By Gregg Clifton and Jeffrey Toppel, Jackson Lewis LLP
A new era in the world of player agent relationships in professional baseball will begin
on October 1, 2010 when the Major League Baseball Players Association’s (“MLBPA or Association”) major overhaul of its existing regulations governing player agents and their actions on behalf of baseball clients takes effect.
The sweeping changes introduced by the Association and new Executive Director Michael Weiner are the first major modifications to the agent regulations since their introduction in 1988. The amended regulations are the result of a nearly one year effort by the Association to strengthen and extend the reach of its rules and regulations. The Association’s goal is simple: to ensure the highest quality of agent representation for all of its members throughout professional baseball.
The 40-plus pages of regulations contain numerous changes to the way a baseball agent must operate his or her practice. The changes are so significant that all currently certified agents are required to submit new applications for certification. All agents will now operate in much more regulated environment.
The first significant change dramatically alters the agent certification process. Unlike the current regulations, which only require MLBPA certification for individuals who negotiate contracts for players on Major League 40 man rosters, the amended regulations will require certification of all recruiters and those who perform “client maintenance services” for players on behalf of certified agents. These two groups will be required to apply for “limited certification” to perform functions that were previously unregulated by the Association.
Recruiters, more frequently referred to in the sports world as “runners”, have always operated outside of the direct control of the Association. Section 2(D) of the new regulations now contains a very broad, three part definition of the terms “Recruit,” “Recruiting,” and “Recruitment” that gives the Association much greater control of these formerly unregulated individuals. In fact, even an individual who hands out business cards or promotional literature for a certified agent is now considered a recruiter and required to seek appropriate “limited certification” and, therefore, is subject to the rules and regulations promulgated by the Association.
The “client maintenance services” group will also be required to apply to the MLBPA for a reduced “limited certification” level of authority. This new group of limited certified individuals will include all of the following:
(1) Individuals seeking, securing an/or negotiating marketing and endorsement opportunities for players;
(2) Individuals providing legal, accounting or financial services, including bill paying services, on the certified agent’s behalf; and
(3) Any individual involved in the purchase or supplying of baseball equipment, the securing of training services or facilities, arranging for the transportation of vehicles, personal shopping services, or providing hotel and travel concierge services to any player.
In essence, the Association now mandates that any individual who works under the control of a certified agent and provides services to any individual player member of the Association be subject to the rules and regulations of the union.
A second major change will affect the way agents “recruit” prospects who are currently represented by other certified agents. While agents traditionally have had free rein to speak with and encourage players to switch representation at any time without informing the Association, the new regulations require all communications between an agent and a player not represented by that agent to be disclosed to the Players Association. (Sec. 5 (B)(8)).
For example, if an agent plans a scheduled recruiting meeting with a player who is currently represented by another agent, that agent must provide notice to the Association before the recruiting meeting occurs. In other situations, where the contact between the prospective agent and a player is initiated by the player or happens in a spontaneous, unplanned fashion, the communication must be disclosed by the agent to the Players Association within 24 hours of the contact. Sec. 5(B)(8).
In addition, the new regulations further expand the Association’s desire to control the recruiting of 40 man roster players with the creation of additional agent disclosure requirements covering off-season agent activity. Section 5(B)(9) requires any player agent who travels during the off-season to meet with a Player whom he currently does not represent to provide written notice to the Association of his travel itinerary.
The Association’s constant desire to ensure quality agent representation for each and every one of its members is clearly reinforced in Section 6(L) of the new regulations. For the first time, the Association is limiting the ability of a player to switch agents at his whim. Previously, the Association has always allowed its members the flexibility to select the agent of their choice, regardless of the time of the year or the current stage of a player’s career. Such freedom is now limited. The new regulations state that any player who is eligible for either free agency or salary arbitration during the following off-season must now consult with the Players Association if he desires to change representation after the end of the current season. This mandatory safeguard is a major step for the Association in the area of agent selection. While the player’s desire to make an agent change during this critical time in his career will not automatically be rejected, the Association wants to reserve the opportunity to confer with the player and make sure he understands the potential consequences that an agent change at the crucial point of salary arbitration eligibility or free agency could have to the negotiation of his next contract.
The final two areas of significant change in the regulations involve the areas of restrictive covenants and the use of arbitration to settle disputes among the Association’s player agent group. As in any employment setting, baseball agents frequently switch jobs and either go to work for another agency or establish a representation practice of their own. It is commonplace that the employment contract of the departing agent will contain restrictive language which affects the agent’s ability to represent players from his former employer or to compete with his former employer for a designated length of time.
Historically, the Association has always allowed a player to be represented by the agent of their individual choosing. This “freedom of agent choice” decision has lead to a long established Association position that any restrictive covenant which limited a player from being represented by the agent of his choosing was a violation of the Association regulations.
However, the Association’s new regulations take a different position in this controversial area. The MLBPA will now permit employers to utilize “reasonable” restrictive covenants in agent employment agreements. The determination of the reasonableness of each covenant will be made on an individual basis through an analysis of the facts and circumstances of each agreement. The party seeking enforcement of the covenant will possess the burden of proving its reasonableness. Section 4(L)(2) provides that in order for any restrictive covenant to be enforceable it must:
(1) Be included in a written agreement, that is supported by consideration and signed by both parties;
(2) A copy of the restrictive covenant terms and the name of the employee subject to the restrictive covenant must be disclosed to the MLBPA in writing; and,
(3) The proposed written agreement containing the restrictive covenant must contain specific language that requires any and all disputes arising from the agreement to be resolved exclusively through the arbitration procedures of the MLBPA.
The last area of significance in the new MLBPA Regulations involves the expanded use of the Association’s arbitration procedures to settle disputes. Historically, the Association has mandated that all agent player disputes be handled through the MLBPA’s arbitration procedures. The Association has not formally controlled agent versus agent disputes and they have remained outside of the Association’s exclusive jurisdiction. The new regulations change that position. The new regulations now provide final and binding arbitration as the exclusive method to resolve three specific categories of disputes:
(1) All disputes between Players and Player Agents that arose during the term of their player agent relationship;
(2) All disputes between or among Player Agents and other Player Agents that relate to the representation and recruitment of players and disputes involving a duty of loyalty or restrictive covenant; and,
(3) Any appeal by a Player Agent aggrieved by an appealable decision of the MLBPA with respect to his certification or discipline as a certified agent.
This major step by the Association now ensures that almost all disputes involving agents can be handled in an arbitration setting rather than through a potentially lengthy and expensive litigation process.
