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Comparing Agent Regulation in the United States and Europe

By Rick Karcher, Michael McCann, Geoffrey Rapp, Greg Skidmore, and Howard Wasserman

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.

Full post as published by Sports Law Blog on June 08, 2008 (boomark / email).