In recent years, steps have been taken to reduce the role of NFL agents, particularly with younger players. Since the NFL and the NFLPA entered into their 2011 Collective Bargaining Agreement, NFL agents have been limited in what they can negotiate for rookie players. They are only able to negotiate the timing of salary bonus payments and “offset” language, which addresses whether the salary of a player who is released from his contract and signs with another team reduces, or offsets, the amount the first team must pay to the player. As a result of this restricted role, some players have even begun to forego agents completely for their first contract, hurting agents’ revenue.
NFLPA Agent Regulations Updates
Unfortunately, the latest revisions to the NFLPA Regulations Governing Contract Advisors, which take effect on November 1, 2016, will continue to negatively impact agents, particularly as it relates to their commission rates. While the changes to the commission rates have been publicized, there are a number of lesser-known provisions that agents also need to understand.
The revised regulations provide the following:
- The NFLPA’s Standard Representation Agreement is the mandatory agreement that must be entered into between a player and agent. Starting November 1st, the Standard Representation Agreement’s default commission rate for agents is cut in half, to 1.5 percent. Previously, the default was 3 percent, the maximum commission permitted by the NFLPA. Although the maximum permissible rate under the Regulations will remain at 3 percent, agents must ask clients to agree to double the default percentage in order to get the same rate they used to get automatically. Realistically, this may be a hard sell, especially considering steps taken in recent years to reduce the role of agents.
Even before these changes, NFL agent commissions were well behind those in other sports, even setting aside that NFL contracts are not guaranteed. For example, Major League Baseball does not establish a maximum rate, although typically it is 4-5 percent; the NBA has a 4 percent maximum rate; and the NHL has no maximum rate (agents typically collect 4-5 percent).
- Disclosure of representation. The new rules require agents to provide written disclosure to all clients of their representation of college coaches or professional coaches in other leagues. Previously, agents only had to disclose the representation of NFL coaches or management.
- Email communications. The regulations authorize the use of email to communicate with the NFLPA and with players, including when commencing a fee or other grievance. This update to the regulation is long overdue and recognizes the realities of modern communication as well as the problems that can arise with older, less predictable, and slower methods of communication (i.e. fax).
- Designated person for payment. Agents are now required to designate a specific person to whom players should pay commissions. This is a beneficial change for agents meant to simplify situations where multiple agents represent a player.
- Disclosure of certain criminal or civil offenses. Agents now have a continuing duty to inform the NFLPA of any criminal offenses, other than minor traffic violations. They must also disclose any civil complaints involving dishonesty (fraud, breach of fiduciary duty, etc.). Disclosure of criminal offenses must be made when the agent is charged with the crime. For civil matters, it is at the time the complaint is filed. Previously, agents were only required to inform the NFLPA at the time they applied for certification as an agent.
- A technical change was made to the deadline for filing a grievance – from “6 months” after the occurrence to “180 days.” While this change will have little impact in most situations, it is a potential trap for the unwary who wait until the last minute to pursue a grievance, when every day counts.
- Recipient of fines. Interestingly, the NFLPA has changed who receives the fines paid by certified agents for violations of the Regulations. Previously, fines collected by the NFLPA from agents were split equally between the Players Assistance Trust and the NFL Players Charities. Under the revised Regulations, one-half still goes to the Players Assistance Trust, but the other half is not specified. If these amounts in fact will go to fund the NFLPA’s operating budget, this may result in more aggressive oversight and enforcement of the Regulations.
- Challenging exam grades. Prospective agents who fail to pass the certification exam can now challenge the exam grade within 30 days of receipt.
Agents should be aware of how these revisions will affect them as of November 1st. The question of the long-term impact of these changes on NFL agents and players remains to be seen but will continue to be debated.
If you have questions about the agent regulations, contact us for consultation. Click here to learn more about our sports law practice.
This post does not constitute legal advice or establish an attorney-client relationship.