The Future of Sports Law and Business - Football Family or Litigation Frenzy?

The hotly anticipated and EU funded report of Edge Hill University, ‘Promoting and Supporting Good Governance in the European Football Agents Industry’, received its premiere last Friday, 1 November, at the Etihad Stadium. But will its findings usher in an era of peace, or an age of litigation between the key football stakeholders?

It was a pleasure to attend this flagship conference, hosted by Kings Chambers in conjunction with the Centre for Sports Law Research at Edge Hill University ("Edge Hill"). This annual event has a proven record of bringing together leading sports law and business experts from across Europe and this year's edition didn't disappoint, offering insight into the latest industry trends and developments.

These included some prescient comments from Dr Richard Hardie, Consultant Neurologist, RFU referee and concussion assessor, as to the impact and legal responsibilities associated with concussion in sport, given Kyle Sinckler's enforced third minute withdrawal from the Ruby World Cup Final the following day. Other items on the agenda  spanned the recent growth in and opportunities for women's football, sports finance, the challenges faced by sports governing bodies from breakaway groups and the continuing stain of bullying within the industry.   

But the cornerstone was undoubtedly the unveiling and first public debate of Edge Hill's findings. These were presented by their lead author, Professor Richard Parrish. He was joined on the panel by  FIFA's Chief Legal Officer, Emilio Garcia Silvero, General Counsel for the European Football Agents Association Roberto Martins, Professor of European Law at the University of Oxford, Stephen Weatherill, Head of Player Status and Competition at the FA, David Newton and the Senior Legal Counsel for Sporting Clube de Portugal, Patricia Silva Lopes. 

Edge Hill's conclusions can be summarised as follows:

• EU law regulates a wide range of economic activity and has in recent years extended  its reach to sporting matters. This has included scrutinising the transfer system by  way of cases such as Bosman and Piau, the former needing no introduction and the latter  establishing that FIFA's rule making authority did not breach EU law. Likewise governance standards, by way of the Meca-Medina and International Skating Union decisions, which forcefully established the primacy of EU law over that of individual sports federations.
• The need for strong governance was further underlined by the 2011 EU Commission Communication on Sport, which moved thinking from a mere desire, to the settled position that wider sporting autonomy is and must be conditional upon an adherence to strong governance standards. Likewise the EU White Paper on Sport, which committed the Commission to carrying out an assessment of the activities of agents in the EU and the extent to which fresh action was necessary.
• The EU Work Plans for Sport followed over three phases, the first between 2011 and 2014, focussing on transfer rules and the activities of football agents. The second between 2014 and 2017, addressing the themes of sports agents and the transfer of young players. And the third, still ongoing, which looks to put these into active effect, hence Edge Hill's research.
• The time has come to replace the term "intermediary" with agent" and reinvigorate the entire space.  The term "agent" is to be preferred because (i) it is a term understood by the public, (ii) is favoured by football stakeholders, (iii) it conveys more accurately the range of services offered and (iv), it aligns with the need for FIFA to properly regulate the profession.
• This finding makes a good headline, but the deeper issue is a plain and obvious need for stronger governance and with a view to bringing agents into the football family. Agents are now a permanent part of the industry and the time has come for all stakeholders to accept that. But in return, the worst excesses of agents including poor conduct, illegal activity and the payment of remuneration well beyond the services offered, must come to an end.
• There needs to be uniformity of regulation, not the unsatisfactory patchwork quilt ushered in as a result of FIFA's 2015 Regulations on Working with Intermediaries ("RWWI"). The new system must re-introduce a full licensing system, with mandatory and ongoing education requirements and only limited exceptions, perhaps in the case of dual qualified professionals.
• Efforts should be focused on  the "best interest of client" principle. This must  lead to the dual representation of club and player being allowed in only limited circumstances, justified by reference to legitimate and transparent sporting objectives.  And the effective banning  of the triple representation of both the buying/selling club and player.
• There must be meaningful enforcement and a complete dispute resolution regime, with sanctions to be applied against all who breach the rules, not just agents.

Emilio was quick to accept the thrust of Edge Hill's findings, making it clear that FIFA have committed to these in principle.

He noted that:

• The transfer market was designed 20 years ago, following Bosman and with a focus on encouraging the training of young players, as well as protecting minors and the stability of contracts.
• Life has moved on and there has been an exponential rise in transfers, from just under 12,000 in 2011 to over 16,500 in 2018, an increase of 39.1%.This has been mirrored in transfer fees, which have ballooned from around $2.90 to $7.03 billion, over the same period.
• FIFA's focus for the next couple of years will be a detailed consultation process, based in significant part on Edge Hill's findings, including the wide discrepancy between agents' commissions and so called training awards paid to training clubs, for the loss of their young talent. This last point is strikingly illustrated by the fact that, in 2018, $2.14 billion was spent on agents' commissions, compared with just $466 million tricking down to the training clubs.
• FIFA will actively work on its new licensing system, detailed education requirements, dispute resolution regime and arrangements for agents' commissions to be paid via a clearing house system , similar to that operated by the English FA for the past 15 years.
• Most contentious of all and following a meeting of FIFA's stakeholder committee as recently as 24 October, it intends to apply an absolute  cap on agents' commissions. 
•  The plan is for the cap to be limited to 10% of the transfer fee when acting for the releasing club, 3% of the player's salary when acting for him personally and 3% of the player's salary when acting for the engaging club. Where the agent represents both the player and the engaging club, his fee will be capped to 6% of the player's salary.
• The implementation of RWWI was a "big mistake" and the time has come to move on. He accepted that FIFA's plan, educated by Edge Hill's findings, may well lead to litigation but was confident that the plans were robust, justified, and compliant with the boundaries previously set by EU Courts and detailed above.
• FIFA is likely to report back with a view to implementing its final conclusions, by no later than July 2021.

Perhaps unsurprisingly, Roberto  took a starkly different view. He welcomed the reintroduction of a full licensing system and agreed that the introduction of RWWI had led to a "nightmare scenario", but had numerous questions about the road ahead.  In particular:

• In what jurisdiction would future contacts be registered?
• Which legal jurisdiction would apply and how could cross border consistency be guaranteed?
• How would those agents already registered be treated i.e. would the new rules apply to them retrospectively?
• How could the disapplication of "market economy' rules be justified, in legal or moralistic terms and how would this approach be upheld by the Courts? The proposed fee cap struck him as disproportionate; the median figure for agents fees on transactions in the last window were 15.8%, so a cap of 3%, 6% or even 10% is well below the industry standard and represents  a "red line". He couldn't understand how these seemingly arbitrary figures had been reached.
• As matters stand, it appeared to him that litigation on the point is highly likely both as to the principle and the inevitable attempts of agents and other stakeholders to circumvent the rules.
• Who would operate FIFA's new clearing house? David was quick to point out that the FA's own scheme operated to date without any assistance from FIFA, processed £1.4 billion of payments last year alone, spanning some 2,300 intermediaries. Rolling this out on a global basis would represent an enormous enterprise.

For her part, Patricia recognised that out in the real world, both agents and clubs like the idea of dual representation, as the arrangement helps get many deals "over the line". But having said that, it has long been a complaint of clubs that if and in reality, the agent is working for the player's ultimate benefit then surely, when it comes to his remuneration, the player should pay?

This was a view shared by David, whose favoured outcome would be a "player pays" model. After all, this would engender better understand what is being paid to agents, why and would likely lead to an improvement in the service offered by them. It would also act as a "natural brake" on what has otherwise proven to be an inflationary cycle, where larger and larger sums are paid out from the sport to individual and highly influential agents, with limited evidence of these bringing any appreciable benefits to the game.

Many of panel's comments focused on the enforceability or otherwise of this brave new world, so it was invaluable to have Stephen to hand. He was clear that the EU's desire to allow for the autonomy of sporting bodies has, for some years, been conditional on their compliance with its laws. Naturally, FIFA would need to ensure that any new scheme was proportionate, transparent, not arbitrary in nature, or leveraged to its own commercial advantage. But in principle, there is no reason to believe that the Court's would seek to interfere or overturn rules designed to address legitimate concerns. Here, FIFA can properly say that the proposed rules exist to "avoid the powerful taking advantage of the weak". It would be analogous, in his view, with the EU's decision to harmonise the cost of mobile phone data. This also involved an element of what some would describe as price fixing. Yet looking at the wider picture, it was deemed to be to be in the public's obvious interest.

George Burns once said that happiness is having a large, loving, caring, close knit family – in another city. If the football family is to move forward constructively and without troubling the courts for years, or potentially decades, they're going to have to learn to live in far closer proximity than that.