(Editor’s Note: What follows is an excerpt from Chapter 6 (Sports Agents and Contracts) of Rules of the Game: Sports Law, an engaging and informative book written by one of the leading authorities in the field, Michael E. Jones. Jones teaches art, sport and media law at the University of Massachusetts Lowell. He began as an agent for professional athletes and TV celebrities and went on to co-create the Association of Representatives of Professional Athletes, which was later assigned to the NFL Players Association. Jones was the first Chairperson of the American Bar Association’s International Forum Committee on Sports and Entertainment Law. His books include Sports Law and Intellectual Property Law Fundamentals. Jones serves as an adjudicatory hearing officer for the Olympic sport of triathlon and is former regional legal counsel for the national governing body for swimming. To order, visit www.rowman.com, or call 800-462-6420.)
Contracts and Sports Agents
Not all sports agents are lawyers nor does the law require it. An advantage to retaining a lawyer in representing an athlete playing on a team professional sport is that he or she is trained in the elements of forming and negotiating contracts.
On the other hand, occasions exist when lawyers and accountants cannot personally connect with athletes the way fellow performers that want to expand their business affairs into the sports agency business might. Music and media mogul Jay-Z recently entered into the sports agency world via his Roc Nation Sports firm, which is a subsidiary of his entertainment company Roc Nation. Jay-Z’s personal relationship with Yankee Alex Rodriguez, which led to him signing on as a client, and his desire to help professional athletes make money in the same way he has helped artists in the music business is an unprecedented aggressive and innovative move. To succeed Jay-Z or his associates will need to gain a skill set in negotiating sports contracts.
The skilled agent, lawyer or not, must become knowledgeable about how the athlete meets the needs of a team; recognizes salary and bonus money parameters; has familiarity with the terms of the collective bargaining agreement; understands the athlete’s strengths and weaknesses; has experience in securing personal services contracts; and is sufficiently personable to work with an adversary to negotiate a contract in the best interest of the athlete-client.
By way of an example, on the narrow issue of negotiating a baseball contract for a high school or college player that was drafted by a major league team, these are aspects of the collective bargaining agreement that an agent must understand. Teams may no longer immediately sign a drafted athlete to a major league contract. Each major league baseball team has a limited bonus pool that they can spend on signing bonuses for newly drafted players in addition to the negotiated annual salary. Bonus pools fluctuate depending on the number of draft selections a team has during the first ten rounds of the June draft. In the most recent draft year, the bonus pool ranged from over $17 million to less than $4 million. Each individual draft slot is assigned a recommended bonus amount. The current recommended signing bonus for the first pick of the draft is around $9 million, whereas the last choice in the first round is slotted at around $2 million. However, a team may pay more than the slot recommended bonus for an individual player so long as the total paid does not exceed that team’s bonus pool. A team that exceeds its signing bonus pool limit must pay a financial penalty depending on the dollar amount of the overage. A team has until July 15th to sign a drafter player otherwise the team loses the right to sign the player to a contract, which in the first instance must be a minor league contract. The unsigned player may not sign with another major league team until the following year’s draft when he is re-eligible for the draft. For more information on the rookie player draft in baseball see www.baseballamerica.com/draft.
In the above baseball illustration, the term contract is used multiple times. But what is a contract? A contract is a legally binding agreement between two or more parties. In the business of sports, a common contract is a standard player agreement that nearly every professional team requires their players and their players’ agents to use. Book deals, publicity appearances, and licensing of publicity rights for a product endorsement necessitate different contracts.
All contracts, including a standard player agreement found in a sport’s collective bargaining agreement, must include the following elements for it to be legal and enforceable:
the contract involves an offer that the other party must accept;
the parties must exchange something of mutual value, also known as consideration. At the most basic level the athlete promises to practice and perform to his or her highest level and in return the team promises to compensate the player for performance;
there must be a meeting of the minds over what the material or key terms and conditions of the agreement cover;
there must be the actual performance or delivery of what duties or promises the parties considered in the agreement;
the agreement must be for a legal purpose;
the parties that sign the agreement must be of sound mind and of legal age (generally the age of 18 or older otherwise a parent or legal guardian must sign);
the parties acted in good faith and honest dealings throughout the negotiations.
Sports contracts are different than many business related agreements, as Jay-Z and other non-legally trained agents will learn. Player-team contracts are employment contracts. Each individual athlete brings to his or her sport a unique skill set and personality. Agents assist players in leveraging their extraordinary contributions and stature by adding to standard player contracts bonus conditions for exceptional performance or no-trade clauses after significant years of service to the same club.
The flip side of the exceptional talent negotiating position a professional athlete enjoys is a reciprocal acknowledgement that more is expected on and off the field by management. Past publicized player incidents of gambling abuse and illicit use of performance enhancing drugs led to a modification of the integrity condition found in today’s standard players agreements. Players promise in writing not to breach these material conditions without being subject to punishment by the league commissioner.
Increasingly significant in a world sensitive to disparaging remarks and domestic violence is an express contract duty on the part of players to maintain good moral character and citizenship even on their social media sites consistent with the best interest of their sport. Three examples stand out. The Kansas City Chiefs suspended and later released star running back Larry Johnson for tweeting an anti-gay slur. The NBA’s New York Knicks fined starting guard J.R. Smith for posting semi-nude photos of a woman on his Twitter account. Baltimore Ravens running back Ray Rice was initially suspended two games for knocking his then-fiancée unconscious in a hotel elevator, and later released by his team for conduct detrimental to the team’s best interests.
