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Why Fifa is wrong to meddle in economics

Trevor Watkins, global head of sport at international law firm Pinsent Masons, argues that new Fifa rules which restrict money earned by agents are arbitrary and capricious.

Fifa, the world governing body of football, will soon consider wide-ranging changes to the way in which the football transfer system is operated culminating in the Fifa Council meeting on 24 October.

Much of the proposed reforms are sensible, logical and will likely benefit the way in which the game operates. There is one area, however, where troubled waters lie ahead – how and in what way the business of agents is regulated by Fifa.

Only four years ago Fifa abandoned a licensed system for agents. Ironically, a decision made at a time when the full investigative force of journalists and US services were just carving open the systemic corruption that Fifa had become embroiled in. The relaxation in oversight at international level saw regulation delegated to national associations. Fast forward and since early 2018 the court of public opinion and others have encouraged Fifa to rein back on those changes.

Media headlines of eye-watering agency fees and money being ripped out of the game come to mind when considering the changes. Premier League clubs paid out more than £260m to agents during the 2018-19 season, an increase of £49m on the 2017-18 season.

Fifa’s changes are designed to keep more money “in the game” and to protect the integrity of the transfer system and prevent abuses. They include a new licensing system for agents and restricting payments to:

  • agents of the selling club at 10% of the transfer fee.
  • player’s agent at 3% of the player’s remuneration; and
  • agents of a buying club at 3% of the player’s remuneration
  • preventing agents from acting for multiple parties to avoid conflicts of interest.

You might expect sympathy from me for the changes, having been immersed in football for over 20 years and being chairman of AFC Bournemouth for 5 of those. Yet even with some experience of the less respectable side of the business I question if the premise for action is balanced and whether the solution is either legal or correct.

Like them or loathe them, agents are a necessity of the football framework. The intended changes appear to target a flow of money and make assumptions that there is something inherently wrong with that. In doing so the rule change is arbitrary and capricious. Plenty of parties take money “out of the game”. The rules discriminate by separating agents out from others paid by a club or a player – for example, finance brokers, consultants, lawyers, accountants and so on – simply by linking them into the transfer system. The intended cap impacts agents whilst none exist for players, managers or on the amounts clubs pay on transfers.

Given there’s no evidence that a restraint on agency payments will reduce costs for clubs it suggests the objective will not be met by this rule. Instinctively monies will simply flow elsewhere. It is also unclear whether, even if this were the consequence, that enabling other stakeholders to be paid more is a laudable and legally sustainable motivation.

In reality we are dealing with economics. Clubs should be free to determine how to deploy their monies, agents free to strike terms on whatever basis clubs are prepared to pay. That should not be a Fifa issue.

What I do believe is fundamental and right for Fifa to insist on is transparency and to maintain the integrity of sport by ensuring it is clear who is representing a party and benefiting. The law is very clear, a party must always act in the best interests of a client – and if a conflict or a loss arises then those affected can take action. I’d support Fifa having jurisdiction over agency disputes to enforce that but the law is clear. A system that observes, monitors and enforces that principle does away with any need to restrict who a party chooses to retain and how many parties any one entity acts for. Transparency over payments and relationships should ensure a robust system of checks and balances.

An eminent Swiss lawyer this week observed the new system is like “putting a coat of paint on a completely rotten wall”. I beg to differ. Football and governance have come along way since 2015. In my view the tools are already there. They just need to be deployed properly and forcefully.

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