An English Football Association (FA) tribunal has ruled that regulations proposed by Fédération Internationale de Football Association (FIFA) on agent fee caps breach UK competition law and are unenforceable. The decision is a significant setback for FIFA and its plans to restrict the fees that football agents can charge for their services.
FIFA's Agent Regulations (FFAR)
FFAR establishes a licensing system for football agents to regulate how agents provide services in relation to the transfer of players and coaches between football clubs.
As a member of FIFA, the FA is bound to comply with FIFA regulations.
National Football Agent Regulations (NFAR)
To align domestic rules with the FFAR, the FA was required to implement its own set of regulations – the NFAR. The NFAR contains Fee Cap and Pro Rata Payment Rules.
The Fee Cap limits an agent's fee when acting in a transaction involving the sale of a player to 3% when a player's annual salary is more than USD $200,000 and 5% when it is less than that amount. These limits are doubled to 6% and 10% respectively when the agent is acting for both the player and the purchasing club. In circumstances where the agent is acting for the releasing club, the agent's fee is restricted under the NFAR to 10% of the transfer compensation.
The Pro Rata Payment Rules, in addition, require payment to be made over the life of the player's contract.
After a five-month arbitration the FA tribunal ruled that the Fee Cap operates as an anti-competitive horizontal purchasing agreement on behalf of football clubs and that, if implemented, both the Fee Cap and the Pro Rata Payment Rule would amount to restrictions of competition by object and effect, resulting in an abuse of the FA’s collectively dominant market position for players’ services. As a result of the decision, the FA was unable to implement the NFAR in its current form in the UK.
The FA has confirmed that it is considering the implications of the decision and an update is expected, although it’s not clear when this will occur.
In a statement from FIFA, it confirmed that the FA tribunal's decision only affects two of the multiple provisions in the NFAR and other key provisions were endorsed by the tribunal, including those preventing agents from representing multiple clients in a transfer and requiring that the client pays the agent, both of which were unsuccessfully challenged by agencies challenging the NFAR.
Alongside the partial implementation of the FFAR in certain European countries, including France and Italy, there are also a number of other legal challenges ongoing in Europe. Recently agents have therefore been required to grapple with different rules in different jurisdictions, creating uncertainty.
As always, the January transfer window will be an exciting time for football fans. It remains to be seen whether this uncertainty impacts any potentially significant transfers this winter.
If you are a football club or agency looking to better understand the implications of the decision of the FA tribunal, please feel free to contact your usual S+W contact or our sports law team to find out more.