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Volume 21 No. 2

Labor and Agents

Liz Mullen
A health and fitness app for the iPhone and iPad that launched late last month and features Georges St-Pierre is one of the latest commercial deals for the MMA star.

CAA Sports, which represents St-Pierre, partnered with developer Zolmo on the app, called Touchfit: GSP. Nez Balelo, who is the lead agent for St-Pierre at CAA Sports, said the fighter has an equity stake in the app, which sells for $6.99, but would not provide additional details.

Georges St-Pierre’s Touchfit: GSP launched last month, around the time his new book, “The Way of the Fight,” was released.
“We think there are a lot of opportunities in this space and we are going to continue to explore this space, not only for Georges St-Pierre, but our other athletes, as well,” Balelo said.

Also, St-Pierre’s book, “The Way of the Fight,” hit bookstores last month. It was No. 30 on The New York Times Best Sellers list for hardcover nonfiction last week.

Balelo is an MLB agent and one of the co-heads of CAA Sports’ baseball division. He counts 2011 National League MVP Ryan Braun and all-stars Andre Ethier and Adam Jones among his clients. He met St-Pierre through a business acquaintance in 2008 and signed him as a client for the agency.

“It wasn’t easy in the beginning. We had to really educate people out in the marketplace on who Georges St-Pierre was,” Balelo said. “The first two big deals we landed were Gatorade and Under Armour, and those two deals put him in a classification differently than other fighters in the MMA space.”

St-Pierre’s other endorsements include Google, Topps, Bacardi and the Coca-Cola energy drink brand NOS.

> OCTAGON’S HOCKEY: Octagon is representing several top prospects for what is one of the most anticipated NHL drafts in years, including left wing Jonathan Drouin, whom The Hockey News recently ranked as the No. 2 prospect.
Octagon is also representing center Elias Lindholm, center Aleksander Barkov and center Alexander Wennberg.

The Hockey News, in its recently released NHL Draft Preview issue, ranked Lindholm No. 4, Barkov No. 6 and Wennberg No. 11.

Agents Allan Walsh, Peter Wallen and Larry Kelly represent the players.

This year’s draft is set for June 30.

> OCTAGON’S HOOPS: Octagon’s basketball division signed Virginia Tech point guard Erick Green for representation in this year’s NBA draft.
Octagon also signed forward Ryan Kelly and guard Seth Curry, both from Duke, and University of Arizona forward Solomon Hill. Octagon additionally is representing point guard Dennis Schroeder, who played for New Yorker Phantoms Braunschweig in the German BBL.

Agents Jeff Austin, Chris Emens and Alex Saratsis represent the players.

> AGENT SWITCHES: Rosenhaus Sports, owned by agents and brothers Drew and Jason Rosenhaus, has signed University of South Florida cornerback Kayvon Webster, who was selected in the third round of the NFL draft by the Denver Broncos. Webster was formerly represented by Majestic Agents & Consultants.

Oklahoma wide receiver Justin Brown, who was selected in the sixth round by Pittsburgh Steelers, has left K Sports & Entertainment. Brown had not selected a new agent by press time for this story.

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

It took just one short meeting to oust Billy Hunter as executive director of the National Basketball Players Association. Finding a new union leader is proving to be a far more drawn-out effort.

The union has yet to hire an executive search firm to replace Hunter, who was fired in February. And while NBPA player leaders have been reviewing a list of search firms to oversee the process, the union recently sent a memo to some players saying it intended to push back its annual meeting from its traditional June date to August or September, sources said.

That could be a pivotal meeting in the process for finding a successor to Hunter.

The memo also asked players for their input on whether the meeting should be held in Las Vegas or in the Bahamas, said the sources, who requested anonymity because they were not authorized to speak publicly on union business. Union officials were seeking opinions on the site in part so that as many players could attend as possible. The meetings in recent years have been held in both the Bahamas and in Las Vegas.

NBPA officials declined to comment for this story. In February, the union said it would undertake a comprehensive and transparent process to name a new executive director but did not provide a time frame for making a decision (SportsBusiness Journal, Feb. 25-March 3 issue).

The time frames and processes used for selecting new executive directors at other sports unions have varied. When the NFL Players Association lost its longtime leader Gene Upshaw after he died unexpectedly in August 2008, that union hired a search firm in October 2008, and DeMaurice Smith was elected executive director in March 2009. When Paul Kelly was fired as executive director of the NHL Players’ Association in August 2009, the players subsequently asked Don Fehr, who had just retired as MLB Players Association executive director, to advise them on finding a successor. Fehr ultimately was elected NHLPA executive director in December 2010, after players convinced him to take the position following a long process that included Fehr meeting with NHL players across North America and Europe.
The NBPA player leaders voted unanimously to terminate Hunter’s contract Feb. 16 and since then have been holding sporadic conference calls, though the meetings have slowed down in recent weeks because a number of the members of the executive committee are playing on teams in the playoffs.

Ron Klempner, NBPA deputy general counsel, has been acting executive director since Hunter’s departure.

Some NBA agents are grumbling at the lack of progress. “Nothing is going on, that’s what’s going on,” said one prominent agent.

The absence of a search firm, however, hasn’t stopped people in the industry from floating names. The latest name to surface is Charlotte Bobcats President and COO Fred Whitfield, a Michael Jordan confidant who also worked for Jordan Brand and as an agent for David Falk’s FAME agency.

Whitfield confirmed he has been approached but refused to disclose specifics.

“A couple of people have mentioned to me I potentially might be a good candidate for this role, but no one has mentioned it to me in an official way,” he said.

Whitfield would not say who spoke to him, nor would he comment further on the issue.

Other names of potential candidates for the NBPA top job that have been mentioned are Steve Mills, former Madison Square Garden Sports president and chief operating officer; and Fehr, of the NHLPA. Sources close to Fehr have said he plans to remain in his job at the NHLPA.

The NFL Players Association last year agreed to reduce future salary caps in exchange for a higher amount under the cap in 2012 than the players were due to receive, the union disclosed recently in court documents tied to its collusion case against the league.

The fact that the NFLPA made the agreement to create an artificially higher cap in 2012 is not unknown, having been reported previously. But the court documents mark the first public confirmation of the deal by the union.

“In early March 2012, the NFL was negotiating with the NFLPA to obtain its consent to certain team salary cap reallocations as a quid pro quo for an NFLPA request to defer the salary cap charge of certain player benefit costs to future league years,” the union’s lawyers wrote in a brief filed with the 8th U.S. Circuit Court of Appeals earlier this month.

An NFLPA spokesman did not respond for comment.

The NFLPA has publicly confirmed it also boosted the 2013 cap by deferring performance-based pay to future years. Performance-based pay is counted as a benefit cost and detracts from salary, so by not paying it out in 2013, that would serve to boost the cap.

Player compensation, set by calculations in the collective-bargaining agreement, is divided between cap and benefits, the latter of which is usually $20 million to $22 million annually per club. However, with benefits rising quickly — in part because of increases in pension and medical insurance costs — the amount dedicated to salary has not risen nearly as fast.

By diverting some required funding of benefits to future years, the league agreed to raise the cap in 2012, sources said, from about $113 million to $120.6 million.

The cap in 2013 has been set at $123 million, and the league projects the cap to rise only slightly until 2016, when internal projections have it jumping to $130 million. That would then take the cap over the previous high of $127 million in 2009.

These calculations are subject to change depending on revenue. In addition to the deferral of performance-based pay, a late upward revision in 2012 league revenue caused the 2013 cap to jump $2 million more per club than had been expected.

With lucrative TV deals commencing in 2014, part of the explanation for the tepid projections would seem to be this agreement to allocate more cap dollars in 2012 and then take that away in future years.

Some experts see an advantage to the NFLPA move.

“[The] immediate hit would be reduced by deferring to future years when the NFL’s revenues would be higher and the salary cap would be going up,” said Mark Levinstein, a player lawyer. “The increase would be much more than the salary cap charges that are being deferred.”

The union disclosure is contained in a document arguing to the 8th Circuit that the players should be allowed to sue the league for collusion. A lower-court judge rejected that argument, saying players had waived their rights to sue in settling the 2011 lockout.

The players contend the league had a secret salary cap in 2010, when the CBA disallowed a cap.

In March 2011, the league announced it had docked salary cap space of the Dallas Cowboys and Washington Redskins because they front-loaded contracts in 2010 contrary to a previously undisclosed league policy. The league needed the union’s approval of the penalty, and to get it, the league agreed to the higher cap.

“Players received the benefits to which they were entitled in 2012,” a league source said. “The deferral involved the funding contributions that were otherwise supposed to be made in 2012. This is strictly a cash-flow issue.”

Even with the most up-in-the-air talent scenario in years, familiar major agencies led the way in the NFL draft. Sportstars again led all agencies in most players drafted, with 21, according to SportsBusiness Journal research.

Athletes First was second, with 18, and the football division of multisport agency Octagon was third, with 11.

CAA Sports had five first-round picks, again leading all agencies for the most first-rounders drafted. Athletes First tied Lagardère Unlimited and Octagon for second; each agency represented three first-rounders.

When recruiting season for the NFL draft started late last year, the sentiment among many in the athlete representation business was that smaller agents and agencies might get a chance to break into the business, because it was harder to figure out which players would be drafted. ProSource Sports Management, for example, represented its first first-round pick, LSU defensive end Barkevious Mingo, selected No. 6 overall by the Browns.

Despite some lower-profile firms making inroads, though, it appears that the major football firms navigated their way through a cloudy talent picture to dominate representation again.

Opinions in the agent business differed on which agent or agency had the best draft. Agents do agree, however, that what matters is who represents whom four years from now and whether those players are still in the league: Under the 2011 collective-bargaining agreement, contracts for high first-round draft picks are about half of what they were under the old CBA.

“Clearly this is a business of getting to the second contract,” said Alan Herman, founder of New York-based Sportstars, which has been known for years for representing some of the largest NFL draft classes and signing players who don’t always have the highest profile.

It is difficult for any agency to make a profit on a player, after training expenses for the NFL combine and NFL draft, Herman said. NFL agents are allowed to charge up to 3 percent of the total contract value, under NFL Players Association rules.

Herman said that, according to his firm’s research, Sportstars has represented the most drafted players eight of the last 11 years. It led all agencies last year with 20 drafted players and had its largest class of players drafted in 2006 with 22 players, Herman said. Sportstars recruits and signs first-round draft prospects, but it has built a business by agreeing to represent players projected as late-round picks. One of its clients is Washington Redskins running back Alfred Morris, a sixth-round pick in 2012 who broke the team rushing record during his rookie season.

Herman, who has been an agent since 1984, agreed with the consensus that 2013 was a tough draft to figure out, and added that he thought many clubs took players based on need, rather than taking the best player available. “Some of those guys drafted in Round 4 could have gone in Round 2,” he said.

Doug Hendrickson, an Octagon agent who represented two first-round picks, including Oregon defensive end Dion Jordan, a surprise pick at No. 3 by Miami, agreed with that assessment. Octagon targets first-, second- and third-round players and was very pleased to represent seven players in the first three rounds in this particular draft, Hendrickson said.

“The hardest thing to do — any agent will agree if they are not lying to you — is to determine when you are signing these guys, whether it’s in late December or after their bowl games in January, where they are going to be drafted in four months,” he said.