The following is a guest contribution from Charles Bennett J.D.
A recent trend in European Union (“EU”) countries is for individual leagues to enact sports agent regulations. The regulations have caused confusion amongst agents as to their scope and applicability, and have done little to alleviate the issues they were meant to resolve.
For example, the Beko Basketball Bundesliga (“BBL”) in Germany and the Italian Federation (“FIP”) enacted regulations governing sports agents in the past few years. One sports agent recently asked me whether he needed to register in Germany or Italy to place a player in either country. Several other agents have asked about the effect the regulations have on dispute resolution and the BAT.
The BBL and FIP, like leagues in several other countries in the European Union, began proactively enacting sports agent regulations following an initiative by the European Parliament in 2007.
In July 2007, the European Commission produced a White Paper on Sport. In the White Paper, the Commission sought to protect “[t]he health and security of players, particularly minors,” and fight against criminal activities. The report cited “bad practices in the activities of some agents which have resulted in instances of corruption, money laundering and exploitation of underage players. These practices are damaging for sport in general and raise serious governance questions.”
In November 2009, the European Commission published a Study on Sports Agents in the European Union (the “Study”). The Study found that at that time approximately 6,000 sports agents operated in the European Union, and the agent commissions earned in football alone were nearly EUR 200 Million per year.
Prior to the 2012-2013 season, the BBL enacted its own sports agent regulations (“BBL Regulations”). The BBL Regulations apply to all activities of Agents connected to the transfer of players or coaches to BBL teams. BBL Reg. § 1.1. FIBA approved the BBL Regulations. BBL Reg. § 1.2.
However, the BBL Regulations only apply to 3 types of sports agents:
- EU residents who are not FIBA-licensed sports agents,
- Residents of Germany, whether FIBA-licensed or not, and
- FIBA-licensed agents who are not residents of Germany and who are involved in more than five transfers of players to BBL teams per year.
BBL Reg. § 1.3(a–c). Unless a sports agent fits into the narrow scope of §1.3(a–c) above, there appears to be no reason to register as an agent in Germany.
The Italian Federation (“FIP”) enacted its own regulations in 2011 (“FIP Regulations”). The FIP Regulations appear to be only an alternative to FIBA licensing. Players and teams may only use an Agent licensed by “FIP and/or by FIBA.” FIP Reg. § I, Art. 1(1).
This “and/or” language in § I, Art. 1(1) is curious because the FIBA Regulations require all FIBA players and teams to only deal with FIBA licensed agents, unless the agent is licensed to practice law in the country where the agent resides. FIBA Reg. 3-136, 3-137.
So a sports agent licensed by FIP but not FIBA may legally represent players in Italy under FIP Regulations but not FIBA Regulations. The same is true of non-FIBA licensed agents living outside of Germany who represent players in Germany.
Also, a lawyer licensed and living outside Italy, who is eligible under FIBA Regulation 3-137 to act as a sports agent without a FIBA license, may be required to have a FIP license in order to represent players in Italy.
The “and/or” language may also create issues with respect to FIP arbitration. FIP arbitration is ripe with opportunities for teams to control the outcome of disputes.
FIP appears to require all Italian agents to use FIP’s arbitral tribunal instead of Italian courts, the Basketball Arbitral Tribunal, or any other tribunal. FIP Reg. § X, Art. 20(1). If a sports agent subject to FIP Regulations attempts to resolve a dispute in the Italian courts he may face fines for a “serious infringement” of the FIP Regulations. FIP Reg. § X, Art. 20(4). IBPA sources report FIP may also be attempting to fine Italian agents who resolve disputes using the BAT.
To further incentivize agents and players to use FIP arbitration, the process is much cheaper than the BAT. But FIP can afford to make the process cheap because the teams pay such large fees to FIP to be a part of the league. These fees give teams great influence over FIP because agents and players pay FIP little or nothing––All of the FIP’s revenue comes from team fees.
This calls into question the motivations and independence of the FIP Regulations. Our sources report many Italian teams are dissatisfied by the multitude of BAT decisions that have gone against them. Italian teams have seemingly put pressure on FIP to make changes. The FIP Regulations may be FIP’s attempt to limit teams’ liability to agents and players. If FIP can force players and agents to only use FIP arbitration to resolve disputes, it can control the decisions and appease the teams.
Another indication of potential abuse is that the BAT uses experienced International arbitrators, while FIP appears to use individuals with close ties to the league and the teams.
To further confound the situation, FIP fines and decisions are likely not legally binding over non-FIP-licensed Italian agents. As stated above, the “and/or” language in § I, Art. 1(1) allows Italian agents to either be FIBA licensed or FIP licensed. FIBA-licensed sports agents are not subject to FIP regulations, and the FIP arbitration tribunal has no jurisdiction over non-FIP licensed sports agents.
The NBA, NFL, and MLB––the three big professional sports leagues in the US––employ a process similar to that which FIP is attempting to instill that results in an exclusive arbitral dispute resolution forum for players and agents. But the US leagues’ arbitration provisions are provided for in the leagues’ players associations regulations, and all agents representing players in the three US leagues are required to be licensed by that respective league.
The players and players associations in the US leagues have significantly more bargaining power over leagues and owners than players in the Italian league. For example, the NBPA was instrumental in getting Donald Sterling removed as the Los Angeles Clippers owner. This leverage enjoyed by the players in the US leagues provides a check on the power of the league that the players and agents in the Italian league do not have.
The confusion and legal issues will only multiply as more leagues, international federations, and governments within the EU enact different laws and regulations. The problems caused by such varying laws and regulations may actually increase the number of legal issues because it is difficult to understand what they mean or how and to whom they apply. Corruption, money laundering, and exploitation of players will likely continue until these issues are resolved.
Charles Bennett is the CEO and Executive Director of the IBPA and currently clerks at BFSN Law while awaiting his results from taking the Texas Bar in July 2014. Mr. Bennett played professional basketball in Europe from 2001–2008 and graduated cum laude from SMU Dedman School of Law in May 2014.
Email him at [email protected], find him on LinkedIn, follow him on Twitter at @IBPA_Basketball, and follow IBPA on Facebook.
