The most contentious issue: The 3% cap

The 3% recommended commission rate in the current FIFA Intermediaries Regulations has, for the most part, not been observed by the industry. Instead, the past 5 – 10 years have seen player salaries and, therefore, intermediaries’ fees rise considerably. According to FIFA TMS, USD 496.2m was paid by clubs in agency fees in 2020. FIFA seems determined to reduce the amount that it sees as flowing ‘out of the game’* and, in particular, what it perceives to be the exorbitant fees paid to intermediaries on some of the more high-profile deals.   

And so, in its draft Football Agents Regulations, FIFA plans to impose a 3% cap – not merely a recommendation, but a hard cap on what a football agent can earn. There are certain deviations from that 3% cap: (i) if an Individual’s remuneration is less than USD 200,000, the cap rises to 5%; (ii) if the football agent acts for the Engaging Entity as well as the Individual, the cap is 6% (or 10% if the Individual’s remuneration is less than USD 200,000); and (iii) if the football agent acts for the Releasing Entity (the selling club), the cap is 10% of the transfer compensation. However, the default 3% cap is notably below industry custom and practice, with agency commissions generally ranging between 5% and 10% of a player’s remuneration.

The reality is that football agents’ fees as a proportion of player remuneration tend to be higher in the lower leagues, where the absolute value of fees is relatively small. FIFA’s ‘Intermediaries in International Transfers 2020’ report recorded an average commission of 17.3% for transfers valued at less than USD 500,000, compared with an average of 5% for transfers valued at more than USD 5 million. The reality is that 3% – 6% commission in respect of the majority of lower value transactions would amount to a sum that would simply not justify the intermediary’s time and effort.

There are of course outliers, where the intermediary fees as a proportion of player remuneration is high notwithstanding the high remuneration paid to the player and/or sizeable transfer fee paid between clubs. But, those are the exceptions, not the norm. A blanket cap on commission rates as per FIFA’s new regulations would arguably be more prejudicial (in relative terms) for those thousands of agents operating at a lower level of the industry, than it would be for agents operating in the upper echelons – indeed, it could pose an existential threat to many agents who represent players outside the top tiers in the top leagues, potentially distorting competition by pushing such smaller agents out of the market and consolidating the power of the larger agencies, which benefit from economies of scale.

Moreover, it remains to be seen whether a cap on agents’ fees can survive the legal challenges that will undoubtedly follow, as there appear to be good grounds for asserting that any such cap would fall foul of European competition law. FIFA would need to show that the cap is legitimate, necessary and proportionate to FIFA’s objectives, and there appear to be significant hurdles that it would face in trying to do so. 

*We strongly disagree with this concept of money flowing ‘out of the game’. Intermediaries / agents play a crucial role in the football industry, in representing the interest of players and clubs, in helping to oversee, develop and nurture players’ careers, in constructing, facilitating and delivering opportunities, etc. Many of the world’s best-known players would not be the global icons they are today were it not for the opportunities sourced and guidance provided by agents. It is wrong to view agents’ fees as money leaving the industry – it is simply money being paid to a long-standing and important sector of the industry. It is never suggested that money paid to players, club suppliers, club non-playing staff, club chief executives, is money flowing out of the game. It should be the same with agents, and it’s important that this misconception regarding fees paid to agents is addressed. If the remuneration paid to agents is recognised as being part and parcel of a functioning football industry, it may be that a more sensible approach to the regulations of such payments prevails.