FIFA to implement a 10% cap on agent fees
FIFA plans on capping agent fees at three percent of a player’s salary and 10 percent of the transfer fee. It is part of FIFA’s new Football Agent Regulations that will take effect in 2022 and aim to provide a fairer and more transparent system.
Transfers surrounded by mystery and high agent costs
A cap on agent fees is not a surprising move. Some might say it is long overdue. With the general feeling being that the amounts paid on intermediary fees, whether those are for agents, parents or other representatives, are excessive and far from transparent.
For instance, major controversy arose from Paul Pogba’s €100 million transfer from Juventus to Manchester United in 2016. The Football Leaks operation reported that agent Mino Raiola received a €49 million fee for representing all three sides in the deal. It led to inquiries by FIFA.
Another controversy came with the transfer of Neymar Jr. from Santos to FC Barcelona in 2013. It turned out the initial reported £48.6 million was far lower than the true cost of £71.5 million revealed later by Barcelona president Josep Maria Bartomeu. The deal included a £33 million compensation fee paid to Neymar’s father, in addition to a £2 million fee for acting as his agent.
$500.8m spent on agent fees in 2021, a 110% increase since 2014
These amounts seem outliers, but are part of a market where clubs are willing to pay big money for players and therefore for intermediaries. According to a 2021 FIFA report, clubs paid a total of $3.5 billion for intermediary service fees between 2011 and 2020.
Moreover, the amount has increased significantly in recent years. In 2021, clubs spent $500.8 million on agent fees according to another report by FIFA. A 110 percent increase compared to the $239 million spent on such fees in 2014.
And if it had not been for the dampening effects of the COVID-19 pandemic, the increase would likely have been higher. Before the pandemic-related financial challenges came along, spending on agent fees amounted to $654.7 million in 2019.
More regulations concerning agents
A cap on agent fees is part of a wider, ongoing process by FIFA to reform the Transfer Matching System (TMS) in order to ‘protect the integrity of the system and prevent abuse’. It is not the only regulation change concerning agents. FIFA will also limit multiple representations as to avoid conflict of interest. This comes after earlier changes such as a reintroduction of a mandatory licensing system for agents, a resolution system to solve disputes between agents, players and clubs and that all agents’ commission must be paid via the FIFA Clearing House.
Taking back control over the intermediary market
In effect, these are all proposals and regulations to take back (some) control over the intermediary market. From the 17,945 international transfers of male players only 19,8 percent involved at least one intermediary in 2021. Yet, with a size of half a billion dollars, it is a market FIFA would like to have (financial) control over. By having payments going through FIFA Clearing House – initially set up to effectively ensure the payments of the Solidarity Contribution and Training Compensation – the governing body will achieve just that.
Will cap on agent fees lead to legal battles?
For some agents these regulations will have an immediate impact on the amount of their commissions. Hence, they will likely take legal measures against FIFA’s latest plans. This poses the question whether FIFA’s regulations go against the European Union’s free market principle? In other words, does a cap on agent fees prevent free movement of capital and labour? It is an interesting legal question, especially since European clubs account for the majority (95.8%) of the $500.8 million spent on agent fees. And a timely one, with the next transfer window taking place in January.