FIFA regulations on agents’ fees save first penalty in the Netherlands

On May 10, 2023, the District Court of the Central Region of the Netherlands (“Rechtbank Midden-Nederland” or “Dutch Central Court”) dismissed an application for injunctive relief against the new regulations of the Fédération Internationale de Football Association (“FIFA”) limiting the fees that players’ agents can charge. According to the Dutch court, the request for injunctive relief lacks the necessary urgency, given the ongoing parallel proceedings against these regulations and a request for a preliminary ruling pending before the Court of Justice of the European Union (“CJEU”).

Besides the complaint to the European Commission by the agents’ association The Football Forum, the FIFA Football Agent Regulations (“FFAR”) have been challenged in Germany, Spain, the United Kingdom and the Czech Republic. Agents are also negotiating with national federations and ministries to prevent their application in Italy and France.

Service fee cap (art. 15 FFAR)

On December 16, 2022, the FIFA Council approved new agent regulations (FFAR, available here), replacing the previous ones.

The FFAR came into force on January 9, 2023, although the fee cap under article 15 is subject to a transitional period until October 1 of this year.

Article 15 establishes that fees must be paid to agents when they provide “agent services,” understood as “football-related services performed for or on behalf of a Client, including any negotiation, communication relating or preparatory to the same, or other related activity, with the purpose, objective and/or intention of concluding a Transaction.”

The maximum fees that agents may charge if they represent the individual or the engaging entity[1] in the transaction will be calculated based on the remuneration of the individual (player or coach), without taking into account conditional payments. On the other hand, if they represent the releasing entity,[2] their fee will be based on the transfer compensation for the relevant transaction. Thus, the FFAR limit the agents’ share based on their client and the individual’s remuneration:

i)     If the client is an individual or an engaging entity: the agent may charge a maximum of 5% of the individual’s annual remuneration if it is less than or equal to USD 200,000, up to a maximum of USD 10,000. If the individual’s remuneration exceeds USD 200,000, the agent may charge a maximum of 3% of the amount above that threshold.

ii)    If the clients are both the individual and the engaging entity (dual representation in the transaction): the cap is 10% of the annual remuneration below USD 200,000 and 6% for amounts above that threshold.

iii)  If the client is the releasing entity: the agent may charge up to 10% of the transfer value, regardless of the individual’s remuneration.

The Dutch case and actions against the FFAR in Europe

In response to the limitation set by the FFAR, two associations of football agents—Pro Agent and the European Football Agents Association (“EFAA”)—and two private individuals filed a lawsuit against FIFA and the Royal Dutch Football Association (“KNVB”) before the Dutch Central Court. Seeking annulment of the regulations, the plaintiffs claim that the fee cap is an anti-competitive agreement between FIFA’s member associations to set commercial conditions. Also, they consider that the regulations constitute an abuse of FIFA’s dominant position. In addition to the lawsuit, the plaintiffs requested the precautionary suspension of the FFAR until the court’s ruling.

On May 10, 2023, the Dutch Central Court issued a decision refusing to grant the interim injunction for lack of urgency. Furthermore, the court considered that the plaintiffs had failed to prove the irreparable damage that could be caused by such denial.

The Dutch Central Court first took into account that the fee cap has also been challenged before other courts, namely before the District Court of Mainz. This case deals with the same legal issues and was brought by the agent Roger Wittman (representing, among others, current Liverpool player Roberto Firmino). The court also referred to parallel proceedings before the Court of Arbitration for Sport in Switzerland.

The arbitral award is expected in July, and FIFA has already shown its willingness to amend the FFAR—which makes the interim suspension of the Regulations unnecessary, according to the Dutch Central Court. In addition, the Mainz Court has referred several questions to the CJEU for a preliminary ruling (Case C-09/23 RRC Sports), and its binding answer may come before the entry into force of the disputed provisions. Therefore, the Dutch Central Court decided to stay the proceedings to ensure that its judgment is consistent with the CJEU’s preliminary ruling—especially given FFAR’s worldwide effects and the need for uniform implementation.

Finally, FIFA objected to the jurisdiction of the Dutch Central Court on the grounds that the parties were subject to an arbitration clause before the Swiss Court of Arbitration for Sport. However, the Dutch Central Court confirmed its jurisdiction to hear the case based on KNVB’s domicile in the Netherlands and the likelihood that FIFA would be summoned to a Dutch court with KNVB as a co-defendant.

Conclusions

FIFA’s exercise of its regulatory powers and the interaction between sport and EU competition law has been gaining prominence in the legal landscape over the last year. Since the Super League case and FIFA’s measures against the promoting clubs, as well as the problem of “home-grown players” (analyzed in this post), many legal questions have been raised about EU legislation and CJEU’s clarifying role also in the field of sport.

In this case, we will have to wait for the CJEU to rule and provide guidelines to resolve the problems raised by the FFAR. The scale and economic impact of a change of this magnitude have the potential to shake the foundations of the industry with consequences at all levels.

In any event, neither the proceedings before the Court of Arbitration for Sport nor the request for a preliminary ruling before the CJEU will prevent the entry into force of the Regulations. Therefore, we will see their effects on the market and the global football landscape if there is no decision before October of this year.