Fifa vs football agents: the battle for the transfer market that you haven’t heard about

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It was another of those off-field moments that didn’t receive too much attention at the time, but will profoundly influence the game for years. The January transfer window will certainly be affected.

On 30 November, an Arbitral Tribunal in the United Kingdom ruled that Fifa would not be able to impose a cap on agent commissions for football transfers in the territory. The decision immediately freed the various agencies to start consulting with clubs on January plans knowing what budgets they could work within, and have forced the global governing body “back to the drawing board”.

Potential alternatives, like limiting the number of possible transfers, strengthening homegrown player rules to spread talent and even salary caps have since been floated but all ideas are naturally at a very early stage. Fifa would argue this reflects how the impetus behind the agent reforms was simply to control transfer spending to improve competitive balance in the sport. In other words, to ensure it is less dictated by money and more teams stand a chance of winning.

The logic behind that was that the current agent industry incentivises transfer money, which further concentrates talent at the wealthiest clubs, increasing financial disparity. One of the examples put forward is that, if Erling Haaland or Kylian Mbappe were to move, the agent fees would cost £50m. Only five clubs in the world could feasibly afford that. That, they argued, is why caps on commissions are essential. Fifa have since released figures that show a 42.5 per cent increase in agent service fees from 2022 to 2023, at $888.1m, with the commissions surpassing $1m in the women’s game for the first time.

Agents in the UK successfully persuaded the tribunal that a measure like that completely misunderstood how their business worked, to go with similar rulings in Germany, Spain and France. The argument put forward was that such a measure would actually affect the representation of the thousands of players who don’t have such commercial appeal, as well as having huge unintended consequences. Among those would be more unscrupulous actors seeking to represent players outside the industry.

The tribunal similarly agreed with the agents’ position that Fifa reverse-engineered the justification for limiting caps, from a general populist will to curb agents. It was deemed as going against competition law. “Fifa recognised that it would have to find a legal justification to support it,” the judgement read.

Such decisions come as the European Commission and other continental bodies take an increasing interest in the idea of a European model of sport as a cultural good, which could yet have a bearing on the European Super League decision on 21 December. The European Commission had previously called for reform and Fifa would point to how their level of legal scrutiny in a submission to the European Court of Justice (ECJ) went far beyond what is seen as the more superficial reading of the UK tribunal. One key paragraph from the ruling was that “the tribunal has not been able to discern any justifiable connection between the fee cap and the claimed abuses and market failures”.

The ECJ decision on Fifa’s reforms, which would rule whether they can be implemented in the rest of the continent, will come around late 2024 or early 2025.

They would also point to the irony of how the ruling is based on competition law but the real-world effect is highly anti-competitive for the sport.

Fifa also claimed some victories against challenges. Agents can now only represent one party in any deal, whereas before they could feasibly represent all, and the client must be the party who actually pays the representatives. Protections for minors are increased and there will be the introduction of a clearing house.

It was the cap on commissions that was by far the most influential issue regarding how the industry works, which is why Fifa must now have a considerable rethink. A meeting with the Football Agent Working Group has been scheduled to discuss the outcome of the proceedings. The potential options are: to stop the whole project of agent reform, which is unlikely; to suspend the whole project until the ECJ decision, which they do not want to do; to simply suspend the cap; to suspend all rules in litigation; or, press ahead with everything but have countries like England as exemptions.

The last point is viewed as unworkable, especially when the Premier League is by far the biggest spender in the game. English clubs were responsible for almost a third of global agent commissions in 2023, at $280m. It would create an unfair and almost absurd system.

This is why, for the long term, alternative options are being looked at.

It is instructive how many people in football talk about how so many of the game’s problems would immediately be solved if they had the foreign player rule that was in place before the Bosman ruling in 1995. It would instantly force more talent to be spread around, while ensuring the wealthiest clubs couldn’t just keep spending. That would even mitigate the effect of sportswashing projects.

A regression to such a rule is seen as completely off the table, though. Most immediately, it would be viewed as discrimination in the European Union.

Fifa may instead seek to mimic the effects in terms of spreading talent through other means. Limiting transfer spending or a salary cap are options but, again, competition authorities would be all over them. Limiting the number of transfers would meanwhile just require one club to pose a legal challenge, arguing they are overtly affected by such a measure. Player representative unions would similarly be against that as they don’t want opportunities blocked. The increasing feeling is that Fifa “may have to think outside the box”.

That is heightened by the fact many of the rules are in place from an era that doesn’t really exist any more. The regulations assume all clubs are independent of each other. Instead, 2022 research from “Play the Game” indicated that there are at least 100 European clubs in multi-club ownership systems, with at least 156 such projects in existence.

This creates huge issues for concepts like sustainability rules since they assume market value is being paid in all transfer deals. This may not be the case if it’s two clubs owned by the same group.

It is for now just another case of the regulations being behind the reality of the game. The transfer market is arguably the most profound example of this.