Transfer window insights: Agent contracts and dual representation

Welcome to this Mills & Reeve Sport 101 Guide. I'm Rustam Sethna, a senior associate in the sports law team at Mills & Reeve.

And I'm Harry Bambury, an associate in the sports team based in our Birmingham office. 

In this episode, we're looking at two key documents that you'll encounter in the context of a football transfer.

The first being a representation contract, and the second a dual representation contract, sometimes called a tripartite agreement.

And these agreements sit at the heart of how agents, players, and clubs interact during a transaction, and they're heavily regulated under FIFA and national football agent regulations.

So, we'll walk through key clauses, highlight the commercial and regulatory issues, and flag some practical points to look out for.

So, starting with the player or manager agent representation agreement, this is the core contract that appoints the agent and forms the basis of the relationship between the agent and their client.

Under the FIFA Football Agent Regulations, an agent must have a valid representation contract in place in order to be able to provide football agent services to their client. 

Now, football agent services has a broad definition in the regulations, and basically, this includes any negotiation, communication, or other related activity with the purpose or objective of concluding a transaction.

A transaction could be a transfer of a player or indeed a renegotiation or extension of a player's existing contract. Typically, the scope of services that an agent is appointed to provide includes negotiating playing contracts, sourcing opportunities advising on career matters, and often other commercial and image rights work.

And that commercial element can be significant because that'll include sponsorships, endorsement agreements, and broader image rights.

So, it's important to check exactly what's included within the scope of the agent's engagement. 

And obviously the next thing to consider from there is exclusivity.
Most of these agreements are exclusive, meaning the player agrees not to appoint or deal with another agent during the term except in the last two months of the contract's term.

But there is some nuance to that. So even with exclusive representation contracts, players do retain the right to represent themselves under the regulations.

The regulations also provide that if there's a clause in this representation contract which limits or penalises the player's ability to do so, then that won't be enforceable.

But that being said, it is a bit of a grey area whether a player is considered to be penalised if an agent is contractually entitled to their commission, but the player has represented themselves on a transaction in any event.

Something else that the regulations do is they cap the maximum term of these contracts at two years. So, if a player and an agent are looking to renew or enter into a new representation contract, then they'll have to do so using a fresh agreement. Terms longer than two years or a clause that provides for an automatic renewal, they won't be valid.

Exactly. And as we'd said previously, the regulations generally prohibit other agents from approaching players bound by existing representation contracts until the last two months of the term. But interestingly, a recent decision by the European Court of Justice on the challenge against FIFA's Football Agent Regulations seems to suggest that a prohibition against other agents tapping up players is potentially anti-competitive because it basically gives an undue advantage to the current agent by allowing them to renegotiate with their existing client, i.e. the player, outside of that two-month window. 

Now, coming on to the part that everyone wants to know about, fees or commissions payable to an agent. That's obviously always important.

Typically, you'll see that around 5% of a player's remuneration under a playing contract will be payable as a commission, and in relation to that commercial piece that I mentioned earlier, that can be anywhere between 10 to 20%, but it's not that straightforward. There are key things to look out for, and often what you'll see is the commission for playing under a playing contract is linked to a player's remuneration.

Now, it's important for that to be defined properly. Will it include, for example, performance-related bonuses, other payments such as signing on bonuses, or will it just be tied to the player's basic wage? Another key thing to consider is when will this be payable? Typically, you'll see these commissions spread out over the lifetime of a contract in instalments, but we have seen some where it's payable as an upfront lump sum.

And a third thing to consider is whether the club is paying the commission on the player's behalf as a benefit in kind. That's almost always the case.

And what's also important is whether the agent is entitled to commission after termination, which can extend to deals negotiated or substantially negotiated during the term.

Now, under these representation contracts there's obligations on both sides.

So, the agent, they must act in the player's best interests, they must comply with the regulations, and the player must cooperate with the agent, provide the information that he needs in order to do his job, and importantly, comply with any exclusivity provisions. As of recently, the FA have amended their regulations to make clear that both the player and agent must also retain all communications in relation to the provision of football agent services under a representation contract.

And then just adding to that, I guess most, most of these agreements will also include a, uh, an advance consent to dual representation, which basically allows the agent to act for the player and, uh, the club, uh, in, in, in the same transaction. 

But in order to satisfy the regulations, that consent must ultimately be informed and transaction specific.

And we now move on to the next important document we're covering in this session, which is dual representation or tripartite agreements.
And as the name suggests, these agreements have three parties, so that's the player, the club, and the agent. And that'll apply where the agent is acting for both the player and the club in the same transaction.
Now, given that you've got one agent acting for two different parties to the same transaction, that could give rise to a conflict of interest, so the regulatory framework is critical. As I mentioned earlier, the key requirement is full, informed, written consent from both the player and the club, and it, in order to have this consent, the conflict will need to be disclosed, and there'll need to be a clear agreement on the fees payable.

Typically, this consent is recorded on a form known as an AF1 form, usually prepared by the clubs during in, during these transactions and then submitted to the FA. And this form will set out which parties have used the agent and how that agent is to be paid. All parties to the transaction are required to sign this form in order to show that they do consent to the agent acting for both parties.

And the player must also be given the opportunity to take independent legal advice, which is documented on a formal declaration, which is usually included, uh, at the end of every rep contract. Now, moving on, the structure of the services in a tripartite agreement, the, the agreement is, is usually divided into player services, which is services provided by the agent to the player; club services, which is services provided by the agent to the club to help get the player to the club; and then sometimes what is called further services, which is, is basically ongoing support to the club after the transfer, uh, which typically includes ensuring that there is a good relationship between the player and the club, um, over the course of the contract.

And as mentioned earlier, the key point is that the agent is acting for, and ultimately being paid by, two principals at once, so it's important that these contracts are clear in the role that the agent is playing in relation to both of them.

And moving on the, again, the issue that, that most people are interested in, fees and how they're paid. Um, so typically you'd see a split in fees. You've got the club service fees, which are the fees payable by the club for the club and service, for the services. And then you've got the player service fee, which is the fee payable for player services. The key issues to include here are who ultimately bears the cost, whether the club pays on behalf of the player, and the associated tax implications.

It's important to ensure that the commission is properly apportioned to the player and the club in relation to the services that they actually receive.

And these payments are usually conditional on the completion of the transfer or the transaction, the player remaining at the club on each due date for payment, and the agent remaining licensed.

But ultimately, it's a commercial decision for the parties as to whether these conditions will be included. 

So, moving on and I think to an issue that is common across both rep contracts and tripartite agreements is dispute resolution. Dispute resolution is an increasingly important and complex area under the current regulatory landscape.

These principles currently apply to disputes arising out of both, as I said, representation contracts and tripartite agreements. So, let's get to it.

When it comes to dispute resolution, there's typically three main forums that you'll see. There's Rule K Arbitration pursuant to the FA's rules, the Agent Chamber of the FIFA Football Tribunal, although that's not currently in operation, and then thirdly the CAS, the Court of Arbitration for Sport.

Now, for disputes without an international dimension, and when I say that I mean disputes arising out of purely domestic transactions, disputes must be referred to Rule K Arbitration, and that's because the FA include a number of obligatory clauses that need to be included in representation contracts, one of which is specifying that these kind of disputes must go to Rule K.

And essentially what Rule K is, is a private arbitration process under the FA's rules, as Harry said. It is intended to be confidential, heard by specialists, and a relatively streamlined process when compared with the ordinary court process. The next body is the FIFA Agent Chambers. Now, this body, as Harry said, is not currently functional, but the intention is for it to have jurisdiction where there is an international dimension.

Yeah, that, that's right. The FIFA Football Agent Regulations actually provides for the disputes to be heard by this chamber, although, as we say, it's not currently operational.

So, what, what, what do we mean by the international dimension? Typically, the agents chamber will have jurisdiction to cross border transfers or where parties are based in different jurisdictions.
But given that it's not currently in operation, something that we often see is these international disputes typically either being referred to Rule K as with the domestic disputes or alternatively to the Court of Arbitration for Sport. Now in theory, once the agent chamber is up and running, CAS, the Court of Arbitration for Sport, will serve as the appeal body for the decisions of the agent chamber, as is currently the case with other disputes that have first instance decisions from FIFA.
But currently what we're seeing is parties to representation agreements agree to refer their disputes in the absence of you know, the FIFA agents chamber directly to the ordinary division of the CAS. So rather than CAS being an appeal body, it will act as a first and final arbitration body.

The key piece there is whether the dispute has an international dimension.

If it does, once the a- agent chamber is up and running, FIFA jurisdiction is likely to apply. But for now, CAS might serve as that first instance body. Once the agent's chamber is up and running, then CAS might have a different role, sitting above the, the agent's chamber as more of a appeal forum. And if it doesn't, Rule K pursuant to the FA rules that will usually govern these disputes.

Brilliant. And so, to summarise, final takeaways. Representation agreements between players and agents or managers and agents govern the relationship between an agent and their client, which could be a player or a manager. Dual representation agreements are typically transaction specific and regulate the relationship b- between an agent, a player, and a club where the agent is providing services to both parties.

And crucially, both types of agreements are subject to the football agent regulations, which as the recent decision of the ECJ shows, are constantly evolving. So if you'd like to discuss any of the issues that we've mentioned, then please do get in touch.

That brings to an end this 101 session. Thank you so much for listening to our Sports score shorts podcasts.

You can find other episodes on Spotify, Apple Podcasts and YouTube. But thanks for listening. If you've got any questions, feedback, or topics you'd like us to cover in the future, please feel free to get in touch.