SBJ/19980525/This Week's Issue
New 3% cap stirs no outcry
Published May 25, 1998
Although nobody is ever happy to have his potential future earnings capped, not all agents are upset with a recent rule adopted by the NFL Players Association that cuts the maximum commission that agents can charge players.
A majority of the players representatives from the 30 NFL teams voted in March to cut the maximum commission from 4 percent to 3 percent, said Carl Francis, director of communications for the NFL Players Association.
Francis cited the $17.6 billion television contract the NFL negotiated with the networks as a reason for the new rule. The new contract spurred a discussion of "the amount of money in the system" by the players representatives, Francis said.
"Being that the salary cap went up, they felt that agents could live with the 3 percent of what they [players] were making," Francis said.
The salary cap per team has been bumped up from $41.5 million last year to $52.4 million this year, and the minimum annual salary that players can earn also increased substantially roughly 10 percent across the line, in fact (see chart).
Still, the commission rule is not expected to be controversial, Francis said. The reason is simple: Many agents don't charge more than 3 percent anyway, some going as low as 2 percent in order to attract players.
A recent New York Times article, quoting anonymous agents, reported that some agents were angry about the rule and were considering suing the union to overturn it.
Although a few "super agents," like Leigh Steinberg, charge commission rates of 4 percent, according to sources, lesser-known agents' rates are generally lower. Agents interviewed by Street & Smith's SportsBusiness Journal said the new cap was a non-issue since 3 percent already is the going rate in the marketplace.
"I don't think that many people were about to charge 4 percent anyway," said Jack Mills, a sports agent and member of the board of the Sports Lawyers Association.
Mills added that he was not aware of any effort to fight the new rule. If agents do file a lawsuit challenging the new minimum, Mills said, "There is no way they can win."
Sports unions are among the few unions that do not negotiate their own wages, Mills said. "The whole deal is we work under a license from the players union, and we are pretty much subject to their governance."
Mills added, "I don't have any problem with it [the new rule] at all," saying he has been charging 3 percent anyway and the new television contract is raising salaries, which raises agents' commissions.
"We've got defensive linemen making $5 [million] and $6 million a year and that is double and triple what they were making [a few years ago]," he said.
Drew Rosenhaus, an agent who represents about 40 NFL players and who recently negotiated a $36 million, six-year contract for All-Pro Tampa Bay Buccaneers defensive tackle Warren Sapp, isn't crying over the new rule. "I think it protects the players," he said.
Rosenhaus said he charges between 2 and 3 percent on most of his contracts oftentimes using his lower commission rates as a recruiting tool and that if an agent is successful, he shouldn't be hurt by the rule.
Derrick Fox, a San Diego-area agent who represents nine NFL players, was not alarmed by the decision of the Players Association either. "Everyone is at 3 [percent] anyway," he said.
Fox, who has represented professional boxers, noted the commission structure in that sport is higher 33 percent. But agents have a lot more responsibility with boxers, including overseeing their travel and conditioning programs, he said.
"I don't have to figure out who is going to coach my tight end with the Kansas City Chiefs," Fox said.
Most of the time and money an agent spends on NFL clients involves travel in the recruiting process. The negotiation of contracts takes a few hours on the phone with faxes sent back and forth, Fox said.
Fox noted that the NFL "negotiated a helluva contract" and players and agents alike are going to benefit as a result. As far as cutting the maximum commission from 4 percent to 3 percent, Fox said, "Nobody is going to end up in the poorhouse over this."