Application of EU consumer protection law to sports agency contracts with minors

CJEU's findings

The CJEU examined the applicability of Council Directive 93/13/EEC on unfair terms in consumer contracts to the agreement between the agency and the minor athlete. The Court concluded that the directive applied, as the athlete was not pursuing the sporting activity on a professional basis at the time the contract was concluded. As such, he qualified as a consumer, while the agency fell within the directive's definition of a seller or supplier.

The Court emphasised that, according to Article 4(2) and Article 5 of the directive, contractual terms must be drafted in plain and intelligible language, allowing consumers to foresee the economic consequences of such terms. In this case, the athlete's obligation to pay 10 % of his future income for 15 years was deemed potentially capable of creating a significant imbalance between the parties, to the detriment of the consumer. On the other hand, the contract was not solely favourable to the agency, as it included certain realistic risk factors.

The contract stipulated, among other things, that

• remuneration due was payable only on condition the player's income reached at least EUR 1,500 per month;
• the player could unilaterally terminate the contract without owing compensation if he decided not to pursue a professional career; and
• the services provided by the agency came with no guarantee that the player would achieve the desired result of becoming a professional athlete.

The CJEU also underscored the importance of taking into account the rights of the child, as enshrined in Article 24 of the EU Charter of Fundamental Rights. The fact that the player was a minor at the time the contract was concluded and that the contract was signed by the minor's parents on his behalf is also relevant for the assessment of whether the terms are unfair.

Ultimately, the CJEU found that the clause in question does not inherently create a significant imbalance to the detriment of the consumer merely because there is no direct link between the value of the service provided and its cost to the consumer. The existence of such an imbalance must be assessed in light of

• the rules applicable in national law in the absence of an agreement between the parties;
• fair and equitable market practices regarding remuneration in the relevant sport on the date the contract was concluded; and
• all the circumstances attending the conclusion of the contract, as well as all other terms of the contract or any other contract on which it is dependent.

Therefore, the Latvian Supreme Court must decide if the clause at issue is in accordance with EU consumer protection law.

Implications and future considerations

The judgment reinforces the application of EU consumer protection laws to contracts involving minors, particularly in the sports sector. It serves as a reminder to organisations and entities entering into agreements with young athletes to ensure that contractual terms are fair, transparent and do not exploit the vulnerability of minors.

Legal practitioners and stakeholders in the sports industry should carefully review their contractual practices to align with this ruling, ensuring compliance with EU consumer protection standards and upholding the rights of minor athletes.

The author of this article is an attorney and licensed football agent. The value of an agent's work in assisting young athletes to become professionals should not be underestimated. In reference to the case at hand, both the objective clause and the agreed remuneration of 10 % of the athlete's net income appear to be in line with industry standards. This is particularly common in agreements with young athletes, who often sign representation contracts long before reaching professional status. At that stage, most are more than willing to commit to a 10 % share of their future income in exchange for the guidance, support and contacts needed to pursue a professional career. However, only a small percentage of these athletes ultimately succeed in becoming professional and, as a result, agents typically receive remuneration only from the few who manage to reach the top. In the case at hand, it seems ironic that after years of support, the agreed share of 10 % becomes a point of contention only as substantial salaries start flowing in, and the sports agents must fight even with those athletes they have successfully helped to turn professional.

Key takeaways for the conclusion of sports agent agreements with minors:

• use plain, intelligible language
• negotiate the important terms individually
• review and align the agreement with the applicable regulations of the relevant sports association
• request the athlete to seek own legal consultation prior to signing
• conclude a new contract as soon as the athlete becomes of legal age

Finally, the CJEU's considerations provide some indications for the pending preliminary ruling proceedings on the Case C-209/23 - RRC Sports concerning the conformity of FIFA's Football Agent Regulations ("FFAR") with the EU competition principles and the principle of freedom to provide services.[2] FIFA stipulates in the FFAR, among other things, a service fee cap for football agent services within a range between 3 % to a maximum of 10 % in specific cases. If the CJEU does not view a remuneration of 10 % as inherently creating a significant imbalance from a consumer protection law perspective, this may not bode well for FIFA's service fee cap from a competition law standpoint.

authors: Bernhard Schmidt, Patrick Petschinka