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Volume 21 No. 35

Labor and Agents

NFL Players Association Executive Director DeMaurice Smith publicly suggested at this month’s Sports Lawyers Association that NFL player agents are not necessary for players.

“Do agents provide significant value? Obviously, yes,” Smith said during the union executive directors’ panel at the annual conference. “But do players need them? Do they need them in order to get their contracts done? No.”

Smith’s comments came during a back-and-forth question-and-answer session during the panel discussion on May 19, which was moderated by SportsBusiness Journal/Daily Executive Editor Abe Madkour.

Madkour asked Smith, “Do players need agents?”

“Do they need them?” Smith responded. “Well, we know that players have done their own contracts without them, so … well, need is normative, right? So I need love. … I need air.”

Pressed by Madkour, Smith later made the comment that players did not need agents to negotiate their contracts. Those comments and others he made about agents ricochetted throughout the industry almost instantly as it was reported on Twitter and relayed to NFL agents by people who were in the room.

It added fuel to a growing fire in the relationship between the agents and the union. “Agents are hot,” one NFL agent texted to SportsBusiness Journal within an hour of Smith making the comments.

At an SLA event, NFLPA leader DeMaurice Smith suggested that players don’t need agents.
Photo: getty images

Smith would not answer a question of whether there would be a pass-fail rate for a test the union will administer to most of its 800 certified agents in June. The test will be administered from June 1 through June 12. Agents who fail will sit for another test given to the prospective incoming agents later this summer, and if they fail that, they could lose their certification to represent NFL players.

Smith suggested it wasn’t really a test. “It’s 25 multiple-choice, open-book questions,” he said.

Asked if he was concerned that agents with clients could fail the test, Smith implied that agents who could not pass it might want to consider a different line of work.

“Well, you know, it’s sort of a weird question, right?” Smith said. “When someone says are you concerned that top agents might not be able to get a number of the multiple-choice, open-book questions right. Some people would say that if you are a really good lawyer and you can’t comply with your continuing legal education that maybe dot, dot, dot.”

Smith also seemed to suggest that players could get their contracts done with a lawyer who was not a certified agent. “Can players avail themselves of lawyers where they pay them an hourly fee? … Sure.”

As reported, some agents had expressed anxiety about the test at a raucous meeting with NFLPA officials at the NFL combine in March. Some at that meeting asked if the union was trying to “weed out” agents. Others asked that the union not take punitive measures and instead of a test with a fail rate, use a learning module, with no pass-fail attached to it.

A group of NFL agents has been holding conference calls for the last two and a half years about measures that the NFLPA has taken that the agents say have created a harsh business environment for them, including instituting a 1.5 percent “default fee” on player contracts. The maximum fee is still 3 percent, but the 1.5 percent default language, which the union added to the Standard Representation Contract in 2016, has put pressure on them to cut fees.

The agents also hired Peter Ginsberg, a former assistant U.S. attorney, to represent them. Ginsberg said he received calls about Smith’s comments from agents during the weekend that he made them.

“De’s comments reflect just another step on a long path he’s been walking the last several years,” Ginsberg said. “This is another incremental step on his path to undermine the relationship between players and agents and his efforts to de-legitimize the agency industry as a whole.”

UNIONIZATION OF G LEAGUE, NBA 2K LEAGUES?: The National Basketball Players Association could unionize the NBA’s developmental league but is not likely to unionize esports players in the new NBA 2K League, a senior union lawyer said.

In response to a question about whether the NBPA would be interested in unionizing the esports players, who were recently drafted into the esports league, Ron Klempner, NBPA senior counsel, said, “Absolutely freaking not.”

But on the subject of whether the NBPA could unionize G League players, Klempner said union officials were “thinking about it.” He declined to elaborate.

The NBPA was instrumental in forming the Women’s National Basketball Association, the union for WNBA players in 1998.

LOL PLAYERS NOT CLOSE TO UNIONIZING: Players in Riot Games’ League of Legends trade association are not close to becoming a union, Hal Biagas, executive director of the North American League Championship Series Players Association, said last week.

Biagas, a former NBPA attorney who was chosen to lead the LCS group last year, was asked about the group’s plans to unionize or not while he was moderating a panel on esports at the SLA conference.

“For the time being, a trade association versus a union makes the most sense,” he said.

When pressed as to why not a union now, Biagas said, “Once you form a union, you tend to lose your rights to pursue antitrust litigation.” He did not elaborate further.

Generally speaking, unions are exempt under the law from suing employers on antitrust grounds.

Esports player salaries have been exploding with the popularity of the games and the price tag for esports teams. The average salary of a League of Legends professional in 2018 is $320,000, according to a slide presented at the panel.

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

The MLB Players Association is working on an analysis of last offseason’s free agent market and looking at whether the system under the current collective-bargaining agreement is functioning the way it was intended, which was to ensure competition for players.

“That is the No. 1 focus of the players association at this time: What happened in that offseason,” Ian Penny, MLBPA general counsel, said on a panel at the Sports Lawyers Association earlier this month. Lawyers and others at the MLBPA are investigating why the market kept many top free agents unsigned for months and prices lower than expected, Penny said.

When the analysis is complete, the union intends to be able to tell players “whether the system that has basically kept labor peace for multiple decades is now under threat because some of the basic assumptions underlying that system are now no longer necessarily there,” he said.

The question comes down to whether the assumption that teams will try to win is still valid, Penny said.

“It really boils down to this question of competitive integrity because of what we saw in the offseason,” he said. “And even by their admissions some of the clubs were talking openly about the idea that clubs were actually looking to lose. To put a team together that would actually not win, but lose, and to do it in a strategic way, obviously, to get draft picks or position themselves for the future.”

Penny (center) spoke on a panel with NBPA’s Ron Klempner and NFLPA’s DeMaurice Smith.
Photo: courtesy of sports lawyers association

Dan Halem, MLB deputy commissioner and chief legal officer, who spoke on the panel immediately after Penny, said it was premature to say if the new CBA, which began 2017, was responsible for what happened in this year’s free agent market or whether teams are just rebuilding. The CBA runs through 2021.

“I don’t think our collective-bargaining agreement has had any impact on that,” Halem said. “And frankly, given that we are one year into it, I don’t think anybody, including me, who knows a lot about our CBA, can make any predictions of how that is going to play out over the next five years.”

The number of teams with losing records has not changed for decades, Halem said. As of earlier this month, 18 clubs, or more than half the league, were within four games of winning their division, Halem noted.

Halem also said that 56 percent of MLB revenue is going toward players’ salaries, a percentage believed to be higher than other leagues.

“We’ve always had rebuilding — now the pejorative word for it is tanking — across all sports,” he said. “I really think the conversation about tanking, generally, is kind of a code word for if you are not out there spending a lot of money on free agents, i.e., you’re tanking. That has been the public narrative.”

Penny, however, said the large number of teams that were rebuilding was a concern for players. He said the market wasn’t just characterized by teams not spending on free agents, but on dumping contracts and essentially giving up the season by not spending on talent.

“We’ve never seen it embraced so openly by so many teams at the same time to the point that it really does threaten what the system was based on,” Penny said. The MLBPA agreed to the competitive balance tax, he noted, with the understanding that the money would be spent by teams on players.

The MLBPA has filed a grievance against four teams, the Oakland A’s, Miami Marlins, Pittsburgh Pirates and Tampa Bay Rays, alleging those teams failed to comply with the rules on how to spend revenue-sharing money, but Penny did not provide details on that. He did say, however, that the union was in the process of “debriefing” MLB agents on their experiences in the free agent market.

Penny did not give a timeline as to when the union would report back to players.

“There were abnormalities across the board,” he said. “There are certainly things we are investigating right now that will help us paint a picture for the players as to what the causes were.”