Registration and Regulatory Compliance – Don’t get caught offside!

Tuesday, 9th October 2018

Guest blog by Brabners LLP. This blog was originally published here.

This month, we look specifically at the registration process and regulatory requirements that football agents (FA Registered Intermediaries “Intermediaries”) must comply with in this country.

These requirements should be taken very seriously by anyone whose conduct falls within the definition of ‘Intermediary Activity’ under The FA Regulations on Working with Intermediaries (the “Regulations”) which, for the avoidance of doubt, includes an FA Registered Intermediary. There are serious consequences for non-compliance, some of which we will discuss in this article. Aside from any disciplinary penalty The FA can impose, receiving sanctions from The FA can give rise to serious reputational harm. Notwithstanding the current climate, football clubs will be keen to avoid being associated with ‘unscrupulous’ Intermediaries, particularly where players who are Minors (under 18) are concerned.

If you are new to the agency marketplace or you have not previously worked with Minors, it is best to seek the appropriate guidance and / or legal advice specific to your circumstances to avoid any costly mistakes.

Registering as an Intermediary

In The FA Handbook, a ‘Participant’ is defined as follows:

“Affiliated Association, Competition, Club, Club Official (which for the avoidance of doubt shall include a Director), Intermediary, Player, Official, Manager, Match Official, Match Official observer, Match Official coach, Match Official mentor, Management Committee Member, member or employee of a Club and all persons who are from time to time participating in any activity sanctioned either directly or indirectly by The Association”

Despite some protests from the marketplace, there is little doubt that a FA Registered Intermediary falls within the wide definition of a Participant and therefore falls under the regulatory jurisdiction of The FA.

Within the Regulations, ‘Intermediary Activity’ is defined as follows:

“acting in any way and at any time, either directly or indirectly, for or on behalf of a Player or a Club in relation to any matter relating to a Transaction. This includes, but is not limited to, entering into a Representation Contract with a Player or a Club;

For the avoidance of doubt, a Club Official is not acting as an Intermediary when he carries out any Intermediary Activity in relation to any matter relating to a Transaction for or on behalf of that Club. Similarly, a Lawyer is not acting as an Intermediary when he solely and exclusively undertakes or provides Permitted Legal Advice in relation to any matter relating to a Transaction”

Individuals and companies wishing to conduct any ’Intermediary Activity’ as defined under the Regulations must be registered with The FA as Intermediaries beforehand. Individuals and companies will be charged £500 (+VAT) for their initial one year registration period and this registration will need to be renewed and maintained every year at a cost of £250 (+VAT). Individuals are required to declare they comply with the criteria for the Test of Good Character for Intermediaries upon registration, and Intermediaries must confirm that they continue to meet that criteria every time they carry out Intermediary activity in relation to a Transaction.

If an individual does not wish to register as an Intermediary, and would rather try to ‘operate’ outside the scope of The FA and the Regulations, then that individual will not be able to legally conduct Intermediary Activity and, more importantly, will not be able to receive payment for such activities directly from a Player or Club. Any Player, Club or other Registered Intermediary, associating themselves with individuals outside the scope of The FA and the Regulations run the risk of sanctions from The FA.

Should I register as an Individual or a Company?

It is not a requirement for individuals registered as Intermediaries to register the company they are operating through as an Intermediary. However, there are a number of advantages to operating through a limited company. Commercially, registering the limited company as an Intermediary provides the opportunity to develop a recognisable brand as opposed to Clubs and Players feeling affiliated to a specific individual. There is the potential to grow a business and expand with the recruitment of more staff, and possibly additional Intermediaries, under the same corporate entity. Although a company may register as an Intermediary, only “natural persons” also registered as Intermediaries will be able to carry out Intermediary Activity on behalf of that Company.

Working with Minors

A “Minor” is any “player who has not yet reached the age of 18” and there are strict rules about approaching and entering into contractual arrangements with them. There are also additional registration requirements under the Regulations so we recommend seeking legal advice when considering approaching (directly or indirectly) a Minor with a view to entering into a representation contract and / or undertaking any activity in relation to a Transaction with a Minor (which, for the avoidance of doubt, includes acting on behalf of a Club in a transaction concerning a Minor).

As a general overview, Intermediaries wishing to work with Minors (whether that be representing Minors or representing Clubs in respect of Minors) will need to upload an enhanced Disclosure and Barring Service check (or equivalent disclosure for applicants domiciled overseas) which will be reviewed by The FA. This can also be submitted for review at any point subsequent to the completion of your initial registration.

Enhanced Disclosure and Barring Service checks need to be applied for through The FA specifically for the position of Intermediary. Checks obtained otherwise (including as part of the application to become a Licensed Agent) will not be accepted.

In the UK, Minors are able to agree to enter into scholarship contracts on or after the first (1st) January in the year the player attains 14 years of age (commencing at under 16 level), and their first professional contracts at 17. However, as the competitiveness of the marketplace concerning youth recruitment and development intensifies, Clubs will often (despite what The FA, Premier League and EFL regulations state) try to enter into pre-contractual agreements with Minors in an attempt to oblige them to commit to a formal scholarship and / or professional contract at the appropriate age. Given the sophistication of the scholarship contracts, and the growing complexity of player contracts (even for a young academy player), and of course the lucrative sums of money involved, it seems common sense that a Minor and his / her family would want to seek support and advice from an experienced Intermediary.

However, The FA doesn’t make it easy for a Minor and his / her parents to obtain this important support and advice. Under the Regulations, Intermediaries cannot approach (directly or indirectly) or enter into representation contracts with Minors until the first (1st) day in January of the year of the Player’s sixteenth (16th) birthday. Further, an Intermediary cannot get paid for any work relating to the negotiation of a scholarship contract, and can only receive payment for work relating to a professional contract once the Player turns 18. This means that, in the majority of cases, a player is unable to formally obtain proper advice from an Intermediary until he / she is 16 (at which point they are likely to have entered into some form of contractual relationship concerning a scholarship contract, if not a pre-contract agreement for a professional contract), and may struggle to obtain proper advice from an experienced Intermediary until the age of 18, which is when (finally) the Intermediary can formally be paid for the work undertaken (only of course if he / she is authorised by The FA to work with Minors).

Notwithstanding the (often complicated) contractual issues which a Minor will have to deal with at his / her club before the age of 16, there are significant complexities around FIFA, The FA, Premier League and EFL Regulations relating to recruitment, registration and transfers of Minors. Add into the mix the fact that it is not uncommon for a 14 year old to have a boot deal with one of the major sporting brands (the terms of which will be enshrined in a multiple paged legal document) and one may be forgiven for wondering why FIFA and The FA are making it so difficult for Intermediaries to work with Minors.

Regardless of what your position is on this topical debate, the Regulations are clear and a quick glance at The FA’s suspensions list, will show that The FA takes very seriously even the most innocent breach of the Regulations concerning Minors. Out of the 40 plus number of reported cases (“written reasons”) listed on The FA website (at the time of writing), more than 30 relate to Intermediaries’ breaches of the Regulations concerning Minors. A link to The FA discipline and charges database is here:

Consequently, it is particularly important in the current climate for Intermediaries to ensure that they are doing everything by the book and being transparent in their dealings, especially when dealing with Minors. As you will see from the link above, The FA is not reluctant to hand out significant penalties to Intermediaries who have not complied with the extra requirements in respect of Minors, even if an honest mistake (often as small as an administrative error) has been made.

Are you compliant?

Here are some tips to help minimise the risk of falling foul of the Regulations. Whether you are a sole operator or an international agency, it is important to consider the agreements and procedures you currently have in place:

  • Do you have a system for automatically renewing your Intermediary registration(s)?
  • Do you want to work with Minors? If so, have you completed the Enhanced Disclosure and Barring Service checks?
  • Do your contracts with Minors comply with the rules regarding the agreements they can enter into and at what age?
  • Do your standard representation contracts require countersignature from a Minor’s parent or guardian?
  • Do you have a reporting procedure or provisions in your contract with Intermediaries who you employ to ensure that they must notify you if they are no longer compliant and / or there is a breach of the Regulations?
  • Do you have provisions in your contract with Intermediaries who you employ to decide what will happen to any of the players they have been working with in the event a particular Intermediary is subject to an FA suspension, and whether someone else in the business can take over the Player relationship?
  • Do you have provisions in your contract with Intermediaries who you employ to impose further penalties on Intermediaries who breach the regulations and potentially damage the agency’s reputation?
  • Do you have provisions in your contract with Intermediaries who you employ to impose further penalties on Intermediaries who breach the regulations and potentially damage the agency’s reputation?
  • Do you have provisions in your contract with Intermediaries who you employ to impose further penalties on Intermediaries who breach the regulations and potentially damage the agency’s reputation?
  • What are the consequences for non-compliance?

When you look at the Intermediaries currently serving suspensions, it becomes apparent that a huge number of the penalties have been awarded to Intermediaries who have not correctly understood the Regulations, particularly regarding transactions with Minors. Suspensions of between 3 months – 18 months have been given to Intermediaries for not having the additional authority to deal with Minors and / or they have failed to obtain a parent or guardian’s signature on contracts.

These infringements are not being taken lightly by The FA and Intermediaries can expect to be sanctioned if they fail to comply. Once the suspension is served, Intermediaries can expect to find it difficult to build up their business and reputation again. If the Intermediary had been working for an agency it is likely that a clause in their contract means any players they had been managing will have been passed to another Intermediary. If the infraction is in relation to Minors, the time spent building that relationship of trust is likely to be wasted. Much of the work Intermediaries do is long term, (scouting young talent and building relationships) and it may take a number of years to recover professionally from the suspension.

Ultimately, the Regulations rely on Intermediaries taking responsibility to understand and comply with the obligations placed on them. The FA is not shy in handing out penalties for breaches and due to the commercial consequences of suspension, all Intermediaries should ensure that they are compliant, particularly in their work with Minors. We have a team of experts at Brabners that is able to help ensure your practices, procedures and standard contracts are complaint with the Regulations.