By Manny Arora
When professional athletes hire a contract advisor (a.k.a. agent) what is it that they actually pay for?
The NFL Players Association lists the sole duty of the agent to provide contract negotiation services to the player. For his work, the agent can earn up to a 3% commission on the total value to the contract.
Due to the fact that many agents have law degrees, you would think the agent’s responsibility to the player is no different than that of a lawyer to a client. But that is hardly the case. The agent’s job of negotiating the contract has become a minor part of their duties. Instead, agents serve as mentors, travel agents, therapists, day planners, you name it.
We all know there are numerous rules in place governing the conduct of both agents and players (especially those about to enter the professional ranks from college). However, the reality is that regardless of the rules and regulations, there are violations at every level. In the quest to justify the fees being paid by players to their agents, recent cases in the media tell us that agents are offering lavish gifts to the player, their families, and their friends (to include homes, cars, jobs, etc.). To get around some of the regulations, agents are now are rumored to offer money directly to outgoing collegiate players under the guise of an “endorsement” bonus (the money businesses may pay an athlete for endorsing their product).
The question then becomes do we want to solve these problems or pretend like they are anomaly when they do get exposed? Aside from actually enforcing the rules (see the recent violations regarding the football and basketball programs at U.S.C. and the lack of any action), what can the agent do to change this pattern of activity?
The answer, from my perspective, is to treat the athlete / agent relationship much like a lawyer to a client. The lawyer / agent has a smorgasbord of services and the athlete / client can pay hourly for those services. As most agents are lawyers (though not practicing) they should have an understanding of hourly billing. As we all know, legal fees are earned on an hourly basis. So why aren’t contract negotiations and other services being done by the agent at a fixed hourly rate? This would resolve the temptation for agents to provide extracurricular incentives to athletes to get them to sign with them. If all agents billed hourly, it would level the playing field for all agents and the athlete would benefit because he or she would decide on an agent based on merit and not who has the best “benefits” package.
NFLPA statistics indicate that the median salary for an “average” NFL player is nearly two million dollars. As such, the “average” NFL player would pay nearly $60,000 to that agent for negotiating the contract (3% of two million dollars). However, at a typical hourly rate of $400, the agent / attorney would have to spend over 150 hours to earn $60,000 in fees. That would come out to nearly a full month of forty-hour work weeks to complete a single contract. With the pro forma nature of the contracts in the NFL, I seriously doubt that any advisor, with a rudimentary understanding of math and the English language, would spend that much time on an individual contract. Most contracts are negotiated over the phone, fax and email, without the expense of travel. Experience teaches us that even the most convoluted or complicated contract could be done for far less money being paid by the player. I would dare say the “average” player’s contract regardless of it being a re-negotiation, dealing with free agency, etc. would not take more than 30 to 40 hours of actual intellectual work. However, under the current commission based system, the “average” player is paying his agent nearly $2000 an hour to negotiate the contract. Thus, the temptation of extracurricular gift giving runs rampant.
With my proposal, the “average” NFL player would save over 70% in agent fees ($400/hour times 30 hours equals $12,000 versus $60,000). That is cash money in the players’ pocket. The player gets what he pays for, a certified agent and attorney to negotiate a contract, thereby allowing the NFL player to maximize the money in his pocket. The player then has enough money left over to hire his own personal assistant to get his laundry, pay his bills, book his flights, etc.
Manny Arora graduated from Georgia State University, College of Law, in 1994. He also earned a Bachelor’s Degree in Nuclear Engineering from Georgia Tech in 1991. Manny currently manages his own law and sports practice (Arora & LaScala, LLC) in Atlanta, Georgia. Manny can be reached at email@example.com or (404) 881-8866.