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A case of the sports industry in denial

The majority of sports agents are oblivious to a raft of legal regulations that could put them out of business, claims a leading sports and entertainment lawyer. Ardi Kolah investigates the case of a sports industry in denial.

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Some of the world's biggest names in sport spend a small fortune in legal fees in order to protect their intellectual property rights.

It now looks like football sports agents may need a little extra help navigating the thicket of legal regulations that could have a significant impact on their day-to-day dealings with their players and would prevent them acting for both the player and the club in lucrative football transfer deals.

The issue, identified by Jeremy Summers, founder of SK Sport & Entertainment and one of the world's leading IPR lawyers, is relatively straightforward.

If the services of the sports agent include finding their clients' employment with employers (which is defined very broadly), then such services fall within the scope of the employment agency legislation.

"One big issue for football agents relates to the fact that they can't take money from both parties in a transaction, irrespective of what Fifa or the FA regulations say - the Conduct of Employment Agencies and Employment Businesses Regulations 2003 (which came into force in April 2004) applies," argues Summers.

According to Summers, many sports agents and their lawyers are in denial as to whether the regulations apply.

"There was one lawyer who told me the [regulations] weren't relevant to sports agents and went as far to argue that sports agents weren't employment agents. I haven't seen anything to justify this argument," adds Summers.

Summers argues that the regulations apply across sport and entertainment and affect both sports agents and music managers.

In fact, the Agents Association of Great Britain -- whose members include many of the countries leading music agents -- were worried that they could be caught by onerous obligations originally imposed under the Employment Agencies Act 1973. They contacted Summers' firm to write standard terms of business so as to avoid any problems with the DTI at a later date.

"A core aspect of every music agent's services is to get work for the artiste in the form of one-off live appearances, which would fall within the definition of employment.

"Therefore providing such services -- or even advising artistes about such possibilities -- makes the music agent an employment agent and subject to the conditions of the Act and Regulations," Summers explains.

Breach of these regulations is a criminal offence which could lead to fines and the agent being banned for as long as 10 years.

Whether these regulations apply to sports agents has yet to be tested in the courts, but that day is getting closer.

Summers warns: "A sports agent must comply with the regulations if they're advising on and negotiating player contracts, personal appearances and even endorsements.

"Likewise, managers in the music industry will be caught by these regulations if they're advising and negotiating on recording and publishing agreements as well as live performances."

So what has the DTI got to say about all of this?

An investigations manager at the DTI concluded that the Employment Agency Standards Inspectorate has no plans to publicise the fact that particular agencies must comply with the requirements of the legislation prior to any investigations being carried out.

So watch this space...

Ardi Kolah is the author of Essential Law for Marketers (Butterworth Heinemann, £25) and is a marketing, public relations and sponsorship consultant.

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