SBJ/20080825/This Week's News

Survey puts CAA tops in player salaries

CAA Sports, in two short years of existence, has become the dominant sports agency in the United States for representing athletes in the four major team sports, according to SportsBusiness Journal’s analysis of player salaries and their representation.

Wasserman Media Group, which is not much older than CAA, has emerged as the clear No. 2 agency for representing athletes in team sports.

CAA’s athlete clients in Major League Baseball, the NBA, NFL and NHL were paid salaries and/or bonuses valued at $670 million, based on numbers from the most recently completed seasons in the NFL, NBA and NHL, and the current MLB season.

WMG represented athletes in the NBA and MLB who were paid $451 million, collectively. WMG does not represent players in the NFL or NHL.

The examination is focused only on the four major team sports and is not meant to be an overall ranking of agencies. But the fact that two companies that have been in the business only a few years have become the biggest players is an indication of how volatile the sports agency business can be, said Kenneth Shropshire, a professor at the Wharton School of Business who specializes in sports. Both CAA Sports and WMG built their team sports practices by acquiring successful agents.

“What this shows is the agent business is one that can constantly be in flux by the movement of single agents,” Shropshire said, “because neither company existed within the (team sport) athlete representation business and they acquired the right guys and ended up on the top of the list.”

The Power Brokers

Octagon, which has been around for decades (its predecessor company was Advantage International) is No. 3 with $333 million in salaries.

Scott Boras Corp., owned by and named for the powerful baseball agent, is the fourth largest with $326 million in salaries. Boras Corp. also is the largest agency that is both independently owned and was grown through the signing of new clients, rather than the acquisition of other agents. That number was achieved solely through the representation of MLB players.

Priority Sports & Entertainment, which represents 84 NFL players and 43 NBA players, is in fifth place and is the second largest independently owned athlete representation firm at $279 million.

The ranking is not meant to be an overall ranking of sports agencies, since it does not include categories other than the value of team sport contracts. It is also not necessarily an indication of how much money an agency is making on clients, as fees vary from sport to sport and sometimes from athlete to athlete within a sport.

Some agents said it was unfair to compare agencies based on the value of playing contracts alone, as that does not include other major parts of the agency business, such as marketing and endorsement deals, or the representation of non-team-sport athletes. For example, IMG did not make the list even though it has the strongest golf player representation in the world and a strong practice for tennis players, sports announcers and coaches. IMG no longer represents players in the major American team sports for playing contract work.

WMG has focused more on global sports, and its soccer, action sports and golf clients were not included in the data. Octagon also has strong business in golf, tennis and action sports, and has the strongest global Olympic business, representing swimmer Michael Phelps.

But the problem with trying to compare agencies based on individual sport athletes is that the athletes generate much of their income through endorsements, and the value of those deals often are either not reported or difficult to determine. The value of players’ contracts with big league teams are, for the most part, public.

Even so, there are difficulties in trying to get accurate figures for salaries and bonuses earned by NFL, NBA, NHL and MLB players represented by every major sports agency, at least partly because players often change agents (see sidebar on research methodology).

Although SportsBusiness Journal has reported extensively about CAA Sports and WMG becoming powerful sports agencies almost overnight, until now there was no data to quantify that growth, other than number of clients.

The Top Five
Agency Big Four player salaries
(No. of athletes)
CAA $670 million (277)
Wasserman Media Group $451 million (96)
Octagon $333 million (152)
Boras Corp. $326 million (63)
Priority Sports $279 million (127)
Note: Salaries based on numbers from the most recently completed seasons in the NFL, NBA and NHL, and the current MLB season.

WMG is a sports marketing, media and management company that was launched by sports entrepreneur Casey Wasserman in June 2002. It got into the athlete representation business in April 2003 by acquiring The Familie, the business of action sports agent Steve Astephen. In January 2006, WMG entered the U.S. team sports representation business by acquiring the business of Arn Tellem, a powerful NBA and MLB player agent, and it boosted its baseball practice later in 2006 by acquiring the business of veteran baseball agents Tom Reich and Adam Katz.

Hollywood talent firm Creative Artists Agency launched its sports business a few months later by acquiring the business of former IMG football agent Tom Condon and former IMG baseball agent Casey Close, and then added the businesses of successful sports agents Ben Dogra (football), Leon Rose (basketball) and Pat Brisson and J.P. Barry (hockey).

“Acquisitions have become a trend, but the key is acquiring the best and the brightest, and that is what CAA and Wasserman appear to be doing,” said Andrew Brandt, former vice president of the Green Bay Packers who is now an adjunct professor at Wharton and Georgetown University Law School.

But there can be risks in growing a business too big, too fast through acquisitions. SFX Sports grew into a mega agency in the late 1990s through a rapid-fire series of acquisitions, but dissolved after a few years.

Methodology for agency research

Multiple sources were used for the data.

The NFLPA provided SportsBusiness Journal with a list matching each player that had a signed contract as of July 31 with his agent. Individual agencies, agents, teams and other industry insiders helped us match MLB, NBA and NHL players with their respective agents.

USA Today’s salary database, based on opening day rosters, was used for each of the leagues.

SportsBusiness Journal has ranked individual agents and agencies several times during its 10-year existence, and each of those instances revealed that there is no perfect methodology for this type of discussion. Players sign deals, then switch agents; agencies are acquired or spun off; agents switch agencies. And then both shops claim the athlete as a client.

At the end of our research, each of the agencies listed here was contacted and provided an opportunity to look at the numbers. Some confirmed the data. Others offered small tweaks, but were required to provide proof of their claims. The result is a list that we believe offers an accurate snapshot of the industry.

— David Broughton

“We had 15 companies bought in 2 1/2 years,” said Donald Dell, a sports industry pioneer who founded ProServ and sold it to SFX Sports. “We had 15 egomaniacs, all strutting around telling everyone what to do, and nothing happened.”

Dell now runs tennis, media and television for Blue Entertainment Sports Television, a company that also is growing through the acquisition of successful sports agents. “Whether (growing an agency through agent acquisitions) is a good or bad thing depends on how the people work together internally,” he said.

But “CAA and WMG are not SFX,” wrote AEG president and CEO Tim Leiweke in an e-mail sent from China , where he was attending the Olympic Games. “SFX was in live entertainment, motor sports, management, sponsorship and other areas and seemed to be all over the place. CAA is an agency, period. WMG is very focused on this business and will be for a very long time.”

CAA Sports and WMG’s athlete management practices have both been built largely on the acquisition of agents who worked at larger companies. (Even Dell admits that Tellem and Dogra are agents who hail from the former SFX Sports, but who came out more powerful than they were when they went into SFX.)

Shropshire said he wasn’t particularly surprised that CAA Sports and WMG top the list of agencies ranked by team sport athlete salaries because of the high-quality client lists that agents Tellem and Condon brought with them to the new companies. But Shropshire said Priority’s rank surprised him a bit, because that firm does not garner a lot of press and publicity.

Priority CEO Mark Bartelstein, who is an NBA and NFL player agent, said the firm does not seek out publicity but is proud to be one of the top agencies in the U.S. that is independently owned and built from the ground up. Bartelstein said, “We are a little different from what has become the norm in the business, because you are seeing so much consolidation and mergers and acquisitions and you don’t see as much of the independent guy who is successful.”

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