Was the Massimo Cellino Case a ‘Game Changer’ for Unauthorised Agents?
With the January 2018 arrival of Alexis Sanchez at Old Trafford, his long time agent Fernando Felicevich will pocket around £15M over the next five years from the Red Devils for his part in the acquisition of the Chilean winger.
This article examines how the FA deals with payments being made in the modern game to agents unlike Felicevich who are not registered, based upon a case involving another charismatic figure: the former Leeds United chairman Massimo Cellino.
FA Under Scrutiny for the Ross McCormack Transfer
The charges levelled by the FA at the former Elland Road supremo and the Whites themselves concerned the 8th July 2014 transfer of the former Scotland International striker Ross McCormack to Fulham for £10.75M.
Derek Day was an authorised agent for the purposes of the FA Agents Regulations (replaced on 1st April 2015 by FIFA Regulations on Working with Intermediaries). However, he did not represent McCormack in his switch to Craven Cottage and was instead a party to a ‘scouting contract’ which was created in the FA’s opinion, to deliberately mislead them concerning an irregular payment made by Leeds United to Barry Hughes as part of the transfer.
Barry Hughes was an unauthorised agent who was deemed crucial by Cellino in obtaining the asking price demanded by the 1975 European Cup Finalists for McCormack’s services. Hughes was also a party to the ‘scouting contract’ and was paid £250,000 on the 18th September 2014 by Leeds United for his ‘consultancy services in helping to procure a guaranteed transfer fee of £10.75M for R McCormack’. Effectively this payment was made to an unauthorised agent by the Club (at the sole request of Cellino) for agency services and constituted a clear breach of FA Rule J.1.
Graham Bean was employed by the Club as a consultant to ensure that all the paperwork was completed correctly in relation to the transfer.
When the Club were approached by Hughes with his £250,000 invoice Bean initially disputed the payment on the basis that he was not an authorised agent and should be remunerated by McCormack or Fulham directly. It was found by the FA, that under pressure from Cellino to ensure Hughes was paid, following the initial dispute Bean indicated that Leeds United could pay Hughes’ invoice using a consultancy agreement ‘scouting contract’ with an authorised agent Derek Day.
Bean was dismissed from his consultancy role with the Club on 25th September 2014 (a week after Hughes was paid by Leeds United) allegedly due a fall out with Cellino in relation to McCormack’s transfer and Bean subsequently informed the FA of the ‘scouting contract’.
Below is a step by step account of how the story unfolded.
Scouting Contract – the Initial Decision (11th October 2016)
The FA Regulatory Commission’s decision focused upon all parties involved in McCormack’s transfer being aware that Hughes could not legally be paid and any such payment would be in breach of the FA Agents Regulations. The FA indicated that the use of the ‘scouting contract’ was purely to hide the nature of Hughes’ involvement in the transaction and ensure an unauthorised agent was remunerated.
The Club was fined £250,000 for its involvement in the ‘scouting contract’, Day pleaded guilty to the breaching the FA Agents Regulations and was accordingly banned for seven months and fined £75,000. Cellino pleaded not guilty to breaching FA Rule E3(1) ‘acting in any manner which is improper or brings the game in to disrepute’ claiming that he did not know the ‘scouting contract’ would result in a breach of the Agents Regulations. The FA dismissed these comments and imposed an unprecedented fine of £250,000 and an 18 month ban from all football activities upon him.
Appealing the Sanctions (2nd February 2017)
Cellino appealed against the sanctions handed down by the FA and subsequently received a reduced fine for the Club to £200,000, himself to £100,000 and his football ban reduced from 18 months to 12 months.
Rule K Arbitration (30th October 2017)
Not content with the reduced fine for the Club, himself and a reduced personal ban, Cellino commenced Rule K Arbitration proceedings stating that the FA Appeal Board should be an independent body. However, one of the members on the Board was also on the FA council and therefore the Board was not independent. The initial decisions made by the Appeal Board in February 2017 were upheld.
It has been suggested that the practice of unauthorised representatives being paid through ‘consultancy agreements’ has been common in football since the mid 1990s and given the secretive nature of these arrangements many payments have been disguised or gone unnoticed by the FA. Therefore the Cellino case changed the game in a variety of ways:
Previously chairmen and directors of clubs had not been charged in a personal capacity and/or banned regarding payment of agents by clubs which they operated. Cellino was arguably a marked man to the FA after his previous four month ban by the Football League in 2014 as a result of tax evasion, perhaps displayed best by the huge initial £250,000 fine and 18 month ban imposed upon him. The FA quite clearly took into account his previous misconduct but Cellino should have been penalised solely based on the current facts and not of those unrelated to the McCormack transfer.
Credibility and the Commission’s Decision
Despite labelling their own key witness Graham Bean as ‘unedifying’, the Commission still decided to favour his evidence over that provided by Cellino upon the fundamental elements of the case and specifically the existence/intention of the ‘scouting contract’.
Bans and Contracts
The FA’s ban of Day for seven months and Cellino for 18 months (initially) for their involvement in the ‘scouting contract’ (despite both parties claiming they were unaware that payment of Hughes would be in contravention of the FA Agents Regulations) may appear excessive. Neither party benefitted personally from the transfer and the FA was keen to make an example of Day and Cellino who were both regulated by them (Agent and Chairman respectively) and should have prevented an unauthorised third party benefitting from any involvement in the transfer.
Summary – what comes next?
Given that the FIFA Regulations on Working with Intermediaries were implemented in order to ‘promote and safeguard high ethical standards in relations between clubs, players and third parties’ an argument can be made that Leeds United and Fulham as significant commercial entities with huge resources at their disposal should not be prevented from using non-regulated intermediaries as part of their commercial dealings (player transfers) in order to generate a better return on their transfer dealings.
Yet conversely a public interest argument exists, as many people will correctly argue that payments to non-regulated intermediaries only tarnishes the image of the beautiful game and diverts much needed funds away from the sport which could alternatively be invested in grassroots schemes.
The Future of Agreements
The de-regulation by FIFA of the Agents Regulations in 2015 dramatically changed how transfers in the modern game are now conducted. Arguably the necessity for ‘consultancy agreements’ has now been negated given the relative ease with which previously unauthorised agents can become registered with the Wembley based governing body.
However, should chairmen, directors and/or clubs make payments to non-registered intermediaries in relation to their footballing activities, the precedent and sanctions handed down in the Cellino/Leeds United matter will surely now be followed by the FA. The FA Regulatory Commission armed with almost unlimited discretion upon fines and bans have showed, irrespective of any differences with Cellino, that the issue of unauthorised representatives financially benefitting from their involvement is player transfers will no longer be tolerated.
Please contact Michael, our solicitor and FA Registered Intermediary for more information about representation of elite athletes covering legal advice, contracts and representation. Or please visit EHM Sports Management.