The Legal Case Against the New FIFA Football Agent Regulations and What Happens Next?
Introduction
Earlier this year, the new FIFA agent regulations were implemented to the extent of a transition phase with the plan being by the 1st of October 2023, they will be fully enforced. The regulations detailed provisions and restrictions to the activity of football intermediaries such as a new licensing system including an examination process, multiple representation and commission caps.
It has always been discussed amongst the world of agents, those most affected by the changes, that there would be grounds to bring a legal case against the new regulations for a variety of reasons, mainly regarding the non-compliance of the new regulations with international and national laws. In this blog, we will aim to help you understand the legal basis which these cases will call upon, how this may develop, FIFA’s most likely defence, the possible outcomes and the wider effect this may have upon football agents and the sport as a whole. We will do this without entering into any of the complicated aspects of International Employment and Competition Law.
Background
Put simply, there are many different levels at which disgruntled agents can bring a case against the new FIFA agent regulations. There are different areas of law that agents consider are infringed upon by these new regulations and hence, if true, there is a good basis for a robust legal case. Regardless of FIFA’s all-powerful position in the world of football, they must consider national and international laws and therefore, the new agent regulations must be compliant and compatible with these legal systems. This is because in the legal pyramid, national and international laws are treated as superior to FIFA laws. They will take precedence over FIFA laws if there is any conflict with national or international laws such as employment laws in European Law within the European Parliament.
Firstly, potential issues with the new FIFA regulations lie in European Competition Law. This concerns preventing a body being able to develop a ‘monopoly’ over an industry and acting against the interests of the public. For the FIFA agent regulations, agents could possibly argue that FIFA have breached European Competition Law and that it is facilitating an anti-competitive industry. The commission cap is the biggest contradiction against Competition Law as it prevents agents conducting their business competitively against other agents. Furthermore, this could also be an illegal restriction of trade and limits the earning potential of agents. This could be brought to court and argued against on legal grounds.
Another major point of legal discussion is around what is known as an “Abuse of Dominance”. To break this down, firstly we must acknowledge that FIFA possesses a position of power, or ‘dominance’, over the football industry. Whilst the laws of football are produced by IFAB, FIFA are the governing body that makes, amends and removes rules and regulations within the sport and across the world, their regulations are implemented on a national level. Therefore, FIFA satisfies the first criterion of dominance, that there is a dominant organisation in the industry.
For an abuse of dominance to be successfully argued in court, it must be shown that the dominant organisation, in this case FIFA, has abused their position. For it to be said that their actions are an ‘abuse’ of their position in the football industry, agents will aim to argue that the new agent regulations are damaging to market competition as well as the general well-being of the industry. Additionally, the agents’ case will try to prove that any alleged attempts of FIFA to avoid abuse of dominance, such as the consultation process they conducted with agents as discussed later, were futile. So, for example, agents will attempt to demonstrate that the hard commission cap and other objectionable aspects of the regulations are detrimental to the welfare of football as a whole as well as the profession of agents.
The new regulations have restricted the earning potential of agents by only allowing a commission service fee of 3% if a client’s annual remuneration is above $200,000. The maximum an agent could possibly earn in any deal under the new regulations is 10% of the individual’s remuneration (if under $200,000) or 6% (if over $200,000) if they act on behalf of the client and the engaging club. However, realistically this is never guaranteed and often agents will only be able to earn a smaller, restricted service fee from a single party. It is also very common in football that agents will split commissions between two or three agents when trying to find their best deal for clients. This will mean individual agents will receive a maximum of 1% or 1.5% in these deals which is not financially viable. This will form part of the legal case against the regulations and argue that it damages competition and the well-being of the industry.
The cases against the new agent regulations may point to the recent implementation of a new format for a ‘Club World Cup’ as evidence that FIFA commit abuses of dominance in their governance of football. National associations, the European Leagues Association and the World Leagues Forum have already issued complaints about the new 104-game format of the Club World Cup that will take place every four years as they were not consulted by FIFA despite the effect this will have on both international and national competitions. La Liga described FIFA’s unilateral decision making as a ‘complete disregard’ for the football community.
FIFA have received numerous accusations that their lack of external consultation and respect for other stakeholders is damaging for football. However, the lack of consultation before making a major decision which alters the landscape of club football could also be used within the legal battles as a strong example of FIFA’s abuse of dominance which the European Leagues Association stated has become a ‘habit’ of FIFA in recent years.
There are then several legal issues surrounding the aspect of the new regulations and the FIFA Clearing House requiring agents to publicly declare their earnings. The concerns around this are not only based on the right to privacy of agents but also the dangers this may present to agents in certain parts of the world. Agents will hope that courts will consider that breach in privacy and an effect on the safety of agents to be a valid argument against this part of the new regulations.
Ultimately, agents feel as though at least some parts of the new FIFA agent regulations, particularly the commission cap, are unfair. Agents that aren’t in the top bracket of earners are likely to be driven out of business and this could have drastic consequences for players in lower leagues and the wider football landscape. However, ‘unfairness’ is often not enough, the cases that will be brought to court at different levels in different legal systems globally will rely upon evidence and well thought-out arguments that the regulations undermine laws that are in place nationally and internationally and that should apply to FIFA.
What has happened so far?
So far, agents from competing companies have united together into representative associations and groups to join forces in creating a robust legal argument against certain elements of the new FIFA Agent Regulations. For example, the ‘Association of Football Agents (AFA)’ held a meeting in London to discuss possible legal action and plan for the next steps for agents.
In some places, legal cases have already commenced. We know FIFA and the KNVB (Dutch football board) have been summoned to the Dutch Courts to begin the first legal proceedings disputing the new regulations. Furthermore, following a German Agency suing the DFB (German football board) the national court has escalated this to a higher European court who will take the case further before reaching a conclusion as to whether or not the new FIFA agents regulations are compatible with wider International laws. The Professional Football Agents Association (PROFAA) have also brought a case to the Court of Arbitration for Sport (CAS) and a case is set to begin in Belgium as well. Evidently, there is a wide array of legal battles ongoing against the FFAR.
Agents originally objected to the claims that FIFA had properly consulted agents when devising the new regulations as we will explain further in the next section. This can contribute to the strength of the ‘abuse of dominance’ argument as agents are considering how best to demonstrate that FIFA implemented the new regulations without proper collaboration with those that the regulations were going to impact the most. The decisions made by FIFA to introduce regulations such as hard commission caps have consequences and collateral damage on many stakeholders within the game of football. Agents have begun to point to this as legal cases are built and brought to courts.
Importantly, many agents welcome and are supportive of introducing regulations for the profession. For example, lots of agents have given positive feedback on reintroducing an exam to raise the quality and standard of the profession and the notion of increasing transparency within the game is mostly agreed with. However, the belief is that the new FIFA agent regulations as a whole, the manner in which they have developed, the contents of certain major points and the nature of the implementation has not been practically reasonable and raises legal issues..
FIFA’s Position
To defend the new regulations successfully in court, FIFA’s legal representatives will have to convincingly justify the reasons and basis for each questionable aspect of the regulations. For example, they must show that their reasons for restricting commissions and the amount of money that agents can make has such a benefit for football that outweighs the case against them. Their main argument will be that agents take money away from the football industry. In itself, this will be too vague and only reflects the small proportion of agents that take large sums from single transactions, so FIFA will have to reinforce this with evidence within court to show that it is enough of an issue to bring in hard commission caps.
FIFA will also have to defend their position as to why agents representing the selling club can earn more than a player agent, hence seemingly valuing these agents above player agents. The court will then decide whether, under international and national free market, competition laws and more, there is sufficient grounds for certain regulations.
As we briefly touched upon, there are claims in defence of FIFA that they conducted a consultation process and purposeful meetings with global agents in order to better inform their development of the new regulations. If they were able to prove that these meetings were what they are saying they were, this may act as a defence against the claim of ‘abuse of dominance’.
Since 2018, FIFA has held several so-called ‘consultations’, supposedly bringing together agents from around the world to voice their opinions and concerns regarding their proposed regulations which have now come into force. The fundamental premise of this was positive, if FIFA were to have openly collaborated with agents to find the best possible solution, compromise and regulation for agents as ‘stakeholders’ in football, it would have most likely benefited the sport as a whole.
The entire process may have appeared positively to the public as a proper and thorough consultation but this contrasts the fact that many agents left this process and disagreed with how they were conducted. A particular concern was that apart from the very first meeting, FIFA sent representatives rather than stakeholding decision-makers (ECA/FIFPro). It gave the impression that agents were just there to listen whilst they simply outlined the new regulations they had already decided upon.
A further issue that could be raised within the court cases against the new regulations is that the agents that were in attendance at these consultations were ultimately not accurately reflecting agents worldwide. FIFA selected a handful of agents from different continents to form ‘unions’ but none of the big agencies were represented. The cohort represented less than 0.5% of active global agents. This is also further proven within the agent group that has been formed by FIFA.
The courts will also consider the suggestion that the new regulations could have a completely adverse effect from the justifications given by FIFA. There is an argument that the new agent regulations will actually create new ways around the laws and that agents will try to find different ways of getting paid. Hence, the burden may move from the club to the player in many circumstances and the losing party out of all of this could be the player.
Potential outcomes
It is assumed that agents do not want to achieve complete immunity from regulation as a result of challenging the new Regulations in court. In reality, the aim of battling against FIFA is to protect the agency profession and ensure that unfair and legally problematic regulations are not enforceable.
Instead of total deregulation, the desired outcome is for feasible, reasonable and practical regulations. This may mean that FIFA are legally obliged to amend their new regulation proposals. The best possible outcome is to find a ‘middle-ground’ compromise that still achieves the enhanced transparency in the agency and football industries but does not have damaging consequences for the game as a whole and for the livelihoods of working professionals, especially for players.
Summary
In summary, this is a volatile topic that is likely to have several twists and turns along the way over the next few months and maybe even years. It is expected that the legal cases will be taken seriously and there will be some extent of success in the hope of legally encouraging FIFA to revise certain objectionable elements of the new agent regulations. Any outcome that improves the agency profession is the kind of result that all parties will be hoping for rather than a botched solution which burdens players and encourages finding loopholes within the laws and therefore, malpractice that is damaging to the well-being of football.
Well defined explanation