Football players enter into countless agreements throughout their careers. Usually, their agents and any relevant clubs are given free rein to negotiate on their behalf. This means that many players sign agreements without a clear understanding of their contractual rights and the serious implications that come with breaching the terms.
Here, Eleanor Green explores various ‘on-field’ agreements — those that govern which club a player plays for, who acts on the player’s behalf and how much a player is paid — to help players protect their reputations, financial security and rights.
Loan agreements
A loan agreement between the club a player is employed by (the parent club) and the club a player is joining on loan (the loan club) sets out the terms and conditions of that player’s temporary transfer.
While there is no requirement for players to be a party to a loan agreement, players have rights and obligations under such agreements that they should be aware of.
New FIFA Regulations on the Status and Transfer of Players (the RSTP)
Following the introduction of the new RSTP in July 2022, the parent club is obliged to immediately — upon the request of the player — reintegrate a player when the loan agreement is prematurely terminated. Any refusal of the parent club to reintegrate the player will constitute a breach of the new RSTP.
The new RSTP also provides that during the loan period the contractual obligations between the player and parent club are suspended (unless otherwise agreed in writing). As a result, the player should only owe contractual obligations to the loan club during the loan period. That said, the new RSTP still permits the parent club to pay the player’s renumeration during the loan, as is common practice.
The new RSTP also requires that a player and the loan club enter into a written contract covering the duration of the loan.
The player should therefore ensure that, pursuant to this contract:
- they are contractually entitled to benefit from the loan club’s bonus structure
- they receive the same health benefits as they did under their contract with the parent club
- the loan club takes out the relevant insurance (with appropriate cover) on their behalf.
Bonus arrangements
As set out above, it’s common for English domestic loan agreements to include a clause that stipulates the parent club is to continue to be responsible for paying the player their full contractual entitlement (as set out under their player contract with the parent club) while out on loan.
More often than not, the full contractual entitlement will include the player’s salary, any guaranteed bonus payments (such as signing-on and loyalty payments) and any payments made to the player’s agent on their behalf.
Performance-related bonuses often lie outside the scope of what the parent club will pay, as the player will typically sign up to the loan club’s bonus scheme. To ensure that they’re entitled to benefit from the loan club’s bonus scheme, players should check there is a clause to this effect in the loan agreement.
Benefits and insurance
Given that under the new RSTP the contractual obligations between the parent club and the player are suspended during the loan period (unless otherwise agreed in writing), players must be certain that — pursuant to the loan agreement — they’re being provided with the same benefits as they would have otherwise received from the parent club.
This may include the right to receive the same health benefits, such as access to a physiotherapist, gym or — in the event that they’re injured while on loan — to treatment and rehabilitation. Players should also ensure that the parent or loan club is contractually obliged to take out insurance on their behalf to protect them in the event of any accidents or injuries suffered during the loan period.
Multiple registrations
According to the new RSTP, while players may be registered with a maximum of three clubs during any one season, they’ll only be eligible to play official matches for two of those clubs. Players must be aware of this particular rule. If they agree to loans that would result in them being registered to three different clubs, they may find themselves unable to play games.
An exception to this rule is when a player moves between two clubs that belong to associations with overlapping seasons. Here, players may be eligible for official matches with a third club during the relevant season, provided that they’ve fully complied with their contractual obligations towards their previous club.
Tripartite representation agreements
A tripartite representation agreement between a club, agent and player is used when a club is interested in negotiating with a player via their agent. This may be with a view to acquiring a player’s registration from another club, negotiating a new contract with a player or terminating a player’s contract early. Pursuant to tripartite representation agreements, an agent will supply their services to both the player and club to facilitate the conclusion of a transaction.
In such a scenario, players must ask the following questions.
1. Who’s paying?
Tripartite agreements often contain a clause that stipulates that a club will pay the commission due to the agent for the provision of their services in relation to a specific transaction on behalf of a player.
While this is permitted, players should be aware that if the club fails to pay the commission due and payable, the player may still be liable for this payment. In other words, if the club fails to pay the agent on time, the player may be exposed to a potential breach of contract claim from the agent and may be liable to pay any interest that has accrued on such a payment.
2. Tax indemnities
In tripartite representation agreements, it’s often the case that the club and player agree to each pay half of the commission due to the agent for their services pursuant to the agreement — with the club paying the player’s half of the commission on behalf of the player. This is considered to be a benefit in kind to the player from the club. The club and player would expect to be taxed individually in accordance with the value of the payment that they have each made to the agent.
However, HMRC will sometimes review such transactions and conclude that the player has in fact benefited more than the club from the services provided by the agent. In this situation, HMRC may order that the player pays more tax on the payment of commission to the agent.
There is often an indemnity within tripartite representation agreements pursuant to which the player agrees that if HMRC comes to such a conclusion, the club will be permitted to deduct the additional tax payment — which is often a substantial amount of money — from the player’s next salary payment. Alternatively, HMRC can also review individual players’ self-assessment tax returns and assess (retrospectively) that additional tax is due from the player owing to the services of the agent.
As such, players must ensure that they’re aware of the tax implications of payments made to agents under tripartite representation agreements as well as the potential implications of an indemnity (if there is one) in such agreements that could result in them being on the hook for a substantial (and often unexpected) tax liability (P11D).
3. Is the agent properly registered?
Pursuant to the new FIFA Football Agent Regulations (the FIFA Regulations) and The FA Football Agent Regulations (the FA Regulations), before carrying out any activity as an agent (such as making an approach to a player or entering into a tripartite representation agreement) the agent must obtain a licence with FIFA.
Subsequently — should the agent wish to undertake agency activities in England — they must also register with The FA to become an FA Registered Football Agent.
If a player was to enter into a tripartite representation agreement with an unregistered agent, any services provided by that agent (including any contracts they source and negotiate for a player) would be considered null and void.
The player and club could also face disciplinary sanctions from FIFA or The FA for instructing the services of an unlicensed and unregistered agent.
4. Implications of potential amendments to the Agent Regulations
At the start of 2024, FIFA introduced and then suspended a number of provisions within the FIFA Regulations. The suspended provisions were then held back from the FA Regulations.
Whilst it’s unclear whether FIFA will reintroduce any of the rules that are currently suspended, players should be aware of them as they have the potential to cause a significant shift in the relationship between agents and players in the future.
These include:
- Payments of service fees to agents must be exclusively made by players unless the player earns less than $200,000. If this rule is reintroduced, any additional amounts due to HMRC will need to be paid directly by the player.
- Service fees must be paid every three months (unless the duration of the playing contract is less than six months). This appears to be aimed at stopping agents from being paid lump sums upfront.
- Service fees are only payable in respect of amounts actually received by the client. This means that where the club fails to pay the player or the player moves to a new club, the agent won’t be entitled to commission — irrespective of what the representation agreement says.
- Agents are limited to only being able to act for an engaging club and player. In this scenario, they would only be entitled to receive, by way of commission, a maximum of 6% of the player’s earnings (3% from each party). Contrastingly, an agent representing a selling club would be entitled to receive a commission representing 10% of the transfer fee received.
If such rules relating to fee caps were to be reintroduced, agents would likely be incentivised to act for selling clubs and work to increase transfer fees to the benefit of the club at the disadvantage of the player whose registration is being sold. At the same time, this would drive down the commission that an agent can earn for negotiating a player’s wages and limit the choice that players can have in appointing an agent on terms to be agreed.
Exit/settlement agreements
An exit/settlement agreement is legally binding between an employee and employer (or player and club) and sets out the terms that have been agreed to resolve an employment dispute (or a potential employment dispute).
In an exit/settlement agreement, a club will usually agree to make a payment to a player in return for an effective waiver of the player’s right to pursue any employment claims against the club. This type of agreement is often entered into where a club and player agree to terminate a player’s contract early and make some sort of ‘settlement payment’ (a portion of which would often be earned remuneration) to the player.
In this way, exit/settlement agreements provide a clean break for both the club and player. Typically, they also have the benefit of preserving the relationship between the parties and avoiding expensive litigation.
Exit/settlement agreements are often negotiated by the relevant club and the player’s agent. Lawyers are also likely to input to the drafting of terms. This means that players will often sit in the background and have little oversight as to what is being agreed.
Many issues can arise as a result, including:
Obligation to not say anything derogatory about the club
Exit/settlement agreements often place onerous obligations on players to not say anything derogatory about the club they’re leaving or its players, staff, owners and other employees.
This could include saying something negative about the club’s current performance while acting as a pundit or writing something negative about the club on social media.
Often, the consequence for breaching this type of contractual term is that the player may have to repay the settlement payment received — which in most cases will be a sizable sum — in addition to being obliged to indemnify the club for any losses incurred as a result of a derogatory comment.
Return of property
There will often be a term that contractually obliges a player to return all property in their possession that belongs to the club. This may include kit, keys, documents and equipment.
Such clauses are often drafted widely, which means that the player could be deemed to be acting in breach of contract if they fail to return even the most insignificant items such as a book or particular document.
Contribution to legal fees
Players should also be aware that by entering into a settlement agreement — and therefore agreeing to terminate their playing contract prematurely — they’re benefitting the relevant club. As such, they should always try to seek a contribution to the legal fees that incurred in the negotiation and drafting of the settlement agreement.
In the event that the club agrees to make a contribution, the player would be well advised to ensure that the obligation of the club to make payment is contained in a clause in the settlement agreement.
Tax indemnities
Generally speaking, where a settlement payment is deemed to be a compensatory, ex-gratia (non-contractual) payment made in connection with the termination of employment, an employer (the club) may pay the first £30,000 in compensation tax free. Any amount over and above the £30,000 exemption is subject to income tax in the normal way.
However, just because a payment is made on termination of employment doesn’t necessarily mean that it automatically benefits from the ‘tax free’ exemption — so players are advised to seek the appropriate tax and legal advice at the relevant time.
This is particularly important as — similar to tripartite representation agreements — exit/settlement agreements will often include a clause whereby a player agrees to indemnify the club in respect of any further tax that may be due on any payments or benefits made under the exit/settlement agreement.
Essentially, if HRMC was to determine that tax should have been paid on any ‘tax free’ amount, the presence of a tax indemnity would enable the club to recover any latent tax liability from the player. Players must therefore be made aware that they may well be contractually obliged to reimburse the club for the tax bill received from HMRC on the £30,000 payment in question.
Four practical tips for players
From a detailed analysis of the rights and obligations that players have pursuant to on-field agreements, it’s abundantly clear that they need a certain degree of awareness as to what they must do and what they’re entitled to receive.
Without this, players risk of experiencing financial loss and reputational damage, losing out on playing time and being unaware of their entitlement to receive certain contractual benefits, which are valuable from both a personal and professional perspective.
All players should therefore:
- Request a summary of each agreement they’re presented with, which sets out their headline rights and obligations, prior to signature.
- Ensure that their agents keep up to date with the constant regulatory changes that govern the operation of the football world.
- Ensure that an experienced legal professional reviews all relevant agreements prior to signature to ensure that they include no onerous, unfair or unrealistic obligations and the terms of such agreements are as favourable as they can possibly be.
- Hold their agents accountable for acting in their best interests at all times.
With one of the largest and most experienced multidisciplinary legal teams in the sports industry, we’re proud to work with many Premier League and English Football League clubs, managers, coaches and players, as well as international sports agencies.
If you need legal advice, talk to us to arrange a no-obligation chat about your circumstances.
