By Ben Pilbrow and Annemaree McDonough
Football has often been described as the beautiful game, but never the beautiful business. Regularly tainted by allegations of corruption and shady-dealing, the importance of regulation in the sport increases in line with the flow of money into it. Between 1 October 2015 and 1 February 2016, intermediaries and agents received an estimated £46,582,843 from Premier League clubs alone.
This figure, staggering for those outside the sport, is ample evidence, if any is needed, of the motivation for unscrupulous intermediaries to behave improperly.
Football’s regulatory bodies have long sought to address this risk. Any person wishing to act as an intermediary (as football agents are now known) in England and Wales has to register with the FA. They have to abide by the FA Rules, which contain numerous regulations designed to protect footballers from the predations of unscrupulous intermediaries. These include the obligation to enter into written contracts with their clients, spelling out the basis on which they act for them and explaining how, and importantly how much, they are paid.
But a series of cases have illustrated that, notwithstanding this proscription, abuses are rife. In 2009, Kelvin Jack successfully sued his former agent, Mike Berry, for secretly, and hence unlawfully, taking commission from his club on his transfer. More recently, Wilfred Bony has issued proceedings against Gilbert Kacou and Dalibor Lacina alleging that they received secret commission of £8 million from Swansea in connection with his 2013 transfer to the club.
Whether or not Bony’s former agents defrauded him remains to be determined. It is another aspect of his claim that highlights the conundrum faced by regulators, and participants in the business of football more generally. Perhaps it suggests the solution too.
Kacou and Lacina sought to defend Bony’s claims by disputing the English courts’ jurisdiction to judge them. They asserted that, by participating in professional football in England and Wales, their contract with Bony incorporated the FA Rules, which, in addition to containing the footballer protections previously highlighted, mandate arbitration as the means of resolving a dispute. The High Court has just rejected their attempts to divert the proceedings from the glare of open-court scrutiny, confirming that their representation contracts with Bony did not incorporate the FA Rules.
Without incorporation of the FA Rules into their contracts with their client, what basis is there to say that Kacou and Lacina had submitted to the supervision of the FA? They are, after all, not citizens of the UK and, arguably, do not carry on business within it. Football, particularly in its upper echelons, is now truly a global industry and, as a result, it is all too easy for there to be confusion about who regulates whom. Intermediaries now provide their clients with a host of services beyond contract negotiation. The FA faces a significant challenge policing this complex and varied marketplace, whilst not becoming a bar to innovation and development.
Take, for example, the dispute between Tony McGill and Jerome Anderson, Jeffrey Weston and David Sheron about the transfer of Gavin McGann to Bolton Wanderers. McGill made several unsuccessful complaints to the FA about how the trio poached McGann from him, before issuing proceedings. The court expressed disapproval of the trio, finding aspects of their evidence to have been dishonest, and concluded that they had poached McGann from McGill, breaching a number of FA Rules in the process. However, to date McGill has been largely unsuccessful in his claim, because he did not have a written contract with McGann, a requirement of the FA Rules, and the court felt he was unlikely to secure one.
So what is the solution? Perhaps Bony (and Jack before him) are showing the way by pursuing their private rights. Any professional footballer who is unaware of exactly how much his intermediary is paid, and by whom, must insist that his intermediary provide the information. Any football intermediary informed by a client or potential client that another intermediary is acting, or is offering to act, for ‘free’ should explain that, not only is the unscrupulous intermediary likely to be lying, he is potentially depriving the footballer of millions of pounds in secret commissions (allegedly £8 million in Bony’s case).
And if these steps do not produce change, footballers (with the encouragement of respectable intermediaries) should vindicate their rights by legal proceedings, obtaining the secret commission that unfaithful intermediaries have procured for themselves. The circumstances could not be better for such an approach. Civil litigation has undergone a revolution in the last 10 years, such that it is now possible (and in respect of a robust case, relatively easy) for a claimant to structure the proceedings so that they do not have to pay the legal costs of the proceedings and bear no costs if it is not successful.
Thus, far more than the remote risk presented by regulatory action, the prosecution of private rights has the potential to change the behaviour of hitherto unscrupulous intermediaries. Those intermediaries would lose their (secret) commission, recompensing the footballers short-changed by their behaviour. Respectable intermediaries, who to date have appeared ‘expensive’ compared to intermediaries pretending that they were acting for their clients for ‘free’, could sign up new clients by persuading the young, uncommercial footballers duped by these claims with the promise of recovering the compensation for the ‘secret’ commission.
They say that there is no disinfectant as powerful as sunlight. The transparency that an uptake in the prosecution of private rights would bring to the sport would finally rid it of suspicions of shady-dealing that have, for too long, plagued it, to the detriment of all involved.
Ben Pilbrow is a Senior Associate, and Annemaree McDonough, Consultant, at Shepherd & Wedderburn