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Sunday, June 08, 2008
Comparing Agent Regulation in the United States and Europe

On Thursday, I had the unique opportunity of guest lecturing in The Hague, The Netherlands at a seminar hosted by the Asser International Sports Law Centre of the T.M.C. Asser Institute, which is a center for research and postgraduate education in the field of international and European law. The center publishes numerous books, including an international sports law series, and for those interested in how sports agents are regulated around the globe I highly recommend their recent publication on the subject, Players Agents Worldwide: Legal Aspects. The seminar provided a great opportunity to engage in a comparative approach to agent regulation, and there are glaring differences between the systems in the U.S. and Europe.

In Europe, FIFA has been very proactive recently in unilaterally adopting strict rules and regulations that govern the certification and activities of agents, including in the areas of exam requirements, compulsory insurance, charging of fees and conflicts of interests (to name just a few). The first question from the perspective of an American familiar with agent regulation in the U.S. is obviously, why should FIFA have any say whatsoever in how agents conduct their business with players? That would be like the NFL dictating to players and agents how their relationship should operate. In the U.S., although we like to think that agent regulation is very complex with all of the various union agent regulations, state laws (UAAA), federal law (SPARTA), NCAA rules, and common law agency and fiduciary duty principles, agent regulation is much more complicated in Europe for a variety of reasons.

First, public regulation of agents via national law oftentimes expressly contradicts FIFA's agent regulations (which bind its member associations that are also bound by national law). For example, national law may prohibit intermediaries from receiving any compensation from workers and only permit compensation to be paid by the employer (which obviously prohibits a player from compensating his agent as permitted by FIFA). To make it more complicated, national law takes precedent over regulations of private associations such as FIFA. However, in the U.S., for the most part, state laws governing agents do not contradict union regulations. State law just adds another layer of certification and fee requirements, and in many respects union regulations are actually more stringent on agents than state and federal law. Also, in the U.S., public regulators basically defer to the unions to monitor and regulate agent misconduct. As I discussed at the seminar, although players unions in the U.S. are private associations (like FIFA), the unions are essentially "quasi-public" regulators of agent activity involving both amateur and professional players because federal labor law affords them the status of "exclusive" representative of the players, which even exempts union agent regulations from antitrust law. While the FIFA regulations have been challenged before under the Treaty of Rome's restraint on trade laws in the Laurent Piau case (in the Court of First Instance), without the benefit of an exemption, the regulations will most likely be challenged again on the same grounds as FIFA continues to make them more strict on agents.

Another glaring difference between the U.S. and Europe is the characterization of the agent's role. In Europe, it is common practice for an agent - referred to as a "broker" - to represent both players and teams (and FIFA even permits it). Although prohibited by the FIFA regulations, clubs sometimes pay the agent's commission on behalf of the player and some club owners and agents even have ownership interests in players' transfer rights. These practices would simply be unheard of in the U.S., because the agent's role is clearly defined as a "fiduciary" role on behalf of the player and the agent is required to serve the best interest of the player and avoid conflicts of interest. Ambiguity over the agent's role in Europe leads to ambiguity regarding what constitutes "agent misconduct". But even exclusively within the U.S. where the agent's role is clearly defined, there is disagreement about what constitutes agent misconduct in certain situations. As an example, is it a conflict of interest for an agent to represent both coaches and players? The NBPA regulations prohibit it (and the union has indicated that it is going to start enforcing that provision) and the NFLPA regulations don't prohibit it. What should the agent certification process entail? And how aggressively should the regulations be enforced against agents? Most importantly, who gets to decide the answers to all of these questions? In the U.S., the labor laws clarify that the union is the proper entity to make these decisions, and, in theory, the players are the ones that should be making these decisions. In Europe, it is not at all clear who is the appropriate entity to regulate and determine the "industry norms."

While it is an industry norm in Europe for agents to work on behalf of both players and clubs, it is most certainly questionable whether FIFA should be unilaterally dictating to players and agents how to operate their relationship. Perhaps a more sensible and practical regulatory approach in Europe would be to bifurcate the club-agent relationship and the player-agent relationship. In other words, maybe FIFA (via its member associations) should only regulate the club-agent relationship, and leave it to the players and agents to figure out the industry norms within their relationship as well as how to regulate it. Such a bifurcation by FIFA would also have a better chance of withstanding future claims by agents that the regulations constitute an illegal restraint on trade.


For those interested in more comparative sports law, the upcoming issue of the Seton Hall Journal of Sports and Entertainment Law will be publishing a piece comparing American and English sport organization bankruptcies.

Anonymous Anonymous -- 6/08/2008 5:47 PM  


Interesting comparison. The issue of brokers representing both sides raises the question os advocacy and fiduciary duty you mention. Think about it: Would Argovitz's conduct in the famous (or infamous) case of Sims v. Argovitz be proper in the EU, since he represented both a football club and a player?

Blogger Mark Conrad -- 6/09/2008 1:59 PM  


Great question, and your question really gets to the issue of what constitutes "agent misconduct" -- In other words, what are (or should be) the industry norms and who gets to decide them? A European court, if faced with the question, might look at the agent's role differently than the way the football (soccer) industry views it. And if the court does in fact have a different view, who has the ultimate say on industry norms -- the courts or the industry?

An example here in the U.S. is the Speakers of Sport case (involving the solicitation of Ivan Rodriguez), in which the court determined that an agent soliciting a player under contract with another agent is "healthy competition" that ultimately benefits the player, and, thus, doesn't give rise to a civil claim for tortious interference. However, the industry MIGHT decide that client solicitation is harmful to the players, e.g. the NFLPA prohibits it (with the 60 day rule exception) and the other unions do not. The NFLPA is looking at it from the player's persective in a fiduciary role (as it should). But the court in Speakers of Sport was looking at it like the player is just a "consumer" purchasing the services of an agent, and competition within the agent business is a good thing for the consumer.

Having said that, at some point in this regulatory process, whether it's FIFA, the unions, the courts, the state or the feds doing the regulating, the agent is entitled to some level of fairness in the process, and what that level of fairness should be is the battle going on right now in Europe between FIFA and the agents.

Blogger Rick Karcher -- 6/10/2008 2:52 AM  

What is the relevance of Bennett's good faith in determining whether or not the city has "clean hands"? Thanks,

Anonymous anwalt fuer ehe-und familienrecht -- 6/20/2008 10:07 AM  

This is definitely an interesting article Mr. Karchner.

I was wondering, what is your take on the current agent regulations in the UK with regards to football and the Football Association.
It would be great to hear any feed back you have on that.

Anonymous Chigs -- 5/21/2009 5:15 PM  

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