SBJ/October 8-14, 2012/Labor and Agents

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  • More junior agents leaving for rival firms

    Rich Paul leaving CAA Sports to start his own agency representing LeBron James is part of a growing trend that has seen junior agents leave the company that trained and mentored them for a rival firm.

    In the last six months, at least 13 agents representing players across all major sports have left talent firms (see chart) and either joined a rival agency, launched their own firm or are weighing their options.

    Truckin’, Got My Chips Cashed In

    A list of recent moves by agents from their previous employer to their next

    Agent Sport Former firm New Firm
    March      
    Aaron Mintz NBA Priority Sports CAA Sports
    April      
    Jon Wagner Golf IMG Milestone Sports Management
    Jeff Stacy Golf IMG Empire Sports Management
    Kevin Lynch Golf IMG To be determined
    May      
    Joe Panos NFL LMM Athletes First
    July      
    Jon Heaton Golf IMG To be determined
    August      
    Paul McDonough MLS Santio Sport & Entertainment Wasserman Media Group
    Spencer Wadsworth MLS Santio Sport & Entertainment Wasserman Media Group
    September      
    Rich Paul NBA CAA Sports Klutch Sports Group
    J.D. Smart MLB Hendricks Sports Management Excel Sports Management
    Jim Murray MLB Hendricks Sports Management Excel Sports Management
    Matt Laird MLB Hendricks Sports Management Excel Sports Management
    David O’Hagan MLB CAA Sports Excel Sports Management

    Source: SportsBusiness Journal research

    While it is not altogether new or uncommon for younger agents to leave the agency that trained them for a better deal, veteran executives at major agencies interviewed last week said they can’t remember such a fluid marketplace in which so many junior agents are moving on.

    The defections started in March when NBA player agent Aaron Mintz left Priority Sports & Entertainment for CAA Sports in a move that sparked dueling lawsuits that are scheduled to be tried before a jury in Los Angeles federal court next month (see related story). Agent moves continued through last month with Paul’s exit, while three MLB agents left Hendricks Sports Management and one MLB agent left CAA Sports for Excel Sports Management.

    Although industry insiders say each agent move is different, many point to the changing face of the business.
    New companies, including Lagardère Unlimited, Relativity Sports and Excel Sports Management have entered the representation business, and with the increased competition both new and old firms in the business are trying to consolidate — and retain — power by securing talent. The fastest way for the companies to do that, sports executives say, is by hiring younger agents away from rival firms. These agents may bring athlete clients with them, but they also have proven they can recruit new clients, which is the key to success in the agent business.

    At the same time, notes Octagon President Phil de Picciotto, “Younger agents are looking for an opportunity in an industry that doesn’t have as many opportunities as in the past.”

    His point is that unless an agent has a marquee player, like James, it is very difficult for a young upstart to start a new firm that can compete with multisport athlete representation firms run by veteran agents. For some young agents, leaving the firm in which they are in a lower-level role to a so-called “name” agent can mean more recognition, more autonomy and more money, among other things.

    There are also specific situations at specific companies at play. Much of the movement in the golf space has been centered around an organizational shake-up at IMG. The agency’s most high-profile golf agent, Mark Steinberg, left in 2011 and four more departed this year.

    Wagner
    Jon Wagner, who was co-managing director of IMG Golf’s business in North and South America, left in April. Wagner was followed by Jeff Stacy and Kevin Lynch. Both had responsibilities for managing clients and recruiting new talent. They originally left in April to go to work at Wagner’s new agency, Milestone Sports Management, but that arrangement fell through in a court battle that lasted through the summer. In the end, the court said a noncompete clause in IMG’s employee agreement prohibited Stacy and Lynch from going to Milestone. Stacy, a nine-year IMG veteran, has since landed at Charleston, S.C.-based Empire Sports Management as vice president, business development.

    Another IMG defection came with Jon Heaton’s departure in July. He left to go to work with Steinberg at Excel Sports Management, but IMG is pursuing the same legal course of action to block that move, based on the noncompete clause. That case is pending.

    Excel Sports Management is another firm in the center of the activity. Originally formed as a basketball player representation firm by NBA player agent Jeff Schwartz in 2002, it expanded into a multisport agency by hiring Steinberg and MLB agent Casey Close last year. The firm is clearly on a hiring spree, but its partners have been mum about their plans. Close confirmed that Excel had hired J.D. Smart, Jim Murray and Matt Laird from Hendricks Sports Management and David O’Hagan from CAA Sports last month, but declined further comment.

    Many are also watching how Paul fills out Klutch Sports Group. While James was expected to officially sign on as the first new client for the firm, it is unclear just how many players will follow the other agents to their new employers’ agencies.

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  • Federal trial will decide whether agent Mintz can leave former firm, take clients with him

    Editor's note: This story is revised from the print edition.

    A jury trial in federal court scheduled for next month in Los Angeles could determine whether NBA player agent Aaron Mintz can leave and take clients from his former employer Priority Sports & Entertainment to his new employer, CAA Sports, without penalty.

    The case also could result in a “multimillion-dollar” verdict for Priority Sports, lawyers for the NBA and NFL player representation firm have said, according to court papers filed in the case.

    The trial is set to begin Nov. 13 in the courtroom of U.S. District Judge Stephen Wilson.

    Mintz
    Mintz first left Priority Sports on March 23 and filed suit against his former employer of 11 years the same day, asking for a federal court declaration that the restrictions in his employment agreement with the firm be declared void. Mintz’s employment agreement with Priority Sports included provisions preventing him from competing with the agency or signing the firm’s clients for two years. But Mintz contends in court papers that such restrictions are unenforceable under California law.

    Priority Sports countersued Mintz and Creative Artists Agency, parent company of CAA Sports, on April 17, alleging claims of breach of contract, misappropriation of trade secrets, defamation and unfair business practices, among other things.

    A number of CAA employees, including President Richard Lovett, as well as NBA players, including Washington Wizards guard Jordan Crawford, and even former Indiana Pacers general manager David Morway, could potentially be called to testify, according to court documents filed by attorneys for Priority Sports.

    Lovett, Crawford and Morway are on a list of more than 30 individuals who have information on the case, according to court documents submitted by Priority Sports attorneys.

    Officials at CAA and Priority Sports, as well as their attorneys, did not return multiple phone calls.

    Federal Magistrate Suzanne Segal, who is overseeing the pretrial motions in the case, granted Priority Sports’ motion last month to allow attorneys to depose more than 10 witnesses.

    It is not clear how many NBA player clients may have joined Mintz at CAA Sports. Mintz recently signed Toronto Raptors forward Dominic McGuire and was listed by the National Basketball Players Association as the agent of record for Crawford and the co-agent, along with his former boss and Priority Sports & Entertainment CEO Mark Bartelstein, for Pacers forward Danny Granger.

    It also was not clear whether there are talks to settle the dispute before trial. A pretrial conference is set for Oct. 29.

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  • NFL veteran Lal Heneghan joins Cornerstone Sports Consulting

    Lal Heneghan, who has more than 20 years of experience working in the NFL, is now working for Cornerstone Sports Consulting, which is advising college football players at eight Division I colleges and universities.

    Heneghan most recently was the San Francisco 49ers’ general counsel and executive vice president of football operations. He also has held positions with the Cleveland Browns and with the NFL, working with the NFL Management Council.

    Heneghan said he joined Cornerstone earlier this year and participated with Joe Mendes and Jack Mula in conducting more than 100 agent interviews for college football players hoping to be selected in next year’s NFL draft. Mendes, a former Washington Redskins vice president of operations, founded Cornerstone four years ago to help advise college football players on their professional careers. College and university clients pay for the services, which include education on many aspects of playing in the NFL, including the selection of an agent. Mula, a former agent and former general counsel of the New England Patriots and who joined Cornerstone in 2010, said the firm brought Heneghan on to help with the increased workload from schools.

    Heneghan called his commitment to work at Cornerstone open-ended and said that he enjoys the work of helping educate college football players about transitioning into the NFL.

    “I have known Joe and Jack for quite some time and I really first participated with them over the spring and summer and went to a couple of schools where we met with players and families,” Heneghan said.

    During May, June and July, Heneghan, Mula and Mendes conducted preliminary agent interviews for about five players at each of the eight schools with about half a dozen agents each, Mula said.

    “We had agents who have been around for 25 years and represent the top players, and we had people who don’t have clients yet and are just trying to break in,” Mula said. “The first-year-out-of-law-school, I-want-to-be-an-agent to the superagents, if you will.”

    Mula said the purpose of the preliminary agent interviews is to allow players to narrow their choices to two or three agents so they would not have to talk to agents during the college football season. Players cannot sign with an agent and stay eligible to play college football but may interview agents, under NCAA rules.

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  • Meehan’s optimism for hockey negotiations goes unrewarded

    Liz Mullen
    Don Meehan, founder of Newport Sports Management, said that before talks began for a new NHL collective-bargaining agreement this summer he was hopeful a deal could be reached, more hopeful than he was before the 2004-05 NHL lockout.

    “I felt comfortable that, at the end of the day, this time would be more productive and there would be a better chance at a resolution than during the last labor issue,” said Meehan, whose agency represents more than one-sixth of the players in the NHL.

    Asked how he feels now, Meehan laughed and said, “I’d rather not say.”

    The NHL locked players out last month after talks with the NHL Players’ Association failed to reach a new agreement. Meehan and the seven agents who work at Mississauga, Ontario-based Newport represent 130 of the 740 players in the NHL, including stars Steven Stamkos, Drew Doughty, Zach Parise and Jarome Iginla.

    Meehan said that, although he hoped for the best, he was ready for the worst in this labor negotiation. “It’s not something that anyone looks forward to, but I have been around long enough to prepare for things,” he said. “We are fine at the firm. If it’s a whole year, it’s a whole year.”

    As of last week, about 100 NHL players had committed to play in Europe while the labor talks continued. Newport represents five of those players: Nashville’s Patric Hornqvist, who agreed to play for Swiss team Red Ice; Winnipeg’s Evander Kane (Dinamo Minsk, of the KHL); Ottawa’s Erik Karlsson (Jokerit in Finland); Montreal’s Alexei Emelin (Kazan of the KHL); and Montreal’s Raphael Diaz (Zug in Switzerland).

    Meehan said that if the lockout were to drag on, more players might sign overseas. While he did not disclose financial details of the deals, he said that outside of deals with the KHL and some other exceptions, players generally are not making a lot of money by playing in Europe.

    “I think the players are concerned,” Meehan said. “They want to remain fit and they want to be ready when there is a resolution.”

    > ESCROW CHECKS COMING: Although the NHL and NHLPA had not worked out the exact amount as of last week, locked-out NHL players will receive about 8 percent of their 2011-12 salaries sometime between Oct. 15 and Oct. 31, union and NHL sources said last week.

    Players put 8.5 percent of their paychecks into the league’s escrow system last year, as called for by the CBA that expired Sept. 15. With the money being returned from escrow, they collectively are getting 57 percent of defined hockey-related revenue.

    Players normally would receive their first paychecks of the new season Oct. 15, said Robert Raiola, a certified public accountant who does accounting work for several NHL players as head of the sports and entertainment practice for accounting firm Fazio, Mannuzza, Roche, Tankel, LaPilusa. In the absence of those paychecks because of the lockout, Raiola said, the escrow checks will be welcome to a lot of players.

    > CAA SIGNS HAMILTON: CAA Sports has signed Denver Nuggets guard/forward Jordan Hamilton, who was the No. 26 overall selection in the 2011 NBA draft. He will be represented at CAA by a team of agents led by Ty Sullivan and Aaron Mintz. He was formerly represented by Premier Sports & Entertainment.

    > VICTORINO DROPS ACES: Los Angeles Dodgers outfielder Shane Victorino has left Aces Inc., where he was represented by brothers Sam and Seth Levinson. Victorino will be a free agent after the World Series. “We wish Shane all the best as he moves forward in life and in the game,” Seth Levinson said via email.

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


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