Game of two payments

By Jonathan Michie, the director of Birmingham Business School (THE GUARDIAN, 16/09/06):

Just when football was supposed to be entering a new era of transparency, two members of Argentina’s World Cup team sign for West Ham – for an unknown fee, unknown duration and unknown reasons. It was thought that Carlos Tévez might sign for Manchester United, to replace Ruud van Nistelrooy. Instead he and Javier Mascherano have moved to Upton Park from Corinthians, in Brazil.The West Ham manager denied rumours that the deal includes a requirement that they be picked for the first team. It’s also rumoured that West Ham will be required to sell the players as soon as a bid of €50m is received. Which sounds fair enough, except that West Ham wouldn’t actually get the money. Most would go to Media Sports Investments (MSI), a fund of investors that provided the players to West Ham.

Kia Joorabchian, who founded MSI, brokered the deal «for an undisclosed price and undisclosed terms». He has had past dealings with Boris Berezovsky, the exiled Russian oligarch, but denies any with Chelsea’s owner Roman Abramovich – who had been linked to MSI by the Spanish football paper AS. (Chelsea were also rumoured to be interested in Mascherano and Tévez.)

Meanwhile a VAT and Duties tribunal last week accused some of Britain’s top football agents of misleading the FA by failing to declare that they had acted for players in deals – breaching the regulations of Fifa, the sport’s governing body. The tribunal said that Newcastle United had claimed that agents had been working only for the club, allowing it to reclaim VAT on its payments to agents. The tribunal ruled that Newcastle must repay more than £500,000.

The Revenue, understandably, regards the work of players’ agents as work done for players, not clubs. Ironically, one of the reasons that some clubs pay these bills is, precisely, as a tax scam. A player would have to pay an agent’s bills out of post-tax income, so it is «tax efficient» for the club to pay the bill, rather than paying an equivalent amount of money in wages, which would be subject to income tax.

Clubs do sometimes use agents – as opposed to just picking up the tab after a player has used one. But the reasons some clubs use agents are not necessarily any more honourable than the tax-avoidance motive. Clubs use agents to do their dirty work when they want to circumvent the rules and «tap up» players under contract with other clubs.

There has been a succession of high-profile cases of dodgy dealing by football agents going back years. George Graham lost his job as Arsenal manager in 1994 after he was found to have received a payment from an agent – even though he had by then repaid it. It was widely thought that he was made a scapegoat, simply because no one else was caught.

It doesn’t have to be like this. Other sports across the globe have managed to regulate the activities of agents, so that they are limited to their proper role of representing the interests of the players who employ them. The football authorities have been talking for years of doing just this, and some action has been taken – but nothing like what is needed. The Football League (which looks after the three divisions below the Premiership) has at least required clubs to publish what they pay to agents. And, perhaps as a result of this increased transparency, the overall sum has fallen.

But what is needed is for agents to be employed solely by players. Football clubs should not be permitted to employ or pay agents. This single reform would cut through the mountains of proposals doing the rounds of Fifa, Uefa, the FA, the Premier League and other bodies.

As a new report, The Role and Regulation of Agents in Football, explains, the case for banning the use of agents by clubs is perfectly feasible. It would be cheaper and simpler for all concerned. But clubs have become so entangled in the unsavoury practices of agents, any other way of working seems unrealistic. At best, having an agent working for both player and club risks a conflict of interest. This could lead to an agent failing to act in a player’s best interest, if he or she is being paid by a club to deliver a player to it, for example, rather than to another, more appropriate club.

The time has come to leave agents to the players, and let clubs do their own work and stick to the rules of the game.