SBJ/January 23-29, 2012/Labor and Agents

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  • ‘Fair question’ whether new CBA allowed agent to win Luck

    Liz Mullen
    Will Wilson, the newly signed agent for Stanford quarterback Andrew Luck, couldn’t say last week if he would have been the agent for the expected top pick in this year’s NFL draft if the league’s new collective-bargaining agreement had not changed the structure of playing contracts for top picks.

    “That’s a fair question,” Wilson said when asked if Luck would have signed instead with an experienced NFL agent had deals for rookies stayed the same. “It’s hard for me to answer that question. If it was not that structure, I don’t know.”

    Highly touted Andrew Luck selected an agent who hasn’t repped an NFL player.
    Photo by: GETTY IMAGES
    Wasserman Media Group
    announced last week that it had signed Luck for representation on and off the field and that it also had hired Wilson, who most recently was executive vice president of MLS and Soccer United Marketing but has worked in the sports business for 21 years. He’s previously been an executive vice president at the Arena Football League and at CART. He also, notably, is Luck’s uncle.

    Under the NFL CBA agreed to last year, the first pick in the draft will get less than half of what top picks did under terms of the prior labor deal. In addition, the contracts now are structured in such a way that there is not a lot of negotiation involved.

    Wilson was certified to represent NFL players in contract talks with clubs by the NFL Players Association in 2010, but he has never previously represented an NFL player. WMG represents hundreds of athletes, including star NBA and MLB players, but no NFL players. For those reasons, Luck’s selection of Wilson and WMG came as a surprise to many, especially given Luck’s standing as arguably the most heralded draft prospect in years.

    “We’re four months out [from the draft], but at this point, I haven’t seen a player more locked into the No. 1 overall pick than Andrew Luck is right now,” said Rob Rang, senior draft analyst for CBS Sports.

    Quarterback guru Steve Clarkson, who has trained a number of top college and NFL quarterbacks through the years, said, “I think he is the best prospect to come out in the last 10 years.”

    Despite that talk, agents and others in the industry say Luck hasn’t had his head turned by the hype. Asked if it was important to Luck that he be drafted No. 1 overall, Wilson said, “I think for Andrew, it’s just important to play.”

    As for marketing, Wilson said Luck will probably do some work but that his focus is on football. “I think the general feeling on Andrew is less is more,” Wilson said, regarding marketing. “We will take it as it comes and we will be very strategic about it.”

    Wilson has known WMG founder, Chairman and CEO Casey Wasserman since about 2002. He interviewed to run the former AFL team, the Los Angeles Avengers, that Wasserman owned. While Wilson did not get the job, he and Wasserman stayed friends.

    Wilson is joining WMG as executive vice president of football operations and will spend “1,000 percent” of his time managing Luck until Luck is situated in his career. After that, Wilson will work with the WMG management team on international business development, including on its soccer division, which represents more than 400 players worldwide. 
     
    OCTAGON SIGNS NFL PROSPECTS: Octagon signed Alabama linebacker Courtney Upshaw, Illinois defensive end Whitney Mercilus and Oklahoma State quarterback Brandon Weeden for representation in this year’s NFL draft. Octagon also signed Oklahoma cornerback Jamell Fleming, Missouri tight end Michael Egnew, Cal linebacker Mychal Kendricks and Cal wide receiver Marvin Jones.

    NFLDraftScout.com projects Upshaw and Mercilus as first-round picks, with Upshaw at No. 18 and Mercilus at No. 22 in a mock draft last week. Agents Doug Hendrickson, C.J. Laboy, Sean Howard, Mike Sullivan and Andy Ross will represent the players.
     
    PRIORITY SIGNS NFL PROSPECTS: Priority Sports & Entertainment signed Georgia punter Drew Butler, Arizona State wide receiver Gerell Robinson and Michigan defensive tackle Mike Martin for representation in the draft. Agents Deryk Gilmore, Mike McCartney, Rick Smith and Kenny Zuckerman will represent the players.

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

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  • Talent firms merge to form Legacy Agency

    Legacy Sports Group, the baseball player representation firm run by prominent MLB player agent Greg Genske, has merged with athlete marketing company The Agency, run by veteran agent Jordan Bazant. The merged company is known as The Legacy Agency, and its CEO is industry veteran Mike Principe, who helped create the former SFX Sports and Blue Entertainment Sports Television.

    Genske and his baseball agent partners, Brian Peters and Scott Parker, will be partners at the merged firm, as will Bazant and his partners at The Agency: Andrew Witlieb, Russ Spielman, Peter Raskin and Kevin Canning.

    Principe will run the company out of The Agency’s old offices in New York. Genske and the other baseball agents will continue to operate from Legacy Sports Group’s offices in Newport Beach, Calif.

    While agency roll-ups in the past have often involved multiple playing-contract sports practices and marketing agencies, by combining two agencies with no competing businesses, Principe said he is hoping to create a more nimble agency without a lot of overlap. “We plan to grow organically through the complementary nature of the two practices, through earnings-enhancing acquisitions and through select events,” he said.

    Principe, who got his start in the sports business as a mergers and acquisitions lawyer, helped Robert Sillerman roll up a number of sports agencies to create SFX Sports. He also was the managing director of BEST, which he left in the wake of the firm being acquired by French conglomerate Lagardère Group in early 2010.

    The Legacy Agency represents about 225 clients in the United States. Legacy Sports Group brings to the merged firm its contract-representation work for about 100 baseball players. More than 40 of those players are MLB players, including New York Yankees pitcher CC Sabathia and Boston outfielder Carl Crawford. On The Agency side, it brings clients in sports broadcasting, including Troy Aikman; golf, including Jim Furyk; and college coaching. It also has clients for marketing-specific work, including the NFL’s Reggie Bush and Ndamukong Suh.

    The merger was finalized last month. While Principe would not discuss specifics about how the deal came together, he said he has known Genske and the principals at The Agency for years.

    To facilitate the deal and fuel growth, The Legacy Agency quietly raised about $10 million of debt financing and about $20 million from placing shares in the new agency on the Alternative Investment Market of the London Stock Exchange.

    “We went to AIM because it has a successful track record for newly founded companies to raise equity capital,” Principe said.

    Institutional investors will own about 70 percent of the company and the principals about 30 percent, a source said.

    Principe would not comment on the financial aspects of the deal except to say, “We have institutional shareholders, but it is important to note that the principals, including myself, have equity in the company as well.”

    Principe and Genske are part of a five-person management board for The Legacy Agency. Also on the board are Peter Moore, EA Sports president and Electronic Arts COO; Bart Campbell, founder of Global Sports Management Ltd.; and Keith Sadler, group finance director of Digital Marketing Group.

    Genkse, Principe and Campbell all have equity in the new firm. Sadler and Moore serve as independent, non-executive directors.

    Genske said he had been approached numerous times about business combinations, but those opportunities involved Legacy Sports Group being a small part of a larger agency, with little or no control. “This is different,” he said, “because we remain in control — we at Legacy and the partners at The Agency.”

    The Agency and Legacy combined had about 30 employees. All are staying on with the merged company.

    The Agency represented athletes off the field but did not represent baseball players. That made it a complementary business to Legacy’s, Principe said. The company does not plan to acquire other sport-playing contract representation practices in the near future, he said.

    Principe said that he has learned from his experience building multisport athlete representation practices and that the new company will differ from those endeavors.

    “We keep refining the model,” Principe said. “At SFX, we were a mega-agency. At BEST, we were a broad-based, multipractice agency. With [The Legacy Agency], we are limiting the on-field initially to baseball and complementing it with The Agency’s off-field capability in marketing, coaching, broadcasting and golf representation.”

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  • Football agent Segal, representative for Vick and Bush, signs deal to remain with Lagardère

    NFL agent Joel Segal, whose clients include Philadelphia quarterback Michael Vick and Miami running back Reggie Bush, has signed a long-term deal to stay at Lagardère Unlimited.

    Kevin O’Connor, chief operating officer of Lagardère, confirmed the deal but would not disclose financial details. One source said the term of the agreement is more than five years.

    Segal
    “Joel is one of the cornerstones of our business and is clearly one of the best in the industry,” O’Connor said. “We couldn’t be more excited for the opportunity to continue with Joel.”

    Segal represents about 65 NFL players, including Baltimore linebacker Terrell Suggs and Tennessee running back Chris Johnson. “Lagardère Unlimited is reinforcing its commitment of growth, and I am very excited and proud to be a part of it,” Segal said.

    Segal’s deal with Lagardère had expired at the end of 2011. He said he never considered going to another agency.

    Lagardère Unlimited is a subsidiary of the French conglomerate the Lagardère Group. It became a major player in the U.S. athlete representation business when it acquired the former Blue Entertainment Sports Television in 2010. Earlier this month, it made a move into the golf representation business, announcing that it had acquired Gaylord Sports Management Group, whose clients include Phil Mickelson, Nick Watney and Keegan Bradley.

    Segal, who was certified in 1993, had been running his own practice, Worldwide Football, when it was acquired in 2007 by private equity firm Blue Equity. Blue Equity folded Segal’s business together with several other sports practices to create BEST in 2008.

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  • Workers’ comp cases could rise to high court

    The NFL is battling the NFL Players Association in at least four different courts over where players can file workers’ compensation claims, one of the few unresolved battles of last year’s labor standoff.

    Unlike the concussion litigation that has received plenty of attention — there are at least 16 federal lawsuits that have been filed by former players against the league — the workers’ comp fight has the players union playing a prominent role, and it’s a battle that could be played out in courts for years to come. Some observers say the matter could proceed all the way to the U.S. Supreme Court.

    Where the NFL's workers' compensation lawsuits stand.

    Photo by: GETTY IMAGES
    “Workers have an absolute right, which cannot be waived by a private employment contract, to seek workers’ compensation benefits in those states in which they claim to have suffered injury,” the NFLPA contended in a filing with the 7th U.S. Circuit Court of Appeals earlier this month.

    Like the concussion cases, the workers’ comp lawsuits are essentially the same: The players signed contracts binding them to file workers’ comp claims in a jurisdiction designated by the team, and then they chose to file claims in another jurisdiction that they found more favorable, California in most cases.

    On workers’ comp matters, California is regarded among the states as one that awards higher damages and allows for more expansive benefits. Teams outside of the state also must incur the cost of local
    Photo by: NEWSCOM
    counsel for filings in California.

    The league and players last summer negotiated over workers’ compensation during the collective-bargaining process, but the parties, diametrically opposed on this single issue, agreed to leave the subject unresolved. (Another disputed issue, HGH testing, did make its way into the CBA, though the sides now disagree over how to implement the testing.)

    The NFLPA contends federal and state laws do not allow private contracts to take away employees’ rights to file injury claims in places they have worked. The NFL disagrees with that assertion.

    “According to the [NFLPA’s] logic, every NFL player is entitled to
    The NFL got mixed results in workers’ comp cases against Bruce Matthews (top), Kendall Newson and Tom Tupa (above).
    Photo by: NEWSCOM
    California benefits — even if he played only a few games there and even if he promised to resolve any disputes in the state where his team is located and where his contracts were executed and performed,” the NFL argued to an Illinois federal court on Aug. 12, 2011, just eight days after the union and league signed the CBA. The case involves three former Chicago Bears players who are seeking to file claims in California. “As expected, no statute or judicial decision supports that outlandish theory,” the NFL argued.

    Several weeks later, the court ruled in the NFL’s favor, deciding the players must file in Illinois, a decision the NFLPA soon after appealed to the 7th Circuit.

    The NFL won a similar victory early last year in a case brought in California federal court by the NFLPA and hall of famer Bruce Matthews. Matthews, who spent the final years of his career with the Tennessee Titans, sought to overturn an arbitrator’s decision that Tennessee law had to be used in the player’s claim even though the claim had been filed in California. The NFLPA and Matthews appealed that loss to the 9th Circuit.

    The NFL in a court filing in Louisiana earlier this month cited both the Illinois and California cases as evidence in another case. There, an arbitrator ruled eight former New Orleans Saints players could not file in California, and the league sued the NFLPA and the players in federal court to enforce that decision.

    The NFL did not, however, mention in that filing that not every court agrees with the league. In Pennsylvania last May, a federal court ruled in favor of former Miami Dolphins player Kendall Newson, allowing him to file a claim in that state. The team objected, pointing to a provision in Newson’s contract requiring him to file in Florida. The court, unlike the others, disagreed.

    “The Pennsylvania Workers’ Compensation Court has concluded, as have others, that private contracts cannot effectively waive the Commonwealth’s statutorily-enacted public policy regarding workers’ compensation benefits,” the court ruled. In other words, if a worker claims an injury occurred in that state, a private contract cannot trump Pennsylvania law granting access to file there.

    The Dolphins and the NFL have not appealed the decision.

    Similarly, a Maryland state court ruled in 2009, and a state appeals court affirmed last year, that former Washington Redskins punter Tom Tupa could file a case in that state even though his contract stipulated he had to file in Virginia.

    “The forum selection clause in Tupa’s contract would contravene Maryland’s public policy,” the state appeals court wrote as part of its decision last year.

    Given the many cases, this is an issue that likely will get to the Supreme Court, said John Goldman, a Herrick Feinstein partner.

    “If the 7th and 9th Circuits come to a different conclusion, that is one for the Supreme Court,” he said. “It is an important enough issue.”

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  • NFL workers’ compensation court cases

    Cleeland, NFLPA v. NFL

    Eight former New Orleans Saints players filed workers’ comp claims in California despite language in their contracts restricting claims to Louisiana. The NFL won an arbitrator’s ruling and sued the players and the NFLPA in August 2011 to enforce that judgment.

    STATUS:  The NFLPA and NFL have filed briefs stating their positions.

    Haynes, NFLPA v. Chicago Bears

    Three former Chicago Bears players filed workers’ compensation claims in California, contrary to their contracts. A federal court ruled against the players in September 2011.

    STATUS:  The case is now on appeal in the 7th Circuit.

    NFLPA, Matthews v. NFL, Tennessee Titans

    Bruce Matthews filed a workers’ comp claim in California, despite his contract saying he must do so in Tennessee. This sparked an arbitrator’s decision that Matthews could file in California but using Tennessee law, a ruling Matthews appealed but lost in California federal court in January 2011.

    STATUS:  The case is on appeal in the 9th Circuit.

    Miami Dolphins v. Newson

    Former Miami Dolphins player Kendall Newson filed a workers’ compensation claim in Pennsylvania, contrary to his contract, which stipulated he must do so in Florida. The Dolphins sued, but a Pennsylvania lower federal court ruled in Newson’s favor in May 2011.

    STATUS:  No appeal has been filed.

    Pro-Football Inc. (Redskins) v. Tupa

    Former Washington Redskins player Tom Tupa filed a workers’ compensation claim in Maryland, but his contract stipulated he must do so in Virginia. A Maryland state court ruled in Tupa’s favor in 2009, and a higher state court ruled in favor of the punter last year.

    STATUS:  The case is on appeal within the state’s court system.

    Brache v. Tampa Bay Storm*

    Ignacio Brache, a kicker with the AFL Tampa Bay Storm, filed a workers’ comp claim in California, contrary to the AFL CBA. The Workers’ Compensation Appeals Board of California in 2010 upheld a ruling in the player’s favor.

    STATUS:
      No further actions.

    * Brache is not an NFL case, but NFLPA lawyers cite it as evidence that private employment contracts cannot supersede California’s workers’ comp laws and that it specifically shows even a football CBA cannot trump state policy.

    Source: Federal and Maryland court filings

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