In his fourth exclusive Column for CaughtOffside, Jon Smith, one of football’s first-ever agents and a man who was an integral figure in the forming of the Premier League, delves into the world of football agency and explains the stages of a football transfer…
The summer transfer window officially opened today.
Now we’re at the start of the trading window, not many people know exactly why it takes so long for deals to be concluded, nor do they have an understanding of just how many people are involved.
In today’s market, there are more individuals involved in football deals than ever before – that is of course unless you’re involved with a club that is totally dominated by the owner.
Even before you begin, you have a dozen people in the mix on the selling club’s side, including the sporting director (if applicable), his ‘team’, the coach and his assistant and of course, senior management – and just as many on the purchasing club’s side. If you have a player that is wanted by multiple clubs, this scenario then becomes even more inflated, so you can already begin to build a picture of just how many people are involved when discussions get underway.
The agent is potentially in a really pivotal position which means as opposed to some agencies who jump on a deal and say to clubs ‘I can get you this player because I know so and so’, a decent agent, who has a player under contract and is trusted by clubs, will report back over time. The agent’s role is often best described as being a ringmaster within a professional circus.
Once a transfer has been agreed in principle, the most fundamental part is the player’s salary. In most cases, particularly with top-flight clubs, these salaries are five or six figures a week, but in rare instances, can even reach seven figures. However, regardless of how much a player will be earning, the sums always have to be contracted within the PAYE system. The professional football industry in the United Kingdom has a contract with the PAYE system.
There are also image rights. Nowadays, these rights can be fairly flexible. There has to be a good reason for a player’s representative to carve out an image rights deal. The rule of thumb is no more than 16 per cent of the player’s overall contract. Anything inside or pertinently outside of that rule of thumb gives the HMRC authority to challenge. If, as a representative, you reach that point, the kind of reasons you will give may be, for example, something like the player is moving from Spain and has a contract with Telefonica, who is not a UK-based company, therefore, we want to carve out that income so the player gets paid in Spain and is taxed outside of the UK’s tax system, even though the contract for services provided is now inside his deal with the club through his image rights transaction.
When it comes to the individuals who generally work alongside an agent, you will have at least one lawyer, a tax accountant, as well as staff members who help with logistics.
Once all these people come together and are sitting around a table (I always prefer to keep it to about seven individuals) and you have discussed salary demands, there are then various contract clauses to consider. There is sometimes a signing on bonus involved. A lot of clubs do not agree to these anymore because they’re inclusive in the wages on offer, but for the clubs that do, do them, it is normally a percentage of the player’s income. For example, if a player is set to receive £500,000 in a signing on fee and a five-year deal, that will be spread out over the duration of the contract at £100,000-per year for five years.
Once you put that together with the salary that is often how some of these incredible numbers we see come to be.
Those are the basic components, after that, it can become interesting. A representative may propose additional incentives, such as salary increases every year, appearance-related bonuses, such as starting line-ups (starts), substitute appearances (subs) and occasionally goal and assist bonuses, but these are most commonly found with lower league clubs. There are also clean-sheet bonuses and most certainly league finish place bonuses, as well ad-hoc bonuses for remaining in European qualification spots throughout the season, and of course, there are individual and collective bonuses for winning any type of domestic competition.
When you see a deal announced and read reports that the player is earning £100,000-per week, the chances are, he isn’t. He is more likely to be on something like £60,000-per week with the rest of the sum made up of potential bonuses.
One trend that has been creeping into the industry recently is a ‘family fee’. Often nowadays, a family will view a player as a cash cow and invite agencies to come in and what happens is they effectively spark a bidding war. Agents will then offer a family financial incentives if that player agrees to sign with their agency. Although technically this is something that isn’t allowed, agencies find ways around it quite easily – for example, they may factor this fee in as an advancement against marketing income.
At this point, a family may have spoken to 10 or more agencies and now have a good idea of how things are going to stack up. They will then either decide they can manage the player by themselves (which is often a bad idea!), or they opt to continue with an agent.
Baring in mind that, under FIFA regulations, an agent is only allowed to sign a player for two years at a time so it is important for a representative to keep his contract current.
Also interesting to note – the PFA’s private pension scheme matures at 35 as opposed to aged 65 like the rest of the nation.
Even a ‘simple’ deal, because of the sheer amount of people involved, as well as all the corporate boxes that need to be ticked, certainly at Premier League level, plus the aspirations of the player and his family, can take a significant amount of work – from all sides, plus of course, there is sizable FA paperwork to complete, as well as the traditional medical.