BESLS PRESENTS: Q&A WITH DANIEL GEEY
Katherine (president): I'm Katherine. For those of you who don't know me, I'm the president of BESLS, the Brooklyn entertainment and sports law society. Hopefully you're in the right place. So, thank you all for coming today. We're really excited to kick off our first event of the semester. Before we get started, I just want to make a couple of general BESLS announcements. First for those who applied for the delegate application, thank you. We got a lot of applications. Hopefully we'll announce our delegates next week. The other quick announcement I want to make is that Billboard magazine ranked BLS as one of the top music law schools again for 2019. We're really proud of that they gave a shout out to BESLS in as part of their consideration for that. So, thank you all for being a part of that and for making this such a great school for entertainment and sports topics. With that being said, I'm going to turn it over to Jake and Alana, our sports chairs, and they're going to introduce our guest and moderator.
Alana (student): Again, thank you all for coming. Professor Balsam is going to be moderating today. Jodi S. Balsam is the director of externship programmes at BLS and also teaches Sports Law core courses at both Brooklyn Law School and at NYU School of Law. Professor Balsam was previously the National Football League's counsel for operations and litigation, where she managed litigation in all areas of law, oversaw a variety of policy and operational matters, negotiated contracts for League special events, administrative relief, internal dispute resolution, resolution processes and compliance programme. She began her practice career as a litigation attorney with Simpson Thacher & Bartlett representing a wide range of clients and antitrust matters in complex litigation.
Jake (student): All right, guys. Thank you for coming. We have a real good event coming up. Our guest is Daniel Geey. Daniel Geey is a partner in the Sport group at a leading media law firm, Sheridans, located in the UK. Daniel’s practice focuses on helping clients in the sport sector including rights holders, leagues, governing bodies, clubs, agencies, athletes, sports technology companies, broadcasters and financial institutions. Daniel has significant experience in the football industry and has worked on a variety of club takeovers, high profile transfers, commercial endorsement deals and disputes. Daniel also works in the wider entertainment industry, advising on competition and antitrust matters. Daniel is also the author of the book ‘Done Deal’, which is available now on Amazon. The book lifts the lid on the inner workings of modern football and dives into football contracts, multimillion pound transfers and Premier League big business.
Jodi Balsam: I'm Jodi Balsam, this is Daniel Geey.
I want to start off by saying - with telling a little story about how Daniel and I met. So, this to me is an object lesson for lawyers and people in business in any setting. I was in London on a pleasure trip; I was there to see the Yankees x Red Sox game last June. I don't know if anybody paid any attention to that and decided I would just sort of call around to London sports lawyers I knew of, heard of, to see if they would just want to sit down with me and have a cup of coffee, so I could learn something about their career and their practice. Daniel was one of those lawyers and was incredibly generous to spend some time with me and now he's visiting me in New York City and has generously given his time to talk to all of you. So, I just take away from that – pick up the phone, reach out to people. You'll find especially in the very close-knit community of sports and entertainment lawyers that they're really generous with their time.
DG: And if I may say one of the things, as well, which is the backstory to the backstory, which is - it was probably 18 months or so ago now that you wrote a fantastic piece in the LawInSport Journal, the online journal that I read about agency and US sports and because a lot of my practice is player agency in the UK market it was really fascinating to see the differences. So, after I read the article, I reached out to Jodi and said, ‘Wow, fantastic article. If you ever got the chance to come over to the UK or if you want a quick chat on the phone, I'd be really interested to pick your brain’, so as much as Jodi says, ‘I came to London to pick Daniel's brain’, I was picking her brains.
Jodi Balsam: And speaking of brain picking, I would just want to hold up the book for a second everyone - take a look at it.
DG: This is free publicity.
Jodi Balsam: This is the Bible. So let me tell you that I have a wide range of acquaintances in sports and entertainment that have nothing to do with law and I was socialising with friends. This is a true story. This is last weekend. I'm socialising with friends who came up to my country house over the weekend and the reading that he brought along was this book. So, he's a music industry executive. He happens to be a sports fan and he brought along this book and said, ‘this is a great book. You really should read it’. I looked at it like you’ve got to be kidding.
DG: Because you’re surprised it’s a good book.
Jodi Balsam: No! - Because what small world incident is this that I should be hanging out in my vacation home with somebody who brought that book along, not planned at all. So that is how interesting, accessible, readable this book is. If you have any interest in European football, and I'm going to use the word football even though Americans have claimed it in a different context, I'm going to use the word football to mean soccer in this conversation. This is the book to read if you want to know a little bit more about how that business operates. But, and by the way, Daniel is very generously donating a copy of this book to the library, so you'll be able to take it out although it's worth owning. Let me tell you, it's not that expensive on Amazon.
So, let's start with a couple of introductory questions. What does your typical day as a sports lawyer look like at Sheridans London? You get up in the morning you get to the office, or maybe not, what happens next?
DG: Yeah. Firstly, thanks very much for inviting me. I sort of, half, invited myself is the truth. Thanks everyone for coming along. It's great that so many people want to hear about how stuff works in the UK, especially on football stuff. So, what I will try and do as well in the question - the answers - is just try and tell stories because I think that's always a bit more interesting than just basic monotonous law which you are already reaping on a daily basis.
So, you know, I tend to - I never used to be this way is the truth - but I tend to actually get in the office pretty early. So, there's a team of about eight of us now. The quieter time is probably between about 7:30 and about 9:00 o'clock in the morning. Now the lawyer 15 years ago, it'd be like 7:30 in the office ready to go? Not a chance. The difference now is that I have two girls under six who wake me up pretty early in the morning anyway.
But once I'm in the office, I have about two hours to myself, is the truth, to be able to actually get things done before. What really ends up happening is I become quite reactive to things in the day, if it's emails, if it's phone calls, if it's WhatsApp messages, if it's meetings, if it's things I know I need to do for that particular day.
The primary basis of my practice now - and it sounds pretty glamorous because it is, but actually it's pretty tough at the same time - is working with football players and football agents in the UK. And that tends to be around particular periods of the year when the transfer window is going on. We can talk about the transfer window I guess at some point where players are moving for multimillion pound deals. They're signing multimillion pound employment contracts and the reactive side of my business a lot of the time, also is, I guess, what you call reputation management and compliance which is the very unsexy way of saying something's going in the press and we don't want it to be in the press, or someone’s said something on Twitter, or Instagram, or Tiktok, or other types of platforms that has caused problems. It can also be in relation to any type of brand deal or commercial deal. So, in the UK, usually the biggest type of brand deals that the players and athletes will do are boot deals with Adi or Puma, or Nike, or Under Armour - whoever else.
Jodi Balsam: Sneaker, boot means sneaker.
DG: Sneaker, sneaker. Cleat, cleat!
And after that, a lot of my time as well is actually focused on - sounds strange being a lawyer - is actually delegating work away from myself to the rest of the team, which is an art that I'm still getting better at because ultimately, I'm a sports lawyer, I’m a football lawyer. I came into the practice to do football work; I want to do the work selfishly myself. But the truth is, is that my time has to be split between lots of different things, most of it now - it sounds again, strange to say - I am a glorified salesman. That's what I think and that's one of the things we can talk about as well which is you know; I came into law to do law but actually I'm a middle management salesman to some degree and that is quite a strange thing for me to say, but ultimately that is what I need to be able to do in order to make sure that the rest of my team have good work to do, and we can stay profitable.
Jodi Balsam: So, I want to talk a little bit about the business and law of European football. But I want to get a sense of our audience and your familiarity with it. So, who here follows the English Premier League?
Oh, nice. Well, that's makes sense as who's in the room.
Who follows any form of international football outside even outside of EPL? Right? And who, who follows Major League Soccer here in the United States? Interesting, interesting.
I am a season ticket holder to NYC FC, just saying. I'm probably like the first person you've ever met who can say that. But anyway. Okay, so focus up a little bit of sense of how that sport operates differently from professional leagues in the United States. But I thought it would be helpful to talk about a few of the differences that are most relevant to the practising lawyer, and I had a couple in mind, especially the fact that professional athletes in international football are not unionised, and also that professional teams in international football are subject to a huge degree of uncertainty because of promotion and relegation. So, we've talked about those two aspects of international football.
DG: Before I do, and me being a Liverpool fan in the EPL, are there any Man United fans in the room? So, you know where the door is?
Jodi Balsam: Probably just started watching EPL football when they were successful, right? It's not like you've been so that's the team you root for, at least that's what I say as an Arsenal fan. Sorry. Yeah, no.
DG: So, the second element is the interesting one, actually, because you know, relegation is something that is – ‘the R word’ in America, for American owners or non-UK owners, it takes a while for people to understand. So, there's a story from a few years back now when an ownership group in India were looking to take over an EPL club at the time. And I mean, this is true although I don't believe it sometimes, they asked when they bought the club what relegation meant, and relegation explained briefly is when you finish in the top or bottom three positions of the top league and in the lower leagues, when you get relegated you get actually demoted to the league below and the reason why that's very important is because the broadcasting revenues and the commercial revenues when you're in the top division, the EPL are huge. So just to give you an idea, Manchester City for winning the league last year got over 160 million pounds from winning the league. The bottom place team who were relegated still earned 97 million pounds. So, there is significant money in being in the EPL and…
Jodi Balsam: …it would be as if the Milwaukee Brewers were told, I'm sorry, you're so bad. You have to now go play triple A baseball. You can't share in MLBs revenues or exposure.
DG: And, you know, in my experience of working with club owners that are buying EPL and Championship clubs, which is the league below, the major risk factor for purchasing a club is ‘the R word’ - is the relegation word because you can't have that certainty of revenue. You can't have that certainty when you're then negotiating with players to sign long term employment contracts, because usually you will try and relegation proof those by putting a clause in which says, if we get relegated your pay has been reduced by 30% to 50% and a lot of those players will say, well, no, I'm not signing for you, because that's the basis of the negotiation.
Jodi Balsam: But can't they, if they have the leverage, insist on a reciprocal provision that says we're relegated you release me, and nobody has to pay a transfer fee.
DG: You know more than me, no, but the truth there is that - what would tend to happen is if I was in that negotiation, and there was a clause which said, or there was a motive clause, which is relegation reduction clause, I would then - the flipside would be you probably wouldn't be able to get away for a free transfer, but you would then have a release fee for preordained amount which would be lower than that player's trump market transfer value.
Jodi Balsam: So just one other aspect of relegation, for folks who aren't familiar, is that it's paired with promotion. So, the bottom three teams are relegated but in the multi-tiered English football scene, so there are five leagues…?
DG: Four. Four main ones.
Jodi Balsam: So, those who rise to the top of the lower leagues can get promoted to the Premier League.
What is the likelihood that anyone who's ever promoted actually gains a real foothold in the Premier League and stays for the long term to really benefit from the richer revenues?
DG: Yes, two things there.
The first is: some statistical analysis was done on promoted clubs to the EPL, who then were subsequently relegated in subsequent seasons and that that instance is very high. So, it is very difficult when you are an aspiring or aspirational team to actually stay once you've actually reached the holy grail for a number of different reasons. Usually, it's because you're trying to spend a decent amount of money. It's like the Moneyball theory to a degree, which is there's a huge correlation between usually money spent on employment wages and where you finish in the league, it tends to be.
Ultimately the case with relegation and promotion is that, at least in the medium term, you have probably a group of six to eight clubs in the EPL who unless something disastrous happens are not going to be relegated from the league. Every year you have 12 or so which have the possibility of being relegated. In the same way, you know, if you're looking at owning a club in the lower divisions to try and get up into the EPL, there's some amazing stats out there, which is, you know, not only is it very difficult to get into the EPL but you have to spend a lot of money getting there.The trend over the last five years for losses in the league below the EPL, the Championship has gone from around 150 million pounds per season, cumulative, to over 700 million pounds, cumulative. And this is another thing we talked about, cost control, which is a big thing in the EPL and the Championship at the moment, but the Championship i.e., the division below is an accumulate to speculate league, which is - great riches to be had, you've got to spend your way to get out of that league. Once you're there it's extremely difficult to stay there. So, you are in a bit of a virtuous circle, but it's actually the exact opposite. It's a very difficult circle to be able to continue to feed.
Jodi Balsam: So, let's talk about the player side of the picture for a minute because what we are familiar with here in the United States, in most professional leagues, is unionised players who negotiate collectively for a method of sharing overall league revenues. There are limited opportunities to move among teams, highly regulated by the collective bargaining agreement. In comparison, international football just strikes me as a free for all and the whole process of transferring from one team to another and the way it is dictated by certain norms which seem to undercut player's autonomy. It's just fascinating to me. Can you tell us a little bit more about how most player mobility works in international football?
DG: Where to start is always the question. I mean, the significant differences are that in the UK and across Europe, and a number of non-European leagues, it is possible for a player to force a move to another club, whilst he is under a long-term contract. It is also the opposite which is true where clubs can effectively force a player who is under a long-term contract to leave by imposing potential sporting sanctions, which is if you don't want to move, we're not going to play you, you're not going to earn enough money, and therefore you're going to be frozen out.
Jodi Balsam: Does anyone ever complain about the equipment as a basis for moving? Antonio Brown?
DG: Yes, so in a similar way that the US market works in terms of agents is almost amplified in the UK and Europe. So, the difference is transfer fee, really, which is relatively unheard of outside European, and some of South American soccer/football, but is very, very common here.
So, you know, we had transfers over the summer where there's a player called Harry Maguire, who's a centre back, who was centre back for Leicester, who, three years ago moved for less than, I think it was £20 million, from a local team called Hull to Leicester. Then subsequently, two years on has moved to Manchester United - who used to be very good but aren't that great anymore - for over £18million. Now, the reason I say that is that because effectively, contractually, what is happening is both parties are constrained, consensually agreeing to United to terminate an employment contract on a certain term and that term is effectively the amount that that termination cost is due, which is the transfer fee.
Now, ultimately, then what tends to happen as well is whilst some clubs aren't necessarily profitable in particular leagues, a lot of very switched on owners using lots of different matrices, and metrics, and data will actually think about buying clubs, not because of the capital appreciation that they can actually have for the club if they managed to get up into higher leagues, but actually having a very good use and transfer policy and actually owning a club effectively to speculate on future transfer fees. There are a lot of clubs that have done that extremely well over the years Tottenham Hotspur being one, Liverpool, my team, actually doing very well over two particular transfers lately, which meant they've been able to reinvest. So, the anomaly is very much transfer fee is which is a strange phenomenon outside of us, I guess, but it's very much par for the course across European and other international physics.
Jodi Balsam: So, I want to switch gears here because I know a large part of what you do is broadcasting related counselling and deals and, in your book, Done Deal, you mentioned how - you talked about the proliferation of media streams, and how that's going to affect the broadcast value in the future. Can you tell us a little bit more about that?
DG: I actually see the US usually about 2-4 years ahead, in most things, especially sports related, and we've definitely seen that on the US side with a number of the large practices, MLB being one I think effectively going OTT over 3 or 4 years ago, over the top I mean in terms of internet enabled platforms, and then subscribers being able to subscribe to a quality product free of latency, not worrying about pirated or Reddit links or streams [SS1] and then there being potential legal issues as a result of that. And what does tend to happen, just very briefly, by way of structuring the UK market is there are two very big pay TV platforms usually through, tends to be not OTT but through satellite decoders, basically to a degree, although it's now going OTT. One is called Sky and the other is called BT, British Telecom. Sky has been the incumbent since 1992, more or less having all EPL rights on a live exclusive basis. So, if you want to watch EPL matches in the UK, you have to subscribe to Sky. Then three cycles ago, British Telecom, which was historically the privatised national telecoms provider, who are the number one broadband provider, entered the space primarily because when Sky had this Pay TV offering, they also bundled in broadband with it for free and what happened is BT saw this broadband provision, they were churning a lot of customers over to Sky so they needed effectively to have a reciprocal product that they could effectively say well, we can have this quad play offering, which is Pay TV, broadband phone line, mobile, etc.
Fast forward a little bit and you have this competition between BT and Sky in the UK, at least for live and exclusive rights. More recently, Amazon has come in. Amazon Prime has actually bought a particular package as well in the UK market. So, for the first time, there's actually three - you have to subscribe to three separate providers in order to watch a comprehensive set of fixtures in the UK, which is in my mind, I’m from an antitrust and competition perspective, I don't know how the competition regulators can see that as enhancing consumer welfare, but that's again for another day.
One of the really interesting things that I have said for, I say interesting, I can’t really say it’s interesting if I’ve said it, but one of the things I think is coming is the Premier League’s own platform channel. I don't think will happen in the UK soon because you don't kill the goose that lays the golden egg…
Jodi Balsam: Although the leagues here have managed to develop their own channels very successfully without…
DG: …cannibalising, to a degree.
I mean, I think ultimately, and this is the thing I wish - I only pay 60 pounds a month and broadband and all the other things, to watch two games of EPL a week. So, if I didn't, even if they charged me half of that, 30 pounds a month to be able to have an OTT platform that enables me to watch all the games and Sky, then BT’s business model goes out the window. Then suddenly you're offering a direct-to-consumer offering which is very different than going through the broadcaster and guaranteeing a certain amount of money. But the point is that that amount of money is huge. So, Sky and BT paid over 4 billion pounds over three years just for those rights and internationally the international broadcasters bid over that, actually four and a half billion. So, the market for live EPL routes across the world being over 9 billion pounds over three years is pretty substantial.
Jodi Balsam: I wonder if you add up all of the EPL distribution deals on an annual basis. Is it more than the NFL gets? Yeah, so the NFL’s numbers are roughly $7-8 billion a year. It's not near that yet? That's the…
DG: … 8/9 is the global number. So, we’re nowhere near that…
Jodi Balsam: …but I see it coming at least based on my circle of acquaintances who are now getting up at 7:30 in the morning on Saturdays to watch EPL games. Can we do anything about that? Can you guys play in the middle of the night so we could watch them at a reasonable time?
DG: Well, you joke about that. In the Spanish league, in La Liga, they've actually had certain kick-off times specifically for Asian markets, for example. So, you know, and the truth is that I don't know if it's the same for NFL or NBA or other particular leagues, but in the UK now because we're - really ridiculous rule, I think we'll talk about that in just one second - the weekend of matches tends to be so spread out now across lots of different times. So traditionally, when I was growing up in the 80s, you know, almost every game on a Saturday kicked off at 3pm, on a Saturday afternoon. That was it. The traditional landscape was that. If I could compare and contrast that to now, what we have is over the weekend: we have a 7pm Friday game; we have a 12:30pm Saturday game - this is all the televised games - we have a 5:30pm Saturday game; we sometimes have a 7 or 8 o'clock (evening) Saturday game; we sometimes have a 2 o'clock and 4 o'clock (afternoon) Sunday game; we sometimes have a 7 o'clock (evening) Monday game and that is all because, you know, if you've got this property i.e. what the broadcasters have, they don't want all the games being shown at the same time. They need those eyeballs across a whole range and a whole weekend in order to maximise everything they need to maximise.
Jodi Balsam: Well, that's why they need their own network, right? EPL red zone, right? It's an NFL programme, NFL Network programme. So, technology is clearly changing the sports industry and I wonder if in your experience, the wearable technology developments are having an impact yet, and you know what I'm talking about; where you can biometrically - you can collect biometric data from players through advanced means of accessing their vital signs, like ingestibles even and sensors it's …
DG: It’s the new horizon without question in my mind, loads of things are. So, usually, and I know it’s across US sport majorly, but in the past three or four years, you more or less see rugby players, cricket players and footballers specifically wearing the GPS sports bras underneath all of their tops, where they have the device - in between the shoulder blades tends to be the accepted place that it sets - and it's more or less to measure lots of different data points. For rugby, it can be load and impact, for football one of the major really interesting stats is particular types of sprint speeds over short distances. I know in Aussie rules football, for example, you can measure heartbeat. So, what they've actually had, which I wouldn't be too keen on is the truth, is when they're taking certain kicks, the kicker is on screen. It tells you how fast their heart is beating, to see how well they are coping with the particular situation - just crazy.
Jodi Balsam: And are they integrating that with the betting, live data?
DG: Well, why not? You joke, I’m not joking.
So, the truth now is that especially - what happened a couple of years ago in UEFA competitions, which are the European competitions, and in the EPL as well, they actually have real time live data streams straight to the iPad at the side of the bench in order to work out whether this player has done X amount of sprints which means his capacity and stamina has decreased by 33%, or this player is injured or hasn't been playing to his level based on 17 other comparables or previous games, etc, etc. So, as well as using, you know, coaches and data teams using their eyes to be able to work out particular things on the pitch, they're very much using data in lots of different ways.
And the other interesting element - just very briefly as well - is when transfers are happening. So, if for example if a club has 3 or 4 years-worth of training and match data, there is a real question mark now over whether when a transfer is happening, the buying club can ask for that data in order to use it for certain particular reasons. Has he had injuries? How has he been playing particularly in the games? How is his training load been over a particular period of time? How many days has he missed, etc., etc. And there's really big consent issues there because what happens if the player says, ‘no, you can't have my data because it might show things that I don't want it to potentially see.’ The second thing might actually be that the two different clubs might have different data providers, and that data might not be as interoperable as it otherwise would be and therefore, does that cause problems to be able to use across. So there's two big providers, Catapults and Stats are the main two, but I'm positive that their data doesn't interoperate pretty nicely for the exact reason that they want to retain that proprietary information.
Jodi Balsam: So, in the United States, the issue of wearable technology and the effect on players careers is probably going to be resolved through collective bargaining in all the major professional leagues. The players unions are taking a pretty hard line that when you get to the skin and below that is property owned by the player, right, not by the club, and that they need permission and consent, and players should be benefiting to the extent it results in new revenue streams. But again, you know, this is probably an inept metaphor, international football just strikes me as the Wild West, right? How is this going to be regulated, is the government getting involved or the football organisations getting involved?
DG: GDPR is probably the answer. So, data protection regulations, which might be an issue for England, UK, if we're no longer in the EU with Brexit related things. Don't get me started on Brexit.
Jodi Balsam: That was my next question.
DG: You’re on a slippery slope when you start there.
We have done some advice on this now and it will only grow because of all of those things.
So, the question is, who owns that data?
Now there's a query about a whole range of operators in that space. Is it the actual technology provider that owns that data? Or are they only providing a licence for the club to actually then retain that data? Query whether the club retains that data, pre, post or otherwise - probably pre, current and post simply because they are their employee during a particular period of time? And then query whether, actually, all of that is invalid because the player hasn't necessarily given their correct opt in consent to be able to provide that data, not knowing what that data is going to be used for even post that employee being employed at that club.
Jodi Balsam: So yeah, we're probably not going to solve that problem today. So, let's move on to the bigger problem, which we probably also won't solve, which is Brexit and how is Brexit going to affect, I mean, there are a lot of industries that will be affected by Brexit, but we're here to discuss sports. So, how's it going to affect international soccer?
DG: As you can probably tell from my sighing, I am very much a Remainer or ‘Ra-moaner’ as I'm called quite a lot. I'm an EU competition lawyer at heart, that's where I started off at Jones Day and then Fieldfisher, so I am - I feel - more sometimes akin to my European colleagues rather than my British ones is the truth. That's a different story.
Two things that it will impact quite considerably, they tend to be around free movement. So, in the EU, the incredible benefit of the European Union is the ability for a European citizen to be able to work in any EU member state. So, you can go with your EU, whichever national passport, to another country and start working anywhere without any more documentation required than that. Post Brexit, if the idea of Brexit is that regardless of its no deal or deal, we won't be – the UK won't be in the European Union anymore, then free movement comes to an end. The default position will be that any non-UK workers or players will require a type of work permit to be able to play in the UK. That's the default position. What that means in practice is - I don't know it is also the truth because just to be said, sport isn't the most important. My experience from the Home Office, which is the government agency that more or less puts together all the different criteria for foreigners working in the UK, is this isn't even number 50 on the list, never mind anything else. There are a lot more significant industries that are having much more considerable issues than sport and football. But the ultimate issue will be movement, and we do quite a lot of like immigration advice for non-EU workers like a South American for example, coming into the UK there are set criteria. So, he has to play, or she has to play a certain number of national team games or has to be at the highest level in order for a huge transfer fee to be paid and a big salary to be paid i.e., to show that they are effectively of such talented nature that that team couldn't get it from anywhere else in the world. So those criteria as a default will probably apply to anyone non-UK in the short term should we leave, which in turn then from a transfer fee perspective, makes UK players extremely valuable.
So, there are all of these crazy things going on at the moment in the UK where we don't know when we're – if we’re - leaving the EU on the 31st. Halloween. That would be a lovely Halloween present for everybody. Which would mean then for the January transfer window, which is one of the registration periods where players can move, whether that would actually be the first period where it would become very difficult for EU players to move to the UK now. Sorry to go on about this a tiny bit more because I’ve given quite a lot of advice on it is what no one seems to understand - one of the main reasons for Brexit, which I disagree with, is we need to stem immigration. It's not a UK problem. I know. It's very much, sort of - I think Trump and Boris on either side of the Atlantic are having quite a lot of fireside chats on this right now, but one of the things post Brexit that the government has already implemented to put in place when Brexit happens is what's called temporary leave to remain, and what that effectively means is regardless of if you are an EU citizen, if you're an EU citizen, you automatically are enabled to come into the UK and work for three years as a default. So, for everybody saying Brexit will be brilliant because, actually, we need to stop all these damn immigrants coming in, working, paying taxe,s increasing our economy's value and for the services being provided. They actually think that what will end up happening is all of the jobs that no one else wants to do us plucky Brits will end up doing. The truth is that all of these foreigners still will be able to come into the country and still work, which almost defeats one of the big purposes of why people voted for Brexit in the first place.
There we go.
Jodi Balsam: Well, so I'm going to open up the floor for questions in a minute, but I had one more question about the life of an agent, or intermediary as you call it an international football, which is - okay, you're working really hard but it's really exciting. How's the financial side of the opportunity? So here in the US, player agents in the major professional sports are actually pretty heavily regulated by player unions and there are a lot of obstacles to even becoming a certified player agent who's allowed to represent one of our professional athletes in the major team sports, and then the union further regulates how much compensation they can earn. It's gotten to the point where in American football at least, agents are complaining that you can no longer make a living unless you're one of the top agents in a conglomerate agency. Is thathow the opportunity’slooking in the UK?
DG: We come back to my very first interaction with you, which is basically on the article that you wrote because I was like whoa, this is so different to the UK setup and the truth is that in the UK and across the world, because of the way that FIFA, which is the world football governing body, what they did about three years ago, is they more or less said we are deregulating the way that we regulate agents across the world. So, we are putting together some minimum standards - which (*inaudible*) minimum would be an understatement - and all effectively agents need to do is sign a declaration of good character which basically means as long as you haven't been to jail or been insolvent you can become an agent. What had happened pre 2015 as well, was that all agents had to had to pass an agent's exam, intermediary exam, and the pass rate for that was actually only about 20%. So, post 2015 onwards, every man and his dog in the UK has become an agent, maybe because their cousin, uncle, brother, sisters, step-sister, whoever it might be, might be a footballer, and they think they can potentially negotiate a multimillion pound deal, which is difficult for the best agents in the world, never mind novices coming in because they think they know how to do a deal unfortunately.
So, in terms of regulation, the truth is, it is terribly regulated at the moment and the problem that I have a lot of the time is agents who don't know the regulations have signed the Declaration and then are doing a deal will come to me and say I need some help because I didn't know that I had to do it this way, or this was going to be the case, I didn't know commission was going to be paid in this fashion or I didn't know I couldn't speak to the club before I spoke to the whatever else it may be because there's detailed regulations they just haven't read them and don't understand them.
But to make things more complicated, the way actually agents get paid in the UK and across Europe is completely backwards to the way that agents are paid in the US. So, you'd think that a player pays his agent, I mean, it sounds very straightforward is the truth. But in the UK, the exact opposite happens. In order to incentivize the player to come to the club - I'll say this slowly because it took me about six times when I started out in the industry to understand that this actually was the case - what ends up happening is that the club pays the agent on the player's behalf as a benefit in kind. To say that again - club pays the agent, rather than the player paying his agent. What happens in that case, which again, is another bone of contention is that just, like I don't know how your tax benefit systems work in the US, for example. But what happens then is that that is deemed a benefit in kind payment to the player. So even though the player isn't paying anything to his agent, that is a benefit in kind payment which means you still have to pay 47% of that commission to the tax authorities. And without question, five or six times a year, I have to deal with a player who has come in and said I've got this tax bill for 500,000 pounds and I thought that the club was paying my agent, and why do I have this bill? And it's because the agent never told the player that even though he was being paid by the club there is still a tax bill to pay as a result.
Jodi Balsam: So, the agent’s response is well you would have had to pay me a million pounds instead the club paid the million pounds and you're only paying the tax on that.
DG: You read my book. But yeah, you're totally right.
So, it's an expectation management thing, which is, you either pay me 100% Or you pay me 47%. So, what I'd suggest, and effectively then what can happen sometimes in contract negotiations with the bigger players is you can try and negotiate a gross up bonus, which is in the two weeks before that payment tax payment is due the club will pay the player the exact amount in gross terms that would then be netted against his taxable deduction in order to then pay the tax authorities, so he doesn't quite feel it, but that's not a usual.
Jodi Balsam: I remember the first time I heard about this financial arrangement. My reaction was, well, in principle agency law in the United States there's a judiciary duty and what you describe could potentially raise conflict of interest issues and how could this be legit, but it's how it has …
DG: … it does, it does. There's a de facto waiver that the player signs. The truth is whilst it is in the player's tax interest to sign, he will sign it.
Q & A
Jodi Balsam: So, can I hear from the audience any questions for our guests today?
Somebody must be it's in the back
Q: Inaudible
DG: Yes. Exactly. So, and this goes back to actually the financial state of play in the UK where there are rules governing cost controls in different leagues. So, in the Premier League, there's a thing called the Sustainability and Profitability Regulations, in UEFA competitions, which is the Champions League, there is the Financial Fair Play Regulations. In the lower leagues, which Bury is in the lower league and got promoted to League One I think they were for this season, they had what's called SCMP regulations, which was a lesser control version of others. So, Bury were a club that actually went out of business last week, which is relatively unheard of in English football history on the whole because of serial mismanagement, and a lot of people have said that actually, it was the league's fault for not being able to control their spiralling costs over a period of time. A lot of other people have said they're actually mismanaged by terrible owners over probably about four or five years, and they couldn't control those sorts of stemming debts. The truth is, there are different phases of how you actually become an owner in the first place. One's called the owners and directors test, which again is similar to the agent’s declaration, which as long as you haven’t been a criminal or haven't been insolvent, on the whole, you can own a team.
What is different now I've seen in certain US sports, if a team is in trouble, or even if an owner makes some racist remarks, for example, the league has the ability to be able to throw that owner out of the league or take particular measures in order to stabilise the club. It's not the case in the UK. So, what ended up happening at the beginning of this season when Bury owners couldn't demonstrate that they had the financial means to continue until the end of the football season, the league then suspended them from football competition. They said until you show us your future financial information, you're not playing any matches, which is actually pretty unheard of as well. So, they kept on postponing matches and giving the victories to the other teams, but they said this can only go on for so long. So, as they couldn't provide the future financial information they kept on haemorrhaging money and in the end, the league was only left with one decision which is unless you comply with our deadline by a certain deadline you are expelled, and your membership will basically be revoked. And that's unfortunately what happened.
Jodi Balsam: Crazy, right?
Q:
Audience: *muffled audio * … been legal in the UK for a while and I know for example, talking about there's common horse betting or things like that. A lot of things that are sort of touch points. What are your thoughts from the UK perspective on the legalisation in the United States and what obstacles to overcome sort of?
DG: Sounds like a good thesis question.
Executive summary is I'm uncomfortable with sports betting in the UK and I'm uncomfortable with the ubiquity of it if that's the right way of saying it. It’s everywhere. It is on shirt sponsors, the majority of EPL shirt sponsors are betting gambling companies. They're all over the billboards. They are all over broadcasting, right before game, during halftime, after the game, especially as well for particular things in game etc.
There were reports at the beginning of the season that actually the gambling and betting companies were going to voluntarily not advertise in broadcast before games in order to try and reduce the amount of bets because there is a gambling epidemic I think to some degree in the UK, where there’s a huge number of real controversial issues going on with people betting too much money, not being able to fit to be sustainable. But also you'll see lots of adverts. If you ever come to the UK, there are lots of betting adverts, but at the end it says please gamble responsibly and there is a lot more awareness of those type of issues. The flip side of that also by the way, is when Jodi and I were speaking a few months ago, there's an inherent issue with the gambling points as well, which is footballers, without realising that they are in breach of their own gambling regulations because they can't gamble on matches, are actually betting on matches as well and football games. Some players, including an ex-Liverpool player recently got into trouble with betting on matches, not necessarily in his competition, but in other leagues around the world or where he may have had a potential input in with this particular player. He actually told his brother to bet on that he was about to be transferred to another team and told him to bet on that event actually happening, which obviously is just the equivalent of insider trading really more than anything else.
Other questions? Yes, in the back.
Audience: So, I know we have to wrap up soon. So hopefully we can stick around for questions. But a lot of our students are first year students so they're just a couple of weeks aT law school. Maybe you can give them some advice on how to get into the industry and kind of how you got to where you are now.
Jodi Balsam: So, we're going to make this our last question because we are getting to class time.
DG: I'm more than happy to stick around afterwards if anyone's around, I’ll be able to talk more.
The short answer is I've always been a massive football soccer fan. So, I have an inbuilt weakness for football and for football knowledge is the truth. So back in the day, in the 80s where there was no internet or anything, I would just rely on my local newspaper for half a paragraph worth of news about a particular thing, but as the proliferation of more books and more financial reporting and soccer and football more generally happened I just lapped it up.
So really my thing firstly was how do I find out more about the industry full stop. And the way that I ended up finding about the industry was through websites like LawInSport, Jodi knows the founder Sean Cottrell very well. When I started out at Jones Day in London, I tried to put a plan in place, which was I just tried to read two or three articles a week, specifically on sports stuff.
I then also, at the same time, tried to do as much networking as possible, which was go to conferences, speak to people who have written interesting articles in the subject and generally just try and find that balance between networking and building up real sector expertise because then what happens is, you do get a tonne of people and I try and explain the easy way to them that says --, ‘Daniel, you know, I want to be a football lawyer. How do you go about being a football lawyer because I love football!’ And I say, ‘okay, tell me about the five most significant legal issues in football right now’, and each of them, the truth is maybe one out of five, will go, ‘actually I think this, this and this’. The other four will say, ‘Oh, I don't know, but I've still got a real big passion for football’. The truth and the distinction there is use that passion for whichever sector it is that you want to work in, sport, or entertainment, or media, or music or whatever. And really delve into the topics within that subject, subcategory. So, if it's the top five most interesting cases that have happened in the last five years, read them; if it's the commentary on those cases, read them; if there's a new something which comes out that you actually think might be useful read them because then what happens when you come across industry professionals who don't have as much time as you to be able to read all of these different things, you actually can sometimes add value to their knowledge and what happens then is you're able then to talk with real authority, as much as you're able to, on very important topics because you've had the time to deep dive into those particular areas.
If you do that, not for one day, not for a week, not for a month, not for a year, not for 10 years - I have more or less been a sports lawyer for about seven years now out of a career of 16 years. I was an anti-trust lawyer for a long time and then moved into sports, more into sports as I am now. You know, it is the long haul that's all I can say. There is no magic trick, which actually should give you all confidence is the truth. There's no magic trick and magic formula. It's like dedication, year after year, doing the same things, putting the same processes in place because actually what you'll hear from lots of sports lawyers or music lawyers or whatever it is and like how did you get there? It's like, I did it because I loved it and I love the process. Not the outcome. And the process is doing all of the things to get you there. The outcome is what you see here with me, but you don't want to see me as the guy eight years ago that was bloody reading another article at two o'clock in the morning when I should be in bed, and my wife telling me off because I should be in bed and then I'm annoying and grumpy in the morning because I haven't had enough sleep. But that's ultimately the truth. It's like long term dedication to the cause and there's nothing more than that really. It's like how do you keep that focus for a decent period of time to start getting you along the path?
Jodi Balsam: Well, I love being vindicated in the advice I give students which I call - I sum up what you've just said as ‘current awareness’, stay fluent in the area in which you're interested in practising, know more than the people around you.
So meanwhile, thank you for sharing your knowledge with us. Thank you for being here today.
Katherine (president): So, we're gonna wrap up. I wish we had more time. If you guys are interested in this topic, as we mentioned, Daniel wrote ‘Done Deal’. There's a lot more to talk about. Please check it out on Amazon or in the bookstore. Thank you again to Daniel and Professor Balsam for being here. And also, thanks to Jake and Alana for putting this event together.