Regulation of Sports Agents
By Nandan Kamath
A sports agent is a person authorized to act for a professional athlete or sports organisation when dealing with third parties. In theory, a sports agent is merely an intermediary tasked with ensuring that the supply and demand for labour within sport and in allied industries is met. A sports agent has many functions, such as negotiating player contracts, providing advice and investment management, legal and tax counselling, sponsorship and endorsement sourcing and servicing and in the case of young athletes, guidance on education and health as well.
The French Code of Sport defines a sports agent as any person who “Whether habitually or on an occasional basis carries out, in exchange for remuneration, an activity consisting in putting in touch contracting parties interested in concluding an agreement concerning the practice of a sport as a remunerated activity.”
As there is no framework in India to regulate sports agents’ activities yet, this article intends to compare the regulatory frameworks in place in the European Union and the U.S. (two mature sports markets) to provide context on the potential regulation of sports agents in India.
In the European Union (EU), the activities of sports agents are regulated by international sport federations and national governments. Although specific legislation is present in only 5 countries, the vast majority of European Member States rely on contract law, including the laws governing private job placements and competition law to regulate sports agents. The activities of sports agents are also governed by Articles 49, 81 and 82 of the European Commission Treaty, which deal with freedom of services, unfair competition practises such as cartels and monopolistic trade practises respectively.
State regulation of sports agents in the EU takes place in various ways. In the first instance, there may be legislative and regulatory provisions which are specifically applicable to sports agents which is the case, notably, in France, Greece and Portugal. Second, general legislative and regulatory provisions governing private employment services may also apply, like in the case of Germany, Austria, the Netherlands and the Czech Republic. Third, in some cases, only common law may apply as, for example, in the United Kingdom and Denmark.
The aim of government or public regulatory guidelines in Europe with regards to sports agents has usually been to protect the athlete rather than the sports agent himself. In France, Greece and Portugal where legislation governing sports agents does exist, the texts provide guidelines on a wide range of issues including remuneration, payment and licensing of sports agents. The French Code of Sport, which is perhaps the most exhaustive sports legislation in Europe, also provides for the types of sanctions that are applicable to agents in case they breach any of the regulations.
Sports agents’ activities are also correspondingly subject to specific regulations issued by certain international and/or national sport federations. While sports agents are omnipresent in almost any sport, to date only four international sport federations have adopted regulations, namely FIFA, FIBA, IRB and IAAF.
ost national federations also rely on the guidelines laid down by these international bodies to regulate agents in their respective countries. These include the English Football Association’s Football Agent Regulations, which borrow extensively from the 2008 FIFA Players regulations. The objectives of sports bodies enacting their own regulations is broadly aimed at protecting sportspersons and clubs against possible malpractices associated with transactions in which sports agents may take part, sometimes fulfilling a major role such as negotiation of employment contracts or transfer. In this case, regulating the activities of sports agents was seen as a means of preventing malpractices associated with increasingly high financial stakes.
FIBA and IAAF regulations on sports agents on the other hand are different in purpose. While also aiming to protect the interests of sportspersons; they reflect the determination, on the part of both federations, to actively involve sports agents in the management of the sports concerned, side by side with the sportspersons, coaches and organisers of competitions.
As in the case of legislative regulations established by governments, the rules issued by international sports federations are very heterogeneous. For example, there is very little similarity between the FIFA Regulations, which are extremely detailed, and the IRB Regulations, which merely set out a few general principles for the attention of national rugby federations.
Generally, in the EU, there has been considerable difficulty in implying a uniform regulatory framework as sports agents’ activities are characterised by an array of public and private rulebooks, which result in agents, in some cases, being confronted by a legal void, and in other cases, by a variety of sources of regulation which may include mutually conflicting provisions. These contradictions may cause a certain amount of legal uncertainty, which inevitably complicates the implementation of the existing regulations. This was illustrated by the complaint made to the European Commission (EC) and the Court of First Instance (CFI) by Laurent Piau, a French sports journalist, in 1998 wherein the latter argued that the discriminatory licensing system enunciated in the regulations on players´ agents adopted in 1994 by FIFA violated European Community law, and notably articles 49 and 81 of the EC Treaty which relate to the freedom to provide services and free competition (Piau v Commission). While FIFA made only slight changes to the rules in 2000 in response to the complaint, both the European Commission and the CFI felt compelled to dismiss the complaint. It was held that the existence of a private regulation imposing the possession of a licence for exercising the activity of sports agent can be compatible with the Community´s competition law rules and do not violate Articles 81 and 49 of the EC Treaty.
Unlike in Europe, the focus of most U.S. sports agents is not on the costly purchase of contracts but, rather, on the strategic exchange of contracts or signing players at the end of their current contract terms. For these sports agents potential clients are natural persons, i.e., players, coaches or franchise owners. As a result of this process of concentration and the development of sports agency groups that hold substantial portfolios, there is an increasing risk of conflicts of interests. While the commissions received by sports agents on the sport contracts they negotiate are usually capped by players unions to prevent excessive amounts being charged, the fees for other services offered by agents are negotiated individually between the contracting parties. In the U.S., the purpose of regulating sports agents is usually to protect the interests of the amateur college athlete and the university. Hence regulation in the U.S. tends to focus more on the relationship between college sportsmen, the university and the agent and less on professional sportsmen in the major American sports leagues.
Regulation of sports agents in the U.S. is piloted with the help of many sources, which include ordinary law, Federal and State legislations and sports association regulations. Common law in the U.S. recognises the existence of a contractual relationship between a student and his university, with the consequence that the university can take legal action against the sports agent. However, for PR reasons, universities are not ordinarily inclined to take action against sports agents. The penalties provided for under civil law are usually financial or administrative in nature. Therefore, they have little deterrent effect on sports agents, considering the huge profits the latter can make from their activities.
The solitary instance of federal intervention in regulation of sports agents in the United States took place in 2004 with the Sport Agent Responsibility and Trust Act (the Act). The aim was to protect the universities and the student athletes in their relations with sports agents. For the most part, the Act is a compilation of rules that were already in force in some U.S. states. Other than that one instance, the regulation of sports agents’ activities has been mainly left to state governments. These regulations are based on the Uniform Athlete Agents Act (UAAA), adopted on 3 August 2000, a model law, and which is today applicable in 38 U.S. states. Before the UAAA, some states had already introduced regulations on sports agents, but sanctions were not applied, given that the possible offences were not well-defined and agents could play on the differences between the regulations applicable in different States. The UAAA was the first step towards a uniform regulation with the aim of protecting the interests of the players and the universities by regulating the activities of sports agents. However, individual States may implement the UAAA by adapting it to their own existing laws, and this has led to regulatory differences. The UAAA focuses primarily on the recruitment of players, leaving the question of supervision to the players associations.
Privately, there have been a lot of attempts at regulation by organisations such as the NCAA and player associations of the major leagues such as baseball and basketball. The NCAA established rules applicable to the players/sports agent relationship with reference to the money offered or promised by agents to students to persuade the latter to sign an agency agreement. The NCAA states that in no case may an amateur student-athlete be represented by an agent or have a family member sign a contract on behalf of the athlete with such an agent.
Players associations, while having the powers to establish players’ working conditions, have delegated to sports agents the power to negotiate the salaries paid to individual players as well as to finalise the contract. Players associations were at the origin of the development of standard employment contracts in the four professional leagues. The National Football League Players Association (NFLPA) has established a mandatory standard representation contract. Sports agents must register with players associations to be certified. However, there are differences between the requirements established by the four associations to obtain certification. The sanctions applicable to sports agents range from a formal warning to withdrawal of certification, along the lines of the sanctions established by FIFA for football agents.
Position in India
Currently, no legislation or code guiding regulation of agents exists in India. Player representatives have a free reign, and this has resulted in players and sports bodies receiving improper advice, as is evident in the cases of young IPL cricketers Ravindra Jadeja and Manish Pandey – each disciplined for failure to comply with player rules in their communications with other franchises while being contracted to their existing teams. There is an urgent need to regulate the activities of such individuals in order to protect the younger players from making decisions which might jeopardise their careers.
The aim of regulation of sports agents in India should be to organise and control this activity which is liable to run contrary to the ethics of sport and the interests of stakeholders in the sport concerned, which might affect the proper functioning of sport competitions.
The scope of agent regulation in India may include, among other things:- licensing and registration of authorised agents via certification programmes and examination;- enforced transparency and limitations on agent commissions and length of contracts;- regulation of agent communication with athletes and parents under the age of majority;- prohibition of inappropriate communication and other conduct between agents and selectors/administrators; and- confidentiality and reporting obligations to player-clients and avoidance of conflict of interest. Sports agents can play important, positive roles in the sports industry, particularly in their capacity as employment agents and intermediaries in sponsorship and licensing transactions. Regulation of their activities will help preserve the image and integrity of sport in general, prevent corruption and exploitation and fairly apportion value to the various participants in the sports ecosystem. As the amount of money involved in Indian sports grows and laws and regulations become more complex, the need for qualified, ethical and well-regulated player representatives increases.
© The Sports Law & Policy Centre