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Sports Agents – History and Law

Historically speaking, most sports agents recognize the inception of the profession stemming from the work of several individuals during the 1960’s. However, sports agency can actually be traced back to 1925 when Red Grange hired an agent to negotiate his professional football contract. Red Grange was the first football player to have a personal representative, an agent as they are called now, to work out a performance contract. Grange was the first professional athlete in team sports whose pay was linked with the number of fans his fame and performance attracted to the games. These have become commonplace for professional athletes. Grange did not go out for football when he went to the University of Illinois. He was a star in four sports in high school (track, football, basketball and baseball). He thought baseball and basketball were his best sports bets to earn a varsity letter. When his fraternity brothers directed him to go out for football and got out the big paddle, Grange decided to report. He was issued jersey No. 77. In the first scrimmage against the Illinois Varsity, Grange returned a punt 65 yards for a touchdown. Before Grange’s meteoric career on the gridiron, college football was largely a campus game of interest to students and alumni; but by the time Grange’s All-American career was finished at the University of Illinois, millions who had no particular interest in a college were aware of the Galloping Ghost and college football. Professional football, before Grange, was largely played by teams from neighboring towns in sand lot circumstances before hundreds, rather than thousands of fans.

Grange’s 1923 team turned in an unbeaten season, were co-champions of the Big Ten and Red Grange, in his first varsity year, was named an All American. Something very special was arranged for the 1924 season. The new University of Illinois Memorial Stadium, largest campus arena in the nation for football, was to be dedicated on October 18. The University of Michigan, who was also undefeated in 1923 and co-champions with Illinois, would be the opponent. Michigan came to the big game a favorite. Illinois was missing some of its players from the 1923 team through graduation. Illinois had also lost its first game of the season, 9 to 6, to the University of Nebraska.

Grange ran ninety-five yards for a touchdown on the opening kickoff and then rushed from scrimmage for three more touchdown runs of sixty-seven, fifty-six and forty-four yards before leaving the field with three minutes remaining in the first quarter. In the second half, he scored a fifth TD on a twelve-yard run just for good measure.

On Nov. 22, 1925, the day following his last game for the University of Illinois, Red Grange signed the first big time professional contract, casting his lot with the Chicago Bears, It called for one hundred thousand dollars and a share of the gate in a period when most professional football players were getting twenty-five to a hundred dollars a game, if they were paid at all.

In the 1960s, attorney Mark McCormack’s work with young golfer Arnold Palmer probably changed the manner in which sponsors dealt with professional athletes. Since the 1960’s, many other remarkable sports agents have made an impression on the profession that is now dominated by high-profile individuals working for large sport management agencies. In a famous scene in the 1996 film Jerry Maguire, the sports agent played by Tom Cruise is goaded by his client, played by Cuba Gooding Jr., to repeatedly scream into the phone “Show me the money.” By the time that film came out, however, the role of the sports agent had long since been transformed into one far more sophisticated than simply negotiating contracts. And while screenwriter Cameron Crowe based the Jerry Maguire character on agent Leigh Steinberg, it was Mark McCormack who ushered in the modern era of sports management and marketing. McCormack, founder of International Management Group (IMG), believed the popularity and marketability of athletes could transcend borders, cultures, language, even sports itself. McCormack-managed athletes were the first to endorse clothing, watches, and motor oil. They played exhibition matches around the world. They gave inspirational talks to business at a hefty price tag.

Whether it was setting up golf matches between a young Arnold Palmer and company executives at $500 a game, arranging tennis exhibitions throughout China featuring Bjorn Borg and Jimmy Connors, or promoting a soccer match between Pele’s New York Cosmos and the soccer star’s former Brazilian teammates, McCormack had a gift for keeping his clients well-known and well-paid.

McCormack was born in Chicago in 1930 When he was just 6 years old he was hit by a car and suffered a fractured skull. The doctors said contact sports like football and basketball were out, so golf became McCormack’s passion. He starred in the sport at the College of William & Mary, and one day came up against a pretty good Wake Forest golfer — Palmer. The two hit it off, and it was not long before McCormack, after obtaining a law degree from Yale, was busy helping Palmer and other pro golfers look over their contracts. In 1960, after a hand-shake management deal with Palmer, McCormack was on his way. After Palmer came deals with South Africa’s Gary Player and Jack Nicklaus, giving McCormack a lock on golf’s “Big Three.” He then branched into tennis and other sports with a global footprint. By 1985, IMG’s roster included golfer Palmer, soccer’s Pele, tennis players Martina Navratilova and Chris Evert Lloyd, skier Jean-Claude Killy (who became a very close friend of McCormack’s), runners Sebastian Coe, Bill Rodgers, and Mary Decker Slaney, baseball star Jim Rice, and football player Herschel Walker. Athletes knew that at IMG, they stood a good chance of earning just as much off the playing field as on and that IMG would manage everything, from negotiating with team owners to investing their money to making sure they got to appointments on time.

McCormack himself took an intensely personal interest in many of the athletes. Besides lasting friendships with Palmer, Killy, and hundreds of others, McCormack later in his career became a father figure for other athletes, including tennis star Monica Seles. In 2003 McCormick died at age 72.

One need not be a lawyer to be a sports agent, but many agents are lawyers. As a general rule, student-athletes with remaining eligibility may not have an agent to represent their interests in that particular sport. Agents are notorious for becoming occasionally overzealous in furthering the athlete’s interests to secure a contract with a team or league. There is no typical, formal education program for sports agents. Many sports agents have law degrees. Others have no formal college education. Those who attend college earn degrees in a variety of fields, including legal studies, political science, sociology, and sports management.

Practically speaking, however, obtaining a law degree has become an unwritten prerequisite to break into the profession in terms of maintaining a competitive advantage. One can become an agent without a law degree, but being a lawyer allows you to earn money practicing law while building up your sports agency practice. It takes some start up money to be a sports agent to compete with big firms that often give potential clients all sorts of cash and gifts. Agents without formal legal training will likely continue to recruit clients as long as those agents find athletes that will let them represent them. Ultimately, the most important issue for sports agents is to keep their clients happy.

Though there are no current federal laws that directly governs sports agency, this may change in the near future. Uniform Athlete Agents Act (UAAA) is a model act governing sports agents. It was written by the National Conference of Commissioners on Uniform State Laws. It is available for adoption by states. A sports agent advocates and represents the legal and business affairs of a professional athlete, usually for a fee. This fee is usually a percentage of the athlete’s income that came from negotiations by the Agent. The NFL regulates this percentage. Generally speaking, the term sports agent refers to someone who tries to get an athlete to let him represent him when in negotiations with professional teams.

Agents have a fiduciary relationship with their clients. A fiduciary is someone who owes a duty of loyalty to safeguard the interests of another person or entity. Fiduciary duty is a legal requirement of loyalty and care that applies to any person or organization that has a fiduciary relationship with another person or organization. A fiduciary duty is one of complete trust and utmost good faith.

As stated earlier, there are no specific qualifications to become a sports agent. In recent years, however, numerous states have attempted to define and ultimately regulate sports agents and their activities. The National Football League Players Association (NFLPA) now requires a four-year college degree from an accredited institution in order to represent professional football players in the National Football League (NFL). In the major professional sports leagues of the NFL, Major League Baseball (MLB), National Basketball Association NBA) and National Hockey League (NHL), players associations serve as unions and actually regulate fees that the agent may charge the player. These players association are powerful and are capable of barring the agent from being able to represent players within that sport for a violation of its policies and procedures. Agents are now required to pay expensive fees to the players associations. These costs can discourage a new agent from entering the profession.

Agency law has existed for hundreds of years. The basis of this law is for one person to allow another person to act on his behalf. An agency relationship is one in which one party (an agent) agrees to act on behalf of another (the principal). Examples could be a sales clerk, a sports agent, or the president of a corporation. Employees are oftentimes agents of their employers, but this is not always true. A sports agent, for example, is not an employee of his client, but is an agent of his client. The sports agent would be an independent contractor. An employee who acts within the scope of his/her employment furthers the business interest of the employer by creating a relationship that would hold the employer responsible for the actions of the employee. The phrase scope of employment is often referred to as respondeat superior, a Latin phrase meaning let the master answer. An agent expressly enters into an agency agreement with a principal to further the interests of that principal. Sports agents serve in this capacity.

Until the enactment of the Uniform Athlete Agent Act (UAAA) there were too many different state laws governing or regulating sports agents. Such laws theoretically required that agents register and pay fees in each and every state in which they recruited student-athletes. Additionally, differing definitions of sports agent and student-athlete caused great debate on the need for a uniform federal law. Adoption of the UAAA may end this debate.

The National Collegiate Athletic Association has made it clear that having an agent is akin to relinquishing one’s amateur status. In recent years, the NCAA has allowed a student-athlete to participate as an amateur in one sport while remaining a professional (with an agent) in another sport. Chris Weinke, one of the finest quarterbacks in Florida State history, signed with Florida State out of high school and spent four days in August of 1990 on the FSU campus before signing a professional baseball contract with the Toronto Blue Jays. He spent six years in the Toronto Blue Jays organization before returning to Florida State in the spring of 1997. In 1999, he led Florida State to its second National Championship and first undefeated season.

It does not appear that the NCAA at this time is willing to allow a student-athlete to have an agent and still participate in intercollegiate athletics in that particular sport. With the advent of television, professional sports became more visible. Television meant the influx of more money into sports. More money meant players forming unions and wanting more of the pie. Cable and satellite television continues this trend, and sports agents followed the money and have served as advocates for professional athletes rights.

Requiring a sports agent to be a lawyer would allow for more regulation over agents with the ability to take a law license away. However, the advent of the UAAA may be a better way to regulate sports agents.

Some states have enacted laws governing contracts made between athletes and athlete agents, which vary by state. Such laws may govern issues such as state registration and recordkeeping of athlete agents and disclosure requirements in their agency contracts. The majority of states have enacted the Uniform Athlete Agent Act (UAAA). The UAAA requires an agent to provide important information to enable student-athletes and other interested parties to better evaluate the prospective agent. The UAAA also requires that written notice be provided to institutions when a student-athlete signs an agency contract before his or her eligibility expires. In addition, the UAAA gives authority to the Secretary of State to issue subpoenas that would enable the state to obtain relevant material that ensures compliance with the act.

Alabama is serious about its amateur sports and in order to maintain the legitimacy of its amateur sports it is has adopted the Alabama Uniform Athlete Agents Act (the “Act”). Essentially, the Act requires any agent doing business in Alabama to register with the state. It also contains certain restrictions upon the activities that an agent can and can’t engage in. Alabama adopted its Act in the current form in 2001, and is one of approximately 30 states that have adopted similar acts. For example, in addition to requiring the agent to register with the State, the Act states that an agent may not (1) Give any materially false or misleading information or make a materially false promise or representation. (2) Furnish, directly or indirectly, any thing of value to a student-athlete before the student-athlete enters into the agency contract. (3) Furnish, directly or indirectly, any thing of value to any individual other than the student-athlete or another registered athlete agent. [Alabama Code § 8-26A-14(a)]. It also goes on to state that a student-athlete may not, (2) Accept anything from an athlete agent without first entering into a contract in conformity with this chapter. (Alabama Code § 8-26A-14(d)).

In addition to regulating the conduct of agents, the Alabama statute prescribes significant criminal penalties for both student-athletes and agents that do not follow the terms of the Act. Section 8-26a-15 of the Alabama code makes a violation of the Act by an agent a class B or C Felony, depending on the type of violation. Class B Felonies can carry a sentence of up to 20 years, while Class C convictions can be up to 10 years. Violations by student-athletes are Class C misdemeanors and carry a mandatory minimum sentence of 70 hours community service. While it is highly unlikely that a single incident would result in a 20 year prison sentence for an agent, the point is that Alabama clearly wasn’t messing around when it created the Act – and it didn’t stop there. Alabama also provides civil remedies to universities who are harmed by the actions of the agent and student-athlete. Alabama Code § 8-26A-16(B) allows the university to recover “losses and expenses incurred because  .  .  the educational institution was injured by a violation of this chapter or was penalized, disqualified, or suspended from participation in athletics by a national association for the promotion and regulation of athletics, by an athletic conference, or by reasonable self-imposed disciplinary action taken to mitigate sanctions likely to be imposed by such an organization.”

Inside Sports Agents – History and Law