NFLPA enters conflict involving LMM
The NFL Players Association is reviewing the relationship between the player representation firm run by Ethan Lock, Eric Metz and Vance Malinovic and a financial advisory group called Your Source Financial and, in turn, that firm’s alleged association with a financial adviser who is being sued by seven current or former NFL players, according to a union source.
NFLPA officials would not comment.
Metz, an NFL agent and a principal of the Scottsdale, Ariz.-based agency LMM Sports Management, said the firm did not violate any NFLPA agent regulations. He added that the agency, which represents about 50 NFL player clients, welcomed the union inquiry and that he, in fact, has been proactive in cooperating with the NFLPA.
Billy Crafton, the financial adviser, declined to comment, citing the ongoing litigation (see related story).
Principals of Your Source Financial (YSF) did not return phone calls seeking comment, nor did attorneys for the firm.
YSF is owned by Your Source Pacific Fund (YSP). Both groups are based in the Phoenix area.
As previously reported (SportsBusiness Journal, Aug. 20-26 issue), YSP in 2009 acquired a 40 percent interest in the Lock, Metz and Malinovic firm. As part of that agreement, the three agency partners each bought a 5 percent stake in YSF, for a total 15 percent investment.
The player representation firm is now in ongoing litigation with YSF and YSP. In October 2011, the agency filed suit against YSF and YSP, seeking damages in excess of $900,000 and a judge’s order allowing the company to be dissolved. YSF and YSP in June countersued the agency and a second company the partners formed, referred to in court documents as LMM 2, and asked that a judge put the two entities into a receivership.
LMM 2 represents the active group LMM Sports Management that the three agency partners are operating while the litigation is ongoing.
The NFLPA inquiry involves whether regulations involving contract advisers or financial advisers were violated by the player agency.
On April 19, the union issued its first “alert” involving a financial adviser to all NFL agents, asking them for any information on Crafton.
Crafton does not appear as an employee of YSF on its website, but multiple sources said he has been affiliated with that firm. In addition, a lawsuit filed by former NFL player Brad Kassell against Crafton states that he moved his brokerage account to YSF in April or May of 2011 on the advice of Crafton, who was his financial adviser at that time.
According to Metz, Crafton worked as an unpaid intern at LMM 16 years ago but has had no relationship with the firm since then.
Six days before the NFLPA issued its alert, LMM sent a letter to its NFL player clients telling them that they had recently become aware that Crafton was affiliated with YSF. The letter, dated April 13, a copy of which was obtained by SportsBusiness Journal, advised the player clients that the three name agents in the firm had acquired the 5 percent interests in YSF in 2009 but that they had since divested those interests in the firm.
“We became aware early last week that one or more of you may have an account arranged by your financial advisor, Billy Crafton, which account may be managed by YSF,” states the letter, signed by Lock and Metz. “We had previously advised Billy that we didn’t want any accounts of our clients in any way connected with YSF.”
Under NFLPA agent regulations, NFL agents are prohibited from referring clients to financial advisers or firms that are not regulated by the NFLPA’s financial adviser program. YSF is not regulated by the NFLPA.
YSP and YSF, in their countersuit against LMM, states that one of the reasons YSP wanted to invest in LMM originally was so “LMM would refer its clients to YSF for wealth management services.”
Metz said LMM did not refer any of its clients to YSF for any services. He said that when LMM learned that Crafton was involved with YSF, LMM sent the April 13 letter to clients and also called the NFLPA security department.
“We never received a penny from any work that Your Source did or Billy Crafton did with any player, and the minute we learned of his relationship with Your Source, we immediately contacted NFLPA security,” Metz said.
NFLPA Director of Security Tim Christine, whom agents were asked to contact with any information in the April alert, declined to comment.