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NFL Contract Advisor: So You Want to be an Agent...

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NFL Contract Advisor: So You Want to be an Agent...

Welcome to NFL Contract Advisors – “So You Want To Be An Agent…” A big part of sports law is getting agents ready for the obligations of managing high-profile clients. And that’s where lawyers come in. NFL Contract Advisors covers NFLPA certification requirements, agent eligibility, standards of conduct and prohibited actions, key points of agent-player contracts and player-team contracts, and the NFL’s personal conduct policy. And most importantly, we’ll look at some recent episodes of “bad client behavior” in the NFL (aka – The 3 AM Phone Call). Stories include a mercurial QB skipping a game to party (in disguise) in Las Vegas, a star wide receiver allegedly throwing furniture off a 14th floor Florida condo balcony, the league’s highest-paid player bankrolling a dog fighting operation, and of course…“DeflateGate.”

Transcript

Brian Brunkow: Hey, good morning everybody, welcome to NFL contract advisors.

So you wanna be an agent and who doesn't? Think about it, you get a kid, they graduate from UCLA with an MBA, and they've got a couple of options, they can go negotiate contracts for a dry cleaners for the next 30 years, or maybe they wanna try their luck in sports and entertainment, that sounds like a pretty sweet gig, and they kind of think going in, I'm gonna become an NFL agent, I'm gonna be on ESPN and the talk shows. But it's not quite like that, it's not gonna be, you know, Super Bowl parties and private jets and popping bottles all day long, and that's where we come in as sports law attorneys to kind of walk them through the rules and regulations, the disclosures, the deadlines, all the unfun stuff that goes into a licensed professional like this.

So one thing to keep in mind with agents is that they really love the action and not the paperwork, it doesn't really matter if it's a real estate agent or a talent agent or a sports agent, they don't do it because they wanna sit behind the desk and they kind of see the paperwork as optional, and that's something we really got to communicate to agents is that the way you keep your job, the way you keep that license is handling the disclosures, the deadlines and the records, so and I'm gonna keep going back to that time and time again today 'cause that's really important, that's kind of the nuts and bolts of what it takes to become an agent at that level.

As for me, my name is Brian Brunkow. I'm a Seattle-based California and Washington attorney, a little bit of background in mortgage compliance in addition to NCAA athletic compliance. Lots of rules and regulations, not a lot of pictures, but it keeps me busy, outside of work I coach a lot of youth and high school football, the wide receivers and the defensive backs so pretty much all the divas and I used to before COVID I used to speak live at high school clinics for high school coaches on student athlete development and NCAA recruiting best practices. I've authored a couple of short sports parenting books on the same thing, student athlete development is kind of a passion of mine and that's kind of what I do. So I really appreciate you taking time today to discuss NFL contract advisors.

Along the way I'm gonna use what I call 3:00 am stories to kind of reinforce the points that we're gonna make today, because it doesn't matter what area of law you practice, you know, if you send a client out the door with a stack of documents, they don't read it, it's in one ear out the other, so we gotta solidify the rules and regulations with stories, you give them the rules and regulations 'cause that's our obligation, but also you communicate stories because that's gonna be sticky, it's gonna be concrete information and they can take that and remember it six months down the road, which has always, which is always kind of nice. And with these agents you got to keep in mind, you're dealing with highly paid players. I mean, we coach attorneys coach up the agents so that agents can coach with the players. And the agents are dealing with players who are highly paid, high profile, and high maintenance, and they gotta be kind of ready for this. So when we talk about these 3:00 am stories today, that's kind of what we're really trying to hammer home that these agents, you know, kind of the day-to-day function of what an agent does. They kind of think, well, I'm gonna get the contract signed with the Dallas Cowboys and my job is done, I'm going down to Cabo after that. No, that is just the starting line, that's 25% of the job, really NFL agents they make their money and their careers by being that fiduciary and the, you know, the go-to person after that contract get signed, and that comes down to the 3:00 am phone calls, happens all the time, you watch ESPN on the ticker, stuff's going down all the time, guess who gets the call? It's the NFL agent.

So a hypothetical for today, we're gonna have our client coming in, Jamie. Jamie just graduated from UCLA with an MBA. He or she, or they, whatever pronoun is being used. Jamie wants to become an agent and Jamie is smart. Jamie wants to do some preventative maintenance ahead of time, find out how to stay out of trouble. So we've got a 10:00 am appointment with Jamie. We got some coffee, some bagels, maybe a little bit of schmear. We're all set for Jamie to come in. And we're gonna kind of walk Jamie through from the 30,000 foot level, the obligations, what to do, what not to do, and kind of, again, those disclosures, the deadlines and the records that are so important to keep, keep that career on track in a licensed profession, like being an NFL contract adviser.

So Jamie, what's Jamie's situation? Jamie graduated from UCLA with an MBA, no legal background, so Jamie's not gonna look at the same things that we do as we do, look at things the same way as we do, excuse me. So Jamie has got about 120K in student loan debt. Jamie is lucky. That's not a lot of debt. But it's still a chunk of money. Jamie has also got credit card debt of about 23K and maybe no healthcare. That means Jamie is desperate to get some money coming in and what happens when somebody is a little bit desperate, they make bad decisions. They take shortcuts, they do things that are unethical, they poach clients. They do stupid stuff because they're desperate, but there's nothing written into the ethics that say, if you're desperate for cash, you can take a few shortcuts. So that's what we wanna talk to Jamie about today is, really making good decisions as Jamie starts to get ready to become an NFL contract advisors. Three main points for today that I really want everybody to take away from this seminar with NFL agents. First, it's the unfun stuff that keeps the agents out of trouble and that's where we come in, the disclosures, the deadlines, and the records. Write that down, get it tattooed, whatever, but it's just, that's the area that we really have to focus on with the agents. Second, getting the contract signed with the Dallas Cowboys. That's 25% of the job for the agent. Really they're making their career by handling all the unfun stuff that happens with their clients. Those 3:00 am phone calls. NFL player does something really stupid, something really illegal, guess who gets that call? It is going to be the agents and they got to be ready for that. Third, this is a hypercompetitive industry, it is insanely competitive and we'll talk about that. And again, when it's hypercompetitive, that leads to shortcuts, that leads to bad decisions. So we wanna hammer home with Jamie today for that 10:00 am appointment these three things to help Jamie along the way to become an NFL agent.

And oh, man, would you know, the first page of the presentation today, actually page two, but we're gonna talk about our first 3:00 am story, and that's Johnny Football Manziel, where else do you wanna start other than with Johnny Football Manziel? One of the biggest college talents ever. The guy was electric, but he was a troubled client and if you're the agent, you're gonna get that 3:00 am phone call, so we're talking to Jamie about Johnny Football and you go through the timeline of stuff that happens. And yeah, I could just put a quick summary together of all the bad stuff Johnny did, but that doesn't drive home the point. You got to go incident by incident to show all the kind of stuff that's gonna come up, because if you're representing Johnny plus 10 other NFL players as an agent, this is the kind of stuff you got to deal with. It's not just getting the contract signed with the Miami Dolphins, it is all the stuff that happens after that contract get signed. That's really where the agents have to provide that quality service to their clients if they wanna stay in the game. So Johnny, you can just kind of go through these on your own, but it kind of gives you an idea of what you're up against. He's drafted by the Browns in may of 2014, signs a big old contract. Pre-season, he's fined $12,000 for sending obscene gestures, giving somebody the finger basically, gets fined, he hasn't even played a first regular season game yet, and he's getting in trouble like that. January, 2016, he is in concussion protocol, but he's still gonna show up at the facility. He skips a game. Johnny flies out to Las Vegas wearing a cheap, I kid you not, wearing a cheap blonde Halloween wig, that was gonna be his disguise for the weekend and not so much. He somehow missed his red eye flight home to go to the facility for the game or, you know, be available, and the Browns were not too happy about that. And that's not what you want out of your quarterback and your first round draft pick. So February, 2016, agent drops Johnny Manziel, March, 2016, the Browns drop Johnny Manziel, March, 2016, Drew Rosenhaus, the biggest agent in the biz down in Florida, he came Johnny Manziel's agent, next month, hit and run out in Los Angeles, Johnny was a passenger, and April, 2016, just a month or so after Drew Rosenhaus signed him, he dropped him. Maverick Carter, a big marketing rep that worked with Jay-Z dropped him and Nike dropped Johnny Manziel, so not so good for her first round draft pick, that's not what you wanna see, and this is the stuff that agents can have to deal with.

So the roadmap, this is what we're gonna talk about today with Jamie. We're at the 30,000 foot level as Jamie gets ready to become a new NFL agent. We're talking about the bones, the CBA, and the NFL sort of NFLPA certification. That's kind of the framework. We're gonna talk about agent eligibility. We'll talk about the rules and regulations, and then we'll look at the agent player agreements, that's called a standard representation agreement and you'll hear me say SRA a bunch today. SRA is the agent player agreement. Then we'll look at some best practices and conflicts with player/team agreements, and then quickly with the NFL Personal Conduct Policy. Don't laugh, the NFL does have a personal conduct policy, although it doesn't seem like it most days.

 So next page, introduction. Got to know that there's many layers of regulations for agency, and it is a tough, tough business, you have federal rules, state rules, NCAA rules, Conference rules, university rules, team rules, all kinds of fun stuff to keep track of if you're an agent, and again, what do we say? Agents don't like the paperwork, they like the action, and this is our responsibility when the agent shows up to walk them through the rules and regulations, and today we're only focusing on the NFLPA and the CBA. We're not looking at all the other fun layers. It's just the NFL stuff.

Second, if you're a non-agent attorney, you cannot be involved in solicitations or negotiations. If you are not certified with the NFLPA you cannot contact the Dallas Cowboys and get Jerry Jones on the phone and try to pitch them a new quarterback. You gotta be licensed and certified as an agent to do that.

Third, huge watershed moments this year for a college athletics. They are allowing athletes on scholarship to get endorsement money. And that's a huge change from what they'd done in the past. What does that mean? We have college athletes making big endorsement deals. As of July 1st, 2021, they allowed college athletes to sign these endorsement deals, which means they can sign agents to get these endorsement deals. So go down to the car shop, Carla, and sign some autographs, do a public speech, clinics, they can do that now and get paid for it. As an example, Bama quarterback, Bryce Young, signed a million bucks in endorsements shortly after this went into effect, so it is real and it's here. What does this mean? You've got roughly 500,000 student athletes in college, up and down the chain between junior college and the top schools, 500,000 clients, potential clients, that means there's gonna be more demand for agents, which means more demand for knowledgeable sports law attorneys.

So let's jump down here to the next page, the CBA and the NFLPA. This is the bones. This is the framework of what agents need to know about. Again, the bones, not so much fun for the agents 'cause they want the action, but we need to really communicate to them what their obligations are and it starts with the collective bargaining agreement and the NFLPA. 3:00 am phone call on the next page, this is something to keep in mind, COVID is here to stay for a while and that's gonna impact agents and there's nothing in the agency manual that says how to handle COVID-19 and what to, what to do with these vaccinations. It's just, it's a mess, but it's here and it's a 3:00 am phone call that agents gotta be ready for, so coach Urban Meyer down in Jacksonville, he got fired this year, but the NFLPA conducted an investigation after coach Urban Meyer, former coach, said that vaccine status did impact roster decisions that caught the attention of the NFLPA, and did they started to look into it because the vaccine was not required, but they had strict protocols. And this was just one of those things where if you're an agent, player is gonna call you and say, what do I do? Do I get the vax, do I not get the vax? What do I do? If you're an agent, you know, you gotta be ready for that.

First thing, obviously they wanna say is, hey, I'm not a doctor, I can't tell you what to do. The second thing the agents gotta be smart about is that they are a fiduciary at all times for their client. And we know the agent doesn't get paid unless that players on the roster getting paid. But the agent can't think about it that way. The agents got to give advice as a fiduciary to the player, not offering advice that's in the agent's best interest. Agent wants to player on the team. Agent wants to say, hey, go get vax, get on the team, but you have to look at it as a fiduciary. So, hey, player has a question about that, hey, let's go talk to a doctor and try to figure out some good options for you. Well, a history on the CBA, first players association came into being in 1885 old tiny players association. The collective bargaining agreements didn't come into play for pro sports until the late 1960s, so it's pretty new. NFL came in with their CBA around 1968. Got a wonder why new cooperation on the player side, new agents will have a question about that. I mean, you think they would have all the leverage, the NFL is the king of the mountain, watching TV, massive TV ratings, massive endorsements, but why no cooperation? Why aren't the players push around the owners? Pretty easy to know that the reason is that the NFL career is roughly three and a half years. So that's not a lot of time to make a ton of money, which means they don't fight back whole lot as much as they could because you're in the league one year and you're out the league the next year. Similar goals between the players, not so much, like a minimum wage for vets might be around 660K and Patrick Mahomes for 2021 cleared 45 million bucks. There's not much in common between those two people. Messaging, there's a conflict because you have the NFLPA looking out for the collective, NFLPA saying, what's good for the players 5, 10 years down the road, and then you have the agents who say, how do I get as much money for my client today? So there's a conflict there, and that's kind of what you don't see as much leverage as you think that would be from the players against the owners.

Team caps, you gotta know the numbers, it's around 182 million bucks. You divide that between 69 players, 53 on the active roster, 16 on the practice squad, and it comes up to roughly 2.6 million bucks, but you just kind kinda know, you gotta kind of know the numbers and make sure that new agents are aware of this when you know, Jamie wants to become a new agent, you just kinda know everything from 30,000 feet and how everything kind of fits together. Next page, this the CBA is handled under the National Labor Relations Act, just like, you know, the Ford Motor Plant or Boeing covers pay hours and conditions. It's just what happens that it happened is a lot better in the NFL than at the a Ford Motor Plant. Covers all the expected people you'd think, currently employed players, previously employed drafted rookie players and undrafted. So even if you are a drafted rookie, you're not on a team yet, you're not in the league, you still fall under the collective bargaining agreement, you still get that protection, which is kind of good. NFLPA agents, what do they cover? How did they regulate? The NFLPA is the boss of the agents. The NFLPA represents the players and regulates the agents. So they regulate agents and player negotiations, teams can't negotiate with uncertified agents. And that list gets updated monthly, you get agents who drop out, they get kicked out or they get suspended. That list gets updated monthly and teams must negotiate with a certified agent or with the player himself. Also the NFLPA determines the number of agents and the grounds for denial, suspension and revocation. And what's also kind of interesting here, and again, we talk about being a fiduciary, the NFLPA will not discipline, dismiss agents for contract results. So if you have an agent who's not so good at his or her job, they get a bad contract signed for their player with the Dallas Cowboys, NFLPA is not gonna get involved, no privity of contract between the NFLPA and the agent, it's between the player and the agent, but again, we've got to communicate to the agents, you are a fiduciary at all times, don't go out there and get a bad contract signed, just so you get a payday, even though you got to cover that BMW lease, got to cover that trip out to Las Vegas, doesn't matter. You got to work your butt off to get a good contract signed for your player as a fiduciary.

All right, player/team contracts, again, gotta be negotiated by a certified agent or player who is self-represented. And this is kind of a trend we're seeing players who wanna skip that commission and handle it by themselves, player typically goes down, talks to a sports law attorney to get some contract advice, non-agent advice, just talking to an attorney, that's employment law or contract law, then the player works with the NFLPA to kind of find out where they're slotted, it looks at the analytics, the stats, and then they can make a determination. This was a good example.

DeAndre Hopkins signed a deal with the Arizona Cardinals, two year deal, 55 million bucks, which made him the highest paid non QB, so it is possible, you know, sometimes, they get a bad contract signed if it's filled with unachievable incentives, not so good, but if the player is smart about it and they know how to handle their business, Richard Sherman went to Stanford, he negotiated a pretty good deal for himself with the San Francisco 49ers, so that is becoming a trend. Why is that important for us? That means more NFL players might be showing up and saying, hey, give me some advice on this. And that's where we come in as an employment attorney, as a contract law attorney, provide that advice in the background. Then the player goes and has discussions with the NFL franchise, not us, because again, we are a non agent attorney, we can't solicit or directly have those negotiations with the team.

Next page, immediate de-certification. The NFLPA will kick you the hell out if you do this kind of stuff, extraordinary circumstances, that means stealing money from the client, inactivity, and we'll talk about that. The NFLPA will kick you the heck out if you can't get a player signed to a team over a three-year period, and then also improper conduct with college players. That means offering inducements and things like that, all that kind of stuff that agents shouldn't be doing with the college players like inducements and offering loans and stuff like that to get them to sign with them and even improper conduct with college players, the NFLPA will kick you out immediately. All right, so so far so good, we talked to Jamie about the CBA and the NFLPA that kind of the framework and no complaints yet on the coffee or the bagels, so, so far so good.

Next we'll move into agent eligibility and that's gonna be on page 13. This is what we call the cool kids club, who doesn't wanna be an agent? Got to know the stats. So this is a rough business. We talked about how hypercompetitive it is. There's only 1,700 players, you got a whopping 872 agents and that goes up and down all the time, that means a two to one ratio between potential clients and agents, and that means a lot of bad behavior, shortcuts, poaching clients, lying, stealing, all the fun stuff to get those players signed, you can't do that. Not a lot of draft picks, roughly 250-ish per year, depending on compensatory picks, not a lot of draft picks for 870 agents, that means a lot of fighting, a lot of stealing, a lot of lying. And also keep in mind the NFL schedule under the new CBA has moved from 16 to 17 games. That means more wear and tear on the players, shorter careers, more turnover with the clients for these agents, so a lot of fighting, hypercompetitive industry, not a lot of clients to fight over and that can lead to bad behavior.

Ain't cheap. Application is 2,500 bucks non-refundable, you got to have an undergrad and a master's or a law, or at least seven years of negotiating experience. Keep in mind, make a big pilot of this one, the background check, NFLPA is not screwing around, lots of gambling, NFL is high profile, they do a thorough background check, and as attorneys we know that background check anything you supply, it's gotta be current and it's gotta be complete and it's gotta be correct. It's gotta be all the bad stuff that happened in the background. Maybe Jamie got a DUI in college and was out of work for two years after that, whatever it is, you got to disclose it, and the NFLPA wants 10 years of employment history, and the NFLPA wants an information on the spouse as well. So they're not playing around because it's such a high profile business.

The exam. It's only offered once a year. It's a three hour test open book which is never fun though it sounds good, open book, yeah, sure, my notes all all set, but they ain't good. There's a 55% failure rate, excuse me. on the NFLPA agency exam, so that means 45% are passing this dang thing, and there was more people passing state bar exams then pass the agency exam for the NFLPA. If you fail the agent exam two years in a row, the NFLPA will ban that prospective agent from applying for another five years. So they're not joking around. They don't want you if you can't pass the test. So that could mean four years in undergrad, two years to get the MBA, you fail the test twice, that means you're looking at 12, 13, 14 years just to get in the door to become an agent, to sit at the cool kids table. That is a long journey, so take it seriously, they're not playing around. Staying eligible, things to know, got to talk to Jamie about the inactivity lapse, the NFLPA will kick the agent out if the agent cannot get a player signed to a team within every three-year rolling period, so agent signs a player to a contract agent player contract, but the agent cannot get a player signed to a team, you are kicked out from the NFLPA from being an agent and you got to start over if you wanna get back into it. So that's the deal with the NFLPA. They represent the players, their best interest, and they regulate the agents and they kind of run the show.

And man, it might be time to get Jamie a second cup of coffee 'cause now we're gonna dive into agency regulations, what you can and cannot do as an agent rep on page 18, lots of fun, do this, don't do that if you wanna keep your license, and this is where we kind of talk about the regulations, the disclosures, the deadlines, the bookkeeping, all that kind of fun stuff that Jamie is gonna have to take care of to keep that license.

Next page is gonna be Antonio Brown as an example of agency regulations. Again, I love these 3:00 am stories to kind of keep the agent aware of what's coming up if they wanna stay in the game, and probably my favorite, my favorite episode with Antonio Brown is gonna be a July, 2019, Antonio brown was sued by a celebrity chef for $38,000, had a big party and Brown decided not to pay the chef because Brown found a frozen fish head in his freezer after the party. I'm guessing Brown watched the Godfather one too many times, who knows, but he found the frozen fish head in the freezer after the big party and decided not to pay the celebrity chef. Guess who gets that call? It's going to be the agent. So it's not just Super Bowl parties and popping bottles, table service, trips in Las Vegas, it's this kind of stuff that the agent has to deal with after that contract gets signed. So lots of fun, some days. Standards of conduct, the NFLPA. These are their goals from the 30,000 foot level. They want to enable players to make an informed agent's lesion, and that's why all the due diligence, the background check, they wanna assure that agents provide effective representation at reasonable and uniformly applicable rates.

Now, if you go becoming a real estate agent side, decide whatever commission you want, you wanna become an NFL agent, they're gonna cap it at 3%. A 3% commission to the agent on that contract. And they want to avoid conflict of interest by the agents that compromise the best interest of the players, again, no side deals with the teams. The team wants to get the player into camp so they can win a game, agent wants to get the player in the camps so they can get paid, but the agent must be a fiduciary at all times for that player. And it always sounds easy, it sounds easy, sounds good, sounds easy but what if the agent is strapped for money, that's when they start making really bad decisions, and again, just because it's so hypercompetitive, it's a rough business to stay on track and be doing the right things.

Scope of activity is on the next page, that's providing advice, it is contract negotiations, enforcing contracts, that's what the agents do. And that's what the NFLPA regulates. And of course the catchall, any other activity that impacts the agent's integrity or competence such as handling funds and endorsements. So, excuse me. So the agent might be doing things outside or directly just getting a contract signed for the player with the Dallas Cowboys, whatever it is, if it's agent-related, agent-adjacent, the NFLPA is gonna have something to say about that. Grounds for certifications denial. You can't even get to the cool kids table if you provide misleading statements on the application, whoops, forgot to include that information about the DUI and how got fired about it, whatever it is, disclose, disclose, disclose, and Jamie's coming in and again, Jamie is an MBA, not a law degree, and so they kind of don't think about that stuff the same way that attorneys do, the NFLPA will be looking into what's on that application, anything that doesn't look quite right, they won't let you in the door.

Also, if there's any kind of soliciting clients between the application and the NFL certification, they will not let you in the door, so that means the prospective agent takes the exam, passes that, passes the background check, waiting for that piece of paper from the NFLPA that says you're in the door. You cannot be doing anything on social media that says, you're an agent and you're ready to do some business. And we kind of know that as attorneys, you wanna get signed into a new state, you got to wait until you get that slip of paper that says, go ahead, but agents don't think that way, because again, why? They like the action, they don't like the paperwork. General requirements, all kinds of stuff that agents must do. 21 things exactly. And it comes down to complying with the maximum fee schedule under the CBA. It comes down to timelines and deadlines about the annual itemized statement, kind of think about that. It's kind of like an IOLTA statement, it's gonna have money coming in, money going out for each player, you've got to keep good track of that 'cause at the end of the year on 5/1 is the deadline, the agent must notify the player and the NFLPA with the annual itemized statement, and you don't wanna be keeping those receipts in a shoe box because the player can show up at the agent store with an attorney and say, I'm gonna audit your books, I don't think you're doing things correctly, so that these agents who are kind of working as a mom in pop shops sometimes, they gotta be keeping good track of those records, 'cause if they don't, it's gonna get audited, it's not gonna be good, and that's gonna get them into a lot of trouble.

Notice of contract violations. This one is really tricky. This in red down at the bottom there. Think about it this way. If you're an agent and you represent a top tier player, and you find out that the NFL team is doing something kinda, kinda shady with the contract. Yeah, Tom Brady is gonna say, go get me my damn money, 'cause he's at the top of the food chain, Aaron Rogers, Russ Wilson, any kind of contract violation by the team, they want the agent to go get that money. But what happens if you are just a bubble player, you were seventh round draft pick, sometimes you're on the practice squad, sometimes you're on the team, you're just sort of a fill-in player. If the agent notifies you that he or she has to go contact the NFLPA about this, that player who is already on the bubble is gonna tell the agent to do nothing, because the player, the bubble player doesn't wanna get blacklisted from many teams, doesn't want to create any waves, right? But this is an affirmative obligation of the certified agent to the NFLPA, it's a duty that they have to have to meet to keep their license. So what you wanna have that conversation with Jamie about is you gotta notify Jamie, attorneys coach up the agents so the agents can coach up the players, got to have that conversation that agent's got to have that conversation ahead of time with the player so there's no conflict down the road when the agent finds out that the team did something kind of funky with the contract and the agent must notify the NFLPA. Prohibited conduct, next page, there's 21 things you must do and 32 things you must not do as an agent.

All right, so you can't be doing inducements, we know about that. Agent can't be paying money to the player, family, or friends to get that kid to sign with the agent. You can't be providing any kind of false misleading information to induce a signing, cannot conceal material facts with the player during negotiations, who would do that? Agents wouldn't do that. So a player shows up thinking about signing with an agent and the player says he's a player, he's a quarterback and says, are you representing any other quarterbacks at this time? 'Cause that's gonna impact my ability to get a job. I don't wanna go down and work at Amazon on the assembly line, not interested in that. Agent says, yeah, you're gonna be my only quarterback, you're my number one client, my only quarterback, trust me. But the agent just signed two other quarterbacks to an agent player contract last week and they concealed that fact from the player. That's the kind of stuff that's going to get the agent in a lot of trouble with the NFLPA. Also circumventing the maximum fee schedule with the player agent contracts, I'm sorry, with the player team contracts, that maximum commission, again, is 3%, but you don't wanna be playing any games with that fee schedule, an agent might think, she or he is being tricky and they say, you know what? I'll tell this player I'll negotiate a player team contract for 1% instead of 3%, I'll take it, I'll take a cut on that, but I'm gonna make it up on the endorsement contracts, I'm gonna bump up my endorsement commission from 10% to 12%, so it's kind of a wash. Can't be doing that stuff. Any commissions that you have in place abide by them, don't play with the numbers, the NFLPA is gonna find out about it cause you got to send these contracts over to them to take a look at, and that can get you in a lot of trouble.

Also interacting in any sort of tortious interference is gonna be next. That would never happen. Would agents poach players? Well, probably. So that's why they have this rule, you cannot be contacting players who are signed with an agent already. You can't be having discussions about the agent, the current SRA and the SRA again, is that player/agent contract or anything to do with the players contracts with agents or teams, can't be doing it, no poaching, no tortious interference, but there's gonna be an exclusion of this. So the agent can't reach out and have communication with the player on those issues, but if the player initiates the communication with the agent, then it's okay to have that conversation, but as attorneys, we know you gotta be smart about this. If the player reaches out to an agent to have conversations about the next player/team contract with the Dallas Cowboys, open game at that point to have that conversation. But the agent wants to be smart and not open the door to conversations about endorsement contracts, excuse me, because that would be a violation, that's probably tortious interference with another agent who's representing the player on endorsements. The player has got to open the door to the conversation, then you can have that discussion.

Next page, bundling. You cannot bundle the contracts. A player might have three separate agents. Agent one handles the player/team contracts, agent two handles the endorsement deals, and agent three handles the investments. So you can't have a top tier agent show up and say, yeah, well, I'll handle your player/team contracts as long as you let me exclusively handle your endorsement deals, and that's a big issue, that's not a small deal because again, the player/team contracts, the agent's commission is capped at 3%, but for endorsements, there's not gonna be a cap on that, so you can have 3% for the player/team contracts, 10% let's say for endorsement deals, and that can add up a lot, you probably make more money as an agent handling the endorsement deals than the player/team contracts in a lot of ways.

Arbitration, that's coming up next. Stuff goes wrong, always does and you have to agree to arbitrate when these problems come up, that means if an agent gets an application denied because Jamie lied on the application, go to arbitration on that. Any kind of agent player disputes, again, we talked about being a fiduciary, if an agent gets a horrible contract signed, you know, incentives that can't possibly be reached, player gets off about it, go to arbitration. NFLPA will stay out of that, again, 'cause we know about that, NFLPA doesn't care if it's a bad contract, the NFLPA only cares if it's no contract signed. So if it's bad contract, that's between the agent and the player, because they have contract privity. Agent disputes, yeah, they do fight over money. They do fight over who represents who? So that's goes to arbitration as well. So you got to abide by arbitration or you don't go to the NFLPA and become an agent. Disciplinary action, yeah, this stuff is only gonna give you a range, the NFLPA can do a bunch of stuff, but the agent could just be informal, put a note in the file, says test, don't do that. If it's bad enough, it's gonna be formal, it goes to the public and the player so they can, they can see it and decide if they wanna hire this person down the road, they can suspend yet, they can prohibit you from recruiting new clients so if an agent is dropping the ball, making mistakes, negligent, the NFLPA might look into it and say, you know what? You are capped at representing 10 clients, but we're not gonna allow you to represent any more than 10 for the next 48 months, something like that.

So that's kind of what we're dealing with the rules and regulations, 21 things they must do, 32 things they must not do, and these are not suggestions from the NFLPA and we know that as an attorney. And here we go, let's kind of sum it up a little bit for Jamie at this point. Jamie is ready for another cup of coffee, probably a donut for a sugar rush, it's a lot of information and we are just, just about halfway done. So we talked about, you know, the framework, the CBA, the NFLPA, they represent the players and regulate the agents, talked about the eligibility, how you get in there and the importance of the disclosures. Then we looked at the agency regulations, do this, don't do that, and again, it comes down to deadlines. It comes down to disclosures and good records. That's how the agents keep themselves at the table, so now we're gonna dive into the agent/player agreements, the SRAs. Probably didn't see a whole lot of talk about the SRAs in Jerry Maguire because that's not the fun part of agency, that is not popping bottles.

So let's jump in and we are now on page around 30, 31 is this area for the player/agent contract. So all the fun stuff, it's gotta be a standard form. There's a pre printed form in the NFLPA, don't get creative, use the contracts just fill it in kind of like a real estate contract you get it's already done for you, fill in the open dots, open blanks. The work of an agent is in the negotiating, not in creating a brand new contract, that's a really creative. Do not get creative with these contracts. Use the forms that they provide because if you don't, if you color outside the lines on these contracts, the NFLPA will not enforce it against the player and you can lose your commission. And again, there are deadlines with this, if you file an SRA, you gotta get that over to the NFLPA within five days of signing. It doesn't sound like a big deal to attorneys 'cause that's what we're dealing with all day, but again, if you are an agent, you like the action, and you're not thinking about the stuff, you're flying around the country, trying to sign clients, gotta pay attention to these details to stay in the game. Got to love this one, middle of the page there with the SRAs. If a player is under the age of 21 and wants to sign with an agent, guess what? The player needs a parent or a guardian also to sign off on that contract. So it's a kind of tells you what they think of the agents when they want the parents and guardians signing off on a contract for 50 million bucks with the kids.

Compensation, 3% of commission, the maximum fee is, the maximum commission is 3% of the player's compensation and it's not as easy as it sounds. Compensation that the agent can get a cut off includes, salary, kind of that, you know, the typical paycheck that comes out every two weeks from the team, any kind of signing reporting, roster bonuses and performance bonuses, throw 10 touchdowns, get a million bucks, that kind of thing. Agent is not entitled to a cut of any kind of honor incentive bonuses that the player gets, so being named to the All-Pro team, things like that, rookie of the year, and any collectively bargained benefits that the NFLPA got that's not, doesn't have anything to do with the agent, so the agent doesn't get a cut of that. So again, maximum commission, about 3% for these player/team contracts and for endorsement contracts, we've talked about that before, you don't have that same cap, and again, that's why agents like to handle those endorsement contracts too, but you can't be a bully and force the player to let you handle the player/team contracts and endorsement contracts. Agency compensation continued. Agent only gets paid when the player gets paid and these contracts are no joke, you're getting cut and bounced all the time from these teams. You see it all the time. But the agent only gets paid when the player gets paid.

Now, if the contract between the player and the Dallas Cowboys involves deferred compensation, that is due and payable at a later date, it is allowed for the player to pay the agent today based on that deferred compensation as long as all the contingencies are cleared, that's fine. Why would they wanna do that? If you have kind of a middle of the road player, and you have a top of the line agent, maybe the player wants to pay the agent today on that differed compensation, so, Dallas Cowboys, they work out a deal and then the Cowboys are gonna pay the kid 5 million bucks five years down the road, great, due and payable five years down the road, player can pay the agent a commission, however, and this is not negotiable, you must do a present value analysis prior to that commission being paid because 5 million bucks today, especially with all the inflation that we're seeing now, 5 million bucks today day is worth more than 5 million bucks five years down the road, figuring out the value of that 5 million bucks down the road and the agent gets, let's say the 3% commission on that.

Renegotiations happens all the time if the player gets tired of the agent and fires the agent and the player is able to get a contract renegotiated up from a million bucks to 1.5. No fee to the agent because the agent didn't do anything, bye-bye. But if the agent is able to renegotiate a salary increase, the agent's fee is based on the increase, so there's no windfall to the agent. So the original contract was for a million bucks, agent let's say gets 3% of that. A player has a good year, it's gonna be renegotiated up to 1.5 million. The agent gets a 3% commission on the increase, the $500,000, not on the 1.5, because that would be a windfall. And then we're gonna go down to renegotiations that decrease the salary and that happens quite a bit, again, the agent only gets paid for what the player gets paid, so when it goes down, then you got to do those calculations to figure out who gets what, but it's the agents got to take a haircut as the player takes a cut as well. Agent termination, man, this 25, 26 year old kids are firing agents left and right and sometimes they're assigned to a bunch of agents, it can be a mess. But here's one of the protections for the agents. So let's say on a Thursday, the contract is almost ready to be signed between the player and the Miami Dolphins, 99% done, it's gonna be signed on Friday, and the player thinks he's gonna get tricky and fire the agent Thursday night to avoid paying that 3% commission.

Well, that's the sandbag rule. The agent is gonna be paid based on the reasonable value of services if he gets fired right before the contract gets signed and that's to protect the agent. But what did we talk about earlier today? Got to make sure that you keep good records, 'cause if you don't have good records, guess who's gonna lose out on that one? Talked about the disclosures, the deadlines and the records, so player wants to get tricky, fire the agent before the contract gets signed, that's when you got to show up at the record so you can get the reasonable value, 99% of 100, you know, 99% of 3% of a hundred million contract, however, that works, but that's what you gotta do, keep those records so you can get paid for the reasonable value of your services up to the point of termination.

Also, the timelines, this is so important, it looks like a non-issue, but these player/agent contracts, they're not, if they're terminated, it's not terminated immediately. So with the vets, if the player or the agent wanna fire the other one, that contract between the player and the agent remain in effect for five days. So if an agent fires a player 'cause the player did something stupid, the agent is still a fiduciary for five days after notice of termination, and that means taking those phone calls, that means, you know, working in the best interest of your client for those five days, that's an obligation. You know, if you know, like Michael Vick involved in bankrolling a dog fighting operation, you wanna get as far away from that as quickly as you can, but if you're Michael Vick's agent, you are on the hook for five full days after that contract gets terminated.

So let's jump into player/team agreements. We looked at the SRAs between the agent and the player, and now we're gonna look at the player/team agreements. And that is up on page 36 if you're playing along. So we've got another, oh, look at that. Michael Vick, what do you know? Just right on time, Michael? So this is one of those 3:00 am phone calls that you absolutely don't wanna get if you're an agent and you would not expect this to happen from a player who's the highest paid player back in 2004. Michael Vick had $130 million contract and he used some of that money to bankroll a dog fighting operation, went to prison, sentenced to 20 months in federal prison. And the Atlanta Falcons filed a breach of contract. They wanted to claw back some of the bonus money. When this kind of stuff comes up, the teams can't claw back, you know, the typical salary money, what you might get every two weeks at a job, but the teams can try to claw back any kind of bonus money 'cause if Vick gets a $20 million bonus in August before the season, and then he goes to prison, he's not available for work, so the team can try to claw back that 20 million bucks. But let's think about this, you've got to talk to Jamie and say, when this comes up and it does come up, how are we gonna handle it? You gotta be ready for these 3:00 am phone calls, and there's nothing in the agency book that says how to handle the call when your client is accused of bankrolling a dog fighting operation.

Areas of conflict. This is the stuff that comes up between the teams and the players, and it's not just sign a contract and do what you want, under the collective bargaining agreement, there's some give and take. So if a player is invited to the Pro Bowl and they're healthy, they must go, and that's why I always wonder why anybody would ever go to the Pro Bowl, this is such a dangerous, violent sport, the career is only three years, why would you show up for that? If you're healthy, you got to go. You can probably get excused, but the NFL League can say, no, no, no, you're healthy, show up, you're gonna make us some money. Other activities, significant risk of injury. You got to stay off the snowmobiles, stay off the jet skis, you don't wanna become a rodeo clown because if you are doing something stupid outside of work as an NFL player, the teams can try to claw back some bonus money on that.

So you got to keep that in mind. salary. If you're 25 years old making 2.5 million bucks, you can spend that pretty quickly as Patrick Ewing, played for the New York Knicks used to say, athletes spend a lot of money 'cause they make a lot of money, and that money goes quickly, and their career goes even quicker. And you got to keep in mind the players are only paid over about a 36 week period, and if you're 25 years old, you got a stack of cash coming in, you're gonna be spending that, so you got to... attorneys got to coach up the agents to coach at the players to handle that budget. Contract termination. This is not a fun league to be in. You can get cut at any time, unless you have a no cut contract. You can be cut based on skill, conduct off the field and also salary cap. You can be the best player in the league, and if a team says, we can find somebody to do 80% of what you can do at 50% of the salary, you might get cut. Also side deals, got to disclose anything that goes into the player/team contract. There cannot be any kind of undisclosed agreements there, any side deals 'cause again, this is salary cap league, they want parity, so that's gotta be disclosed. Work injuries. If a player gets hurt on the job, they'll get their salary for the season, but not future seasons. They might, or they will get medical expenses, but the salary that you know, that W2 paycheck that comes out, it's gonna drop off after a year, again, that goes back to it's a violent sport, save your damn money 'cause you're gonna be out of the league pretty quick. Let's move on here.

Forfeit of salary. This is what you can lose. This is how you can lose your money under the CBA. So willfully fail to report or practice like Johnny Manziel going out to Las Vegas, he got, you can lose a lot of money that way. Unavailability due to incarceration, Michael Vick, non football injury, playing as a rodeo clown on the off season, you can lose money that way. And then voluntary retirement, get some bonus money, you're healthy and you decide to retire, you can forfeit money that way too. And we saw the Andrew Luck, he retired from the Indianapolis Colts, now most teams, if you have good relationship with team, they're not gonna claw back the money, but that is an option, they do have that option to claw back the money, but you wanna make sure coach up these agents so they can coach up the players. This is stuff you gotta be aware of 'cause it does come up down the road, right? Kind of like that prenup agreement, you don't wanna think about it, everything is gonna be roses, but this is the kind of stuff that does come up and creates that conflict between the players and the teams and the agents and the players, and that's not what we want, we wanna prevent this stuff ahead of time by clearly communicating the stuff that's gonna be on the way for them.

Voiding of guarantees. Teams and players can negotiate circumstances where the guarantee of unearned salary can be voided, so a player has got some shady background, maybe some weight issue problems, not hitting the weight room, whatever it is, the team can try to avoid out some of that guaranteed money that's unpaid that's gonna be paid down the road if there's a violation, so if you're an agent, as the attorney, you talk to the agent, so the agent talks to the player you want to, you wanna trim that up as much as possible, so with these voiding of guarantees, you wanna trim that down with scope and/or time, and if you can't get one of those, then you try to get something else in the player's benefit if you can't get it, so you have this voiding of guarantee clause, and the agent goes in and says, well, we wanna narrow down the scope of this, we wanna narrow down the time of this, it's not gonna be a two year term, it's gonna be a one-year term where you can kind of try to claw back that money. But that's kind of what you're looking at and that's where the agent really needs to pay attention if the team is trying to cover their bases on that, voiding guarantees, it's gonna happen, so the agent is gotta be ready for them.

Injuries. Injuries happen, yes they do, it's a three-and-a-half year career, you're getting hurt all the time. This is where teams try to claw back that money, there's a falling out between the player and the team, they will come at the player any way they can to get out of paying any money. So here's what we know as attorneys, anytime it says full and complete disclosure of physical and mental conditions, that is vague, what does full and complete disclosure mean? That's gonna be one of those deal points where you're fighting. What about prompt reporting of work injuries? What's prompt? Five minutes? Five hours? Five days? Five months? What if it is a concussion and the player doesn't report it because the player is too dinged up to really know that he has a concussion. That's the kind of stuff that comes up and when the relationship goes bad, this is the kind of stuff where there's that sort of that gray area where you're gonna have that fight between the player and the team.

All right, so we got the contract stuff done, we talked about the SRAs, we talked about the player/team contracts.

Now we're gonna talk about the NFL's personal conduct policy. And as soon as we say the NFL's personal conduct policy, Jamie spits coffee all over our desk. But believe it or not, the NFLPA does have a PCP and it is used very often. So let's go with our 3:00 am phone call for the PCP and that, you know, I'm from Seattle so I'm, I'm from Seattle, so I'm contractually obligated to make fun of the New England Patriots. So there's nothing in the agency manual when you get a call about Deflategate. So apparently allegations claims that Tom Brady knew or had information about the use of underinflated footballs, the reason you do that is you get a better grip, and again, the NFL is based on uniformity, so they measure these balls, the air pressure, all that, they measure everything because they want uniformity, which is good for gambling. So went back and forth, you know, big bag of deflated footballs, and who knows, who knows what was going on, but at the end of the day, Brady won a couple rounds, the NFL won a couple of rounds and Brady just got tired of it, and he agreed to be suspended for four games, fined about 2 million bucks and I'm sure his wife, Gisele, was not too happy about that. She's been on social media going after the wide receivers for not catching the ball. I'm sure she had a couple of choice words about this incident.

So anyways, Brady sat out, lost some money, Patriots had to pay a bunch of fines because the NFLPA said it involved conduct detrimental to competition. But what does that really mean? I mean, this was a lengthy, this was just front page news forever, we got tired of it. And what did they decide with a 200 page report and two years or whatever it took? Down at the bottom here, this is what they said. They said after the investigation, it's impossible to determine whether this activity, deflating the balls, had any impact on the outcome of games or what that impact was. So basically a big nothing burger, but what the NFLPA said is that you did something, it made the league look bad, here's your penalty. And that's what you're dealing with the NFLPA because it's so high profile. So the PCP covers everybody, it's conduct detrimental to the integrity of league, and it covers everybody, it covers the owners, so we had Robert Kraft, owner of the New England Patriots, down in Florida and had some sort of allegations at a massage parlor, we'll leave it at that. We have coaches like Spygate, again with the New England Patriots, I'm picking up on a trend here. And then we have players like Brady with Deflategate. So it's gonna apply to everybody. If you're working in a hot dog stand, probably you're gonna be covered under the PCP, but really everybody in the league is subject to the PCP. And it's pretty draconian. I mean, a not guilty verdict in a criminal trial is not enough. You can go to a criminal trial for, let's say a DUI, you're found not guilty, but the leak shows up and says, you know what? Just like kind of Deflategate, you made us look bad, we don't like that so we're gonna penalize you for that. And that's their prerogative in the NFL. So the policy kind of the expectations, the standard of conduct. You want the players, or whoever's being investigated to cooperate as much as possible. Those sort of mitigating circumstances will be taken into account.

So you've got a player, he's got some anger management issues, he's out on the freeway with his golf clubs, beating the hell out of somebody's 68 Ford Mustang. Well, if he's doing that kind of stuff, show some contrition in that, they're gonna take that into, take that into consideration when they decide what to do. Leave with pay if a player does something stupid, is formally charged or there's reasonable belief the player cannot be involved in practices or games with the team. But to avoid a spin-out, the player can be involved in meetings and workouts and non football related activities at the team as long as the team was in there and the player is gonna get pay through the investigation and the appeal. I know it sounds kind of like, well, why would you want the player at the facility? We don't want these guys spinning out. They've been on the same regimented schedule since the time they were about 10 years old as a player, got to keep them from doing something worse, so they can be at the facility for those meetings and workouts and non football related activities. Reporting. There is an affirmative duty to report suspected violations to the NFL office. So it doesn't have to be a conviction, just any kind of, if any there's any suspension, any suspicious activity going on that might violate the policies, you got to report that to the NFL office. The activity itself, let's say somebody gets again, a DUI, a DUI, you failed to report it, that could be violation one. If you failed to update it, that could be violation two. So you could have, the act itself is a violation, the failure to notify them is a violation and failure to update them on what's going on, you could have three separate violations from a single instance. They wanna know what's going on so they can decide what to do about it and protect the league. And funnily enough, they say the ownership club and league officials are held to a higher standard and more significant than the players and that's not always, always the case, but that's, that's kinda what they say.

All right, so let's look at a quick summary here. We're getting close to the end of this. Curse of knowledge. You got to know that, if you're a 20 year attorney and you're dealing with somebody who's 25, 26 years old, they wanna become an agent, they're not gonna look at these things the same way that we do. So something as simple as inducements and what we call a thing of value. Jamie, not coming from a legal background, Jamie thinks a thing of value is a big old, big old sack of money. But as an attorney, we know an inducement can be, you know, a big old stack of money. It can be a promise, it can be a concession, it can be a free jeskie, a thing of value, there's no diminimous protection there, you cannot be providing any thing of value as an inducement to get a player to sign with you. So to kind of look at that, don't look at it as a 20 year attorney. You've got to think through, you know, what's this person's background and knowledge of this and work from that perspective. The unfun stuff, you might've heard me talk about this before once or twice, but the stuff that's gonna keep the agent out of trouble, you watch the ESPN ticker, it's the unfun stuff. It's paying attention to the deadlines, the records, and the disclosures. I can't emphasize that enough. And that's where attorneys come in. We coach up the agents so the agents coach out the players. 3:00 am phone calls, that's where agents make their career, it's not just getting the contract signed, it's handling all the bad stuff that comes out down the road. It is client management. It is dispute resolution. It's handling those calls as a fiduciary to help your client out. And then also we know as non-agent attorneys, you've got to follow that bright line test so we can do employment law, we can do contract law, but if we are a non agent attorney cannot be calling Jerry Jones at the Dallas Cowboys and saying, I got a quarterback for you. Just can't be doing that stuff. So hopefully that helped everybody. I think there's gonna be more demand for sports law attorneys considering that college athletes can now sign these endorsement deals. It's a big old pool of 500,000 student athletes. That means more agents are gonna be interested, more people are gonna be interested in becoming agents, which means more demand for sports law attorneys.

All right, next page is my contact information. I love this stuff, it's my passion, so questions, comments, feel free to reach out. And I really appreciate everybody taking the hour to talk about sports law, take care.

Presenter(s)

BBJ
Brian Brunkow, JD
Attorney and CLE Instructor
Law Office of Brian Brunkow

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