SBJ/Jan. 13-19, 2014/Labor and Agents

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  • New class of football signings packs surprises, starting at top

    Liz Mullen
    There have been plenty of surprises inside the business of agents and agencies signing the top prospects for the NFL draft this year.

    NFL agents typically sign many of their rookie clients in January, and the top agents often sign the lion’s share of players. But there already have been a flurry of signings that raised eyebrows around the tight-knit football player representation business.

    After media reports starting last summer that Jay Z’s Roc Nation Sports was going to sign top draft pick Jadeveon Clowney, it was Hattiesburg, Miss.-based BC Sports that ended up with the University of South Carolina defensive end as a client, handling both on- and off-field work.

    After media reports had him going to Roc Nation, Jadeveon Clowney signed with Bus Cook.
    Photo by: GETTY IMAGES
    BC Sports owner Bus Cook, who has been representing NFL players since 1991, will represent Clowney with BC Sports NFL agents Madison Howard and Don Weatherell. “He could have signed with any agent in the country,” Cook said, adding that he does not know what the reports of Clowney signing with Roc Nation were based on. Clowney was ranked as the No. 2 prospect for this May’s draft by website nfldraftscout.com.

    Meanwhile, Maverick Carter, co-owner of LRMR, which represents NBA star LeBron James off the court, was close to entering the NFL world by signing Heisman Trophy winner and Texas A&M quarterback Johnny Manziel. ESPN first reported that Manziel had selected Carter, as well as Select Sports Group, for his contract work.

    But those weren’t the only surprises. A number of lower-profile agents and agencies have signed some high-profile prospects.

    Michael Bauer, founding partner of Sports Advisors, confirmed that he signed UCLA outside linebacker Anthony Barr for playing contract work. Barr is ranked as the No. 4 prospect by nfldraftscout.com. Madison, Wis.-based Sports Advisors is a relatively small NFL rep firm, with just four current NFL players listed as clients last week on its website. Barr signed with JABEZ Marketing Group for endorsements and other off-the-field work.
     
    > NEW AGENT TO CO-REP EALY WITH OCTAGON: Joseph Clayborne, a 25-year-old agent who was just certified to represent NFL players in contract work by the NFL Players Association in September, is co-representing Missouri defensive end Kony Ealy with veteran Octagon NFL player agent Andy Ross.

    “I have known Kony probably since he was 10 or 11 years old,” Clayborne said. His younger brother, Justin Clayborne, was a close childhood friend of Ealy’s. “I became an agent to make sure that Kony was protected,” said Clayborne, who has an MBA and is scheduled to graduate from Loyola University Chicago School of Law later this year.

    Ealy was ranked by nfldraftscout.com last week as the No. 11 prospect in the country. Clayborne said he planned to try to partner with a veteran NFL agent to show him the ropes, and spoke with several before choosing Ross.

    Clayborne said that he was in the process of starting his own agency.

    “I think what is out of the ordinary is for me to be in this situation as a new agent and for me to have a player like this as my first one,” Clayborne said.
     
    > YOUNGER SIGNS CARR: Sports lawyer Tim Younger has signed Fresno State quarterback Derek Carr for representation. Carr was ranked as the No. 19 prospect by nfldraftscout.com last week.

    Derek Carr
    Photo by: GETTY IMAGES
    Younger, who owns Younger & Associates based in Rancho Cucamonga, Calif., has been an NFLPA-certified agent since 1992 and has represented free-agent quarterback David Carr, Derek’s brother, since 2010.

    Younger currently represents a handful of players, including Cleveland Browns center Alex Mack, who he co-represents with veteran NFL player agent Marvin Demoff.

    Derek Carr selected Younger after speaking with other agents after his last college football game, the Las Vegas Bowl, in December.

    “I do know that other agents expressed interest in him, but after the Las Vegas Bowl, we had a meeting and he informed me he had selected me to be his representative.” Younger said.

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

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  • Has MLB overrun NBA’s star-salary system?

    The NBA has always been a star-driven league, from the days of Dr. J to Magic to Michael. This star power generally translated to salaries as well, as for years, NBA players topped the list of the highest-paid athletes in all of American sports.

    But not anymore. Parents may want their kids to grab a bat or learn how to throw a curveball, because when it comes to landing the most lucrative playing contracts in sports, Major League Baseball players have taken over the top of the list.

    SportsBusiness Journal research found that of the 10 highest-paid players in team sports in North America, based on average annual salary, eight are from MLB. Only two NBA players — Kobe Bryant and Carmelo Anthony — make the list. This is based on the recently completed 2013 MLB season and the current 2013-14 NBA season.

    That is the opposite of 2000, when the eight richest deals in sports based on average annual value belonged to NBA players. That year, only two MLB players — the Dodgers’ Kevin Brown and Shawn Green — were in the top 10. (See charts below).

    SportsBusiness Journal assembled the lists of highest-paid players based on the average annual values of overall playing contracts across the NBA, NFL, NHL and MLB. Some players make millions more in endorsements, but those deal terms are difficult to obtain and were not included in the analysis.

    About two dozen Major League Baseball players earn a higher average annual salary than LeBron James.
    Photo by: NBAE / GETTY IMAGES
    Agents and observers say the shift can be traced to factors such as revenue growth across leagues and actions and philosophies of union leadership.

    First, the MLB Players Association, long known as the strongest union in sports, has fought off a salary cap and other restraints on player compensation. The battles the MLBPA waged and won decades ago are seemingly paying off for baseball players today.

    Meanwhile, the National Basketball Players Association took a different approach and agreed to a salary cap and a cap on the maximum amount any NBA player, including top stars, could earn. Many agents point to that philosophical decision, which was key in ending the 204-day NBA lockout in 1999, as representing a sea change to the system.

    Two agents, Arn Tellem and David Falk, who have long been NBPA critics, blamed collective bargaining for the new market conditions.

    “The NBA players union has failed to protect the rights of the top players in the league,” said Tellem, vice chairman of Wasserman Media Group, who has represented both NBA players and MLB players for 30 years. “Collective bargaining has proved totally ineffectual.”

    Falk, who represents NBA players and who made his reputation negotiating record-setting player contracts in the 1990s, agreed that the MLBPA and the NBPA are responsible for the change. “It shows how powerful the baseball union has been and how out of touch the basketball union has been with the economic realities of the sport they are working for,” Falk said.

    Photo by: AP IMAGES
    NBPA acting Executive Director Ron Klempner wrote in an email to SportsBusiness Journal, “We are thrilled with the success of our brethren in the baseball union. Measuring our sports against each other, though, is somewhat of an apples-to-oranges comparison. There are different revenue levels, number of games, tickets sold, television deals, roster sizes, histories, cultures, and, of course, collective-bargaining agreements, one with a team salary cap and maximum individual player salary, and the other with neither.”

    In addition to the different approach on collective bargaining, others note that the increase in MLB salaries is a reflection of the dramatic rise in overall MLB revenue. Fueled by new business efforts and media rights, MLB revenue increased from about $3.4 billion in 2000 to about $8 billion in 2013, a whopping 135 percent.

    During the same time period, NBA revenue also saw a significant increase, up 120 percent, from about $2.5 billion to $5.5 billion.

    MLB Chief Operating Officer Rob Manfred wrote in an email, “Our player salaries are reflective of the strong revenue growth that has occurred in Baseball under the leadership of Commissioner Selig.”

    Powerful MLB agent Scott Boras doesn’t usually agree with Manfred, but he does on this point. He attributes the rise in baseball salaries to the increase in league revenue, as well as the rise in franchise values.

    “When franchise prices and revenues are dramatically increasing, you would expect the quid pro quo of 50-50 to operate and that players would receive the rewards of the demand for the game,” Boras said. “You have to remember the franchise values in baseball far exceed those in basketball, the TV contracts and revenues far exceed that of basketball, so that is the reason that you would expect baseball players to be paid more: because the revenues and the franchise values are far greater. The value of the talent, the value of the performance, is far greater because it generates more revenues for the owners.”

                                                      

    The reversal of fortune for some superstar players did not happen overnight, but progressed slowly and steadily over the last 13 years, since the beginning of this century.

    SportsBusiness Journal examined the deals in all four major team sports during four seasons dating to 1999. Since the seasons for the sports are different, we looked at contracts in place for 2000, 2003, 2008 and 2013 MLB and NFL seasons and contracts in place for 1999-2000, 2002-03, 2007-08 and 2013-14 NBA and NHL seasons.

    In 1999-2000, of the 20 players whose contracts had the highest average annual value, 11 were NBA players, led by Kevin Garnett at $21 million a year, based on his six-year, $126 million deal with the Minnesota Timberwolves. Nine of the top 20 were MLB players, led by Kevin Brown at $15 million a year, based on his seven-year, $105 million deal with the Los Angeles Dodgers.

    In 2002-03, of the top 21 (three NBA players tied at No. 19 averaging $15 million a season), 11 were NBA and 10 were MLB. The highest-paid NBA player was, again, Garnett in the final year of his huge deal. The MLB player with the biggest annual contract was the Texas Rangers’ Alex Rodriguez at $25.2 million a season, after having signed what was then baseball’s richest deal ever for $252 million over 10 years the year before.

    Photo by: AP IMAGES
    The trend of sharing the top 20 slots continued over the next five years, as in 2007-08, when nine of the top 20 highest-paid players were in the NBA and 11 were in MLB, including the two highest-paid players in sports, Rodriguez and Johan Santana, both of whom were making $22.92 million a year. During the 2007-08 NBA season, Garnett and Shaquille O’Neal were each benefiting from five-year deals that averaged $20 million a season, topping all other players in the league.

    But years later, a shift became more apparent. In 2013, of the top 21 highest-paid athletes in America (two players were tied for 20th place), 13 are MLB
    players. Six are NBA players and two are NFL quarterbacks — Baltimore Ravens quarterback Joe Flacco and New Orleans Saints quarterback Drew Brees each at $20.5 million a year. Drill down even further, and you see that eight of the top 10 are MLB players and two are in the NBA.

    So the pendulum has swung over the last 10 years when it comes to the highest-paid players, and most agents cited the changes in the individual sports’ collective-bargaining agreements. Most specifically point to when the NBPA agreed to the maximum individual salary in 1999, which was easily one of the biggest deal points — some would argue concessions — by players in a deal that ended the 1998-99 NBA lockout under former Executive Director Billy Hunter.

    That change has slowly altered the landscape as NBA players are, on average, the highest-paid players in sports but haven’t sat atop the list of the biggest contracts.

    Tellem says of all the concessions made by the NBPA over the last 15 years, “the most devastating giveback” was the cap on individual salaries. Tellem and Falk were both adamantly against the concession at the time, but Hunter agreed to it under pressure of a possible cancellation of the entire NBA season. Individual salaries for NBA players were skyrocketing in the years before the lockout, and NBA owners made cost certainty a major point in negotiations in 1998 and 1999.

    Since then, the NHL Players’ Association has agreed to a cap on individual players’ salaries, as well as its first salary cap in the collective-bargaining agreement, which ended the 2004-05 lockout. The individual cap is 20 percent of the applicable overall team cap in any given year, NHL Deputy Commissioner Bill Daly said. This year, the NHL team cap is $64.3 million and the individual salary cap for NHL players is $12.6 million, Daly said.

    Although there is an overall salary cap in the NFL, there is no individual salary cap.

    “Basketball was the first professional team sport to have an individual player salary cap,” said Tellem, who has never shied away from criticizing the union’s decision. And he finds it especially troublesome when he compares the high-profile stars to those of other leagues. “More than their counterparts in any other team sport, the stars of the NBA determine a team’s success, attendance and financial health. The union’s egregious concession allowing an individual salary cap prevents these players from achieving their maximum earnings potential.”

    Photo by: ICON SMI
    But Klempner noted that the NBPA has long focused on having and preserving a healthy middle class. “Our average salary is projected to be $5.6 million this year, and more than half of our players earn more than $2.6 million,” Klempner said. “At the same time, on average two players on each team are earning more than $10 million a year, and our 430 players collectively will earn about $2.3 billion this year in salaries and benefits. Our focus is on growing the pie and increasing our share.”

    In defense of superstar NBA players, Falk says
    no other player in any other team sport has as great an impact on league or team business. He cites Michael Jordan, who was his client when Jordan was a player, and LeBron James, based on what he did for the Cleveland Cavaliers and what he has done for the Miami Heat.

    “You pay a movie star for his ability to bring people to the theater,” Falk says. “And you pay a basketball player for his ability to win games and create crowds. There is no sport, other than tennis or golf, which are individual sports — there is no [team] sport where an individual athlete has more of an impact than basketball.”

    Superstar NBA players can bring teams a championship, which increases ticket sales, television ratings and, in turn, the overall franchise value of the team, he notes. “A superstar player has a much more disproportional impact in basketball than any other sport,” Falk says. “There are only five players on the floor. In football there are 11 and in baseball there are nine, so by sheer numbers [basketball players have a greater impact].”

    Falk also believes that in addition to not allowing the biggest stars in the game to earn their market rate, the maximum cap is unfair because it allows very good players to be paid as much as the mega-stars.

    “They are really stealing from LeBron,” he said. “The fact that LeBron and Chris Bosh make the same salary on the same team is absurd. Patently absurd. Chris Bosh is a very good player. But should Peyton Manning and his backup make the same?”

    James has been vocal about how the NBA system does not compensate him for the value he brings to the court. Attempts to reach him for comment for this story were unsuccessful.

    Tellem noted that there are now about two dozen baseball players who have a higher annual average salary than James.

                                                      

    The average salary for all players in the major team sports has increased during the time period that SportsBusiness Journal studied. The NBA still has the highest average salary for its members, but the league’s average salary has seen the slowest growth rate during that period. The MLB average salary is $3.6 million, up 110 percent since 1999; the NHL average salary is $2.5 million, up 84 percent. The NFL average is $2.1 million, up about 159 percent from $810,000 in 1999.

    Meanwhile, the NBA’s average salary is $5.15 million, up 43 percent (see chart of four leagues salary growth). But the average salary for NBA players has actually dropped in recent years — from 2008-09 to 2012-13, the average salary dropped 3.8 percent. The NBA 2013-14 season is expected to reverse a slide of four consecutive years of decline in average NBA player salary.

    Meanwhile, MLB salaries have risen every year for the last nine years. Tellem cites internal research that compares the salaries of the 400 highest-paid NBA players against the 400 top-paid MLB players.

    The results showed that the top 400 MLB players averaged $7.352 million a year versus $5.066 million for the top 400 NBA players.

    Some say that is an unfair comparison, as Tellem is looking at virtually all of the players in the NBA, versus the top half of the MLB players. But Tellem still feels the data tell what the trend lines are.

    “Baseball salaries have surpassed basketball salaries, and it’s not just the stars,” Tellem said. “It goes way beyond the stars.”




    Highest-paid players, based on average annual value

    In 1999, the five major league players with the biggest annual paychecks each played in the NBA. Basketball players made up 11 of the top 20 that season. This season, 11 of the 13 highest-paid players are MLB players.

    1999-2000

    Rank Player Team Total Value (No. of years) AAV
    1 Kevin Garnett Minnesota Timberwolves $126.00 (6) $21.00
    2 Shaquille O’Neal Los Angeles Lakers $120.00 (7) $17.14
    3 Karl Malone Utah Jazz $66.50 (4) $16.63
    4 Scottie Pippen Portland Trail Blazers $66.37 (4) $16.59
    5 Shawn Kemp Cleveland Cavaliers $107.00 (7) $15.29
    6t Kevin Brown Los Angeles Dodgers $105.00 (7) $15.00
    6t Juwan Howard Washington Bullets/Wizards $105.00 (7) $15.00
    6t Alonzo Mourning Miami Heat $105.00 (7) $15.00
    9 Jayson Williams New Jersey Nets $86.00 (6) $14.33
    10 Shawn Green Los Angeles Dodgers $84.00 (6) $14.00
    11t Mo Vaughn Los Angeles Angels $80.00 (6) $13.33
    11t Rasheed Wallace Portland Trail Blazers $80.00 (6) $13.33
    13 Randy Johnson Arizona Diamondbacks $52.40 (4) $13.10
    14t Mike Piazza New York Mets $91.00 (7) $13.00
    14t Albert Belle Baltimore Orioles $65.00 (5) $13.00
    16t Bernie Williams New York Yankees $87.50 (7) $12.50
    16t Pedro Martinez Boston Red Sox $75.00 (6) $12.50
    16t Larry Walker Colorado Rockies $75.00 (6) $12.50
    19t Vin Baker Seattle Supersonics $86.00 (7) $12.29
    19t Penny Hardaway Phoenix Suns $86.00 (7) $12.29

    2013-2014

    Rank Player Team Total Value (No. of years) AAV
    1 Kobe Bryant Los Angeles Lakers $83.50 (3) $27.83
    2 Alex Rodriguez New York Yankees $275.00 (10) $27.50
    3 Carmelo Anthony New York Knicks $129.00 (5) $25.80
    4t Albert Pujols Los Angeles Angels $250.00 (10) $25.00
    4t Felix Hernandez Seattle Mariners $175.00 (7) $25.00
    4t Josh Hamilton Los Angeles Angels $125.00 (5) $25.00
    4t Ryan Howard Philadelphia Phillies $125.00 (5) $25.00
    8 Zack Greinke Los Angeles Dodgers $147.00 (6) $24.50
    9t Cole Hamels Philadelphia Phillies $144.00 (6) $24.00
    9t Cliff Lee Philadelphia Phillies $120.00 (5) $24.00
    11 Prince Fielder Detroit Tigers $214.00 (9) $23.78
    12t Joe Mauer Minnesota Twins $184.00 (8) $23.00
    12t CC Sabathia New York Yankees $161.00 (7) $23.00
    14 Dwight Howard Houston Rockets $87.59 (4) $21.90
    15 Chris Paul Los Angeles Clippers $107.00 (5) $21.40
    16 Joe Johnson Brooklyn Nets $123.66 (6) $20.61
    17 Joe Flacco Baltimore Ravens $120.60 (6) $20.10
    18t Drew Brees New Orleans Saints $100.00 (5) $20.00
    18t Dirk Nowitzki Dallas Mavericks $80.00 (4) $20.00
    20 Amar’e Stoudemire New York Knicks $99.74 (5) $19.95

    Notes: All figures in millions. Does not include contracts that have been signed but have not begun.

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  • Lagardère adds Donald to growing golf roster

    Luke Donald, the prize of golf’s free-agent class, has signed with Lagardère Unlimited and will be represented by Steve Loy, Phil Mickelson’s agent.

    Donald, whose deal with IMG Golf expired at the end of 2013, was the world’s No. 1-ranked golfer for 55 weeks of 2011-12 before struggling through ’13.

    Luke Donald was the world’s No. 1 for parts of 2011-12 but struggled in 2013.
    Photo by: GETTY IMAGES
    Donald’s signing represents another significant boost to Lagardère’s burgeoning golf business, which also is acquiring an event business, Portland-based Jeff Sanders Promotions. Sanders’ 24-year-old company runs several Web.com Tour tournaments and works with companies to create golf outings for their customers with PGA and LPGA stars.

    The acquisition is the latest move in golf by longtime sports industry executive Andy Pierce, who was hired as president and CEO of Lagardère Unlimited’s North American business last summer by Lagardère Group Chairman and CEO Arnaud Lagardère with a mandate to grow the company’s sports assets.

    The acquisition of Jeff Sanders Promotions checks an important box for Lagardère as it seeks to round out its full-service global golf division. Jeff Sanders Promotions will provide Lagardère with a platform to get into the events business. Sanders will join Lagardère Unlimited as president, golf events management, and report to Loy, who is president of Lagardère Unlimited Golf.

    Lagardère also has signed two other PGA Tour golfers, Jamie Lovemark and Ricky Barnes.

    Donald, Barnes and Lovemark bring to 45 the number of players Lagardère represents on the PGA Tour. That’s believed to be the most of any agency by a wide margin.

    “In terms of global capabilities and global assets in golf, we have more than any other agency,” Pierce said last week. “And that is by design, not default.”

    Pierce indicated, as well, that this is not the end of Lagardère Unlimited’s acquisition spree.

    After being hired in August, Pierce in October acquired Crown Sports Management and its stable of 25 golfers. Lagardère also brought in experienced agent Jay Danzi, who represents up-and-comer Jordan Spieth.

    Pierce then hired veteran industry executive Charley Moore as a consultant to build Lagardère’s consulting practice in North America, and Irish golf executive Roddy Carr to build a consulting business in Europe and Asia.

    Moore, Pierce and Danzi are all former IMG executives, and Carr was an IMG client when he was a player.

    All of those moves were completed last fall, and now Donald’s signing sends the agency into 2014 with another surge of momentum.

    “I think it’s fair to say, having learned the business at IMG, I saw the advantages of being dominant in golf,” Pierce said. “And we are well on our way to doing that at Lagardère.”

    Donald, a globe-trotting golfer known for his busy international schedule, will immediately become one of Lagardère’s most-prized clients.

    “As a global player based in the States, Lagardère Unlimited is a perfect fit for me.” Donald said in a statement. “Lagardère has golf’s top management team, tour players, and solid marketing relationships with the world’s premier brands. Lagardère has a family feel, while also having a global reach.”

    Loy, who sold his business, Gaylord Sports Management, to Lagardère in 2012, said the fact that it is a global company — Lagardère Group is headquartered in Paris — was a major factor in signing Donald. “I recruited him about 10 years ago, and we didn’t have a platform to represent him in Europe and around the world, and he went with IMG,” Loy said of Donald.

    Mickelson, Loy added, likes and respects Donald and approved of the move. In addition to Loy, Donald will be represented by Ben Harrison, a senior vice president for the golf division.

    Donald, an Englishman who came to the U.S. and played college golf at Northwestern, has won five times on the PGA Tour. He ascended to No. 1 in the world in 2011 and stayed there for 55 weeks. During that time, he made history by becoming the first player to top the money lists for both the PGA Tour and the European Tour.

    Harrison also will represent Lovemark, while Loy and Lagardère vice president Tim McNulty will represent Barnes.

    Lovemark, who comes from IMG as well, played at USC and has won twice on the Web.com Tour, including once in 2013. Barnes, a 10-year pro who won the U.S. Amateur championship in 2002, was formerly represented by Blake Sports Group.

    Loy said he also is excited about the addition of Jeff Sanders Promotions and what it will mean for Lagardère’s golf clients. Jeff Sanders Promotions owns or manages six golf events, including the Albertsons Boise Open on the Web.com Tour, but has been involved in managing and producing more than 250 events, including the U.S. Amateur in 1996 when Tiger Woods won his third amateur championship.

    With an events business division, Lagardère can now expand into managing and producing PGA Tour and European Tour events, as well as charity and made-for-television events for its golf clients. Lagardère Unlimited has strong NFL player and tennis player representation practices, and Pierce said it was also possible that the events division could create assets in other sports.

    “We have the clients, we have the capabilities, and we have the ability to create assets and content we think are relevant in today’s world,” Pierce said.

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