The Sports Agent Responsibility and Trust Act (15 U.S.C. §7801-7807), commonly known as SPARTA [1], seeks to protects student-athletes by prohibiting sports agents [2] from signing athletes to an agency contract by:
- Providing false or misleading information, or making false or misleading promises or representations;
- Providing anything of value, such as gifts, cash or a loan to the student-athlete or anyone associated with the athlete;
- Failing to disclose in writing to the student-athlete that he or she may lose NCAA eligibility after signing an agency contract; or
- Predating or postdating contracts.
SPARTA makes certain activities of sports agents come within the regulations of the Federal Trade Commission (FTC) and considers sports agents who entice student-athletes with misrepresentations and gifts to enter into agency contracts in violation of the FTC’s Regulations regarding the Federal Trade Commission Act. The Federal Trade Commission Act (FTCA) was passed by Congress to protect businesses and consumers from unfair competition and unfair or deceptive acts in the conduct of business. If a business engages in deceptive practices aimed at the average consumer, it may be in violation of FTCA regulations.
Three duties of sports agents under SPARTA are [3]:
- A duty to be truthful,
- A duty of disclosure, and
- A duty to refrain from “buying” an athlete. [4]
“The duty to be truthful may be found within §7802(a)(1)(A) and §7802(a)(3). §7802(a)(1)(A) prohibits a sports agent from giving a student-athlete false or misleading information. It also does not allow an agent to make a false promise or representation to a student-athlete. If a sports agent promises a college junior basketball player that he will be an NBA Draft Lottery Pick without any solid foundation for making that statement, the sports agent may be in violation of §7802(a)(1)(A).” [5]
The duty of disclosure is set forth in §7802(a)(2). Sports agents recruiting athletes must provide the athletes or their parents (if they are under the age of eighteen years-old) with a disclosure document containing a warning about the potential of losing NCAA eligibility following the signing of the document. The warning must be in boldface type placed as close as possible to where the student-athlete or his parents sign the disclosure document. [6] Additionally, the athletic director or another high-ranking entity at the student athlete’s institution must receive notification of the agreement immediately following the signing of the document. [7]
Section 7802(a)(1)(B) prohibits a sports agent from giving anything of value to a student-athlete or anyone associated with him, until the student-athlete has signed an agency contract. Signing an agency contract voids any remaining NCAA eligibility that athlete had, anyway. Sometimes, discovery of these gifts do not occur until after the athlete has used up all of his eligibility. [8]
There are two ways to enforce the duties created by SPARTA:
- State action taken by the state’s Attorney General on behalf of the residents of that attorney general’s state, or
- Federal action taken by the Federal Trade Commission (FTC).
If the FTC institutes an action against a sports agent, SPARTA prohibits the attorney general of a state from bringing an action against the same sports agent charged with violation of his duties to a student-athlete. [9]
Under the Federal Trade Commission Act, a sports agent may receive punishment of up to $11,000 for violation of an unfair or deceptive act or practice, which many believe is not a sufficient consequence to deter the larger and more successful sports agents/agencies. No fiduciary relationship exists when a sports agent is recruiting a student-athlete to sign an agency contract. At that point, the athlete has not yet become a principal and the sports agent has not yet become his specific agent. Thus, SPARTA serves an important role in creating duties for sports agents with respect to their relationships with athletes before agency law would kick in to protect athletes. However, SPARTA has received criticism because of the limits it places on those who can take action if a sports agent does not live up to his duties. If state Attorneys General or the FTC decides not to act on agents’ wrongdoings, injured student-athletes have no recourse under SPARTA. The key to the effectiveness of SPARTA is enforcement, and many critics point out that area, in particular, as the statute’s weakness.
[1] SPARTA is an acronym that stands for The Sports Agent Responsibility and Trust Act of 2004.
