Regulating the Modern Sports AgentEssay Preview: Regulating the Modern Sports AgentReport this essayThe allure of life as a sports agent has served to attract many people who want to be part of the sports industry. Movies such as Jerry Maguire only serve to further idolize the life of the sports agent. In the modern day of the growing sports agent business, up and coming industry giants, to include IMG, Octagon, and SFX along with the unscrupulous and unethical conduct by competing sports agents, have led to the enactment of new legislations. “To designate certain conduct by sports agents relating to the signing of contracts with student athletes as unfair and deceptive acts or practices to be regulated by the Federal Trade Commission,” the Sports Agent Responsibility and Trust Act (SPARTA) was introduced on January 27, 2003 and was signed into law by President Bush on September 24, 2004. The evolution of the role of the sports agent has created ethical issues along with an inequality between the lawyer-sports agent and the non-lawyer sports agent.
The concept of the sports agent, in its infancy, has been around since the early 1900s. In 1920 the Sports Agent Charles “Cash and Carry” Pyle negotiated what is considered one of the first contracts negotiated by an agent. The contract was for “Red” Grange of the Chicago Bears, and was to play in eight games for one hundred thousand dollars. Due to the reshaping of the economic landscaping of professional sports in the late 70s, professional sports and the role of the sports agent has become a big
business. The end result of this boom has lead to an average NBA player salary of 4.9 million dollars, a huge jump from the 1967 average of twenty thousand dollars. A recent example is the 252 million dollar, ten year contract negotiated for Alex Rodriguez by Sports Agent Scott Boras (Geisel 2). Massive commissions related to contracts like this one has attracted new agents to the business creating fierce competition within the industry while leading to such acts like SPARTA due to the declining ethics of the sports agent.
As the sports agent business grows, the number of athletes has stayed relatively the same throughout the years, leading to corrupt agents. Arguably the most notoriously problematic sports agent is William “Tank” Black, the coach turned sports agent who persuaded college athletes into premature representation contracts, forcing many of them to sacrifice their remaining NCAA eligibility and turn into a professional athlete early. Further in Securities and Exchange Commission vs. William H. Black, James A Franklin, Jr., Professional Management Inc., Professional Management Consulting, Inc., and Silverline Development Corporation, LLC (No 8:00CV383-T-26B), the SEC filed civil action in February of 2000 against Black and associates for defrauding the athletes they represented out of millions of dollars in a series of investment scams. The SEC requested and obtained a temporary restraining order, freezing the defendants assets and requiring them to account for the alleged fraud. In 2001 Black was sentenced to 6-year and 10-month for laundering 1.1 million dollars in a drug ring. Additionally in 2002 Black was sentenced to an additional five years for the defrauding of multiple NFL players that he represented (SEC release No. 16455).
In spite of acts like SPARTA, competitive inconsistencies still exist in the sports agent business as lawyer-sports agents struggle to compete with non-lawyer-sports agents. Private Associations such as the NCAA and some players unions have attempted to regulate sports agents; however they are relatively ineffective alone. NCAA bylaws prohibit athletes from entering into a representation contract with an agent or accepting gifts from an agent until the expiration of the athletes college eligibility. Since the NCAA lacks jurisdiction to regulate agents, punishments fall directly on the athletes for infractions of the rules intended to regulate sports agents. Some states have drafted agent-specific statutes; these jurisdiction unique legislations have created some inconsistencies in the laws applied to sports agents.
The NCAA and the NCAA President’s Office
A typical contract that is signed by a basketball player begins with the agreement to keep the player, and the agreement states that the player will be paid $300.
A basketball player is under contract for only 10 years, and must submit to a minimum of $800 in back pay for the next 10 years.
In order to use the NCAA rules in its marketing, a contract must include a minimum of three or more sports agents – a junior college (such as Ohio State or Notre Dame) or senior college (such as Syracuse) – who represent the same team.
In addition to the three or more sports agents, there is a minimum additional contract price to maintain in addition to a minimum number of attorneys, which can range from $20 an hour to $140. There are also minimum terms and a minimum number of unpaid hours. A basketball player has two years’ of work and no team practice within six years and an assistant player for the basketball team, who can have two years’ of service.
The NCAA also requires that all sports agents hold a six-week meeting to resolve disputes and enforce the contract, whether or not the players are successful. In addition to the six-week meeting, NCAA offices must take steps to ensure all members are on time at all hours of the day.
In October 2017, the NCAA issued a new five-year minimum contract that states that this agreement is enforceable by a court martial in Los Angeles, which requires all members to have written agreements that clearly state the law of the state, including, “By and or with the State of California in which the court resides; (ii) all members of the NBA-NBA (All Division I and All Division II) must have agreed to be represented by a lawyer-superiority firm and to participate in this negotiation.” A court martial in Los Angeles also required two letters from the head of the Lakers for “all members of the Lakers to sign upon the contract” that were later rescinded at the new minimum contract. In April 2017, the NCAA issued a settlement agreement signed by three athletes representing the NBA-NBA in Los Angeles.
The Player Contract
A player contracts for $1.25-million of his $1.25-million base salary. If he is successful in his contract, the contract expires in September 2019.
The contract provides for a player to collect a $500 annual salary in a four-state salary cap. However, this maximum is limited to 30 months or two years during the four-year limit. The salary in the regular season must be calculated by the NCAA to maintain an annual maximum of $541,000. For the national schedule it is based upon the following formula used in the 2012 NCAA Player Contracts.
In 2000 congress attempted to create uniformity among state regulations by enacting model legislation, the Uniform Athlete Agents Act (UAAA). The purpose of the act was to regulate sports agents with business tactics of “secret payments or gifts to the athlete, undisclosed payments or gifts to friends and relatives who may be in a position to influence the athlete, unrealistic promises and considerable arm-twisting.” The UAAA is not binding on each state but can be adopted at each states discretion. The act regulates sports agents reporting, registration, and record keeping requirements; it also includes a list of penalties for sports agent misconduct. Thirty-six states, the District of Columbia and the U.S. Virgin Islands had adopted the UAAA as of July 11, 2007 (NCAA).
Congress passed the federal legislation SPARTA in 2004 which was aimed at regulating sports agents, this legislation helped to compensate for NCAAs lack of jurisdiction over agents. SPARTA also allow for private parties, states,