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What FIFA’s new regulations on ‘intermediaries’ will change on 01/04/2015 (Joëlle Monlouis, lawyer) Reg – Paris – Monday 9 March 2015 – Essential no. 35592 ‘At its 64th Congress in São Paulo (BRA), FIFA (Fédération Internationale de Football Association) endorsed the new Regulations on Working with Intermediaries on 11/06/2014. These new regulations, which enter into force on 01/04/2015, bring an end to the previous players’ agents regulations, in force since 01/01/2008, and abandon the licensing system painstakingly developed over the years,’ says Joëlle Monlouis, a specialist in business law and sports law, in an analysis for News Tank on 09/03/2015. ‘FIFA considers it essential to protect players and clubs from being involved in unethical and/or illegal practices and circumstances in the context of the conclusion of transfer agreements and employment contracts between clubs and players,’ the international federation stresses in the preamble to the new regulations. FIFA’s stated objective: ‘to allow genuine control and greater transparency in player transfers.’ However, ‘in France, the Sports Code provides that sports agent activities “may be carried out only by a person holding a licence”,’ stresses Joëlle Monlouis, adding: ‘French case law is consistent: national law takes precedence over any regulations issued by an international federation.’ In other words, ‘French law will remain applicable, but numerous disputes can be expected internationally.’ The status of players’ agents has been subject to constant amendments since its creation in 1994. The latest marks a complete break with the system painstakingly developed until now. ‘In 1994, the FIFA agents’ licensing system was born’ To put an end to a considerable number of abuses observed in player transfers, FIFA adopted regulations governing the activities of players’ agents in 1994: the FIFA agents’ licensing system was born. Until 2000, players’ agents were licensed directly by FIFA. From 2001, already overwhelmed at that time by the issue of monitoring players’ agents’ activities, FIFA decided to entrust this task to its affiliated associations, which henceforth became the sole bodies authorised to issue the coveted licence. ‘FIFA found that “only 25 to 30% of international transfers are concluded through licensed agents”’ FIFA, following a review begun on 03/06/2009, the date of its 59th Congress, decided to undertake a thorough reform of the players’ agents system through a new approach based on the concept of ‘intermediaries’ [1]. FIFA had found that ‘only 25 to 30% of international transfers are concluded through licensed agents, with players regularly represented by family members [2], lawyers [3] or unlicensed agents’ [4]. ‘A new framework’ FIFA’s difficulty therefore lay in the fact that it was unable to act against unlicensed agents, who nevertheless account for a very substantial share of international transfers, because they operated outside the scope of its players’ agents regulations. On that basis, FIFA decided to propose a new framework which, while taking these circumstances into account, would allow ‘closer monitoring of the activity and greater transparency’ [5]. ‘A more transparent system, simpler to administer and implement’ At FIFA’s 64th Congress in São Paulo (BRA), on 11/06/2014, the new Regulations on Working with Intermediaries were therefore endorsed. These new regulations, due to enter into force on 01/04/2015, bring an end to the previous players’ agents regulations, in force since 01/01/2008, and abandon the licensing system. Their objective is to ‘propose a new system that is more transparent and simpler to administer and implement, which in turn would result in better enforcement at national level as well’ [6]. A ‘simpler’ system… This major development in FIFA regulations brings an end to the licensing system, a prerequisite for acting as an agent [7] (Article 3 et seq. of the 2008 FIFA Regulations), which had been painstakingly developed over the years. ‘Registration is the federations’ responsibility’ FIFA has decided to introduce instead a registration system (Article 3 of the new FIFA Regulations) entrusted to affiliated associations. The affiliated association must verify, as a minimum, that ‘the intermediary involved has an impeccable reputation’ (Article 4.1 of the new FIFA Regulations) and that he or she ‘(…) has no contractual relationship (…) that could lead to a potential conflict of interest’ (Article 4.3 of the new FIFA Regulations). ‘A shift from a regulated framework to a declaration-based framework’ Under the former framework, an agent had to obtain a licence and pass an official examination in order to practise. Conversely, the new regulations consider that ‘associations are deemed to have fulfilled their obligations (…) if they obtain a signed intermediary declaration from the intermediary concerned’ (Article 4.4 of the new FIFA Regulations), a declaration provided in the annexes to the new regulations [8]. We are thus moving from a regulated framework (compulsory licensing) to a declaration-based framework (an intermediary declaration). The benefit of this new system is that FIFA can now address all those involved in player transfers, rather than only 30% of them. Entry into force on 01/04/2015 ‘to allow federations to adapt’ (FIFA, 11/06/2014) 1/2 ‘The 64th FIFA Congress approves several amendments to the FIFA Statutes and the Regulations Governing the Application of the Statutes necessary to implement the new Regulations on Working with Intermediaries, which will shortly replace the current FIFA Players’ Agents Regulations. The new regulations, which introduce a new approach based on the concept of intermediaries, were already approved by the FIFA Executive Committee on 21/03/2014 and are due to enter into force on 01/04/2015, giving FIFA’s 209 member associations sufficient time to adapt to the new system.’ FIFA, 11/06/2014 ‘The objective was never to deregulate’ (FIFA, 11/06/2014) 2/2 ‘It is important to stress that the objective of this thorough review was never to deregulate the governance of players’ agents’ activities, but to propose a new system that is more transparent and simpler to administer and implement, which will subsequently result in better enforcement at national level. The new regulations no longer regulate access to the activity, but provide a general framework for better monitoring of the activity itself.’ FIFA, 11/06/2014 A ‘more transparent’ system… 1. This new system seeks to define more transparently the remuneration payable to these new participants in intermediation. The new calculation basis adopted in the FIFA Regulations, although expressed more concisely, is not necessarily more transparent, since questions remain as to what it comprises (signing-on bonus, benefits in kind, etc.). The semantic shift towards calculating remuneration by reference to ‘total gross income’, rather than ‘basic gross salary’, should be emphasised… [9] ‘The new calculation basis is not necessarily more transparent’ FIFA also recommends that intermediaries’ remuneration should be capped at ‘3% of the player’s total gross income’, whereas previously no maximum was stipulated [10]. The idea is to put a stop to the exorbitant commissions received by certain players’ agents. 2. However, as the aim of these new regulations is to ‘allow genuine control and greater transparency in player transfers’ [11], it may seem surprising that the method chosen is the declaration-based framework described above. ‘Real opacity and considerable uncertainty’ Having no further control over these intermediaries’ skills and knowledge, or the financial guarantees they could offer players and clubs, as the licensing framework allowed, paradoxically creates real opacity and considerable uncertainty! Ultimately, this new system would rest solely on the goodwill of those involved… Ultimately, this new system would rest solely on the goodwill of those involved… But does this mean that this new system, intended to be ‘simpler and more transparent’, will give rise to no difficulties in its application within the national law of affiliated associations? Consequences of this new system within associations’ national law, and French law in particular 1. In France, Article L. 222-7 of the Sports Code provides that sports agent activities ‘may be carried out only by a person (…) holding a licence (…)’. Anyone in breach would face a sentence of two years’ imprisonment and a €30,000 fine (Article L. 222-20 of the Sports Code). Article L. 222-7 of the Sports Code 1/1 The activity of bringing together, for remuneration, parties interested in concluding a contract either concerning the paid exercise of a sporting or coaching activity, or providing for the conclusion of an employment contract for the paid exercise of a sporting or coaching activity, may be carried out only by a natural person holding a sports agent’s licence. The licence is issued, suspended and withdrawn, according to the discipline concerned, by the competent federation holding delegated authority. That federation monitors sports agents’ activities annually. Each competent federation holding delegated authority publishes the list of sports agents authorised to practise in its discipline and the sanctions imposed under Article L. 222-19 on agents, licence holders, and affiliated associations and companies. Article R. 222-15 et seq. of the Sports Code specifies that the sports agent’s licence involves two examinations: the first is a general examination organised nationally by the CNOSF (French National Olympic and Sports Committee) Inter-Federation Sports Agents Committee, and the second is specific to each federation. ‘The system established by the FFF is entirely autonomous’ The FFF Sports Agents Regulations for the 2014–15 season make no reference to FIFA regulations for their application. By contrast, Article 3.4.3, paragraph 4 of those FFF Regulations, in the version adopted by the FFF Executive Committee on 26/09/2011, provided that ‘the date of the specific examination’ was ‘set by FIFA worldwide’, which could have caused application difficulties in the light of the new FIFA Regulations. As matters stand, the system established by the FFF is therefore entirely autonomous in this respect from the provisions of the FIFA Regulations. FFF sports agent’s licence: specific examination on 07/04/2015 Eligible candidates, following the general examination, are invited by registered letter to the specific examination (see downloadable syllabus), organised on 07/04/2015. 2015–16 session: Registration will open during June 2015 using a registration form published on the FFF website. The first examination in this session should take place in November 2015, the French federation states. 2. This new ‘intermediaries’ system will not affect the opportunity for lawyers to act as sports representatives, in other words to undertake intermediation activities as defined in Articles L. 222-7 et seq. of the Sports Code. ‘Lawyers undertake intermediation activities without needing a licence’ Unlike agents, lawyers undertake intermediation activities without needing to obtain a licence. They need only declare this to the President of their Bar and enter the register of lawyers acting as sports representatives (Article 6.2.0.0 of the Paris Bar Internal Rules). This ‘minimum’ system recommended by FIFA will not adversely affect them; quite the contrary, their qualification remains a major asset among the multitude of these ‘intermediaries’. 3. The question that will then legitimately arise is how these new FIFA Regulations interact with affiliated associations’ national regulations, once again highlighting the conflict between international federations’ regulatory power and the national law of affiliated associations. ‘“The status of an international sports federation is that of a private-law association or grouping”’ French case law is consistent on this point: national law takes precedence over any regulations issued by an international federation. In a Conseil d’État decision of 23/06/1989 [12], the Government Commissioner, Mr Faugère, recalled that ‘international sports federations are no different from the multitude of non-governmental organisations to which legal scholarship denies any prerogative other than regulating their internal functioning… Ultimately, they have no status under international law giving their decisions enforceable effect in domestic law. Their status is that of a private-law association or grouping governed by the law of the state in which they have their registered office.’ In a decision of 02/02/2006 [13], the Conseil d’État reaffirmed this principle more forcefully, recalling ‘the absence of direct effect in the domestic legal order of regulations issued by an international sports federation’. ‘“These regulations establish minimum requirements and standards”’ Despite the entry into force of these new FIFA Regulations on 01/04/2015, French law will remain applicable, meaning that sports agent activities may be carried out in France only ‘by a person holding a sports agent’s licence (…) issued by the competent federation holding delegated authority’ [14]. Aware of these considerations, FIFA nevertheless took care to state in the preamble to the new regulations that ‘these regulations establish minimum requirements and standards that must be implemented at national level by each association, which may add further provisions’. Article 1.3 of the new regulations also states that ‘they [the associations] retain the right to go beyond these minimum requirements and standards’. 4. At international level, numerous disputes can be expected, since France is one of the few European countries to have incorporated a licensing system into its national legislation. ‘Infringement of the principle of freedom of movement’ What will happen to an intermediary who, by definition, does not hold a licence and wishes to negotiate a transfer in France? It is a safe bet that intermediaries who are nationals of another European Union Member State that no longer issues licences will invoke an infringement of the principle of freedom of movement against the application of French law. ‘An entirely heterogeneous system’ We shall therefore face an entirely heterogeneous system in which some less demanding countries will allow people without any qualifications whatsoever to claim ‘intermediary’ status, while other countries will continue to maintain their regulations, based in particular on the granting of licences, to guarantee the competence of these essential participants. Once again, the biggest losers will be players, who may find themselves more readily exposed to unscrupulous intermediaries… --------- [1] ‘A natural or legal person who, for a fee or free of charge, represents players and/or clubs in negotiations with a view to concluding an employment contract, or represents clubs in negotiations with a view to concluding a transfer agreement’, definition – FIFA Regulations on Working with Intermediaries. [2] Persons exempt from licensing under Article 4.1 of the 2008 FIFA Regulations. [3] Persons exempt from licensing under Article 4.2 of the 2008 FIFA Regulations. [4] FIFA Governance statement, ‘FIFA presents proposed reform of the sports agent profession’, 16/11/2011. [5] FIFA statement cited above. [6] Circular no. 1417 of 30/04/2014, New FIFA Regulations on Working with Intermediaries. [7] Except for persons exempt from licensing (Article 4 of the 2008 FIFA Regulations). [8] Annexes 1 and 2 to the new FIFA Regulations. [9] The new regulations provide that ‘the remuneration due to an intermediary engaged by a player [is] calculated on the basis of the player’s total gross income for the entire duration of the contract’ (Article 7.1 of the new FIFA Regulations), replacing remuneration ‘based on the player’s annual basic gross salary stipulated in the employment contract, including the signing-on bonus negotiated by the agent, (…) calculated excluding additional benefits such as a company car and accommodation, match bonuses and/or any other non-guaranteed bonus or benefit’ (Article 20 of the 2008 FIFA Regulations). [10] It is provided that ‘the total remuneration per transaction due to an intermediary engaged [may not] exceed 3% of the player’s total gross income for the entire duration of the employment contract’ (Article 7.3 of the new FIFA Regulations), unlike the previous regulations, which stipulated no maximum remuneration, but only an amount where the parties were unable ‘to agree on the amount of remuneration or if the representation contract contains no information in that respect’. That amount would be ‘3% of the basic salary (…) that the player will receive under the employment contract concluded or renewed for him by the players’ agent’ (Article 20.4 of the 2008 FIFA Regulations). [11] Preamble to the new FIFA Regulations on Intermediaries. [12] CE, 23/06/1989, Bunoz, no. 101894. [12] CE, 23/06/1989, Bunoz, no. 101894. [13] CE, 02/02/2006, no. 289701. [14] Article L. 222-7, paragraphs 1 and 2 of the Sports Code. Joëlle Monlouis Date of birth: 14/01/1980 - MBA, IAE, Université Paris I Panthéon-Sorbonne - DEA (M2) in Market Law, Université de Montpellier - Maîtrise (M1) in Business Law, Université Paris I Panthéon-Sorbonne --- - Business Law/Sports Law – Listed on the Register of Lawyers Acting as Sports Representatives - Member of the Statutes and Regulations Committee of the Paris Île-de-France Football League - Lecturer in Sports Law at Université Paris I Panthéon-Sorbonne --- Cabinet Joëlle Monlouis 11, boulevard de Sébastopol 75001 Paris Tel.: 06 10 60 42 95 Fax: 01 70 24 77 75 www.monlouis-avocat.fr Career | From | To Cabinet Joëlle Monlouis – Founding partner | 2013 | Present Paris Bar – Lawyer | 2007 | Present View the profile on the website Profile no. 5975, created on 15/09/14 at 16:07 – Updated on 08/03/15 at 20:28 Downloads - Regulations on Working with Intermediaries - FFF: syllabus for the 2015 specific sports agent examination - FIFA: overview of the new Regulations on Working with Intermediaries (11/06/2014) Also read - Ambush marketing: defining it precisely, protecting against it effectively (Lucas Leroux, lawyer) - Lens–Sochaux case: the strange decision of the Besançon Administrative Court (Charles Amson, lawyer) - Premier League: €145.7m in commissions paid to players’ agents in 2013–14 (+19.2%) - Players’ agent status: ‘The reform adopted by FIFA has no impact in France’ (EAJF) - FIFPro warns footballers against fraudulent practices by fake players’ agents - Transfers: FIFA Congress recommends limiting intermediaries’ remuneration to 3% - ‘We are trying to bring ethical standards to the agent profession’ (Sidney Broutinovski, EAJF Managing Director) - UEFA: Professional Football Strategy Council calls for regulation of agents’ commissions in transfers Send to a friend Contact the editorial team about this article Contacts Editorial team Send us your news, photographs and initiatives. 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