SBJ/July 18-22, 2011/Labor and Agents

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  • Free agency could take as long as a week to begin after NFL labor agreement is signed

    When the NFL and NFL players agree to a new labor deal, free agency is not expected to begin immediately, and it could take as long as a week before clubs can start signing the 450 or so free agents on the market, said agents and other industry sources.

    There is a plan being discussed that would allow agents and team general managers three days to study any new rules, and then another three days to sign undrafted rookies and restricted free agents, before free agency could begin. That would give the players’ former clubs the right to match offers on restricted free agents, among other things. That second three-day period would be a time for “clubs to sign their own guys who are not under contract,” said one source.

    Although last week there were rumors and reports that a deal to end the four-month-old NFL lockout was imminent, there were also reports that the deal was not as close as was being reported by the media. One source said that Thursday was the last possible day to reach an agreement before the NFL would have to start canceling preseason games, a source of revenue for owners and players. The NFL owners are scheduled to meet on Thursday in Atlanta.

    “The timelines are all speculative,” said Pat Dye Jr., a prominent veteran NFL player agent and partner in SportsTrust Advisors, which represents about 20 free agents, as well as 13 drafted rookies. “The only date we know for sure is the date of the owners meeting, and it’s only logical and reasonable that they could be voting on an agreement at that meeting.

    “I don’t think we are going to get a phone call at 5 o’clock [saying], ‘We have an agreement,’ and free agency starts at midnight. That would be grossly unfair for the two sides who represent the two parties — the owners and the players.”

    Dye and other agents said they expect that owners and general managers to be “given a chance to review this agreement and digest it.”

    When the lockout does end, more teams will sign players in a shorter period of time than ever before. Normally, agents and general managers have five months to sign all the players to NFL contracts, but they may have to do it in a week or so to get a roster of NFL players who are ready to play.

    Clubs usually start to sign restricted and unrestricted free agents at the beginning of the NFL league year, which is always the first week of March. Historically, there are about 400 unrestricted free agents on the market and about 80 restricted free agents. Last year, there were about 240 unrestricted free agents and 300 restricted free agents on the market because, under the expired CBA, players had to wait six years instead of four to become an unrestricted free agent. Although it was unclear last week what the new rules would be about how many years a player had to wait to be an unrestricted free agent, there will be more than the usual number of both types of players on the market, since last year many restricted free agents signed one-year tenders instead of long-term deals.

    Additionally, in a normal NFL year, clubs can sign undrafted rookies and do so about a week after the draft, in the last week of April through the first week of May. There are about 450 of those players, who the teams will have to sign at the same time they are dealing with trying to sign back players who played on their team last year, but who are not under contract.

    Then there are the 254 drafted rookies. Those players traditionally start signing with clubs in May through the first few weeks of July, with the first-round players usually signing contracts last.

    There is a widespread belief in the industry that clubs may sign NFL players with experience, and will favor signing back players who were on their team last year rather than take a chance on an undrafted rookie or player from another club who doesn’t know their system. “Fringe veterans,” players who might otherwise be at the end of their careers, could get opportunities they might not otherwise have been offered, while undrafted college players could get hurt, agents said.

    Agents agree that when clubs do start signing players, they will do it quicker than ever before. “There will be rapid negotiations at an extremely fast pace,” said Joel Segal, NFL agent and head of Lagardère Unlimited’s NFL player practice.

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  • NBA agents expect overseas signings to become standard

    Liz Mullen
    As the NBA lockout continues, expect more players to sign deals with European and, perhaps, Asian professional basketball teams, as player agents said last week they were actively talking to teams.

    Whether any other stars the likes of New Jersey Nets point guard Deron Williams go overseas — Williams agreed to a deal earlier this month with a team in Turkey — may depend on whether European or Asian clubs agree to let the players opt out when and if the lockout ends. The lockout began July 1.

    “We are having a lot of conversations with [European] teams,” said Mark Bartelstein, president of Priority Sports & Entertainment, which represents about 45 NBA players and recently negotiated a one-year, $1.5 million deal for former Philadelphia 76ers forward Darius Songaila to play for Turkish team Galatasaray.

    “The European market is in full force right now,” Bartelstein said, “and I would think [signings] will be an everyday occurrence.”

    Bartelstein added that Priority representatives are talking to teams in China and Japan, as well. “There are teams all over the world we are talking to,” he said.

    According to website HoopsHype.com, several players in addition to Williams and Songaila had signed with European teams as of early last week. Still other NBA players are reportedly at least considering overseas deals. While Williams’ deal includes an opt-out in case the NBA lockout ends, Songaila’s does not. Bartelstein said NBA players are convinced there will be a long lockout.

    Boston Celtics center Nenad Krstic had every intention of exploring the NBA free agent market if not for the lockout, said his agent, Marc Cornstein, president of Pinnacle Management Corp. But when CSKA Moscow came calling, “he got offered a tremendous contract by Moscow,” Cornstein said.

    “Every day we are having what I would consider fairly serious talks,” added Cornstein, about NBA players taking jobs in Europe. “This gives [European teams] a chance to bring in players they would not ordinarily have an opportunity to sign.”

    Greg Lawrence, an NBA player agent at Wasserman Media Group, which has a large NBA player practice, said, “We haven’t had any current NBA players sign over there yet, but I think it will happen soon.” Lawrence said all 15 player clients that he personally deals with have asked him about opportunities in Europe. “If teams make good offers,” he said, “I think there will be guys that go over there that will surprise you.”

    The European or Asian option is of particular interest to players who were selected in the second round of this year’s NBA draft, he said. “There is no shoe money,” Lawrence said. “There is little endorsement money. If we lose the season, and you are a second-round pick or even a first-round pick, you are not getting paid for a year and a half.”

    Lawrence agreed with Bartelstein’s assessment of NBA players’ feelings about how long the NBA lockout will last. “The way the league has positioned itself,” he said, “the players think this will go on for a long time.”

    SPORTSTRUST SIGNS NFL PLAYERS: SportsTrust Advisors has signed San Diego Chargers running back Darren Sproles, Dallas Cowboys defensive end Stephen Bowen, Kansas City Chiefs defensive end Wallace Gilberry and Tennessee Titans linebacker Rennie Curran. Agents Jimmy Sexton, Pat Dye Jr., Bill Johnson and Michael Perrett will represent the players.

    ATHLETES FIRST SIGNS NFL PLAYERS: Athletes First has signed Baltimore Ravens rookie defensive tackle Terrence Cody and veteran quarterback J.T. O’Sullivan. Agents David Dunn and Joby Branion will represent the players.

    MAXX SIGNS OLSEN FOR MARKETING: Maxx Sports Entertainment has signed Chicago Bears tight end Greg Olsen for off-the-field endeavors, including marketing and broadcasting. Maxx President Mark Lepselter will represent him. New York-based Maxx also recently negotiated a deal for former NFL cornerback Ty Law to work as a studio analyst for Comcast SportsNet New England. Maxx also negotiated deals for broadcasters Kevin Dunn (to be a studio host) and Samantha Steele (to be a studio host and reporter) for the new Longhorn Network.

    DBA SIGNS AHMAD RASHAD: Don Buchwald & Associates has signed former NFL player and sports broadcaster Ahmad Rashad for representation. Agent Tony Burton will be handling his broadcast work and Christian Gesue will rep him for commercials and marketing work.

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

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  • Would proposed split ease NFL’s revenue concerns?

    If the NFL resolves its more than four-month-old lockout this week, players will earn between 46.5 percent and 48 percent of league revenue as part of a labor contract of up to 10 years, with some stadium cost credits depressing that share, sources said.

    The core 2011 salary cap under discussion, before benefits, is about $120 million, with the grand total around $141 million, sources said, or the same amount the league proposed on March 11 when the players union decertified and then funded an antitrust lawsuit against the NFL and its 32 clubs.

    “We’ve taken a significant setback as far as overall revenue,” New Orleans quarterback Drew Brees, one of the named plaintiffs in the antitrust case, Brady v. NFL, pending against the NFL, told a San Diego radio station last week. The union in early March proposed a $151 million cap.

    AP IMAGES
    Enough progress occurred last week that owners may vote Thursday on the emerging deal. "I hope we are getting near the end," Patriots owner Robert Kraft (above) said last week.
    Late last week hurdles remained, like the system for paying rookies and how to dispose of the antitrust lawsuit. Enough progress has occurred that owners may vote Thursday in Atlanta on the emerging deal. Key players and owners are scheduled to meet Tuesday in Minnesota with the federal mediator, who has required that the participants who attend are empowered to settle the dispute.

    “I hope we are getting near the end,” said Patriots owner Robert Kraft, unprompted, last Thursday as he stepped out of a black town car in front of the New York offices of league adviser Proskauer, where negotiations occurred.

    The NFLPA did not respond for comment for this story and the NFL declined to comment.

    Before the players decertified, the NFLPA offered a 50-50 division of revenue, which is approaching $10 billion and is expected to grow substantially in coming years. The players were receiving in the low 50 percent range of revenue. The league originally proposed in late 2009 significant cuts that lowered the share into the low 40 percent level, though the NFL had sweetened its offer by March. The percent in the potential new CBA fluctuates between 46.5 percent and 48 percent based on the league’s revenue in a particular year, the sources said.

    The potential deal also includes some credits for pre-existing stadium debt costs that the NFLPA had previously approved as part of the league’s venue financing program, the sources said. And the league going forward could propose new offsets, such as exempting from revenue personal seat license income that finances a new stadium, but the NFLPA could veto each proposal, the sources said.

    While the players look set to be earning no more than the sum that was on the table on March 11, there are elements that are more favorable to them in the potential deal. Teams must pay to at least 95 percent of the cap, sources said, whereas under the old CBA the floor was 85 percent. In the deal the players spurned on March 11, the proposed floor was 90 percent of the cap.

    And the March 11 offer also blocked the players from sharing in excess revenue, perhaps the factor that most sparked the decertification and likely caused NFLPA Executive Director DeMaurice Smith to declare the NFL’s offer to be the worst in the history of pro sports.

    The NFL structured the March 11 offer with predetermined caps calculated on projected revenue, with any excess revenue flowing wholly to the owners. The players insisted they should also share in excess revenue. The league contended the March 11 offer was negotiable, though the players viewed it is a take-it-or-leave-it proposition because the owners extended the terms 12 hours before the CBA expired and five hours before the union’s deadline to decertify.

    The possible new deal is a simple split of revenue, so the players’ share automatically rises along with revenue. The old CBA shaved $1 billion in league revenue, with the remainder shared with players. The league then wanted more credits for costs such as stadium investment.

    The NFL sought the givebacks to counter what it maintains are declining profit margins that endanger the owners’ wherewithal to invest in future growth.

    So does this deal, if it passes, solve that issue?

    To some extent, experts said, though low-revenue teams may still feel squeezed.

    “If they move forward on this agreement it reverses the trend on profitability, but it does not get them back to where they were before 2006 [when the last CBA was extended],” said Marc Ganis, a sports consultant with close ties to NFL ownership. “They didn’t get their way.”

    As a result, Ganis predicted low-revenue clubs will demand further supplemental revenue sharing. Many of these clubs spend under the cap, so while the overall cap declines with the new potential deal, they still might incur higher costs. The cap in 2009, the last year with one, hit $128 million per club, so the 85 percent floor lay at $110 million. If the 2011 cap is $120 million, and the new floor is 95 percent of the cap, that would set it at $114 million, an overall increase.

    If the sides sign a deal, it’s unclear how some of the non-economic issues shake out. The league anticipates terminating federal judicial oversight of the league’s labor deal, in place since 1993, and it wants the antitrust case dropped immediately.

    Counsel for the players want the lockout lifted while the antitrust case is class certified and then unwound over a period of months. That could then protect the right of players to decertify and file antitrust cases in the future.

    There is also the matter of the looming decision from U.S. District Judge David Doty on how much to penalize the NFL for violating the old CBA in requiring broadcasters to pay their fees even in a lockout. The league contested his finding that the lockout fees violated the CBA. It is expected the players would drop that case as part of the potential umbrella settlement of the disputes.

    The rookie wage scale also late last week remained an obstacle. While the sides agree the amount of money paid to rookies should decrease and the savings be passed on to veterans, the owners wanted rookie deals to stretch five years and the players wanted four. And the sides disagreed on how to fund increases in payments to retirees.

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  • Ties deliver Steinberg to Excel

    On the first day that Mark Steinberg was legally able to talk to prospective suitors, NBA agent Jeff Schwartz and MLB agent Casey Close got on a plane in New York headed to Cleveland, the city where they had first met Steinberg many years ago.

    GETTY IMAGES
    Steinberg represents Tiger Woods and plans to build a full-service golf agency within Excel.
    “We really did. We flew in,” Schwartz said. “We wanted to be the first. We wanted him to know how much we wanted him.”

    Excel Sports Management, a company founded by Schwartz in 2002, announced last week that Steinberg, the agent to Tiger Woods, was joining the New York-based sports agency as a full partner. Steinberg had worked for IMG for nearly two decades, his entire professional career. Close, agent to Derek Jeter, joined Excel as a full partner in April after leaving CAA Sports.

    Schwartz will remain president of Excel, but the agents, who met nearly two decades ago at their first sports business jobs at IMG’s Cleveland office, are expected to run the company on a collaborative basis. They declined to share financial details of the deal, but indicated the addition of Close and Steinberg to Schwartz’s company was more like a merger of equals than an acquisition.

    There has been talk for months about Schwartz, Close and Steinberg joining forces, as well as speculation that they could build a major sports agency representing multiple superstar athletes and later sell it. But Steinberg said: “I am not looking to cash out in the near future. I am looking to work as hard as I have ever worked to build a multisport agency that is a destination for premier athletes and corporations all over the world.”

    The agents said last week that Excel may go beyond representing NBA and MLB players and golfers and may grow eventually into corporate consulting work, as well as expand into representing athletes in other sports.

    “Five to 10 years from now, will we be just a golf, basketball and baseball business?” Steinberg asked, rhetorically. “Potentially, but I highly doubt it.”

    Schwartz said that although hiring another agent and entering another sport was a possibility, they were not planning on jumping into another sport immediately.

    Since the late 1990s, a number of companies have tried to build multisport athlete representation businesses by acquiring independently owned sports agencies. But David Falk, who was head of the now defunct SFX Sports, which rolled up major sports agencies in the late 1990s and early 2000s, said he could not think of another instance in which three major agents in three sports merged their practices, and he thinks the business model could work.

    “I am a person who likes to see innovation, new things,” he said.

    Although it was widely expected that Steinberg would join a bigger agency, Falk, who represented Michael Jordan, said he was not surprised that Steinberg chose to merge with other agents. “Representing Tiger is like representing Michael Jordan: It’s an industry unto itself, assuming he comes back,” Falk said, referring to Woods’ injury and the public relations fallout surrounding his personal life. “When he comes back, he has the opportunity to create new income.” Falk added that he didn’t need to be part of a mega-agency to do that.

    Steinberg said he intends to “build a full-service golf agency within Excel Sports,” and that could include hiring more employees and advising companies on their golf strategy, as well as signing golfers.

    Steinberg, who left IMG May 24, said he went to Excel because it felt right: “It’s not just a lifestyle. It’s not just the people. It’s not just about the opportunity to have a vision to help create something. It’s all of that.”

    Steinberg, who lives in Cleveland, will move to New York and work in the same office with Close and Schwartz.

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