An immersive experience in the world of sports that will take students through the four stages of a professional athlete's career. Utilizing lectures, guest speakers, reading assignments and hypothetical walkthroughs, students will learn how the best sports agents manage clients at each of these four stages. This course will provide each student with the skills necessary to guide an athlete through the difficult decisions that can make or lose the athlete millions of dollars, as well as affect their public image and career. Walking through the four stages of an athlete's career, we will provide a broad scope of the landscape of amateur and professional sports so that you can avoid the pitfalls and traps that so many have fallen into in the past; not to mention, bringing you updates throughout the course regarding the rapidly changing sports world that we live in today. Analyzing the best practices in the management of the superstar athletes with whom Professor Carfagna, Professor Volante and their expert guests have worked, we will show you how to manage the career of any professional athlete who might seek your guidance at any stage of his or her professional career.
Darren Heitner - Fiduciary Duties of Agents Pt. II
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From the course by Case Western Reserve University
Becoming a Sports Agent
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From the lesson
Module 2: Recruiting and Managing Clients
An introduction on how to approach recruiting clients, how to build an agency, and how to manage clients once they have signed a representation agreement; an analysis of the effect of professional sports on youth sports, and vice versa.
The optional videos look at the fiduciary duties an agent owes his client.
Meet the Instructors
Peter A. CarfagnaDistinguished Practitioner in Residence
School of Law
Richard J. Volante, Esq.Adjunct Instructor, Representing the Professional Athlete
Case Western Reserve University School of Law
[MUSIC]
So, let's move forward.
And now, obviously you can't have an agent while you're still an amateur athlete.
That's what we're talking about.
You can't receive impermissible benefits,
benefits that aren't available to other non-student athletes at your University,
you know, you can't be paid to play, and you can't promote products, and services.
We know those general rules, but now let's talk about the interface where
he's going pro, the next stage of the pre-professional athletes career,
he's finished his last ball game as you say.
The negotiation of the representation agreement.
You've been on both sides of that.
What would you say are the most important clauses there in terms of scope and
exclusivity?
We're talking about the marketing agreement for the most part here, not so
much the standard form that the leagues would enforce.
What would you say in your experience are the most important clauses in that
representation agreement for off field opportunities taken Mansel for example.
LMNR are representing him.
>> Yeah, I think it's easiest if we stick to one sport so lets stay on football.
As you mentioned there is such a thing as the standard representation agreement
in football.
That is governed by the NFL player's association, and fees are capped at 3%.
And that's really where most negotiations surface between player and agent.
Whether you're going to charge up to 3% or something lower than that.
On the other side, on the marketing end,
I would also say that the compensation provision is the most important.
And when we're talking about endorsements,
we're talking about all field opportunities, it is very typical for
an agent to receive up to 20% on deals that the agent
is able to procure, and have some sort of substantial role in the negotiation.
Of those deals.
It should be referenced that often times
players have this belief that they will be able to command major national, or even
international marketing opportunities, and that's the furthest from the truth.
Especially, if you're not in one of the, if you're not a quarterback or
a running back for an NFL team.
If you're an offensive lineman, or a defensive lineman it's much more likely
that you're gonna command regional, or much more localized opportunities.
And so, again the compensation provision is of vital importance.
But probably, number two is whether, or not it's an exclusive, or
a non exclusive agreement.
Agents rally hard to get the exclusivity in there for a variety of reasons.
Obviously, it prevents a potential dispute between that agent, and somebody else
holding him or herself out as the Representative for those marketing deals.
And so, there is very little confusion.
The agent will want everything to go through him or her, and
it also largely guarantees that the agent will satisfy that
substantial negotiation clause that's often found within those deals.
I mean, just like any other contract,
there are boilerplate provisions that are very important.
It's unfortunate, but often times, agents and
players end up in dispute over the nonpayment of fees.
And this is both with the team contract, but also with marketing deals,
even though, another provision that's oftentimes negotiated is
if there is a deal with a third party company,
is the company going to pay the athlete directly or the agent directly?
And that's of extreme importance because if the athlete's being paid directly,
then the agent has to invoice the athlete for his or her percentage
of that deal whereas, if the company is instructed to pay the agent, that's huge.
It typically, will preclude a dispute arising over non-payment of the fees.
The agent should be taking the money into a trust account.
Dispersing the portion due to the player, and
then, sending the rest of the money to the operating account for the agency.
It's a sidebar, but that is very important that the agent doesn't commingle funds
between the agency and the athlete.
That can also become a dispute if in fact there's an issue on that end.
>> Let's stay with the trailing commission issue.
We've seen a lot of atomization of some of the larger agencies,
IMG is now owned by WNE.
And we see Wabsomen, and Octogon, and
we see excel sports which is a break away from the old IMG.
How do you follow the trailing commission
thread generally without getting into any confidential information.
Agreements that are executed during the term, and
perhaps those that are substantially negotiated during the term.
But what about an agreement that just happens to be deal points before
Excel started its own agency?
>> Right, so, you know, the way that the speeds are avoided is if in fact an agent,
let's say there's Agency X, and Agency Y, and
the agent is at Agency X >> And negotiates a deal.
The parties to that deal execute the contract, then, agent leaves to agency Y.
There's no dispute there, typically,
under the employment agreement between the agent and agency X.
Agency X is going to receive the commissions it is due under that contract.
Even if the substantial amount of those negotiations occur at agency X,
again, they're usually won't be any be any dispute there.
>> Start to finish up, and talk about the fiduciary duties that attend.
Now, we have the signed.
We figured out the commission stream, too, Darren.
>> But the fiduciary duties, the avoidance of conflict of interest,
the need to make full disclosure of any potential conflicts.
And then, we have agent misconduct, just straight up fraud,
mismanagement, kick back Issues I'm thinking of Tank Black, Vince Carter.
Those have gone to full-blown litigation.
Kirk Wright, Steve Atwater's case.
These are agents that led them down the primrose path and/or investment advisors
who have lost all their money.
Now, those are criminal convictions that we're talking about in those cases, but
how does an athlete if he can, protect himself in those situations from,
A scoundrel sort of an agent.
Let's stay with Vince Carter Tank Black.
As you know, in that case he was able through the [INAUDIBLE] which was
unfortunately draft is still collect commissions even though he was in jail.
>> Yeah. You know, there's duties of loyalty.
Duty to obey.
Duty to disclose.
Very important.
Avoiding conflicts, but how does, as you mentioned.
The question is, how does an athlete get around being put into a situation where
he or she may follow an agent's advise to his or her detriment.
I think the key is to ask as many questions as possible.
The agent never take a particular agents advice as the supreme words.
>> Generally, you're now primarily an attorney.
Is it fair to say, disclosure of any potential conflicts?
As an attorney, that's what you would advise every agent in drafting
a disclosure of any potential conflict of interest.
Is that what sets the agent free?
>> Well, nothing necessarily sets the agent free entirely, but
I think that's a very smart first step.
>> So, would you recommend,
even though it's maybe over-lawyering >> There are a cross indemnification
clause, if there's been a misrepresentation coming in,
a breach of a rep and a warranty coming in, either way, both the agency, and
the athlete should be able to seek recourse against the party who has
breached that material representation coming into the relationship.
Well, as a lawyer, it depends on who I'm representing.
>> [LAUGH] >> As to the warrantees are in there.
But certainly, as I mentioned, the contracts between the players and
the agents when we're talking about those for
team negotiations are very standardized.
But when we're talking about those off-field issues,
the marketing opportunities, etc., you always see at least
a paragraph that is designated for representations of warranties.
And oftentimes you will see something boilerplate that says both parties,
are free to enter into this type of agreement,
along with other representations of warranties that are mixed within.
>> I think it is very important to have that there, and
not necessarily an indemnification that is a part of that,
if in fact one of those representations of warranties are breached, but, certainly
that would be a material breach of the agreement that that would allow either
parties to get out of the agreement, even if it is exclusive in nature.
>> Tremendous answers, we really appreciate you're being with us today.
Is there anything you'd like to add, that any of the class should know about
presenting the pre-professional and the professional athlete?
>> Well, obviously, I have tremendously respect for you,
I think you do a great job with this class.
I hope a lot of people are able to gain a lot of insight from not only you but
your other very experienced guests.
I've used your book, representing a Professional Athlete in my class,
I didn't Indiana University for four years now.
I'm going to start using my own, as well.
So, that was published by the American Bar Association recently,
which is called How to Play the Game.
Now, the more information that you can get about this industry, the better.
It's ultra competitive, but if you do a good job for athletes,
you will quickly find that its largely based on referrals, and
you'll be able to build your business quite quickly.
>> Proud to call you a colleague, and a friend Darrin everybody checked the sport
agent blog on a regular basis, and check out your new book its great.
[MUSIC]
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