Wednesday, 19 January 2011

Secret Agents

News of a court case between the English agency 'Formation', and Jorge Mendes' 'Gestifute' have resulted in much consternation from the British press and public alike. Much of the horror seems - as with that directed at bankers - to stem from a revulsion at the figures earned by agents. As with the anger directed at bankers, much of that hostility is misdirected.

There is absolutely no problem with someone earning a high wage. This initial revulsion usually comes from a place of jealousy or disillusionment/disinterest in football. The question is this: do they really add value in proportion to that which they are paid? Mendes is said to have earned €3.6 million of the €9 million fee Manchester United paid for Bebe's services. A 40% stake values the player at only 50% more than the agents' services. Something is clearly amiss here. This particular case raises further suspicion as Bebe's agent 3 months before the transfer was frozen out by the player. Given the number of agents in the game it is not enough to say "The agent does a very good job". There are plenty of other agents who could do a similar job for the player.

However as with most problems it is not that simple. It is the clubs who pay the fees. If the clubs weren't willing to pay the extortionate sums required to secure a player then agents wouldn't be able to request such large fees. Clubs are under immense pressure to achieve success from shareholders and the princely array of stakeholders. A star signing makes fans happy and can help a club leap from "good club" to "top club" (see: Chelsea, Manchester City, and Tottenham in recent years). The pressure to get a small number of elite players with international interest is such that a sweetener to agents becomes indispensable to sign a player. Give a larger cut to the agent and the agent will advise his client to choose that club over another. Don't pay the fee and you can be sure as hell someone else will.

The consumer of football complains when the game is corrupted and yet by being willing to pump large amounts of money in the game through season tickets, sky sports subscriptions and costly merchandise, we implicitly endorse the status quo. The crippling debts that clubs undertake whilst chasing glory is unsustainable. It is for this reason, rather than an aversion to wages written in standard form, that the current model is contemptible.

Aside from suspicions that governing bodies may themselves be corrupt, the obvious route to purging the game of its unsustainability is to legislate or incentivise against crippling debt. This is now happening and yet Platini - the President of UEFA - has been repeatedly criticised by members of the British mainstream press.

A UEFA report last February found that "English clubs contain on their balance sheets an estimated 56 percent of Europe-wide commercial debt". This was not widely reported at the time. Those that did stressed that British clubs also had by far the largest income. Manchester United's revenue of somewhere in the region of £330m is often quoted. And yet when the club holds debts of over £1.1 billion the picture doesn't look so rosy.

You simply cannot have it both ways. You cannot both complain that footballers are overpaid mercenaries who show contempt to the public who indirectly pay their wages and that agents are holding clubs to ransom over players, whilst also supporting a system that encourages masses of unsustainable debt to please that viewing public.

Even if some of the complaints against UEFA are justified - the British Press have more worrying concerns at home. This merits little argument because the idiocy is plain. Agents should not be allowed to represent both player and agent. This conflict of interests is plain and exists nowhere else in the business world. Not only is it common sense, it is outlawed by FIFA. The FA's lack of professionalism is because of the high incidence of ex Pros in the game. I have yet to meet someone who believes this is a problem - most people lay the blame at the small number of "non football men" in the game. They are wrong. This clear conflict of interests is something no lawyer or consultant would understand. Only in football.

So where does all this leave the agents? Well, they don't get off completely. Lawyers have a fiduciary care to their clients. Banks have a fiduciary care to their clients. Football agents have one too. At present this extends only to ensuring the players earns as much money as they can. Agents compete with each other by promising certain wages. The emphasis is shifted from what is beneficial for a player's career or personal and emotional development, and towards what will earn the player (and so the agent) the most amount of money in the shortest period of time. This short termism infects every aspect of the game, and this is no different. Wayne Rooney's career has been handled terribly by his agent. First he was fined for lying during Rooney's move from Everton to Manchester United. More recently he courted the anger of fans, team mates and manager by threatening to leave the club - to rivals Manchester City of all places. Whatever we think of some of the reactions there can be no doubt that one of England's top players was ill advised and risked being put in danger. It is nigh on impossible to imagine Rooney orchestrating such cynical drama of his own accord.

So much for fiduciary care.

If I were in charge of a club I would do something very simple. I would negotiate with a player/agent, say X amount to the player and Y amount to the agent. Then I would give them a simple choice: either take that deal or I give £X + Y/2 to the player and a cursory amount to the agent. The player then has a financial incentive to ditch his agent and you kill the profiteering that takes place on behalf of the agent. A player who is a member of the PFA does not need any more pastoral care, particularly in a well run club (especially when - as with Mendes' responsibility towards Chelsea's recent Portuguese contingent - the agent's role amounts to ensuring the player "turns up timeously for training"... really?). The short term damage to the club through a lack of agent cooperation needs to be offset by strong investment in youth and high quality scouting. The millions (tens of millions?) spent by some clubs on agents could surely be better spent to improve the stability of clubs. Well run, sustainable business models are in everyone's interest.

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