Immediately following the 2009 NBA Draft, Darren Rovell of CNBC, released a list of the lottery picks, their agents, and the money that each player will receive over the next three years of his rookie contract (before a team may extend that contract for an additional year). The slot values are much lower than what top players in the NFL Draft receive, and Rovell goes on to state that people who want to be basketball agents should think again. He assumes that most agents for these lottery picks will drop a percentage point off of the standard take (3% instead of 4%) because no real negotiation occurs due to the slots. The commission on Griffin is less than $500,000. In fact, it’s most likely $0.
Lottery picks are not stupid, and neither are their parents, AAU coaches, handlers, and whoever else might be involved in the agent selection process. In most circumstances, agents for lottery picks do not make a dime off of the initial contract. The first time they will make commission on a team deal will be in the second contract, which will be very lucrative for those rookies who outperform the competition. If the contractual agent is not also acting as the marketing agent for the player, that means that the agent will be working pro bono for quite some time. To make matters worse, other agents will be hawking at your lottery pick client nonstop. If the client leaves you, you may lose quite a lot of money and time over this kid who was supposed to be “The One” to bring your agency to the top.
Recruiting money is never paid back, but often times, lottery picks will basically pay back the costs of workouts and travel expenses that the agent incurred in the pre-draft process. You can call that a commission on the first contract, if you’d like. Rovell is correct, most agents who represent lottery picks actually lose money…their hope is that long-term, these athletes end up paying for themselves and much more.
2 replies on “Still Want To Be An NBA Agent?”
Darren, what is the maximum commission that NBA agents are allowed to take on rookie contracts (for first round picks and for second round picks, if such comission is different)? Is Rovell accurate in saying that NBA rookie 1st round contracts are 3 years (how many years are guaranteed and how many years are at the team's option for rookie 1st round picks)? Thanks for you answers to these questions.
Thanks for the quick response. I appreciate it. I thought that only 2 years were guaranteed but wasn't sure. Also, for second round picks who sign minimum contracts, can agents really charge 4%? And for first round picks, I remember someone saying that agents cannot actually take 4% on rookie deals since the scale is set with not much negotiating to get the 120% maximum. I am not trying to call you out (I think you are a capable agent, especially in baseball), but can you please look into this? I don't think agents can get 4% of the total contract value each year for rookies.
There is not much negotiating going on for first-rounders, but that being said, it is not a solid slot. As you mentioned, there is some leeway for agents to negotiate a contract a little above slot or a team may argue that the play gets slightly below slot. 120% on the high end. 80% on the low end. 120% is more common than 80%. Agents may take 4%, but most do not. There is heavy competition, and a first-round pick can easily find someone else who is willing to negotiate the deal for less than the maximum (4%). But do not get confused and think that just because most agents do not take the full 4%, that agents are prohibited from doing so.
Also, thanks for the complement.
Darren, please look into this. I think there are restrictions specifically for (a) 1st-round picks and (b) minimum salary contract – in both cases agents are NOT permitted to take 4%. I am trying to do a google search to find where I read about this but am hoping you can provide the answers and help enlighten the readers. I am almost completely sure that agents are prohibited from taking 4% on the rookie's full salary and cannot do this for a guy who plays for the minimum. Good luck to all your clients. Your posts are great as always.
2% of rookie deal, 4% of anything negotiated above 100%.
Can someone tell me how to become certified as an agent …