[MUSIC] Welcome back. We're going to explore today, the effects of agents in the soccer football world, just as we have throughout the major leagues. To join me in this is my teaching assistant Ricky Volante, welcome back Ricky. >> Thank you for having me professor. >> It's great to have you back. So our PowerPoint is going to take you on a tour through three primary subjects. We're going to look at contract clauses that an agent can use for leverage in the world of soccer football. Third-party ownership which is another leverage point used to be now prohibited, you'll learn. And influential agents. What are the characteristics of a successful agent in the world of football? And how they've gotten to be successful. And what makes them so successful in the world in which they operate. Again we've looked at these points throughout each of our major leagues in America and now we're looking across the world of soccer football. The first thing we're going to look at is contract clauses. Now the release clause is going to be critical, we're going to pretend you're an agent to a superstar. We have in our PowerPoint the kinds of tipping points that an agent could use to leverage getting his player to a max salary. So we got the predetermined transfer value having been agreed， the bidding club needs to meet that value, and then we get to the equivalent almost of free agency if you will and that's how the leverage gets provided. Now this has been legally still untested in the court of arbitration for sport as our PowerPoint tells us. Why don't you take us through a couple of examples of how a smart agent has used this release clause to his client's advantage. >> All right. Well first of all, typically when they agree to these release clauses what they try to do is forecast what the players value will be at the time that he would attempt to leave the club. So when you sign on a young star that you're hoping will one day blossom into a super star, you're going to try to get a value that reflects that. So that when someone tries to come in and buy them, then you're going to get your money's worth. >> You being the club establishing. >> Yes. >> Establishing that value, right. That's the first PowerPoint, the transfer values agreed between the player and the club. >> Yes. And then on the agent's side, you want to make sure that that value is not too restrictive. Because you want to down the road, have the option of using that release clause to leverage into a bumper contract. Or to get your player out of there to a bigger club. So, you have a nice balancing act going on there, during this negotiation. But what ends up happening, essentially, once you've agreed to this release clause, when another club comes in they will offer the club, x amount of money, so let's say 10 million pounds. At that point then they have the right to negotiate with the player freely or they at least should. >> They being the new club. >> Yes. The new club would have the right to negotiate with the agent without interference whatsoever from his current club, which is a unique setup to American sports, where as you have trades and things like that or free agency altogether. >> Or right of first refusal in the NFL, for example, right to match. >> Exactly, and you do not have that here. What ends up happening is then the buying club meets the current club's release clause. Then they begin to negotiate with the player. If they come to terms, the player leaves without the current club having much say in the matter. However, if they don't meet then the player would remain with the club. >> So our American audience, what we're talking about is contractual free agency being pre-agreed. If I'm understanding your explanation of this. Now give us some examples where this release clause has been used by an agent and the buying club to the absolute maximum advantage of the player. Yes. So there have been a magnitude of examples overall. One in particular that was recently done, we saw Marouane Fellaini, who was with Everton who had a release clause of I believe it was 18 million pounds. Now with most release clauses you have an expiration date, which again is a key negotiation to the clause itself, because once that clause expires then the current club can maximize their value. And that's exactly what happened in this situation. Fellaini had particular date, Manchester United missed out on the date, and then, as a result had to pay nine million more on top of the release clause. So here's a case of where the club won out, the current club won out, and was able to allow the clause to expire, then sell him and get even more than they probably should have. >> So until the contractual free agency expired and then it became a free market. >> Exactly, so that would be one of the most recent examples of how it benefited the team as opposed to the player. Now on the flipside of things you have a situation where with Marcus Roho who had I believe it was a 16 million euro release clause. And at that point, having just had a wonderful World Cup for Argentina, finished runner up to Germany, played a crucial role within the team, and had just followed that up with a great seasonal sport in Lisbon was worth far more than 16 million euros at that point. However, because the release clause was already there, managed to go to Manchester United for far less than what many would say is a current value it was at that point. >> So did the agent blow it in either of those cases? >> Certainly allowing the expiration period to expire, and in the second case probably under valuing the player going in. >> You would argue that in both situations the agent actually managed to come out on top, in the Fillanni situation he ended up getting a larger cut. You're either going to get a percentage of 18 or 27 for the agent he ends up getting a cut of 27 and now his player plays for as Forbes just announced the second most valuable sports franchise in the world. So, obviously, his marketing opportunities and things like that go up and then he also gets the larger cut of the transfer value. Then for Roho who was represented by Doyen same thing. He's now being blocked by one of the top clubs in the world. Has far more marketing opportunities and yes while they get a smaller cut of the transfer value he then got a much larger contract. So you're getting your fees from that on the back end for a longer duration. >> Great. Let's go to the other way an agent can make a difference, the buy out clause. Now this has been confirmed, by the court of arbitration for sport. You can read the PowerPoint, our audience understands how it's similar to a release clause. A predetermined value is agreed between the player and the club. And here we go, the player pays his current club the buyout amount. Now this creates some tax issues which you talked about with some of our other guests because it's an actual transfer of money through and including the purchasing club providing the player as our PowerPoint says with the transfer fee. He then forward the amount as our PowerPoint tells our audience to the current club. Now how is this played out, what are the most recent examples of a buy out clause an agent using it to his client maximum advantage? >> So essentially what happens is the purchasing club will then send x amount of money to the player. Who then forwards it along to his current club who he's trying to leave. As you said, this creates tax issues, because that would all then be gross income. Again, it works very, very similar to the release clause. You'll have certain agreed amount that then the player instead of the buying club pays. In terms of recent examples, there haven't been as many of them because this is typically located. >> Buyout clauses are mostly used in only Spain and Portugal you see a few of them in France but for the most part the release clause is what is used in England, Italy, Germany and mostly in France as well. So there aren't as many current examples but that's essentially how they function. >> Okay. Moving right along, this Third-Party Ownership point which our audience will learn about. Is a thing of the past now, but it's important to understand how it got to where it got. Why the abuses of it led to it's being prohibited and again the powerpoint will tell our audience. What it involves it's a third party buying the rights to a player as if that player were a stock or security particularly prevalent in South America, Spain and Portugal. Why don't you take us quickly through how a third party can purchase a percentage of a player? >> So there are actually quite a few benefits to how Third-Party Ownership works the way it functions is, as you said it's almost sort of like a stock. You'll have x number x percentage of a player who'd their economic rights are purchased by an investment firm or an agency or any other third-party for that matter. So what happens is you have these under privileged players who are coming from villas and things like that in South America who don't have the money at their disposal to afford training, to afford the equipment necessary, and things like that. To reach the elite level that they would need to get to Europe. >> This is our next Powerpoint that you are taking us through. So, keep going please. >> Yes, so, what ends up happening is during sports group, they're one of the main, were one of the main, third-party owners. What they would then come in is they would buy 35%, 40%, 50% of the player's economic rights. And then what that grants them to is that percentage of any transfer fees or things like that, come from the player down the line. >> So we've got the good, that's our next power point slide. It advances the game of football which is name of this. But now here's some negative examples of Third-Party Ownership resulting in criminal investigations, criminal fines, charges, damages, all across the board. We have picked four or five examples for our audience to share. >> Yes, so I guess just to walk'em through these different examples real quick. First you have Neymar who, unbelievable player, possibly, arguably the best Brazilian player in the world at the moment, who was trying transfer from Santos over to Barcelona. This had been a long coming transfer that everybody knew about. It was the worst kept secret in the world of football, essentially. And after the transfer was made, you have Barcelona who's reporting we paid 60 million pounds, Euros, for him. Then you have reports coming out that it was actually 71. Some reports saying that it was as high as 95. So right off the bat, you have some red flags here. How much did they actually pay? Well in the fallout of this, we have now seen that he actually paid or Barcelona actually paid his parents a very large fee to essentially guarantee that Neymar would come to Barcelona. Now. you would say that could be okay if they were the Third-Party Owners, however, he actually did have a Third-Party Owner who owned a percentage of him and then did not get the requisite amount from the transfer. So as a result they kind of blew the whistle on the situation because they only got 6 million. Well, 6 million isn't 30% of 45. It isn't, 30% of 71 and it's not 30% of 95. So it doesn't matter which transfer value you use, they got cut short. >> And now we know the tax courts are looking into it. The Spanish cattle land. Tax courts are looking into it, how does West Ham end up paying 23 and change million in fines and damages? What happened there? >> So what happened with them, was again you have two players coming from South America in Carlos Tevez and Javier Mascherano. Who came over, were owned by the same third-party. And then from there, their became questions of one, who that third-party was and two, how much say did they have in West Ham and how they ran the club. That has always been a strict rule with Third-Party Ownership is that you can have third parties, but they can't cross the line into management of a club, which is what happened, ended up happening here. You would have Tevez who, one, no one knew who owned him. Two, what club is he playing for today, with West Ham, Man United, Man City, all having him a short period of time. And essentially was bringing a whole hotel floor of friends with him every he went, because he didn't have to worry about repercussions, because none of these clubs owned him. So what ended up happening is the English FA caught onto this, they fined West Ham, they did not deduct any points, or anything like that. So they had the initial fine, then you have Sheffield United who comes along and says, look, we got relegated this season. West Ham was breaking the rules we feel like they had an unfair competitive advantage over us. So then you have a grievance filed. The courts end up deciding that there needs to be another fine. On top of what was already given to West Ham, because they indeed did have an unfair competitive advantage. So in the end, West Ham ended up paying 23.6 million Pounds just in fines. That doesn't include the salaries of the transfers to get these two players. >> And then we have not just controlling. A player absolutely so that the team loses personnel control, but we have an agency, the Doyan Sports leveraging, the next couple of examples, again negative examples of Third-Party Ownership. How did those manifest themselves? >> So in the case of Radamel Falcao, what had end up happening is he was arguably and still arguably today one of the best strikers in the world. So they had a lot of leverage to begin with when it came to negotiations. So what they ended up doing having this third-party percentage was leveraging that into requiring athletic code to give up a portion of their sports shirt sponsors as well as getting the rights to Falcao. So again you have that line being crossed into management almost and basically forcing Athletico to give up one of their most valuable sponsorship agreements and sell it to them at under market value. >> Or a sports agency. >> Yes and then again, that money sort it leaves the sport, which has always been one of the biggest problems with third-Party Ownership for FIFA and it caught the attention of FIFA in addition to these other situations. >> How about the last one? >> So then you finally have Marcus Rojo who we already discussed, what essentially happened is when he came back from the World Cup he went completely MIA. Sporting >> missing in action >> yes. Sporting Lisbon wasn't able. To track it down, he wasn't taking their phone calls, wasn't taking their emails essentially hid out. Wasn't coming to practice, wasn't coming to training or anything. So they couldn't get ahold of him so essentially what Doyne and Mart and Rojo did together there was forced Lisbon to let them seek a sale. And then in the end he ended up going to Manchester United and then he finally showed up for the signing of his new contract. >> [LAUGH]. we can see why, our next Powerpoint slide results in banishment by FIFA of the Third-Party Ownership schemes. They announce it in October, 2014. It take us through the rest, the fallout has is been quite dramatic. >> Yes. So essentially what's going to happen is, particularly in South America, you're going to have clubs folding, essentially, because you won't have these third parties stepping in to cover these costs for these players. So these hundreds of Brazilian clubs, essentially the way it works down there is every town has it's own club, well now what you're going to have end up seeing is clubs, towns having to come together to form a single club because otherwise they won't be able to afford the costs. So now you're kind of going back against FIFA's mission to bring football to the world, so there are clearly negative impacts, but at the same time while there weren't that many alternatives, one could argue that just creating transparency rules would have been probably the best way to go, but FIFA has obviously, has already made that decision. >> Okay, let's finish up with the agents who have done it just right, who have been the most successful soccer football agents. We have a laundry list, it could be broader and more inclusive, but we sort of cherry picked, the few that we're going to bring to our audience's attention. We look forward to hearing from our class, our audience, what other agent agents they think have done it better or than these, but start with the first one and the Portuguese control, almost total control. That Ryan Mendez has on the Portuguese market and how important that is to the game of soccer football. >> So, essentially what he has done since signing Cristiano Ronaldo is lock down the entire country. What ends up happening is a lot of the Brazilian and Argentinian, and these other star players that come from South America start in Portugal. These clubs they already have relationships with the South American clubs to bring these players over. And then once they're in Portugal Jorge Mendez manages to get his claws in them one way or another. So, essentially what he's been able to do is anyone that goes through Portugal or is from Portugal. He has been able to sign them. And that goes for both players and coaches. As you can see from his list of clients, he has Cristiano Ronaldo, James Rodriguez, Jose Mourinho, Radamel Falcao, Angel Di Maria, Davide De Gea. And that's just to name a few. He's broken the world transfer record. He currently holds the English transfer record. Heimez went for another 63 million pounds. Faocao went for 51 million pounds and is about to be sold again potentially for another amount possibly broaching 50 million pounds. And then you have David De Gea, who the rumors going around that Manchester United may be forced to sell him. And if he is, he would break the goal keeper transfer record. So essentially he just holds lots of transfer records. >> Sort of like Casey Klaus had that $270 million year last year in baseball. >> Exactly. >> All right. Let's go on. Paul Stretford is our next example in England. How has he amassed his top client list, and what have his primary accomplishments been? >> So, a difference with Paul versus Jorge Mendez is, instead of going for a long list of star clients, he has honed in on just a few. As you can see, his top clients currently, Wayne Rooney, Harry Redknapp, coach of QPR currently, and then Tim Krul, the Netherlands goalkeeper. So his influence has been in a different light. He did have the Rooney transfer which at the time was a big amount. Ten years, or eleven years ago now but only 25 million pounds. Since then Rooney has now signed the largest English contract, paying him over 300 thousand pounds per week. So and I believe Forbes just announced that Rooney's annual income is around 7 million pounds per year once you include endorsements. So he has gone a different path of just honing in on a few top clients, and just keeping them in England, essentially. >> Okay, another example. Here we go. Now we're getting into a brother, brother coach situation with this top agent. >> Yeah. So we have Pere Guardiola, who's brother Pep is currently the head coach at Bayern, previously the head coach at Barcelona. Arguably the best coach in the world. So right off the bat he has some pretty good contacts to work with, going through his brother who is indeed one of his top clients. He also has Louis Suarez as well as Tiego Alcontera. So with him his major accomplishments you have Suarez who just was transferred for 75 million pounds. And in addition again you have arguably the best coach as one of your clients. >> But, let's delve into talk about Casey Close. We know it's probably a 3% or less. What kind of agency fee would he charge on these transfers by these super agents? >> So that it'll depend. And a lot like the Americans sports the lower clients are going to have to pay a larger percentage whereas a Ronaldo could demand 3 to 5%, probably someone more along the lines of Tiago here would be forced to probably closer to 5 to 8 maybe a little more than that. >> Also on the same slide, another form of success formula for Jonathan Barnett. What has he done to make this top agent list? >> So with Barnett, it's similar to what Shreffer did. He's mostly focused on England. As you can see off his client list, he has Gareth Bale, Ashley Cole, Joe Hart, Darren Bend and Wojciech from Arsenal. His main accomplishment is that right now he holds the world transfer record with Bale for 85.3 million pounds. And there again are rumors going around that he could be the first player to break the 100 million pound marker here next summer with Manchester United rumored to be interested. >> Okay, finishing up with Mino Raiola. Top clients and accomplishments. >> So, with Mino, what he has typically done now is focused in on the French league. As you see off his client list, he has Zlatan Ibrahimovic who is currently the star player of the French League for PSG. You have Edinson Cavani also for PSG, Paul Pogba who hails from France, currently playing for Juventas in Italy. Etienne Capoue who plays for the Totham Hotspur and then you have Mario Balotelli the ever polarizing figure that he is. Playing, currently playing for Liverpool, and has transferred I believe three times in the last two years now. So, he has kept Mino >> [LAUGH] >> busier than most of his clients. And then, as you can see from his accomplishments, Ibrahimovic being purchased for 59 million pounds. And then, you have Cavani, who was bought for 55 million by PSG, and that is currently the French transfer record. >> As we conclude this module, Ricky what would you say, is the common thread that runs through these most successful agents? What are the lowest, the common denominators that run through each of practices, and what has made them make this top agent list? >> So, I would say much like their American counterparts. One of the main things we see is the connections are important. As you've seen with some of these guys, they've managed to lock down a particular league or a particular country. And just hone in on that. Getting those players. Another thing is going after the big money clients. Once you get that star player the others tend to follow suit. As we saw with all of them they managed to get one big client and then from there their agency grew. And then when it comes to decisions and characteristics that they make, well they're going to have to value, going after the money, chasing the money, going after the big transfers versus staying with one club and really earning your place in history just with that club. So again, very similar to what we see in the US. And then in terms of characteristics, they're charismatic, great connections and they're good in public essentially. >> At the end is it just show me the money? Or can it be a hometown discount to play for a championship team in a place where you grew up? >> The hometown discounts particularly in soccer tend not to come up until the end of their career. During that prime period, just with the set up in these release clauses and buy out clauses and the way the transfers work, loyalty is waning very thin in Europe in particular. So hometown discounts are rare. >> [LAUGH] Well, we've gone, we thank you so much, we've come full circle from talking about the career trajectory of David Beckham and now we've gone through the agency list. We hope this has been helpful to you in understanding the impact that agents can have on the world of soccer football. And we look forward to hearing from you in your response to this module when we interact with you through one of our live sessions. So thanks for your attention, thanks to Ricky for being with us again. Great job and please enjoy this module. [SOUND]
