be certain that if they are obliged to pay a certain percentage of their salary to the agent, they must be fully trusting that they are paying a fair rate for the benefits and value of the services that the agent is providing. This is generally often around 10% of a player’s gross salary but may be slightly lower in leagues where the finances for players are higher such as the Premier League in the UK. Other factors such as whether the player pays the commission themselves or if it is the responsibility of the club as well as tax implications are all a part of this. There is a rule from FIFA that permits clubs to play the agent on the player’s behalf which is the norm. Importantly, the contract is still between the player and the agent and therefore, if the club does not pay, it is fundamentally the player who is liable to remunerate the agent according to the representation contract.
- Image Rights: Image rights and commercial commission will often be implemented into the representation contract and this once again needs to be assessed and agreed to in full knowledge of what it entails. Commercial commission is often a higher percentage (usually around 20%) than for playing contracts and once again, the player needs to understand how much money they are liable to pay the agent in commercial deals. In some countries, agents are finding a way to sign younger players below the legal age for a representation contract by instead signing an ‘image rights contract’ with them. Brands such as Nike and Adidas pick up players below the U16 level and agents are capitalising upon this. This image rights contract acts as an entry into a relationship with the player which will then transition into a representation agreement once the age is right. This is becoming more common in countries such as the UK.
- Territories: The representation contract will detail the extent of the jurisdiction for each agent. For example, in most cases the contract will specifically and expressly state that they represent you globally to ensure their exclusivity of your representation cannot be undermined, if exclusivity is permitted.
If the representation contract is not carefully considered then there may be problematic consequences that affect the player’s career and beyond. It is clear from the previous sections that representation contracts are complex and intricate documents that form the basis of the agreement between the player and the agent. Hence, the meaning and understanding of each clause must be ascertained. It is essential that the contract is not signed without fully understanding the ‘terms and conditions’.
Seeking the guidance and assistance of a lawyer is strongly recommended. Their legal knowledge and expertise will be helpful throughout the signing process and prevent the player entering into a contract that is difficult to leave and is disadvantageous to them financially or otherwise. Hopefully, this issue may never arise as if the player and the family have gone through the right process of selecting an agent and carried out appropriate due diligence as we explored last week, the trusted agent is unlikely to create such problems. However, it is a possibility and therefore, the importance of understanding and thoroughly considering the representation contract cannot be underestimated.
A final suggestion I would make is that the representation contracts will never automatically renew. It is up to the player and the agent to come to a new agreement after the contract expires and to sign a renewed representation contract. However, I believe that as the contract expires, particularly if it is the end of the very first with that particular agent, the player and their family should ‘re-interview’ and reconsider the agent and other agents. By reevaluating the current agent it is possible to see if they are delivering upon the expectations they had set and adding the value the player had hoped for. Being open minded rather than fixed upon resigning with the same agent can enable finding the best opportunities for the player moving forward.
Following the stages outlined in last week’s blog, you will eventually reach the point at which a representation contract will be signed. After filtering through every potential option, the worst thing that can happen is to rush into a representation contract that creates one or more unforeseen disadvantages to the player. This blog has hopefully provided a useful insight into the structure and general contents of such a contract as well as pointing out some possible supplementary clauses that may be included. The player and their guardians must carefully review and understand the contract before signing and in most cases, a lawyer should be consulted for extra security as their expertise will ensure no detrimental obligations or requirements are contained within the contract.