FIFA's stakeholder committee, which brings together representatives from federations, clubs, professional leagues and the players' union, FIFPro, met for the first time in March 2017. Almost exactly 18 months later, on Sept. 24, they will meet to discuss a raft of measures that, if approved, will represent the biggest overhaul to the transfer system since the Bosman ruling in 1996 (a European Court ruling that required clubs to allow players over the age of 25 to move freely between clubs once their contracts have expired).
When I spoke to FIFA president Gianni Infantino last spring, he foreshadowed what he'd like to see from transfer reform. From creating a consistent transfer window globally for all leagues and capping agent fees to introducing a clearinghouse for cross-border transfers and limiting squad sizes and loans, he made it clear everything was on the table. Indeed, this is the biggest effort yet to regulate what has become a business worth nearly $6.5 billion a year, roughly twice what it was in 2011.
ESPN has obtained a copy of the report and recommendations circulated to stakeholders. Here's a Q&A to help make sense of it.
Why are FIFA doing this?
The chair of the stakeholders committee, Victor Montagliani, who is FIFA vice president and CONCACAF president (and also the Canadian FA president) wrote in the report that the transfer rules were set up to protect players and clubs -- not to regulate what is, in effect, a speculative market.
Player trading is big business if you are smart and do it right (or if you're corrupt and bribe people). It's increasingly becoming an issue because in most leagues, especially in Europe, only a handful of teams have a shot at winning. So there are clubs that basically exist to make money off of player trading.
There's nothing wrong with that necessarily but the fact that there is so little regulation or oversight is a concern.
There are a whole bunch of recommendations in this report. Which ones are likeliest to pass and which will have the most impact?
The lowest-hanging fruit concerns agents, and it's not hard to see why. A number were consulted as part of this process to overhaul the game, but they have no representation on the FIFA stakeholders committee --neither do fans, by the way -- so it's obvious they're going to be on the receiving end. Plus, they're pretty much the oil that greases the transfer system.
The first thing we'll see is some sort of accreditation exam that all agents have to take, which will be "similar to how the SAT is used for college admissions in the U.S.," according to the document. Right now, to be an agent, all you basically have to do is call yourself an agent -- convenient, right? Going forward, agents will need to be licensed and they'll need to renew their licenses regularly.
Incidentally, that's how it used to work -- FIFA issuing agent licenses -- until 2015, when the whole system was deregulated.
Why did FIFA do that? And why are they now changing their minds?
Well, to answer the second part of your question first, there are different people in charge now and there was no stakeholder committee in 2015. At the time, FIFA said regulation was pointless since local jurisdictions allowed for different exemptions in different cases. Plus, some FIFA agents were renting themselves out as "straw men" on deals they had nothing to do with.
Instead, FIFA said they'd allow anybody to be an agent but would monitor each deal. We've seen how well that has worked...
Of particular concern are transfers where agents or intermediaries get paid by all parties involved: the player, the selling club and the buying club.
Wait, that doesn't really happen, does it? I mean, isn't there an obvious conflict of interest?
I'm afraid to say it does. In fact, it happened in 166 different transfers between January 2013 and Nov. 2017 according to the report. (By the way, they only have data on international transfers. Who knows how many more times it happened in deals between clubs from the same country? Those deals don't go through FIFA -- they go through the domestic FAs where the transfer took place -- so we don't have the data.)
Why do clubs put up with this?
In some cases, the agent is simply very persuasive. In others, there may be kickbacks or bribes or an exchange of favours. Another possibility: there might be criminal activity. From January 2013 to November 2017, clubs paid intermediaries $1.6 billion in commissions. That's a big enough pie that at the very least, you want to make sure you know where the money is going. That's why FIFA also plan to restrict how an agent can act for a deal. In most cases, he'll have to pick a side (selling club, buying club or player) though in some he'll be able to act for the player and the buying club.
What about the cap on commissions?
This might be a bit more about playing to the crowd. The size of the commission is to be determined but FIFA are keen on approving the principle. It's tough, though, because if you set it too low, you might go back to the days of under-the-table payments and brown envelopes.
More significant, I think, is the "clearing house" transfer system and the information requirements. FIFA want to collect as much information as possible so you know exactly who represents who and for what purpose. Right now it's a mess, with agents signing short-term mandates and money going out to folks for no discernible reason.
As for the clearing house, the idea is that all international transfer fees get paid directly to the clearing house (basically an external financial services company under contract to FIFA). The clearing house would then be responsible in paying exactly who needs to be paid -- agents and clubs -- in accordance with the documents and paperwork submitted to FIFA's Transfer Matching System, which monitors the international football transfer market and publishes official data on global transfers to enhance transparency. That way it's harder for money to go missing.
The clearing house would also be used for training compensation and solidarity contribution.
In a nutshell, they are payments that are due to whatever club a player plays for between the ages of 12 and 23 (12 and 21 for training compensation). Every time a player is transferred, the clubs he was at during those years are entitled to a piece of the action. That lasts until he's 23 in the case of training compensation and until he retires in the case of solidarity payments.
The problem is that too often, this money doesn't get paid. In 2017, for example, only $64m were paid from an estimated $318m that were due in solidarity contributions.
How is that possible?
Well, in some cases there are complicated legal reasons (like this one, involving DeAndre Yedlin). In other cases, youth clubs forgo future solidarity payments in exchange for an up-front fee when they move the player to another club. (Sometimes they do this under duress, bullied into it by agents and bigger clubs, which is a concern for FIFA.)
In still other cases, there is no reliable enforcement mechanism because we're often talking about tiny youth clubs. With the clearing house, FIFA would take care of all of this, with the help of an electronic "player passport."
What else is in FIFA's crosshairs?
Players on loan, for one. It's probably long overdue since, believe it or not, there is no definition of the purpose of a loan in FIFA's transfer regulations.
The ethos is that loans should be used to develop players while maintaining competitive integrity and balance. In the current situation, that doesn't happen. The study cites a club with 53 players on loan, only one of whom ever returned to play for the parent club. It doesn't take a genius to figure out that said club is either really, really bad at judging talent or is engaged in some kind of accounting chicanery.
So which of these FIFA measures will get passed and when will they come into effect?
The stakeholders committee will need to approve them next week and then, you'd imagine, the FIFA Council will vote on them. So maybe they'll pass by the end of the year.
I'd guess the clearing house has the strongest chance of passing and probably the agent regulations, too -- minus the cap on commission, which is a real hornet's nest. Based on my sources, I'd say might come into force in 2020 or 2021. The loan limitations are a bit trickier because some clubs have more than a hundred of players on their books and they need to stick them somewhere. Still, that could get passed, albeit with a longish transition period.
FIFA will also looked at other aspects of the transfer system ...
Everything from transfer windows, squad sizes and homegrown player rules to replacing transfer fees with some sort of formula, salary caps and luxury taxes. As Infantino said, everything is on the table.