SBJ/August 15-21, 2011/Labor and Agents

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  • Early numbers show rise in signings of undrafted NFL rookies

    Liz Mullen
    Back in the spring, when the NFL lockout was in place, the common wisdom in the industry and the media was that when it was over, veteran players with experience would be the big winners and undrafted rookies would be the losers.

    In non-lockout years, historically, clubs around the league typically would sign about 450 college players who were not drafted a week or so after the draft, and those players would start learning the team’s system right away. The thinking this year was that many of those players would lose their shot at the NFL because clubs with little time to prepare for the season, because of the lockout, would sign players who had already demonstrated they could play in the NFL — and especially those players who knew a particular club’s system.

    Well, early on, it hasn’t quite worked out that way. As of early last week, the 32 NFL teams had signed 615 undrafted rookies, up about 37 percent from the historical number.

    There are several factors behind the signings. Under the new collective-bargaining agreement, NFL training-camp rosters expanded from 80 players to 90 players, so there are an additional 320 spots clubs have to fill. In addition, the salary cap this year is at about the same level as it was in 2009, the last capped year of the old CBA, and the new minimum salaries in the NFL are $375,000 for undrafted rookies versus $685,000 for veterans with 5 years of service. That means teams can sign 18 undrafted rookies for the same price as 10 veterans.

    “At some point in time, clubs are just going to need bodies. There is no other nice way to put it,” said one agent last week, who added that he signed deals for several undrafted rookie clients but had clients who had played on NFL clubs last year who were still looking for jobs. This agent, who asked for anonymity because he did not want his comments to be used against him in recruiting by rival agents, thinks his veterans ultimately will get jobs while most of his undrafted rookies won’t make teams’ 53-man rosters, but he doesn’t know for sure.

    As it is, some of his jobless veteran NFL clients are getting nervous —but they’re also staying active. “I have guys looking at the TV for injuries and saying, ‘Hey, they lost a linebacker. Call this team,’” he said.

    Other agents said the short time frame of about a week this year in which most NFL clubs signed players before arriving at training camp, down from five months in non-lockout years, makes it impossible to predict what will happen to rosters this year. “We are in unchartered territory,” said veteran NFL player agent Peter Schaffer.

    CAA SIGNS JASON TAYLOR: CAA Sports has signed veteran linebacker Jason Taylor for representation. Taylor, who recently signed a one-year deal with the Miami Dolphins, was formerly represented by NFL player agent Gary Wichard, who died in March.

    AP IMAGES
    New Wasserman signee Kevin Tway (right) will wear Nike, just like dad Bob (left).
    WMG SIGNS KEVIN TWAY, LANDS NIKE DEAL: Wasserman Media Group has signed for representation golfer Kevin Tway, who turned pro this summer out of Oklahoma State University, and negotiated a multiyear deal with Nike for him.

    Tway is the son of longtime PGA Tour pro Bob Tway (also a Nike player) and winner of the 2005 U.S. Junior Amateur Championship. He will be wearing Nike shoes and apparel, including Nike headwear, as part of the deal, which also includes equipment, said Sam MacNaughton, a golf agent who will serve as Tway’s primary agent at WMG. MacNaughton would not comment on the financial details of the deal except to say, “It is a really nice deal. It is one we are really grateful to have and to be a part of.”

    MacNaughton said the fact that Tway is the son of an eight-time PGA Tour winner is a plus, noting that Bob Tway did not push his son to play as much as some parents of other young, elite golfers do. “Bob knows it doesn’t matter what you do at 16. It matters what you do at 26,” MacNaughton said.

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

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  • Exceptions for big-ticket projects shave NFL players' annual share

    The NFL can shave hundreds of millions of dollars from the annual revenue it shares with players under terms of the new collective-bargaining agreement, according to an analysis of the document. The players agreed to the reductions because the money is tied to high-cost but big-reward projects, such as stadium construction and other league or team businesses.

    The new CBA, finalized on Aug. 4, also makes it more difficult for the NFL Players Association to challenge the league’s business judgment, something the union did successfully earlier this year when a judge ruled the NFL violated the old labor deal by requiring broadcasters to pay their fees even in a lockout.

    BUD FORCE
    The Dallas Cowboys’ merchandise company is one item in the agreement that thins the money pool from which players get their cut.
    The new labor pact does not have $1 billion taken off the top of revenue for expenses — like the expired one did. It also, however, is not as clean a division of revenue as has been widely believed. The old deal took the $1 billion off the top and then gave the players the remaining 60 percent of revenue. This deal has been billed as giving the players an average of 47 percent of all revenue over the next decade, with no expense adjustments.

    But starting with the average of 47 percent of revenue, the league gets a credit of up to 1.5 percent for stadium expenses, which reduces the overall percentage take of the players. The pool of money the players get their cut from is also thinned for a range of items, including NFL Ventures business, the Dallas Cowboys’ merchandise company, the New York Jets’ and Giants’ personal seat license sales, and potentially a new stadium in Los Angeles (see chart).

    “Each one is expected to have a return for the players many times over,” said Marc Ganis, a sports consultant with close ties to the NFL.

    League officials declined to comment. The NFLPA did not respond for comment.

    While it’s unclear exactly how much each of these measures will reduce the actual percentage share the players will get, league sources insist this is not a case of a fast one being pulled on the NFLPA because the idea is for these deductions and credits to fuel revenue growth.
    INSIDE THE CBA:
    CREDITS AND DEDUCTIONS


    It’s been widely noted that as part of the new CBA, NFL players will get an average of 47 percent of the NFL’s more than $9.5 billion in rapidly growing annual revenue. But there are a host of credits and deductions — designed to increase revenue for both sides — that will serve to lower that percentage. The following are many of those points that are included in the new CBA but were not in the old deal.

    DESCRIPTION / EXPLANATION

       Stadium credit / The league can take 1.5 percent in stadium credits annually for expenses to build new stadiums, lowering the total percentage share by this much.
       Further stadium credits / The league can deduct naming-rights and premium-seat revenue if that money contributes to building a stadium. If this revenue pushes the overall percentage decrease for a given year beyond 1.5 percent, the league will have to prove that the incremental credits will more than double the return to the players.
       Dallas Cowboys merchandising / The Cowboys are the only team in the league to distribute their own merchandise. Under the new CBA, the team’s wholesale merchandise revenue, projected to be $80 million this year, is excluded from the revenue pool shared with the players. However, royalties paid on Cowboys merchandise do continue to be shared with the players.
       N.Y. Jets/N.Y. Giants PSL sales / The NFLPA several years ago had already agreed to deductions from league revenue for several team PSLs that contributed to building stadiums. Because the Jets and Giants are still selling PSLs, this needed to be factored into the new agreement. According to the CBA, PSL sales from the two teams this year are expected to total $43 million.
       Increase in complimentary ticket exclusion / Under the old deal, the league could exclude a certain number of comp tickets for use by sponsors and others, with those tickets not counting toward general revenue. Either 1,700 tickets per preseason and regular-season game could be excluded, or it could be 1,250 tickets for regular-season games and 3,500 tickets for preseason games. Now, those thresholds rise to 2,215 for each regular-season game and 5,000 for preseason games.
       Surrounding stadium real estate / Revenue derived from real estate development opportunities in conjunction with or related to any stadium lease or land-purchase agreement is excluded from sharing. An example might be revenue from Patriot Place, the commercial real estate development adjacent to Gillette Stadium, which has not been shared with the players, though questions were raised from the players side periodically regarding whether it should be.
       NFL Ventures / The league can take up to $60 million of deductions in 2012, with NFLPA approval, for new business startup costs. The league also can go to the NFLPA with three new businesses annually and receive deductions for revenue from those three businesses. The idea is that the NFLPA only signs on if convinced the business will deliver substantial revenue to the players.
       TV revenue for stadiums / This provision allows the NFL, with NFLPA approval, to divert national TV money for stadium projects. While this could be used for any new stadium, its most notable use could be in helping to bring the NFL back to Los Angeles.

    — Compiled from the NFL collective-bargaining agreement and SportsBusiness Journal sources

    “The stadium credits are a 1.5 [percent] … deduction from the … [47 percent] player share,” one league source said. “The other items are indeed off the top, excluded from AR (all revenue), making the pot from which the player share is computed smaller.”

    Part of the league’s concern with the old deal was it did not create incentives for the NFL to invest. If, for example, a new venture in its first year generated $10 million of revenue, that revenue had to be shared with the players irrespective of the costs. Now, the league can identify three NFL Ventures projects annually as being eligible for deductions. NFL Ventures pertains to NFL Network and licensing and merchandise business.

    In 2012, according to the CBA, up to $60 million of deductions for the three selected projects can be taken from annual revenue shared with the players. A league source said the way this will work is the NFLPA would sign off on projects only if convinced the projects can be profitable for both sides.

    No specific amounts are provided for after 2012.

    Similarly, the league can propose further stadium credits beyond the 1.5 percent already factored in, this source said. However, the league will have to prove to the NFLPA that these extra credits will bring well north of a 100 percent return for the players.

    The CBA also has a provision that the league can exclude investments in a new Los Angeles stadium from the stadium credit limit, though the NFLPA has to sign off on this extra allocation, too. A separate provision in the CBA allows the league, with union approval, to divert national TV revenue for stadium projects — a move that, a source said, would aid a new L.A. stadium.

    Meanwhile, the league won language in the CBA that would likely prevent a repeat of the lockout insurance case that played out this year. A federal judge ruled March 1 that the league had violated the CBA by requiring broadcasters to pay their fees even in a lockout, rejecting arguments that the NFL had used its best business judgment.

    “It made it a risk for every business decision a club might make,” a source said. The case was dropped as part of the new CBA agreement.

    In his decision, the judge rejected the NFL’s argument that it had met the legal test of using “sound business judgment” in crafting the TV contracts with the lockout language. The new CBA inserts the replacement term “reasonable business judgment,” appearing to lower the threshold.

    Now the CBA reads, “The parties … shall consider and give substantial weight to the reasonable business judgment of the NFL or the NFL Team but no deference will be applied where the NFL is alleged to have deferred or forgone revenues of $1 billion or more for the purpose of securing leverage in collective bargaining, in which case any finding of non-compliance shall require proof by a clear preponderance of the evidence.”

    In the media fees case, the NFLPA alleged the league gave up about $700 million in TV money to win the guarantee of payments during a lockout. Under the new provision, that would not have been enough to send it to a system arbitrator.

    The new CBA also eliminates the so-called “sham” language. The old contract said that if the union decertified after the expiration of the deal, the league could not declare it a sham, and then the players would have to wait six months to file an antitrust lawsuit. In the new deal, each side reserves its own legal rights.

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  • This amateur has the golf world watching

    When Peter Uihlein tees off to defend his title as U.S. Amateur champion next week, there will be the usual speculation on future marketability and potential PGA Tour success that comes with most promising young players.

    GETTY IMAGES
    Peter Uihlein has compiled a long résumé of successes in amateur and collegiate golf.
    But Uihlein is no regular young golfer, and interest in him is far more than the norm. He’s also the son of one of the most powerful men in the sport: Wally Uihlein, chairman and CEO of Acushnet Co., which owns the Titleist, Footjoy and other leading golf brands.

    “One of the biggest questions amongst agents is the question of who will represent Peter Uihlein,” said veteran golf agent Rocky Hambric, “not only because Peter is one of the top two amateurs in the world, but because he and his family are the most informed consumers of management services in the history of the game.”

    Peter Uihlein, who will turn 22 at the end of this month, has won every major amateur award and title and has topped every national and international amateur ranking for the last few years. He intends to compete in the U.S. Amateur as well as represent the United States in the Walker Cup for the second time early next month before starting his senior year, planning to complete his degree at Oklahoma State University.

    Meanwhile, Wally Uihlein, in his role overseeing one of the world’s largest golf companies, has known — and negotiated with — all the major agents in golf for decades. Acushnet posted more than $1.2 billion in sales last year.

    IMG Vice Chairman Alastair Johnston, who oversees IMG’s golf division, said the golf world is watching and waiting to see what Peter Uihlein does.

    “I think he is the most anticipated in that he has a name-brand recognition in the golf industry and everybody wants to see how Wally’s kid plays,” Johnston said. “For anyone who came into the golf industry in the last 25 years, the first person they wanted to know was Wally Uihlein. But Peter has earned that reputation and has earned that respect.”

    Wally Uihlein reluctantly consented to be interviewed for this story, first by email and then by phone, because, in part, he is aware of the growing speculation about his son’s future plans and he wanted to point out that such talk is premature.

    In response to an emailed question of how many agents had expressed an interest in representing his son, Uihlein wrote back, “Peter is an NCAA student athlete.” He was even more emphatic in the subsequent phone interview. “We don’t even know if he is turning pro,” Uihlein said.

    GETTY IMAGES
    Wally Uihlein, Peter’s father, is chairman and CEO of golf giant Acushnet Co.
    As to rumors that Peter Uihlein already has a business plan for when he turns pro, including hiring a particular agent, Wally Uihlein said, “Many people have insinuated there is a plan. There isn’t a plan.”

    But the talk continues. Among the hottest rumors is that Peter Uihlein will hire a representative with a well-known name from long ago: Hughes Norton, the former IMG agent who was Tiger Woods’ first agent. Attempts to reach Norton, who has virtually disappeared from the golf industry in recent years, were unsuccessful.

    Wally Uihlein laughed when asked about that talk. “That rumor, for the most part, is prompted by me,” he said, adding that it is “a ruse.” He said he brings up Norton’s name — and points out that he counts Norton as one of his oldest friends — when someone in the industry brings up the subject of who Peter might sign with.

    “It’s as much a disarming comment,” Uihlein said, “intended to say, ‘Hey, this subject matter is out of bounds.’”

    Uihlein has been CEO of Acushnet since 2000 and has worked in golf since 1976. When asked if it is a forgone conclusion that Peter, who has played Titleist equipment his entire life, would sign with Titleist when and if he turns pro, Wally Uihlein wrote back, “I suspect Titleist will have an interest in an association with Peter, but that is for the company to decide, not me.”

    In the follow-up phone interview, Uihlein said he would recuse himself from any decision by the company on whether Titleist would sign Peter.

    That kind of separation wouldn’t be new. By all accounts, Wally Uihlein has not been the stereotypical, pushy parent of a gifted young athlete through Peter’s growth.

    “You would never hear from him,” said David Whelan, Peter’s coach at IMG Academies from the time Peter was 13 until he entered Oklahoma State. “The only time Wally and I would communicate is Wally saying, ‘Peter would like to see you.’ Wally, if anything, really created the environment for Peter to do whatever he wanted to do.”

    Oklahoma State officials declined to make Peter Uihlein available for an interview, in deference to NCAA amateurism rules because the story pertains to a potential pro career. OSU officials are increasingly protective of Uihlein’s time, with a growing number of interview requests being made. Peter has already been featured in numerous stories in industry trades, including Golf Magazine and Golf Digest, and he was dubbed “Golf’s Little Prince” in a Wall Street Journal article earlier this year.

    “We have just tried to stop Peter from getting run over,” said Oklahoma State golf coach Mike McGraw. “Ultimately, what is more important: that he talks to another reporter or that he plays well?”

    When asked how good Peter Uihlein is and how he compares to other young golfers, McGraw said he thinks maybe one or two amateur golfers have accomplished in the last 30 years what Peter Uihlein has done. “It’s pretty rare,” he said, “to be the No. 1 ranked junior player in the country twice and then to be ranked the No. 1 college player and then the No. 1 ranked amateur in the world and to be the U.S. Amateur champ.”

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