GUIDE TO FOOTBALL CONTRACTS
Hi, I'm Daniel.
The boring part is I'm a lawyer at a law firm, Sheridans. The exciting part is I do football for my living, which is actually quite cool.
Going back very briefly to all the times I used to go to Anfield as a Liverpool fan with Hal back in the day, as all you guys are, I'm sure, football fans. The thing that I always did when I was a six-year-old, and still do as a 37-year-old, is talk about football all day long. If it's in the office, or if it's after on the WhatsApp chat, because he (Hal) gets really annoying on WhatsApp if the result is good or bad, but ultimately, and the truth is with a lot of the work that I've done, from a very early age, what I wanted to do was talk about football. I've been lucky enough, and you'll hopefully see the career journey to a degree of why and how I managed to convert myself from a regulations lawyer, which doesn't sound as sexy, to a football lawyer, which sounds a bit sexy, but all it is a regulations lawyer in football.
What I wanted to talk about, firstly, is a little bit about my journey, but as importantly, the type of stuff that I do day to day and the very nice impact that my book, which has just come out recently, has had on that.
Now apart from my mum being very excited about the book being published, it's thankfully been quite well received so far. What I want to try and talk about in a little bit of detail are some of the myths that I try and dispel in the book. Usually, the first thing that most of my friends and even my family still ask me is ‘What do you do as a football lawyer?’. So, what is it that you do, that pays the bills, that's cool enough to say that you're a football lawyer and I'm working in the football industry.
So very briefly it is as follows.
On a day-to-day basis, I tend to work with players and agents. So, that is what I do. That tends, traditionally, to be behind a computer but very often is on WhatsApp, is on my phone, is on voice messages that come to me sometimes at four o'clock in the morning. So, I'll give you one brief example of what happened to me the day before transfer deadline day. So, Wednesday evening. I won’t obviously disclose confidential stuff, but just to give you a flavour of what tends to happen very often is a message will come to me from a client, that may be a club, or a player or an agent. Usually, it's an agent or a club saying, ‘Right, this is happening. This deal’s happening on this particular day, we need you to have a ‘quick look’ through the documents’, is always what they say. That happened at 1:45am on Thursday morning, ‘Dan, there's a deal that's happening. You need to get on a train somewhere. You to get to the meeting for lunchtime, try and conclude the deal in the afternoon’ and then hopefully everything will be done before deadline day concludes, and that type of stuff happens very regularly.
The other cool element, that happens quite regularly, is when I tend to know information that nobody else knows, which obviously is very cool, but I need to be extremely careful about telling anybody this especially because my family are the biggest blabbermouths of all time. It happened because I did a Liverpool transfer over the summer; I knew a lot of cool stuff that was going on and couldn't tell anybody, and the brilliant thing about it also was that he was asking me about particular deals that were going on. I couldn't even deny the existence of what was going on. So, for about a week and a half, I couldn't even reply to them. So, he thought I was just being annoying not replying to the general rumour mill that was going on, generally, but it was actually because one of the players that I was working with was going to be signing a deal with Liverpool. I couldn't even tell my dad, obviously, which is very important because he obviously wants to know the goss and what's going on. Needless to say, as soon as the deal happened, I could then tell my dad and the rest of my family, who had no idea what was going on, but I still couldn't tell them anything interesting about what happened in the deal because obviously it's confidential too.
So, the type of stuff that I tend to do is, unfortunately - the glamorous side is great, you're working with so many fantastic players with great clubs; they're spending lots of money - it is without doubt the most terribly stressful hours of my life, on a regular basis, when the window is cropping up, or finishing, or concluding, because you're managing risk. In one sense, you want to make sure that the deal completes because you don't want to be to blame if it has anything to do with you. You're still trying to communicate quite difficult legal concepts to your clients to explain what the risk is of particular things happening, and at the same time you're trying to make sure that you are being proactive, you're thinking about solutions and things generally are going to plan, and you want to look unruffled; looking and ruffled and feeling unruffled are two quite different things at times.
So, that's just a very brief way of background as to what I do day to day.
So, about me, we've had the intro. This is where it all began is the truth (Anfield). So, my seat was just above the director’s box about there, and as you can imagine this big pole got in the way of the goal, which is a problem. So, me and my brother had to alternate games, had to swap seats, so one of us could see the main goal, and one of us couldn't, for a particular game, which worked out well. Now this is the old stadium, so it's now a cantilever stadium, so it's slightly better.
How did I get involved in football?
So very briefly, what happened in law school, at university, was that I asked my tutor, literally off the cuff, can I write about the Bosman ruling? The Bosman ruling was, Jean-Marc Bosman back in the day, in 1990 ,wasn't allowed to transfer to a new club after the end of his contract, after it expired, and that started a very big landmark case, which five years later resulted in what's called the free movement of players across Europe, which meant that after a player's contract had finished, they could move on a free transfer and the selling club couldn't didn't have to demand and couldn't demand that transfer fee. So, I thought what a brilliant thing to write about in third year uni which was the Bosmun Ruling, the transfer system changing and how things would work, and they let me write about it, which is even better.
After that, I just tried to persuade my dad for me to spend an extra year at uni, which he was happy for me to do if I did something interesting. I did a master's in football broadcasting rights. It didn't sound as interesting because actually underpinning it was competition law, which obviously is not quite as sexy as football law, but at the same time meant that I could spend the best part of about 9 or 10 months writing about how broadcasting rights are sold across Europe, which is cool, and it meant that I could get out of the real world for one more year before I had to start working.
As a result of that master's degree, I had little bit of spare time at the end which meant that my tutor said to me, ‘instead of just slacking off, why don't you write in a couple of law journals about the things that you've written about?’. Great okay, I'll do that. I didn't think anything would happen, but in a fantastic way they were happy to publish something about the football industry which was broadcasting rights and about club ownership. The Entertainment Law Review at the time published those two articles in a few month spells, but I realised afterwards that it was great for my ego, fantastic getting in The Entertainment Sports Journal, great to have the publicity, fantastic to show a few people and have it on my CV, but the truth was, I don't mean to speak badly against The Entertainment Law Review, maybe only about eight people read it. You'll soon find out from a lot of the talks, or rather a little bit the talk that I have given, is what I realised, as much as it was really good for the ego, because no one was reading it I actually needed to increase my profile, to a degree. The way that I did that, I met my wife, Holly in 2007, and quite quickly we talked about all the stuff that I could do in my job and wanted to do in my job. She then said to me, ‘Well, hold on a second. Why are you writing five or 6000 words for the Entertainment Law Journal, when you could be writing 500 words on your own blog, free, that everybody could be able to access and read accordingly?’ And I thought, you know, that’s actually a pretty good idea.
So, what I ended up doing was not necessarily not writing in law journals overall, but ultimately deciding to start my own website, which is danielgeey.com, and then effectively start writing small pieces about trying to demystify the football industry to a degree, even though at the time, I wasn't doing a huge amount of work in football. I was doing small bits that was hopefully increasing, but I wasn't doing huge amounts of that time. It came at a very, fruitful is the wrong word, but a really interesting time in the football industry. There was financial fair play, which I'll talk about in some detail, there was third party ownership, which was a big thing at the time. Luis Suarez came to the country and obviously he had a lot of issues with racism, with biting, with suspensions. The John Terry matter came up as well. Nicolas Anelka happened at the same time. So, what was actually happening was, which is quite cool, there were lots of cases and lots of issues that the public, the wider fans, really wanted to know about. I had a little bit more time before kids and marriage, so was able to read these cases, try and explain what they meant for the average fan, and try and get beyond the ‘Luis Suarez is a racist’ or ‘it's a three-match ban for fouling somebody’, or actually if you look at the detail of a particular case, it means that or it means this.
What I developed, which was great, was quite a strong follower base on Twitter which was a great amplifier of my blogs. To be able to then put forward easily accessible, easily digestible, 5/6/7-hundred-word blogs that people are interested in. Then what happened as a result of that was that journalists, Sky Sports, all the types of broadcast media, were then interested in having me on their shows, which was great. That in itself then drove the profile that I was able to drive for myself and my firm, I was able then to refine my message that I wanted to get across to people, and in turn led me then to that (Done Deal), which was from blog to book.
So, I used to give a lot of comments and commentary to people in the football industry. Someone, a journalist, said, ‘Why don't you think about writing a book on the topic?’ And I said, ‘Oh, great idea. I don't think anyone will actually think be interested in it.’ He introduced me to an agent, David Luxton, who is, bizarrely, my agent which is quite strange to say, but nice as well. He is an effective miracle worker that got my proposal that I put to him out to five or six different publishers. There's quite a long process in that, to get the all-clear, to then get the deal to write the book. Then more or less three years later from starting, to get the proposal, to finishing the book we are there with Done Deal. So, that is the book that came out a few weeks ago, that so far has done really well. You know, I don't know how many copies mum was bought in order to skew the Amazon algorithm accordingly. But in any event, everyone's happy at the moment in the Geey household which is nice. To the extent that when I told my daughters that I had a book being published, my oldest one is six and my youngest one, Livvy, is three and a half, I told them I was writing a book. The teacher then at the next teachers meeting, they came in and said, ‘Oh, it's fantastic that you're that you're involved in the book industry. I didn't realise that you were a librarian.’ Because Izzy had told her that I'd become a librarian because I'd written a book. So, that's my new pastime as well as being an author and a lawyer.
So, book out.
What I wanted to share with everybody for the next 15-20 minutes, hopefully this works, is just a few insights into the world of football which I see on a daily basis, and what is covered and uncovered in the book, but just talking about particular things. So, you'll see at the top transfer fees, shirt sales, agents, boots deals, appearances, and image rights; some of the more interesting elements that I think, and hope, will be of value. Please feel free to ask questions and to delve into some of the things I say. I think we're going to keep the questions, if possible, to the end, but just hold your questions because I'm always very keen on audience participation. So, the more you're able to ask, the better. I'm looking at Tom, please be careful about the questions because you probably know as much as me about some football stuff, so don't show me up too much please!
Okay, number 1.
A £35 million transfer actually isn't a £35 million transfer. Now I know it sounds slightly counterintuitive, but I promise I'll try and explain myself.
So, when you look at the back page of a story, and the back page of a newspaper, you'll see ‘player moves for £35 million’ and that's the fee, basically, that the club has paid for that player. Yes, that is the case but what I want to drill down to is the liability that the players, or rather the clubs, the buying club, has to incur for that player. Now, if we talk about just the transfer fee for a second; the transfer fee is effectively the amount that the buying club pays to the selling club. The buying club is obvious, but what isn't usually as obvious is how that is structured. So, in most deals that I've seen, I've come across, what happens is there's what's called a ‘fixed’ and a ‘contingent’ element to a transfer fee. The fixed bid being paid regardless of anything over a particular period of time, usually first, second and third anniversaries of the transfer, and the contingent being if certain bonuses are met, certain conditions are met, which mean bonuses are paid. So, if I give the £35 million example, it may be, I’ll try and do the math right, that £15 million is paid upfront at the time of the transfer, and then maybe on the first anniversary, £5 million is paid. Maybe on the second anniversary of the transfer another £5 million is paid. So that takes it to £25 million. It may be that for the next £10 million, in order to be paid, the buying club has to win the Champions League, or the buying club has to win the Premier League, for example, and if those performance measures aren't hit that extra £10 million will never be paid.
It gets a little bit more complicated than that because usually what has to happen is, as well as the club winning those trophies, the player has to appear in a certain amount of those games i.e., he has to contribute to that season's worth of success. Now, that's the first element. So, £35 million pounds doesn't usually mean £35 million, it actually could only mean £25 million and certain contingencies as a result. The other element which is not factored into any of that is the player's wages. Now, obviously, the player's wages are usually the biggest liability over the length of the deal. If a player signs a five-year deal, let's say for £200, 000 a week that could add over five years – I’ll just try and do the calculations - possibly £50 million worth of liability over and above the transfer fee that might only be £25 million. So, the point is when you see that headline at the back page of the newspaper saying, ‘£35 million transfer’, think first it might not be a £35 million transfer, but actually the main liability is the players wages. So, a £35 million transfer may actually be everything included, but over £100 million worth of liability that's taken into account. The other thing that needs to be taken into account is the agents fee, but we'll talk about that in just a second as well.
So, Myth number one a £35 million transfer isn't usually a £35 million transfer. It's a lot less but also a lot more.
Number two, I see this quite a lot as well.
Without fail Pogba, Zlatan, Mané, Liverpool, Salah, whoever else it may be, every time a big transfer happens the first thing that you will always see, Beckham back in the day, is ‘the clubs will recruit most of the transfer fee from the from the shirt sales that they will then make as a result of the transfer’. I can’t say categorically that this absolutely never ever happens, but I absolutely doubt that it ever happens for the following reason. So, I’ll try and give an example, and this is only from public information because Manchester United for example, are floated in the US. So, they have to provide certain information to investors on a quarterly basis. Anyway, it's reported that Ed Woodward states in some of those quarterly reports, and what is published, that Manchester United makes £75 million a year from their Adidas apparel deal. It makes £75 million pounds a year. That decreases if they don't get to the Champions League over a particular period of seasons but on the whole £75 million a year, after I think it's a 10-year deal. So, almost coming up to 1 billion pounds for a 10-year deal. £750 million pounds over 10 years. Now, what usually happens in these very, very big shirts deals is, effectively, those apparel companies are paying a very big advance for the right to be able to then exploit the brand and to be able to sell those shirts.
This isn't the Q&A part, but just very quickly, how many shirts do you think Manchester United sell on a yearly basis? Just very quickly, shout out.
Audience: 100,000.
Higher! I’m doing a Bruce Forsythe.
Audience: 15 million shirts?
That's quite a difference.
Audience: Fake or real shirts?
Well, that's another big question: fake or real shirts? Let's just say authentic shirts retailing for £50 a shirt.
Audience: 5 million.
Okay, so the last figures were from a season and a half ago that Manchester United on a yearly basis sold 2.9 million shirts, or rather Adidas sold, or whatever the manufacturer was, 2.9 million shirts. I'm not sure if that's more than a lot of people think or less than most people think. I get varying degrees of surprise either way. The point being that usually what will happen in those type of agreements is there will be this advance that is paid every year, but after that there may not be anything more paid, as a result, to the club by way of amounts. Usually there will be performance related amounts, but that only kicks in after a certain amount of shirt sales are made on a yearly basis. So, it may well be, and I don't know, that Adidas don't pay anything more to Manchester United, per year, over the £75 million mark that they do, and when I say pay what I mean is share in the revenue.
But let's say for example, that Manchester United and Adidas share some revenue after they hit 2 million shirt sales a year. Usually that share, that royalty, whatever you want to call, is probably only 10 or 20% of the overall additional amount. So, let's just, without wanting to confuse anyone with too much detail, say that Manchester United for every shirt sold over 2 million shirts maybe gets £10 pounds per shirt. So, you don't need to meet to do the maths very quickly for you to work out that one of the biggest clubs in the world are not making huge amounts of money from shirt sales over and above the amounts that they're getting from their apparel manufacturer straightaway.
Now, the other question to add into the mix on that is, something that no one's really done too much empirical evidence in, would an additional or marginal buyer, or marginal fan, buy an additional shirt with the new players name on, or were they already are going to buy that shirt with an existing player’s name on? Which also fits into the narrative that it doesn't mean that a new fan is going to be buying an absolutely new players shirt. It may be that they'll buy that shirt but we're going to buy it anyway regardless of which player it was going to be. So, second myth hopefully dispelled in a little bit of detail, which is whenever you read the headline of ‘shirt sales will make fortunes for the club’, usually, they won't.
I know the question of agents is always quite a topical issue, generally. The narrative of agents is that they don't do a great job for players or clubs, that they take too much money out of the game in terms of permissions and that their approach is ‘Wheeler-Dealer’ at best. I have a slightly vested interest in this. I work with a lot of agents, but the book hopefully you'll see as well, if you're able to read it, gives a slightly different narrative to the usual narrative which is agents are just bad guys doing bad things all the time, and nobody likes them at all. The difference with a lot of very good agents, they're extremely well networked, very diligent in what they do, and work incredibly hard in a very, very insecure industry. When I mean insecure industry, I mean they work very hard to get very good players on their books and probably at every other window another agent is trying to poach their player to say, ‘I can get you a better deal’ or ‘I can get that for you’, ‘I can do this for you better’. I'm not saying poor agents doing a terrible job on the breadline, but the vast majority of agents are not earning the huge sums that are reported in the media.
The point I’m trying to get to here is that there is an interesting narrative which works in the media, which is ‘look how much agents take out of the game’ and ‘look how much Clubs pay agents’. This is the thing that I think a lot of people maybe don't quite grasp in the same amount of detail that I've been able to, working in the industry for some time: players don't pay their agents. I just want that to sink in for a second because before I started the industry, it seemed quite a strange concept to me. It’s like if I'm a player, and Hal is my agent and Hal does a move for me to a new club, I thought that I would pay him because my contract is with him. I'll pay you a percentage of my earnings and that's the way that things work, generally. But the way that things tend to work, at least in the UK, and other countries, is in order to incentivize the player to move to their club the club pays the player’s agent. That make sense? Okay. That has controversy, because on the whole, that means that fans see their club paying agents, and they see the amounts that they pay agents and don't like the amounts that they pay agents. Where it can get a little bit tricky for the player, and I don't want to go into too much tax detail, because it's certainly not a tax talk and I don't want to get involved in that type of stuff as well, but the one thing that then becomes quite interesting - I've already heard someone's heard too much about tax - One thing that's important just to stress about that is that, that is seen as what's called a ‘taxable benefit’. The club paying the players agent is what's called a P11D benefit. It's like what medical insurance or a company car would be. So, even though the player isn't paying his agent, he has to pay tax on the club paying his agent and if that is one of the most important things that I actually see when a transfer happens, is that there's been so many times when the player 18 months on from a transfer will get a big tax bill from HMRC and then the player will say, ‘Well hold on a second. Why have I got a tax bill? The club has paid my agent on my behalf.’ And then if the agent hasn't done a great job, unfortunately the agent says, ‘Yeah, but there was still the tax bill to be paid on that.’
Usually what happens for very savvy agents when a transfer is happening, we see this more and more and I'm sure you guys will have heard of the similar equivalent, in the employment contract an agent will negotiate what's called a ‘Gross-Up clause’. A ‘Gross-Up clause’ is miraculous payment which comes one week before HMRC’s tax bill comes along, which means that then the player doesn't feel the money going out of his account, because it's more or less going straight to HMRC, which actually is a very clever thing for the agents to do, really, because otherwise, they will, and I've seen it time and time again, get into an awful lot of trouble with the player when the player has to basically pay half of the agent's fee in tax to the tax authorities at the right time. So, they're the type of things that you see day to day, but the point genuinely being is whenever it's feels counterintuitive, almost always, the player will never pay the agent and we'll talk about what the thing is in the future that's going on. I think that there’s a possibility that that may change with the new FIFA regulations that have been implemented.
Deals are complicated.
Okay, so just very briefly, and I'm always interested in doing - actually I’ve used a Google analytics tool for my website to be able to understand which are people's favourite blog posts, more or less, and what are the most views from. The blog that I did on boot sales, which is by far and away the blog that I've had my most views on in my entire history of writing blogs, and the reason why I think ,hopefully, it's hit an interesting point is most people think that a boot deal, i.e., when a player signs a deal, and it may be for goalkeepers with their goalie gloves as well, for their shin pads and their boots, but all they are paying for is the ability of the player when they go on the pitch to use their boots, and shin pads and maybe have a couple of appearances and some promotional stuff.
So, you've seen Messi last week at Pepsi, but he used his Adidas boots as the shoes for the promotional videos etc. So, it more or less means this: whenever I see a boot deal if it's with Puma, Adidas, Nike, New Balance, Under Armour, whoever else it may be almost every situation, it doesn't cover just boots.
So just a quick straw poll, who thinks a boot deal should cover headphones? Anybody?
The scope of a boot deal is vast and there's two particular caveats and carve outs I see quite a lot. One is with most manufacturers; they will try and carve out as much as possible into their scope that they can then exploit for the player to be able to use. So, headphones is a big one, shampoo and skincare is another big one. Any types of electrical goods is another one. Does anyone think Armani is a competitor of Puma? Apparently in some good deals it is. Not giving Puma as an example but the general point is that, if possible, what a brand is looking to try and do is to create the biggest scope as possible for a player not to be able to endorse anything else because it gives them ultimately a bigger window to be able to dress the player up in all of their gear, all the time. Also, the point worth mentioning as well is just if you've signed a Nike deal, for example, obviously it goes without saying that you shouldn't be going out wearing Adidas trainers, but ultimately the practical reality is that if you are signing a long term Nike deal, you're probably not going to be able to wear Adidas for the next five years at all and if you do, bear in mind, if you do wear any competitor and especially a direct competitor, it's pretty likely your deal is over, almost very likely your deal is over.
So that's the one thing on the brand alignment and scope points. The other bit that’s quite interesting, I think, also on boot deals is the amounts. So, the agent may say to the player, ‘Okay, fantastic. You're going to earn 500,000 euros a year for your deal’ and the player says ‘Great, great news. Great to hear.’ There's one annex at the back of most boot deal contracts, which always scares me whenever I see it, and the reason why it scares me to a degree is because it is a direct table which relates to the number of appearances that the player has to make on a yearly or seasonal basis. So what usually happens is the table if he's an international player, which the big players are, obviously, who are getting the bigger money, it will say you have to perform or appear in 80% of your club team matches and you have to appear in 70% of your international club matches and if you don't, the retainer, which is the overall amount, reduces by 40% sometimes bigger depending, and it depends on how you want to negotiate that. So, one of the important elements is for two things, one to try and negotiate hard on those points but secondly, to make sure the player is aware of that point.
Now, there's another question on all of that and I'll talk about the next slide in a second, but I want to just briefly mention it here, and this is obviously where lawyers get involved a lot more. What do you think the definition of an appearance is? Is it appearing in the matchday squad is it being on the pitch? Is it starting on the pitch? Is it ending on the pitch? Is it five minutes? Is it 10 minutes? Is it 20? That is one of the most important definitions in a contract that I will tend to deal with because ultimately, for a boot deal, if an appearance can simply be 10 minutes in a game, you can obviously imagine that it's very much easier to be able to get to that 70/80/90 whatever percent threshold in order to maintain your retainer amount in your boot deal. But most importantly in an employment contract setting, this is very, very, very strategically important for an agent and a player to know about, as you can imagine, but usually for two reasons. The first is when an agent is negotiating his players employment contract, there is much more consideration given to variable pay rather than fixed pay, as it has been in previous years. What I mean is, fixed is you will get 50,000 pounds regardless of if you play one minute, whether you're not even in the squad, and it doesn't matter whether you play or not, that's the fixed amount. The player always knows that he will get that amount regardless of how he plays or what he does. What a lot of the elite clubs are doing now is trying to reduce the fixed amount and increase the variable amount, which is if you play, and if you win, you'll get more than if you would have just had your 50 grand amount every month, every week, and a little bit extra. So, the incentive effectively is that if you think you're good enough to play in our first team, you should take a lower fixed amount and a higher variable amount, because we're good enough, which means you're going to appear and you're going to win, and therefore you'll be remunerated better than you otherwise would have done.
So, you can see obviously the point that I'm trying to get here which then becomes the point appearance becomes very, very important as a definition because the bonus element for the employment contract is appearance fee will give you a bonus. Now that as you can imagine then it's exactly all the points that you said. Does an appearance mean, it usually does a lot of instances, starting a Premier League match? That's what it can sometimes be and there can be caveats throughout. There is a different bonus for starting a Premier League match, to an FA Cup match, to a Champions League match, to a League Cup match, to a friendly match. That's how varied it can be, and it can be different win amounts for all of those competitions and sometimes they can be merged together. So, it's an appearance and win bonus in order to get the bonus. So obviously as you can get to now, an appearance and how that is defined is crucial as to whether a player may get the bonus or not. For an agent, he'll want to try and make sure that one minute on that pitch classifies as an appearance, whereas the club will want to make sure that it's a start in the first team squad for a particular game, which means it's harder obviously for the player to do that if he's injured, out of form whatever else it may be. The other elements of why an appearance becomes very important, is because sometimes in a contract there'll be a ratchet effect, and what that will be is after you've played in 20 games, 40 games, 60 games, 80 games, your salary will go up accordingly as well. So, it may be £50,000 that you get is fixed. If you play 20 games for us and appear in 20 games, you will then go up to £60,000 a week, and then £70,000 a week if you get to 40/60/80, and again, that's very important for how you define appearance. I've talked about appearances for way too long, but hopefully you can see why that becomes quite an important element for players and agents and clubs to understand.
Last bit about dispelling myths a little bit as well. So, I've just put the phrase out there which is ‘image rights deals are just another way to avoid tax’. I just want to briefly spend a few minutes talking about what an image rights deal is for players and then talk about why it's important in the current in the current environment.
So, if I just try and explain very briefly, traditionally, a player will only have one contract with his club. It will be an employment contract that will say, ‘you are employed by this club to play football’. Straightforward. With all of those clauses and all the things we talked about previously. Nowadays for a lot of the elite clubs for their elite players, they have a huge raft of partners and partnership agreements and endorsement deals that they can activate across the globe, which are very lucrative contracts. What clubs are realising is they are happy to, well not realising, what they want to do is control the activities of their players to a degree, so that they can activate those players for the club to be able to then activate its own partnership arrangements over a long-term basis. So, do spurs want to Harry Kane to be able to activate a Nike campaign for spurs? Yes, they do. Do Liverpool want Mo Salah to be able to activate a particular campaign for Standard Chartered? Obviously, they do. Within the standard contract there are default positions where players have to have X amount of appearances, but what is happening more and more with elite clubs is they are entering now into two separate deals with their players. One is the employment contract, but the second is the image rights contract, usually with a player’s company. What happens in this deal is the players company more or less promises to do two things, which has a real significant value to the club. One is it says for the provision of X amount of money ‘we’, the club, want to make sure that ‘you’, the player’s image rights company, make sure that the player appears in X amount of endorsement opportunities and partnership opportunities for the club's partners. That make sense? Guaranteed number. So, that means that then the club's commercial teams can go out and sell quite a lot of inventory on the basis of knowing that maybe their top 15 stars will be available, and are contractually available, to help endorse the club in a club context. That's a very important element.
The other element, which is very useful to the club, in paying a player's image rights company is that there is a hell of a lot of restrictions that the club can then impose on the player. So, just to give you a brief example. So, I don't know how many partners Manchester United have throughout the world, global partners. There's a lot, I mean, I'm not sure it's quite 150. I’ve lost count. I think there was upwards of 90. So for example, and just by way of if it’s Manchester United, if it's Chelsea, if it's Liverpool, if it's Arsenal, a lot of these clubs have a big roster of commercial partners and what those clubs would ideally want from their players is to ensure that those players cannot contract with a competitor of the club’s brands, which means that they are effectively clean from any club competitors which then puts their them in a strong position to make sure that their players are never going to endorse competitors of the club's brands and that's quite a valuable commodity to be able to actually use as well.
The flip side which is why we talked about tax and the reason I gave that commercial explanation is because, still, there are always big headlines about the fact that image rights deals are just a way to avoid tax because obviously players as image rights companies are paying corporation tax, rather than pay as you earn (PAYE) and National Insurance contributions. The point being that even though that money is coming in and the club and the players image rights company is only paying corporation tax, that money is still in that club's account. If the player wants to remove that money, he's either got to pay it through dividends, he's got to pay it through salary to other people through the company, however it is, there still needs to be tax paid for onshore companies that are using an image rights structure. So, my point is I'm not the guy that will always say image rights structures are always totally inadequate; it's just another way to avoid tax. Usually there are very good reasons why clubs will want to enter into image rights agreements with their players. One because it guarantees them appearances. And two, it means they can just restrict the players in promoting competitor club brands, which can be very important.
Okay, almost there, I promise.
What's next. We've talked about agents already and get your questions ready if you have any questions as we go. I'm more than happy to answer anything.
A lot of people since I've released the book have said, ‘Well, what do you think is next for the industry?’ And there's a chapter right at the beginning of the book called The Football Ecosystem where I talk about how everything is sort of overlaid together. So, you know, where the players fit in with their clubs, where the clubs fit in with the league, where the leagues fit in with broadcasters, where broadcasters fit in with the fans for subscriptions, where about international games, what about FIFA or UEFA, and all of these different ways that the football world works. People said to me for quite some time and continue to ask me, ‘Is the football model sustainable?’. I think that's one of the things that lots of people say, you know, football players are being paid huge sums to be able to play football, and for their image to be able to be used. Is that model sustainable in the longer term where we have Sky, for example, and BT paying over 5 billion pounds for UK rights and a whole raft of broadcasters paying upwards of 4 billion for the overseas rights for live Premier League matches. The query is, ‘Well, how can clubs still afford to pay all of these wages and pay these exorbitant transfer fees? Is the bottom going to come out of the market at some point?’. That's the type of question I get asked quite a lot. The answer, at least for the time being, and that's why I just put the broadcasting point out there is that so long as there is an appetite for broadcasters to spend large sums of money because they think they can recoup that money by way of subscriptions and different models, then at the moment the answer is yes. But I saw some interesting stats a few weeks ago explaining that Sky, in the purchasing of the rights for Premier League matches, seem to be straining a little bit, removing some of their other content because they've had to spend so much money on Premier League matches, and live Premier League matches. In the same way, whilst Sky has always been the incumbent for live Premier League matches, BT came into the market two auctions ago effectively because they saw quite significant churn. They saw churn away from their broadband offering into Sky Broadband because people were already taking pay TV, Sky Sports, and thought that they should bundle Sky Broadband with their Sky Sports offering. So, in some ways, what a lot of commentators said at the time was that BT came into the market to protect their broadband offering, and then in order to be able to then get Champions League rights and Premier League rights. Then you can see what's happened subsequently, BT buy EE, Sky has their own mobile offering as well, and you have what's called a quad-play offering. So, you have two quad-play players playing out in the UK market for a whole range of consumer goods, pay TV and the Premier League being a very big part of that overall picture.
So, the question is at some point, who knows what will happen, is whether subscriptions start dropping off because of the cord cutting generation, because people aren't willing to pay £60-70 a month for their Sky or BT or pay TV subscriptions. The question was asked a week ago, Simon Jordan was on talkSPORT and he said, ‘Why don't the Premier League go to them? Why don't they just go straight to market and offer an OTT offering globally? Ask people to pay £8-10 a month to watch every Premier League match they want and take away the broadcasters.’ I wrote a blog 10 years ago about that exact point. You know quite a lot of Major League Baseball doing really well in the States and there's a real interesting offering now that could possibly come to fruition, but the truth is, it will take a very brave whoever the next chief executive of the Premier League is to come in and decide not to take the £9 billion cheque, which is usually on the table for the global distribution of its rights.
So, if I just end on that note, which is are things changing? Yes, there’s cool things happening in the market right now there’s lots of different broadcasters doing cool things, but ultimately so long as that money funnel continues, because fans and subscribers are subscribing to those channels, then that money flow will continue throughout the game and players will probably pay in a significant amount because they are that good and because the clubs can afford it.
So, on that note, I think I'll probably say thank you for listening. I'm happy to answer any questions
Q & A
Audience: What's the strangest thing that you've seen in a player's employment contract with the club, like clause of some sort?
I haven't seen any totally bizarre things that I'm thinking, ‘oh my gosh, that's just really weird’, but there's lots of publicised ones that I've put in the book. So, if I talk about few of them, and this is just what's been reported in the press. So, Neil Ruddock, who was an ex-Liverpool player and Spurs player back in the day who, you know, I think could have only really played centre back because he was quite a big guy, but, you know, he scored a great goal remember in the Liverpool v Man U game. When he went towards the end of his career to particular club, the report was that they put a weight clause in his contract, that if he went over a certain weight, he would be fined, or his wages would be reduced by certain amount. Another clause which I read about which was Stefan Schwartz, he was a Swedish international player. He moved to Sunderland and apparently there was a clause which said, Sunderland had read somewhere that one of the things he always wanted to do was to go to space, so somebody apparently put a clause in saying during your time with our club, you are you're prohibited from going into space. There was another one which is from a Liverpool player, Stig Inge Bjønebye, who was a Norwegian International. He, his father was, I think, an Olympic skier and Liverpool ensured that there was a clause in which said he couldn't ski during the time that he was a Liverpool fan of a player. For obvious reasons that is quite standard, so you can't do anything hazardous for obvious reasons that you could hurt yourself.
Audience: Just quick question about the boot stuff that you put up as well. I've got a good friend actually works for one of the big two and he was saying about one of the biggest challenges he cites when working with some of the players he looks up to five Premier League clubs, I think is their egos and like their personalities and they all want things for free even though they earn, you know. So, I suppose my question is around expectations. How do you deal with expectations with players and with big egos? Well, not everybody's got big ego. But yeah, how do you deal with those expectations of players and big players?
Are you talking about in terms of boot deals or just generally?
Audience: Generally. Yeah, I suppose it's quite difficult to manage.
The simple truth is that of the players that I have close relationships with, it's hilarious, and cool as a football fan, they will WhatsApp you and say, ‘hello’, and literally, I'm giving book recommendations to one player who's interested in just expanding his repertoire of reading at the moment because they have loads of away trips, and he's got lots of time on his hands. But the majority of players that I end up having good relationships with are the guys that want to know the detail, is the truth. Usually, in my experience, the players that wants to know the details are the most switched on, that understand the way things work. The players that maybe don't, are the ones that I'd be like just leave it and let the lawyer do it, let the accountant do it, let the agent do it, however it is, and that's absolutely fine too. But usually, I don't like to call it pre-Madonna status because maybe they're not as educated as they need, as the team around them need to give them to make sure they understand what they need to be doing on a daily basis to get by, is the truth. What I try and do a lot of the time just to flip it onto the positive is that every time a new player, if it's a young player, especially, comes into the office to say hello or I’m helping them with the deal. My deal is like look, just give me half an hour with the agents and the player. I just want to talk you through particular things that I think are going to be important for the next deal, for the next endorsement deal you're signing. Think about what you're doing on Twitter, or Insta, or Snap or Tinder. You know everybody has a phone. Everybody has a video. Everybody wants to catch someone this famous out doing something they shouldn't do. That's the truth, unfortunately, that we're living at the moment. Players 20 years ago were, in a way, in a much more privileged position. You’d probably get away with a lot of stuff that players can't do now. So that's almost the point, which is I'm trying to just flip and pivot the narrative, which is get players better educated as to what they need to be doing so they can make more informed decisions. Always players will do things wrong, they’re as fallible as us. People just like a bit of schadenfreude, where a famous person who's earning a lot of money does something stupid.
Audience: Just wondering how you manage your clients’ expectations when you're dealing with someone who, so for example, a player that is injury prone? You're going to see that in the boot sponsorship deals and then there are appearances, a lot of those tied to their, you know, their appearances and how you deal with that.
It's a really good one. It depends how you classify injury prone, is the truth. Now, either you do one of two things, as an agent, you can strategize beforehand to say right, we've got three boot deal offerings on the table. The retainer amount is this amount for this clerk, for this particular manufacturer, we think and estimate that because over the last three seasons, the players play 25 games per season because either injuries or form whatever it is, we need to try and get to this number with this number of appearances that we think we can get to the player of the season.
So, in a way it's a reverse engineering of the contractual matrix in order to make sure that you can get the player over the line, saying this is the amount that you may earn, but you're probably going to earn this amount because of the number of games you're going to play. Ultimately, what can sometimes happen, which can help, is on the appearance side which I didn't quite touch on. If you're savvy enough, what you can say to the boot manufacturers is to say we're only going to classify appearance as particular competitions because if you're an elite athlete, elite footballer, you're probably like less likely to play an FA Cup and League Cup and more likely to play in Champions League and Premier League. So, what you would try and do if you're the elite agent or league player, agent acting for elite player, you're trying to exclude the cup competitions to try and ensure that if appearance is defined as 80% of those games, you're more likely to be able to hit those benchmarks.