How safe are your representation contracts?Wednesday, 14th November 2018
Guest blog by Andrew McGregor and Catherine Forshaw, Brabners. This article first appeared here.
This month’s article in the Brabners Sports Team’s series focusing on the FA Registered Intermediaries (football agents) marketplace, looks specifically at representation contracts between FA Registered Intermediaries (“Registered Intermediaries”) and Players.
Such contracts are commonly referred to as “Rep Contracts”. Rep Contracts should be taken very seriously by both Registered Intermediaries (and their agencies) and Players. The Rep Contract details the terms which govern the contractual relationship between a Registered Intermediary (or agency) and the Player. The Rep Contract confers rights and imposes obligations on both parties and it will often be cross referenced in many Rep Contracts between a Registered Intermediary (or agency) and a Player’s Club, which will allow the Club to make a payment to the Registered Intermediary on behalf of the Player. Notwithstanding the fundamental importance of the Rep Contract to the Registered Intermediary getting paid, it offers the Registered Intermediary protection around his / her relationship with their Player in what is an increasingly competitive marketplace. Registered Intermediaries and agencies should place paramount importance on the contents of Rep Contracts and the conduct of parties during the currency of Rep Contracts.
Despite what is stated above, the true value of the Rep Contract has been questioned over the years. With Players often too happy to unilaterally breach and terminate their Rep Contracts (and other Registered Intermediaries happy to ‘support’ that breach and termination) many Registered Intermediaries and Players wonder what type of real protection the Rep Contract offered. Leaving aside the legal implications for a Player willing to unlawfully terminate the Rep Contract (and any third parties willing to unlawfully influence that termination), the latest regulatory framework makes it more important than ever to understand the value, rights and obligations enshrined in a good Rep Contract.
The FA Standard Representation Contract
Under the FA Regulations on Working with Intermediaries (the “Regulations”), Registered Intermediaries are required to use Rep Contracts containing, as a minimum, all obligatory terms of the relevant FA Standard Representation Contracts (the “FA SRC”) when conducting Intermediary Activity on behalf of a Player (and essentially when conducting a Transaction as defined in the Regulations).
The FA SRC can be found here.
Whilst the FA SRC (and other standard documents) have been produced with a view to achieving compliance with both the FIFA and the FA Regulations, Players, Intermediaries and Clubs are advised to seek independent legal advice in order to ensure that the Rep Contracts they are entering into sufficiently protect their interests. Following a look at the regulatory considerations, we highlight below some of the vacuums within the FA SRC (which are by no means insignificant) and identify some of the potential additions to a Rep Contract which parties should consider in order to safeguard their interests.
In the summer of 2017, The FA made a number of subtle amendments to the Regulations. The amendments to the Regulations were framed as a reaction to the unfathomable rise in spending in the 2017 summer transfer window. However, the marketplace was also straining with a number of anomalies created by the version of the Regulations implemented in April 2015 at the point of ‘de-regulation’.
As far as the contents of Rep Contracts are concerned, the most important changes in the summer of 2017 were the introduction of the following new Regulations:
• B11 – A Registered Intermediary shall only enter into a single Rep Contract with the same Player at any one time.
• B12 – A Registered Intermediary shall not enter into a Rep Contract with a Player under an exclusive Rep Contract with another Intermediary.
• B13 – A Player shall not enter into a Rep Contract with a Registered Intermediary whilst under an exclusive Rep Contract with another Registered Intermediary.
Regulation B11 provides further protection for Players and attempts to preclude Registered Intermediaries encouraging Players to enter into a series of successive Rep Contracts to overlap and artificially extend the current maximum two-year term of a Rep Contract (as provided for in the Regulations), which is seen as a sensible period of time given the average length of a Player Contract.
The FA have taken a firm stance on the length of Rep Contracts as FIFA do not provide for a maximum contract period which inherently leads to contractual disputes. The FA’s two-year period offers some protection for the time and financial investment made by the Registered intermediary in the Player, but it also allows a Player, who may have had a substantial change in the circumstances of his / her career over the period of the Rep Contract, the freedom to find a different Registered Intermediary upon expiry of the Rep Contract.
Regulations B12 and B13 fundamentally deal with ‘player poaching’ whereby a competitor Registered Intermediary attempts to engage in direct or indirect representation of a Player despite the fact the Player is already under an exclusive Rep Contract with another Registered Intermediary. This activity was previously prohibited under the pre 2015 regulatory framework for Licensed Agents, but, since the process of de-regulation and the original version of the Regulations were introduced in 2015, The FA (perhaps unintentionally) relaxed the restriction. This led to a significant increase in FA Rule K arbitrations (or High Court disputes depending on jurisdiction arguments) brought by Registered Intermediaries against Players and competitor Registered Intermediaries for breaches of Rep Contracts and inducements to breach Rep Contracts. However, as part of the summer 2017 amendments to the Regulations, The FA have re-introduced provisions to prohibit poaching, and have also imposed an additional regulatory obligation on Players (capable of sanction in cases of a breach) to refrain from entering into multiple Rep Contracts during the currency of an exclusive Rep Contract with another Registered Intermediary.
As a result of increased regulatory control over the performance and non-performance of a Rep Contract, and an increased awareness willingness and need in the marketplace for Registered Intermediaries to enforce their rights under Rep Contracts, it is more important than ever to ensure your Rep Contracts adequately protect you, your agency and your clients.
What is missing from The FA Standard Representation Contract (and possibly your current Rep Contracts with your most valuable clients)?
Whilst the FA SRC contains the fundamental terms which govern a basic Registered Intermediary – Player relationship, there are some obvious omissions which the more sophisticated Registered Intermediary and agencies will want to include. For example, the FA SRC does not address the following issues:
- Wider express remuneration entitlements (e.g. connected to signing on and loyalty bonuses)
- Services provided and remuneration for activities relating to commercial activity (e.g. procuring and negotiating, on behalf of the Player, a commercial contract with a boot manufacturer or sponsor)
- Relationships with a Player’s image rights company
- What happens if an agency’s particular nominated Registered Intermediary is suspended and / or leaves the agency
- Appropriate warranties from the Player which address the 2017 amendments to the Regulations
- Express obligations and duties on the Player concerning his / her performance under the Rep Contract (including the supporting of claims against any third parties)
- Wider entitlement for the Registered Intermediary to receive payment in respect of monies received by the Player and / or the Player’s company in lieu of earnings (football salary and commercial income) which would normally trigger a payment to the Registered Intermediary
- The General Data Protection Regulation and the Data Protection Act 2018
- Wider express post termination rights and obligations (e.g. entitlement to remuneration crystallised during the currency of the Rep Contract but which does not fall due until after termination / expiry of the Rep Contract and protection against any third party occurrence which attempts to extinguish that entitlement (e.g. signing of a new Player Contract which cuts across an existing agreement and / or tripartite agreement with a Club)
- Express authority to undertake dual representation services
- Wider express dispute resolution provisions
The above are just some of the issues to consider which are not addressed in the FA SRC between a Registered Intermediary and a Player. Given the increased importance of the Rep Contract in today’s marketplace, which will be regularly under threat by the sheer volume of new Registered Intermediaries operating at all levels of the game, the modern day Registered Intermediary simply cannot afford to operate under the FA SRC.
What should Registered Intermediaries and agencies consider adding to The FA SRC?
Remuneration; ostensibly this is the most important component within a Rep Contract for both parties. The FA SRC fails to provide a comprehensive platform upon which the parties can address this integral provision. The FA SRC merely provides an option to detail the commission percentage payable and a tick-box option to identify whether this will be payable by way of lump sum or annual instalments. The specific date upon which these payments are due is not provided for within the FA SRC. Therefore, if using the FA SRC there is ambiguity regarding when payments are due.
The method under which remuneration for the agreed services (in respect of Player and commercial related activities) shall be paid, should be specifically detailed. The terms of how the Rep Contract will align with a Player’s Player Contract and Club, who in-turn may be responsible for discharging the Player’s liability to pay any commission owed, should be clearly specified.
Further, in today’s climate it is prudent to expand upon The FA’s one-liner; “No remuneration will be due to the intermediary while the Player remains a Minor.” Whilst this is unquestionably clear, the pragmatic approach would involve including specific terms regarding when a Player is no longer a Minor, and when and how payment can be received by the Registered Intermediary.
Commercial services: as well as being valuable commodities on the pitch, Players are also able to generate lucrative revenue streams off the pitch. The remuneration received by a Registered Intermediary in relation to activities concerning the commercial exploitation of a Player’s brand, reputation and / or ‘image rights’ play an important role in the financial sustainability of a successful Registered Intermediary business / agency. Therefore, it is crucial that both parties are protected when it comes to commercial services.
It is also important to understand that a Rep Contract outlines the relationship between the Registered Intermediary and the Player. However, if a Player has incorporated a limited company through which to market and commercially exploit his brand, reputation and ‘image rights’ then a more commercial thinking Registered Intermediary may want to impose an obligation on a Player to procure that the Player’s company engages the Registered Intermediary as a service provider. After all, if the Player has assigned commercial rights to a separate corporate entity then the Registered Intermediary needs to ensure that he / she actually has authority to market such rights.
Warranties: are crucial in explicitly providing protection to both parties, including, confirming that the Registered Intermediary has the capacity to act and has obtained the necessary FA authorisation to do so. It may also be prudent to ensure that the Player confirms and warrants that they are free to enter into the Rep Contract and that there are no breaches of the Regulations.
Exclusivity: is a fundamental commodity, highly sought after by Registered Intermediaries and one which The FA’ SRC deals with by way of a simplified tick-box. Needless to say, whilst this method is transparent in terms of ‘exclusive’ and ‘non-exclusive’ there are further defining elements to be considered and incorporated. Most notably, the terms themselves are undefined in terms of obligations on the parties.
This section provides the ideal platform to identify rights and remedies available to the Registered Intermediary in case of breaches of the Rep Contract. The FA SRC is silent on such matters.
Obligations: Clearly outlining the obligations of the parties is key to its success. Obligations act to reaffirm warranties afforded under the Rep Contract. Looking at the interests of the Player, it is important to include a clause which specifies that the Registered Intermediary will act in the best interest of the Player.
Termination: The FA SRC fails to address rights or liabilities, accrued during the currency of the Rep Contract, after it is terminated. It is therefore recommended that appropriate ongoing obligations are provided for under the Rep Contract.
Disputes: The FA SRC only prescribes one option for dispute resolution which is The FA’s own Rule K Arbitration, whereas it is recommended to expressly include an entitlement for the parties to appeal a decision of an FA Rule K Arbitration Panel to the Court of Arbitration for Sport.
Ultimately, the above does not represent an exhaustive list of recommendations or solutions but merely provides an overview of the exposure that Registered Intermediaries face by merely relying upon the FA SRC.
It is our view that the FA SRC is simply not comprehensive enough for the more professional and sophisticated Registered Intermediary / agency. Alarm bells should be ringing if you have used or are contemplating using the FA SRC without incorporating the necessary additional detail and protections.
The Brabners Sports Team have a number of experts who are able to help ensure Registered Intermediary practices, procedures and standard contracts are compliant with the Regulations as well as affording as much protection and commercial flexibility as possible. We regularly advise all types and sizes of agency operations and can offer fixed fee bespoke contractual audit packages for Intermediaries and agencies wanting to review their standard precedent contracts and to better safeguard their interests in the marketplace.
We also regularly advise players on their rights and obligations under various types of Rep Contracts and are available to provide you with support and advice you need when considering (or perhaps being encouraged to) breach or terminate a current Rep Contract.