1-0 to FIFA in Football Agent Regulations case

The Court of Arbitration for Sport recently ruled in FIFA's favour in an appeal by agents against new Football Agent Regulations designed to reform the transfer system.

Background

On Monday 24 July 2023, the Court of Arbitration for Sport (CAS) ruled in FIFA's favour in a dispute with football agents over the legality of the governing body's new FIFA Football Agent Regulations.

The new rules were adopted following a long and inclusive consultation process involving players, clubs, leagues, national football associations and football agent organisations, and were implemented by FIFA as part of its comprehensive transfer system reform.

The primary aim of the regulations is to reinforce contractual stability, protect the integrity of the transfer system and achieve greater financial transparency.

What are the key changes introduced by the Regulations?

The regulations introduced widespread rule changes on how football agents operate, including:

• A 3% cap on commission for any transfer of more than $200,000;
• 5% cap on for deals less than $200,000;
• A 10% cap on earnings when agents act for the selling club;
• The (re)introduction of a mandatory examination and licensing system;
• An obligation on agents to make all transactions public, allowing fans to see how much they are paid for deals;
• A prohibition on multiple representation to avoid conflicts of interest; and
• An annual fee paid by agents to FIFA.

The appeal

The Zurich-based Professional Football Agents Association (PROFAA) submitted the appeal to CAS, sport’s highest court, in Switzerland, seeking to overturn the regulations and specifically, the cap on their fees.

The appeal raised one fundamental question for sports governance, namely: "Can FIFA extend its regulatory powers beyond the task of governing the sport of football itself and cover peripheral economic activities, particularly the market of football agent services?"

The panel concluded that PROFAA had failed to show that, as a matter of principle, FIFA did not enjoy legitimacy to regulate football agent services.

On the contrary, the Panel observed that FIFA enjoys both so-called “technical” and “democratic” legitimacy to regulate football agent services.

PROFAA'S claims that the regulations violate competition and EU laws were dismissed in their entirety. The panel was satisfied that FIFA had conducted a thorough consultation process, gathering input from many relevant stakeholders, including PROFAA.

The award represents the first rigorous assessment of the legality of the regulations by an independent panel of experts and confirms FIFA's position that the regulations are a reasonable and proportionate regulatory measure that help to resolve system failures in the player transfer system.

Get ahead of the game

The provisions regarding becoming a football agent, including the requirement for agents to pass an exam and obtain a licence, entered into force on 9 January 2023.

However, there is a transition period, as the remainder of the regulations relating to acting as a football agent, including the obligation to only use licensed football agents, the cap on agents’ fees and limits on multiple representation, will not enter into force until 1 October 2023.

Therefore, the summer transfer window in 2023 will be the last transfer window in which the current regulatory regime will apply.

Thereafter, all agents must be licensed before carrying out any agency activity and the regulations will be fully operational except that it is understood the new rules on acting as a football agent will not apply to transactions involving representation contracts concluded prior to 16 December 2022 even if the transaction takes place after 1 October 2023.

This means the cap on commissions and limitations on multiple representation will not apply in those instances.

In the meantime, PROFAA will scrutinise the CAS decision before deciding on its next course of action and will continue to support any and all litigation against the regulations.

Read the CAS decision in full.

This article was authored by trainee Imogen Boffin and Dispute Resolution Partner Andrew Sanderson. If you have any queries or would like any further assistance on this or other advertising and consumer law matters, please contact Andrew or another member of the Fieldfisher Sport practice.