Longtime NFL agents Ethan Lock and Eric Metz and the company they own, football player representation firm LMM Sports Management, each filed for Chapter 11 bankruptcy protection earlier this month.
The two agents and their company, which represents 30 NFL players, filed for Chapter 11 reorganization in federal bankruptcy court in Arizona after an Arizona state court judge entered a nearly $2.6 million judgment against them. Vance Malinovic, the third partner and agent in the company, did not file for Chapter 11 bankruptcy protection. Lock and Metz each own 40 percent of the company’s stock and Malinovic owns the remaining 20 percent, according to the filings.
“This in no way changes our operations or how we interact or manage our players on a daily basis,” Metz said in a phone interview last week.
Metz, Lock and LMM filed for bankruptcy protection Sept. 10, a month after Maricopa County (Ariz.) Superior Court Judge David Cunanan officially entered a final judgment that LMM and the three partners pay Your Source Financial $2.58 million. The judgment was entered after an almost three-year court battle between LMM and YSF over a business deal gone sour.
As previously reported, YSF, a financial advisory firm for wealthy individuals and businesses, bought a 40 percent interest in LMM for $4 million in 2009. But in October 2011, LMM filed suit against YSF, alleging breach of contract and fraud, and YSF countersued in June 2012, alleging that LMM violated its operating agreement by making loans to employees and others, including Dallas Cowboys offensive tackle Tyron Smith, an LMM client.
After court hearings last year, Cunanan ordered that LMM pay the $2.579 million judgment. The company and the three partners are jointly and severally liable for the amount, and Cunanan ordered that they pay it immediately.
YSF officials and Olivier Beabeau, the attorney who represented YSF in the case, did not return phone calls.
But Metz and LMM’s attorney in the case, Mark Dangerfield, said the judge’s order prompted them to file for bankruptcy protection. Dangerfield declined comment on why Malinovic did not also file. Malinovic did not reply to an email seeking comment.
LMM is also appealing the judgment, Dangerfield and Metz said.
“The judge has asked us to return the $2.5 million of the $4 million and this amount is incorrect, and the best legal mechanism to appeal for it is [to stay actions by filing] Chapter 11,” Metz said.
Lock, Metz and Malinovic have been prominent NFL agents for 25 years and have represented 16 first-round draft picks from 2001 until 2014, which ranks them No. 9 among all NFL agencies, according to SportsBusiness Journal research. “LMM has been very successful and repped 34 first-round picks over nearly three decades,” Metz said. “We simply partnered with the wrong investor.”
Metz said he and his partners informed all of their players of the Chapter 11 filings.
“We have contacted every player because we are well-aware of how the agent business works and the tactics that will be used to twist the truth,” Metz said.
Metz said he also called Tim Christine, director of security and operations for the NFL Players Association, which certifies Metz, Lock and Malinovic to negotiate with NFL clubs on behalf of their players.
“I alerted him to the details of the trial and our decision to pursue an appeal through Chapter 11,” Metz said. “He was well-aware of the case and greatly appreciated the update and said he would discuss it with the legal office and wished me the best of luck in it.”
Christine said that he spoke with Metz, but declined further comment on the situation. Other NFLPA officials did not reply to requests for comment last week.
Applicants who apply for NFLPA certification must disclose whether they have filed for bankruptcy protection, but there is no regulation prohibiting agents from filing for such protection.
