This article was originally published on March 27, 2015, and republished without changes in February 2018.
Soccer is like any talent business: The top performers will gravitate to the most generous employers.
Behind any audacious player transfer, or newly signed contract with a club, are the agents working behind the scenes to strike the best deal for their client. It’s a murky business of supply and demand, and one that, many argue, a small number of high-priced agents have come to master.
Big European clubs, in particular, have long complained about the rising costs and challenges of dealing with these powerful middlemen, some of whom claim as much as 15 percent in commission for the more than €1 billion-worth of player deals made last year in Germany alone.
Now FIFA, football’s global governing body, has responded with a set of reforms designed to drastically cut the power of the existing agent community. They include capping agent commissions at 3 percent, introducing greater contract transparency, eliminating third-party ownership of players and abandoning professional licenses for agents.
The changes should take effect starting in April, but whether they will really come into force is an open question. FIFA’s members, the national soccer associations around the world, will be free to implement the new measures as they see fit.
We’re not happy with the changes. Licensed agents are being completely taken out of the system. Gregor Reiter, Managing director, German soccer agents association DFVV
Germany’s soccer federation, the DFB, has already decided not to implement the price cap, according to the new rules published on its website. The association declined to speak with Handelsblatt Global Edition, saying it needed first to see “how the new scheme works.”
Unsurprisingly, the reforms’ greatest critics are licensed agents, and some are threatening to take legal action.
“We’re not happy with the changes,” Gregor Reiter, managing director of the German soccer agents association DFVV, said in an interview. “Licensed agents are being completely taken out of the system.”
Some players also fear that the new reforms, if implemented, might hand power in contract negotiations back to the big and powerful soccer clubs of Europe.
Thomas Huschbeck can testify what it’s like not to have an agent in the rough and tough world of professional soccer. Mr. Huschbeck was a professional soccer player with Borrusia Mönchengladbach from 1986 to 1992, a time when the game had far fewer agents and these worked primarily for the very top players.
“When you have an agent, you have an advocate who runs around looking for opportunities for you and other offers that you need to get ahead,” said Mr. Huschbeck, now head of western Europe market research at Henkel, a chemicals company in Düsseldorf.
“I remember a meeting with our manager Bernd Hussmann when I asked him for more money. He told me, ‘Thomas, I can’t give you more money just because you’re a nice guy and a good player. Come back with another offer and then we’ll talk.”
It remains unclear how many national associations will implement the new rules. While some see FIFA’s voluntary approach as wiggling out of its responsibility to establish global rules to ensure a level playing field, others view its recommendations as binding enough.
“They have weight,” Martin Stopper, a lawyer specialized in sports, told Handelsblatt Global Edition. “They’re like a recommended retail price that you don’t want to undercut without suffering some consequences.”
Given the likelihood of the new rules taking force, many agents aim to take action before they’re sidelined, according to Max Randerrath, a lawyer and consultant with the sports financial consulting firm FooBiz. “I expect to see some lawsuits,” he said.
In particular, agents are up in arms over the FIFA recommendation to replace licenses with a simple registration for a fee, which in Germany will be €500 per year. Effectively, anyone without a criminal record and who is not “officially” linked with the game, such as a club manager or referee, can apply. Many agents warn of a wild-west transfer market.
“We expect a loss of quality,” Mr. Reiter of the agents association DFWW said in an interview. “There won’t be any controls anymore.”
Big European clubs, in particular, have long complained about the rising costs and challenges of dealing with these powerful middlemen, some of whom claim as much as 15 percent in commission.
Agents are also upset over the planned move to cap their commissions at 3 percent of a player’s basic gross income for the entire duration of the contract, or 3 percent of the transfer fee paid if the agent is appointed to act for a club on a player transfer.
Commissions in Europe typically range between 5 and 15 percent. The average in Germany is around 7 percent, according to Mr. Reiter.
These fees can add up quickly. Last season, payments to agents in Germany exceeded €100 million, or $109 million, for the first time, prompting Bayern Munich president, Karl-Heinz Rummenigge, to call the situation “absurd.”
In Britain, the sum is much higher because the transfer deals are much bigger, thanks in large part to lucrative broadcasting rights and wealthy Arab sheiks and Russian oligarchs with cash to burn investing in English clubs.
Video: An interview with Gareth Bale.
In 2013, Gareth Bale became the first player to cost €100 million when he transferred from England’s Tottenham Hotspur to Spain’s Real Madrid.
In the 2014/15 season, teams in the country’s Premier League spent €3.43 billion on new players, up from €2.43 billion in the 2009/10 season, according to the CIES Football Observatory.
In relative terms, the biggest increase during this same period was recorded by Germany, which paid €1.10 billion for new players in the current season, up 54 percent from €710 million in the 2009/10 season, reflecting the healthy state of the Bundesliga teams.
Just over the last summer, the so-called Big 5 leagues in Europe – the Premier League, Spain’s Liga, France’s Ligue 1, the Bundesliga and Italy’s Serie A – spent a whopping €2.44 billion on national and international transfers.
Agents help achieve figures like these. For FIFA, they’re a drain on club costs that the governing body hopes to plug with its cap on commissions. The body has also recommended banning agents from being paid for services provided to players under 18. The youth transfer market has become another big but dubious aspect of the business in recent years.
Why Germany’s DFB has chosen not to go along with the cap on commissions is unclear. One possible reason could be the complaint lodged by Britain’s Association of Football Agents with the European Commission in Brussels.
The association claims the commission cap amounts to price fixing and also accuses the soccer authority of abusing its dominant position. Brussels has yet to respond to the complaint.
None of the eight Bundesliga clubs contacted agreed to comment for this story.
Another reform that could cut deeply into the earnings of some agents is the ban on third-party ownership or TPO. Under this scheme, an investor, who can be an agent but also a corporation or an investment fund, gives money to a club in exchange for a share of a player’s future transfer fees.
Numerous clubs, especially those in southern Europe, have built teams around TPO either to hedge against a young player’s development prospects or to raise capital for more immediate needs. The system is often described as a combination of stock trading and gambling but its supporters call it the backbone of global soccer.
Critics argue that outside investors drive up players’ prices and benefit people with little interest in the sport. Third party ownership, they charge, cements a system in which players are sold before their contract with a club expires, allowing investors to cash in.
Some of soccer’s most powerful agents have also become involved in third-party deals to extend their influence and gain access to more players.
“If TPO is banned, it will be interesting to see how it’s enforced,” Raffaele Poli, head of CIES Football Observatory, told Handelsblatt Global Edition. “Many clubs depend on this form of financing as a vital source of revenue, and I’m sure they’ll find new ways to secure it.”
Despite all the criticism they draw, agents still play a critical role in the game.
“An agent does the groundwork for the player, working with the new club on the salary, the bonus, length of the contract and any other benefits,” said Joe Schoenbauer, director of U.S. operations with Washington, D.C.-based agent firm James Grant Sports, which worked with the American soccer player, Steve Scherundolo, who played for Hannover 96. “And even if the player signs a long contract, he’s always interested in opportunities to improve his standing, not only financially but also professionally to play at the top of the league.”
John Blau is a senior editor with Handelsblatt Global Edition in Berlin and played soccer for 25 years in his freetime. No agents were able to discover his "hidden" talent. To contact the author: [email protected]