SBJ/May 9-15, 2011/Labor and Agents

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  • CAA Football agents lead in first-rounders, but similarities to past NFL drafts end there

    CAA Football agents Tom Condon and Ben Dogra led all agents again this year by representing five players in the first round of the NFL draft, but it is a very different year for the powerful agent tandem, who represent more than 100 players in the NFL.

    GETTY IMAGES
    A.J. Green, picked at No. 4 by the Bengals, was the first of five CAA clients in
    Round 1.
    NFL agents typically start planning which college players they will recruit months before the end of the season. But with the possibility of an NFL lockout looming and changes proposed for the rookie pay system, Condon and Dogra said, they pulled back.

    “I think you had to consider there was a possibility there would be a system change,” said Condon, who with Dogra has negotiated many of the largest NFL rookie contracts.

    Dogra said, “We did not recruit as many players this year as in years past due to the uncertainty. But even in years past we limit the number of players we recruit, and this year we lessened that by another 25 percent.”

    “We started really late and we did not cast a wide net,” Condon said. In fact, four of the five players they represented in the first round were “true juniors,” meaning that Condon and Dogra could not talk to them until after Dec. 3, under the former union’s “junior rule.” The one senior that CAA Football represented, Boston College offensive tackle Anthony Castonzo, was selected No. 22 by the Indianapolis Colts (see chart).

    Other sports agencies also had strong draft classes, notably Athletes First, which represented four of the first 17 players taken, including the No. 2 overall pick, linebacker Von Miller, selected by the Denver Broncos.

    As SportsBusiness Journal reported last fall, a number of successful NFL agents concentrated on expanding their roster of veterans and pulled back on college recruiting efforts because of lockout-related uncertainty. CAA was among them. “We decided we were going to make a concerted effort to look at the veteran side of the business, and we did that this year,” Dogra said.

    In the last six months, Dogra and Condon have signed Oakland Raiders tight end Zach Miller and Atlanta Falcons cornerback Brent Grimes, both Pro Bowlers. They also signed New York Jets cornerback Antonio Cromartie, Arizona Cardinals defensive end Calais Campbell and Kansas City Chiefs offensive tackle Barry Richardson.

    Although it was a good draft for CAA Football, it wasn’t their best. In 2009, Condon and Dogra represented nine of the first 19 players selected, including No. 1 and No. 2.

    CAA had represented the No. 1 overall pick for six of the last seven years, but did not this year. Cam Newton is represented by Bus Cook of BC Sports and Tony Paige and Chitta Mallik of Perennial Sports.

    Dogra, who had represented or co-represented the most picks individually every year since 2004, saw that streak broken this year. He represented four picks but was beaten by partner Condon, who represented five. (Condon is the sole agent for Castonzo.)

    “You never want to lose, but if you lose, you want to lose to the best in the business,” Dogra said.


    PICK
    TEAM PLAYER/SCHOOL AGENT(S)/FIRM
    1)
    Panthers Cam Newton/QB/Auburn Bus Cook, Tony Paige, Chitta Mallik/B.C. Sports and Perennial Sports
    2)
    Broncos Von Miller/LB/Texas A&M Joby Branion, David Dunn, Andrew Kessler/Athletes First
    3)
    Bills Marcell Dareus/DT/Alabama Todd France/France AllPro Athlete Management
    4)
    Bengals A.J. Green/WR/Georgia Ben Dogra, Tom Condon/CAA
    5)
    Cardinals Patrick Peterson/CB/LSU Patrick Lawlor/Galaxy Sports
    6)
    Falcons Julio Jones/WR/Alabama Jimmy Sexton, Pat Dye Jr./SportsTrust Advisors
    7)
    49ers Aldon Smith/LB/Missouri Ben Dogra, Tom Condon/CAA
    8)
    Titans Jake Locker/QB/Washington David Dunn, Cameron Hahn/Athletes First
    9)
    Cowboys Tyron Smith/OT/USC Eric Metz/Lock, Metz & Malinovic
    10)
    Jaguars Blaine Gabbert/QB/Missouri Ben Dogra, Tom Condon, Jim Steiner/CAA
    11)
    Texans J.J. Watt/DE/Wisconsin Tom Condon, Ben Dogra/CAA
    12)
    Vikings Christian Ponder/QB/Florida State Jimmy Sexton/SportsTrust Advisors
    13)
    Lions Nick Fairley/DT/Auburn Brian Overstreet/E. Overstreet Sports Management
    14)
    Rams Robert Quinn/DE/North Carolina Carl Carey/Champion Pro Consulting
    15)
    Dolphins Mike Pouncey/C/Florida Joel Segal, Chafie Fields/Lagardere Unlimited
    16)
    Redskins Ryan Kerrigan/DE/Purdue David Dunn, Brian Murphy, Andrew Kessler, Cameron Hahn/Athletes First
    17)
    Patriots Nate Solder/OT/Colorado David Dunn, Mark Humenik/Athletes First
    18)
    Chargers Corey Liuget/DT/Illinois Tony Fleming/Impact Sports
    19)
    Giants Prince Amukamara/CB/Nebraska Todd France/France AllPro Athlete Management
    20)
    Buccaneers Adrian Clayborn/DE/Iowa Blake Baratz/The Institute For Athletes
    21)
    Browns Phil Taylor/DT/Baylor Peter Schaffer/All Pro Sports & Entertainment
    22)
    Colts Anthony Castonzo/OT/Boston College Tom Condon/CAA
    23)
    Eagles Danny Watkins/OT/Baylor Joe Panos/Lock, Metz & Malinovic
    24)
    Saints Cameron Jordan/DE/California Doug Hendrickson/Octagon
    25)
    Seahawks James Carpenter/G/Alabama Rick Smith, Deryk Gilmore/Priority Sports & Entertainment
    26)
    Chiefs Jonathan Baldwin/WR/Pittsburgh Rick Smith/Priority Sports & Entertainment
    27)
    Ravens Jimmy Smith/CB/Colorado Drew Rosenhaus/Rosenhaus Sports
    28)
    Saints Mark Ingram/RB/Alabama Joel Segal, Chafie Fields/Lagardere Unlimited
    29)
    Bears Gabe Carimi/OT/Wisconsin Gary Uberstine/Premier Sports
    30)
    Jets Muhammad Wilkerson/DT/Temple Chad Wiestling/Integrated Sports Management
    31)
    Steelers Cameron Heyward/DE/Ohio State Michael Perrett, Pat Dye Jr./SportsTrust Advisors
    32)
    Packers Derek Sherrod/OT/Mississippi State Bus Cook/BC Sports


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  • Some NFLers getting paid, thanks to deferred compensation

    Liz Mullen
    Contrary to popular belief, some NFL players have been getting paid, and paid well, since the NFL lockout was imposed March 12.

    Although players have not received compensation such as roster bonuses, for reporting for the new 2011 league year, they have been paid deferred compensation in their contracts for money they earned last season and other seasons. Many NFL players’ signing bonuses, other bonuses and incentives earned involve deferred payments, and those payments have been made by NFL clubs, said multiple agent and other player-side sources.

    For example, Houston Texans defensive end Mario Williams earned a deferred payment of $4.25 million on March 15, St. Louis Rams offensive tackle Jason Smith was paid $3.837 million in March, and Houston Texans linebacker DeMeco Ryans was paid $2.5 million last month. Ben Dogra, NFL agent and co-head of CAA’s football division, confirmed the payments for the players, all CAA clients.

    Other NFL agents said their players had also been paid since the lockout started. “Our guys who have deferred signing bonuses and deferred option bonuses have been paid and in a timely fashion,” said Pat Dye, a partner in SportsTrust Advisors.

    Dye added that midround draft picks as well as high-profile players get deferred signing bonus and other bonus payments.

    Clubs are paying this deferred money because they are legally obligated to do so since it had already been earned, agents said.

    Everyone in NFL circles last week was waiting to hear whether the 8th U.S. Circuit Court of Appeals would stay a federal court’s injunction of the NFL lockout. As of midweek, the 8th Circuit had issued a temporary stay and a decision was expected at any time on a more permanent stay.

    But the other question agents were asking was whether the NFL league year had started between the time that federal Judge Susan Richard Nelson enjoined the lockout April 25 and the 8th Circuit granted the temporary stay April 29. The reason that is important: Many NFL players have bonuses, including workout bonuses and especially roster bonuses, that are paid on different days of the league year. “Sometimes it’s the first day, sometimes it’s the third day, sometimes the fifth day, that the roster bonus is earned,” said one agent.

    NFL spokesman Greg Aiello wrote in an email that the league year did not start between Nelson’s ruling and the temporary stay.

    Workout bonuses are earned in the offseason before training camp. If there is no offseason, and the lockout ends with training camp, agents want those players paid their workout bonuses.

    No matter how the 8th Circuit rules, there is an appeal and the lockout could be off again or on again in the future, agents and lawyers said.

    “It’s an odd, odd thing,” said Dye. “I have been in this business for 25 years and never dealt with anything like it.”

    LOZANO SIGNS A-ROD FOR BASEBALL WORK: Agent Dan Lozano has signed Yankees third baseman Alex Rodriguez for all baseball-related work. Lozano also signed Oakland A’s first baseman Daric Barton.

    OCTAGON GETS JIMMER: Octagon has signed BYU point guard Jimmer Fredette for the NBA draft. Agents Jeff Austin and Chris Emens will represent him. He was ranked No. 11 by NBADraft.net last week.

    WASSERMAN SIGNS A CZECH: Wasserman Media Group has signed a basketball player from the Czech Republic, Jan Vesely, the 2010 FIBA Young Men’s Player of the Year Award winner, who is expected to be taken high in this year’s NBA draft. Vesely was ranked No. 6 by NBADraft.net last week and was No. 8 at DraftExpress.com.

    Wasserman principal Arn Tellem and agent Alexander Raskovic will represent him.

    Liz Mullen can be reached at lmullen@sportsbusinessjournal.com. Follow her on Twitter @SBJLizMullen.

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  • NFLPA looks to widen ‘lockout insurance’ case

    As NFL players argue this week before a federal judge that the NFL should pay them up to, and possibly more than, $1 billion for inserting so-called lockout insurance into broadcast contracts, the NFLPA is now urging him to expand the scope of his ruling to include all league commercial contracts.

    That request could trigger a new, potential financial liability for the NFL and become another point of leverage in the labor battle between the two sides.

    “One can assume Defendants’ illegal scheme extended to vendor contracts beyond the broadcast contracts at issue here,” the NFLPA wrote to the court late last month. “Notwithstanding the limited scope of this proceeding, as guardian of the Class, this Court has authority to expand the inquiry beyond the broadcast contracts and redress related violations, in further proceedings.”

    Almost all NFL contracts with sponsors have clauses that guarantee payments even in the event of a lockout, sources said.

    “The commercial agreements are written favorably to the league,” a source said, adding that in many cases the sponsors are not due to get money back until after several games are lost.

    The same source, who is close to several NFL sponsors, said the league began insisting on such language after 2006. That is when the NFL renewed the collective-bargaining agreement that it soon grew disenchanted with. The league began reworking media contracts in 2009 to ensure the league would get paid in 2011 even if no games were played.

    It’s unclear if Judge David Doty will launch proceedings over non-broadcast contracts.
    It’s unclear whether Minnesota federal Judge David Doty will launch further proceedings to look into non-broadcast contracts. The current subject of dispute, the $4 billion of media contracts, started with a special master complaint from the NFLPA in June 2010. The special master ruled in early February that the NFL exercised sound business judgment in the contracts, but Doty disagreed, saying the NFL agreed to less revenue from broadcasters in order to get their commitments of payments during a work stoppage.

    That March 1 decision shifted the dynamic of the collective-bargaining negotiations between the players and league, followed by the union decertifying on March 11. The league locked the players out shortly after.

    Now Doty is hearing arguments about the damages. While the actual amount has not been released because of sensitivity about the confidentiality of the broadcast contracts, the league disclosed last month that the players were seeking hundreds of millions of dollars just in compensatory damages. The players are also seeking treble punitive damages.

    Whatever Doty rules, and sources said the league is expecting a big award to the players, the NFL will almost surely appeal to the 8th U.S. Circuit Court of Appeals. The league could also push players in settlement discussions to drop the media fees case. That, of course, depends on which side has the leverage, and that may depend on the outcome of the lockout case currently pending at the 8th Circuit.

    While mediation between the two sides is scheduled for next week in federal court in Minnesota, until the 8th Circuit rules on the lockout, neither side is likely to make a major move.

    The sides last week were waiting to hear from the 8th Circuit whether it would grant a full stay of a lower court ruling lifting the lockout. The 8th Circuit issued a temporary stay and was considering a permanent stay. The court also set June 3 for oral arguments on the NFL’s appeal of the lower court’s decision enjoining the lockout.

    The players’ principal outside counsel, Jeffrey Kessler, did not reply for comment for this story. Neither did the NFL, though one source close to the league responded to news that the players may attack lockout language in all commercial contracts with a resigned air, saying it was all about leverage in the labor battle.

    The bulk of the contested media fees have already been paid to the NFL, according to the league’s brief to Doty last month.

    “All of the broadcasters except DirectTV were obligated prior to entering into the challenged contracts, to advance rights fees to the NFL in the event of a work stoppage,” the league’s brief noted.

    The players want that money put into an escrow account.

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  • Filing gives look into NFLPA’s finances at decertification

    When the NFL Players Association decertified on March 11, it had $135 million in cash on hand, of which $45 million was designated in a lockout fund, while another $50 million was held in trust for support of the players, according to a notice filed last month to notify the Labor Department that the union had morphed into a trade association. The $50 million, observers said, may be designated in part for legal fees.

    The document also discloses a $4 million trust for player grievances. When the union decertified it lost the right to represent players in grievances before the NFL, but the document says the purpose of the trust is to “provide assistance to NFL players for grievance-related and other legal services.” There is also a $1.5 million trust to “provide permissible welfare benefits and support to NFL players.”

    The document covers only the 11 days from March 1 to March 11. Labor unions are required to file annual reports to the Labor Department, so this is effectively the NFLPA’s final one. The NFLPA is scheduled to file an annual report soon for the 12 months ending Feb. 28.

    The NFL is contesting the union’s decertification.

    The 11-day snapshot provides confirmation that the NFLPA hired former Hillary Clinton adviser Phil Singer, as reported by SportsBusiness Journal on Feb. 21. In the 11-day period, the NFLPA paid Singer’s firm, Singer Bonjean Strategies, $45,000 for what the document describes as collective-bargaining agreement matters. The report, or LM-2, also shows a payment to another public relations consulting firm, New Media Strategies of Arlington, Va., for $29,000.

    In the 11-day period, the NFLPA paid its principal outside law firm, Dewey & LeBoeuf, $104,325.

    The LM-2 utilizes cash accounting, meaning the figures represent actual cash in and out during the designated period. So, for example, there is no listing of UBS, the investment bank the NFLPA hired to review NFL financials. But that could be because payments actually went out prior to or after this 11-day period.

    In addition to its cash reserve, the NFLPA also had other investments, securities and fixed assets, such as its headquarters building, totaling $306.8 million. Liabilities totaled $108.4 million, leaving net assets at $198.4 million, a signal that the NFLPA might be able to endure a lengthy labor disturbance.

    During the 11-day period, the executive director, DeMaurice Smith, earned $55,385. He has said since March 11 that he is not taking a salary.

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  • NFLPA makes gains with sponsors

    The NFLPA’s marketing arm, NFL Players, has signed new one-year deals with NFL sponsors Gatorade, Verizon and Dairy Manufacturers Inc. since the NFL lockout was imposed, and is in talks with several non-NFL sponsors about deals.

    When the NFL collective-bargaining agreement expired, so did the separate commercial agreement between NFL Players and the NFL sponsors that gives those companies the ability to use six or more NFL players in group licensing.

    “As soon as the lockout occurred, those three partners chose to extend their deals,” said Keith Gordon, president of NFL Players, who declined to reveal the value of the deals. “We call them contingency agreements. They signed an agreement with us where they extend their rights while they are in a commercial agreement with the league.”

    The NFL Players agreement that expired was with the NFL and covered about a dozen sponsors, Gordon said. The NFLPA’s marketing unit had been warning sponsors for about a year that the lockout might occur and that the commercial deals covering group player rights would expire as well.

    “All of the sponsors with whom we have entered into separate agreements have continued to utilize and activate players in marketing, promotional and advertising campaigns to support the sale of their products,” Gordon said. “This ranges from broad national campaigns to local-market campaigns, all featuring dozens of players promoting the sponsor’s products. This means sponsors clearly see the value of integrating players into their marketing initiatives.”

    Gordon said NFL Players is close to deals with other non-NFL sponsors but would not identify the companies.

    Some NFL players, with time on their hands because of the lockout, have come with NFL Players executives on sales calls to companies, Gordon said.

    Meanwhile, the NFLPA signed sponsors Nike and Panini America for the NFL Rookie Debut, a series of events held around New York City the week of the NFL draft, culminating in a party featuring musical artist Snoop Dogg.

    Trading card partner Panini America was pleased with its Rookie Debut sponsorship.
    The NFLPA held its first Rookie Debut last year as a way to introduce newly drafted NFL rookies to NFL teammates, but did not have sponsors for the event. “This is the first year we have actually commercialized it,” Gordon said.

    Jason Howarth, vice president of marketing for Panini America, said the trading card company was pleased with its sponsorship of the event, and as part of the deal was able to conduct a mini-focus group with rookie players, including Cal defensive end Cameron Jordan, who was drafted by the New Orleans Saints, and with others already in the league, including St. Louis Rams quarterback Sam Bradford.

    “We had them open up packages of trading cards and we asked them what they liked to see on their trading card,” Howarth said.

    Panini, which has a license agreement with the NFLPA, is looking for sponsorships that are different and resonate with players, Howarth said. “We felt the NFL Rookie Debut gave us the chance to connect with these players early on in their NFL careers,” he said.

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