Collusion??

In an apparent show of support for the “plight” of Division 1 football coaches, NFLPA Executive Director Gene Upshaw recently announced that he will propose that the union amend the Regulations Governing Contract Advisors (“Regulations”) to prohibit any contact between agents and players until a college player has either (i) exhausted his college eligibility or (ii) made himself available for the NFL draft, thereby forfeiting any remaining college eligibility.

The NFLPA took its position in response to complaints by Division 1 coaches, in particular Pete Carroll of USC, based on the investigation into the USC program by the NCAA as a result of allegations that Reggie Bush and/or his parents received benefits of $100,000 from at least 2 agents. If proven to be true, USC may be required to forfeit the 2004 National Championship and Reggie Bush may be required to return the Heisman Trophy.

NCAA rules already prohibit a player from (i) agreeing, orally or in writing to be represented by an agent, or (ii) receiving any so called “extra benefits” from agent…the rules Reggie Bush is alleged to have broken. Looked at another way, if agents and players don’t follow the rules on the book, why would the union or the NCAA think that another rule is the answer to the situation? In my humble opinion, the NFLPA would be better off trying to better protect its current membership from being bought and sold without compensation rather than spending time trying to restrict access to college players.

In our last issue we discussed the recent transactions involving Creative Artists Agency and how CAA and others are building their sports practice through the acquisition of the business and clients of existing agents. In the case of CAA, it purchased the business of Tom Condon and Ben Dogra who, together, represent 137 mostly African American players including, but not limited Shaun Alexander and LaDainian Tomlinson. Since the multiple of earnings approach is a generally accepted method of business valuation, Mr. Condon and/or Mr. Dogra could have been paid between 4 to 6 times earnings before interest and taxes for their respective businesses…without sharing a penny with the players whose accounts were being sold. One way the NFLPA could better protect its membership is by prohibiting the assignment of the Standard Representation Agreement by agents without the consent of the player. Currently, the SRA is silent on this point. By requiring the consent of the players involved, each player would then be able to negotiate a price (all profit to the player) for which the player would agree to transfer his business to the “new” company much like the compensation a player receives for waiving a “no trade” provision in his contract. At a minimum, a player ought to be advised of his right to terminate his relationship with the selling agent and not have any relationship with the “new” company.

If you have questions or require additional information, please contact Everett L. Glenn, Esq. at eglenn@espsportslawpro.com or call 562.619.8460.