Apr
18

Repeal Sports Agent Laws And Pay Student-Athletes

In the past three months, I have traveled around the country, speaking at six different universities.  Most of the time the topic touched upon, or was centered on, ethics in the sports agent profession.  A common question from the audience is how to fix a system that practically allows agents to give student-athletes benefits without fear of reprimand.  The NCAA has virtually no jurisdiction over agents and the players’ associations, states, and federal government have not equitably enforced their rules and laws, or just not enforced them at all.  The Sports Agent Responsibility and Trust Act (SPARTA) has been federal law since 2003.  In eight years of existence, it has never been enforced.  The common answer at these panels is that the rules and laws are on the books; the way to effectively change the landscape for the better is to enforce those rules and laws.  Now I am about to throw a wrench in there.  What if we got rid of all rules and laws that restrict sports agents from giving money and any other kind of benefit to student-athletes?

It will never happen.  The NCAA has too much to lose from sports agents having that type of access and control over student-athletes, something that the NCAA would be too scared of forfeiting.  The NCAA benefits from having a platform distinct from professional sports and is most successful if its student-athletes stay in school for four years.  Anything that jeopardizes NCAA control over student-athletes, its maintaining the guise of amateurism, and takes away power from coaches and member institutions (colleges), is something that the NCAA finds worthwhile to fight (see: no-agent rule).  Do not for a second think that the NCAA’s rules and regulations are in place to benefit the student-athletes; they exist to shield the NCAA and its member institutions.  That includes all rules and regulations concerning sports agents.

But let’s assume a system where the NCAA did not control policy regarding sports agents.  From a normative standpoint, is there anything inherently wrong about allowing sports agents to provide any sort of benefit to student-athletes?

How does the student-athlete suffer? Another common topic of conversation at law schools across the country is the issue of paying student athletes.  Almost everyone can agree that student-athletes deserve to be compensated for the value they provide to their colleges, but no one has the master plan to make it work.  How will various colleges afford it?  How will the money be spread across different sports at different schools?  How will we equitably adjust compensation for players who perform on the same team at the same school?  In a system that allows sports agents to compensate players, the players will earn money based on their worth.  Agents will not just throw money at every single player, and if they do, good for the players!  Those who deserve to be compensated will get their fair value.  How exactly does the student-athlete suffer in this situation?  Just as in the current landscape, the athlete will not be required to ultimately sign with any agent who provides benefits.

How does the sports agent suffer? In the current system, the agents who do not provide benefits to student-athletes are at a great disadvantage.  Those individuals abide by rules, regulations, and laws, and end up hurting their practices as those who ignore sports agent rules and laws benefit by effectively competing against a diminished pool of agents (those who also cheat).  Many ethical agents would have no qualms with paying student-athletes if the rules, regulations, and laws allowed for it.  These same agents end up fronting the costs of training the clients that do sign with them, which turns out to be around $20,000 a client, if they are able to beat out the agents who are throwing student-athletes money under the table prior to signing the players.  Generally, I do not think having the money to spend is a problem for agents.  There are two classes of agents who suffer under such a proposed system: 1) the ones who are currently cheating, because they lose their competitive advantage when all agents (including the ethical ones who actually adhere to the laws) are able to compensate student-athletes based on their perceived value, and 2) the agents who do not have the funding necessary to pay student-athletes their “going rates.”

Picture this system in another industry.  What if a small website designer wants to break into the niche of designing websites for professional athletes.  In order to become known and get referrals, that designer offers a professional athlete $10,000 to build his website.  Instead of the athlete paying for a website, the designer offers the athlete money to design it.  Maybe it is a stupid decision, but who are we to judge?  Journalists may write about this “idiotic” website designer, but no regulatory body is going to stop the transaction.  If sports agents are permitted to give benefits to student-athletes, some sports agents will give players much more than they are perceived to be worth, and some sports agents will end up losing money on those investments, but student-athletes will benefit and for the majority of investments made, those sports agents will benefit as well (or else they will financially force themselves out of the business).

Jeffrey Kessler is the co-chairman of the Sports Litigation Practice Group at Dewey & LeBoeuf and is class counsel for the plaintiffs in Brady v. NFL.  Recently, at the IMG World Congress of Sports, Kessler stated that he is “a big believer in capitalism and the free-market,” and said that he has “no doubt that can produce a pro-competitive, efficient outcome.”  Kessler made that statement in regards to the NFL, but it can also be used in this discussion regarding the regulation of sports agents.  I have no doubt that in a free-market where agents were given permission to give benefits to student-athletes, the result would be a pro-competitive, efficient outcome where, for the most part, agents provide benefits to student-athletes based on their future perceived value and student-athletes get compensated for their efforts while in school.  What is the difference between giving a student-athlete $20,000 in his senior year or giving him the same thing by paying for his training, housing, and other living expenses a few days after his team’s Bowl game?

I expect a fair amount of criticism based on this post, and I certainly welcome it.  While rules, regulations, and laws that restrict sports agent actions exist, it is important for agents to follow them; however, there is no reason that we cannot engage in a healthy debate regarding the justification of those laws.

  • eric

    Nice, well written article. I certainly agree that student-athletes should be compensated for the value they provide to their colleges, but isn’t it true that student-athletes are already compensated by their college in a sense? They receive their education tuition, housing, food, and other services (tutoring, etc.) that a regular college student does not receive. On the flip side, I also understand that these student-athletes probably provide more economic value to their colleges than than they are currently compensated for (tution, housiong, etc.). Therefore, they remain under compensated. Any thoughts on this dillema?

    • http://www.darrenheitner.com Darren Heitner

      I agree that student-athletes are already compensated, but the issue is that it is not based on their fair value. If the colleges cannot afford to pay players their fair value, why not let agents?

  • Cfloyd

    As a former Division 1a football player, I can tell you what I was compensated for compared to the hours I put in was less than minimum wage. Texas just signed a 200 million dollar deal with ESPN…Do the math.

    • http://www.darrenheitner.com Darren Heitner

      I didn’t play D1 ball, but I agree.

  • http://twitter.com/lornesegall Lorne Segall

    Hey Darren,
    Long time reader, first time post. Great job on the site and just doing your thing. As an aspiring sports agent, I must say I’m looking up to you and what you have accomplished so far.

    While I do feel that college athletes are vastly under compensated, lets remember that a large majority of the NCAA athletes are given academic scholarships which may have prevented them from attending university in the first place. A large majority of these players also will never play a down of NFL football in their lives, which means that their biggest asset/investment leaving college shouldn’t be the fancy car they received from a recruiting agent, it should be their diploma.

    Playing college football (I’ll just run with this analogy because I think its the most relevant) is your entry level internship. You do the hard work, and dont get paid for it. You’re asked to put in your overtime, to show your dedication to the job and to prove your worth, in this case to the NFL. Is it a flaw in the system? Sure is. But I unfortunately can’t ever see players getting more compensation than academics.

    I was talking with a friend of mine the other day about this topic and we discussed all these agent scandals with the cars and spending money. To me at least, the main benefits given by agents to players are cars and spending money. Why? Because a) could you see someone like Cam Newton taking the bus to the mall or class? and b) they dont have time to have part time jobs like other students do. What if the NCAA schools were allowed to provide these benefits to the athletes? Not talking a Mercedes Benz for each member of the first-team, but I think it would undercut most of the suspicious activity done by agents who are lingering around the sidelines dangling keys waiting for the first biter.

    Would love to hear what you have to say.

    • http://www.darrenheitner.com Darren Heitner

      Thanks for the comment. I think you’re missing the main point of the article. It really isn’t based on whether athletes “need” to be better compensated, it’s about a system where we did not purport to penalize agents for throwing benefits at student-athletes. Even if student-athletes were “fairly compensated” through athletic scholarships, why not allow agents to provide extra benefits? Is it the government’s responsibility to take that away because of the fact that most student-athletes don’t go pro? Does that really change the educational environment? Last, I don’t see your NCAA payment plan working. Will cost too much, not all schools can afford it, and the best players will still take extra money under the table.

  • Gary Langlais

    I think the first distinction that must be made is it’s irrelevant to compare student-athletes to just students. We’re talking about the regulations (or removal of regulations) to the student-athlete/agent relationship not deciphering the difference in value (i.e. tuition, housing, meal plan) received from student-athletes and students.

    With that said, at the very least this system would bring all business dealings to the forefront. Perhaps transparency in this relationship is more important than upholding the NCAA’s definition of “amateurism.” I also agree this system would allow the free market to take over and level the playing field.

    My largest concern and am surprised that it has yet to be discussed at a forum such as this is for the young, aspiring sports agent. The business side of sports has exploded recently making it even harder for those to break in. The implementation of this system would only put up another barrier preventing the “newbie” from landing the first (profitable) client and thus establishing a footing. These “newbies” are most likely recently graduated and most likely in debt. Now we’re asking them to battle the veteran agents AND put up money before securing the client. I understand change cannot keep everyone happy and the focus of this piece is on leveling the ethical playing field but I dont want everyone to forget about all of us! We’re the ones that want to work in this field and shouldn’t simply allow for the inclusion of rules that will only make it harder for us to compete.

    • http://www.darrenheitner.com Darren Heitner

      I agree that there is a large concern for the young, aspiring sports agent, but is it any worse than the status quo for that person? The new agent hopefully isn’t currently breaking the rules/laws. If he is, then sure, it makes it more difficult under my suggested system.

      Now I do not think it is a good enough reason not to make the change because it will push some people out of the industry. I understand it will prevent many from competing, but that happens in many industries.

  • Cruz Herr

    I agree with your points in the article Darren. I worry that paying college athletes will be letting down the flood gates for a couple reasons. (1) It gives an opportunity for any wealthy person to compete in an industry where the individual may not have knowledge to compete in just because they have money, therefore, doing a disservice to the player/client (2) It can serve as a gateway. By that I mean it could lead to agents trying to find the competitive advantage again and soon they are compensating High School athletes as a future investment.(3) You hit on this point in the article a bit, but it will hurt mid majors and smaller universities in the long run which will hurt more school than not, in my opinion.

    I may be overly skeptical or missing the big picture but I am not sold on this idea.

    Cruz

    • http://www.darrenheitner.com Darren Heitner

      Aren’t there wealthy people in other businesses who don’t belong? Do they get clients because of their wealth? Sometimes. But not always. Further, is there a problem with compensating high school athletes? If an agent sees it as a good investment and the player wants it, why not let it occur? As to your third point, mid majors and smaller universities will be hurt if they are required to compensate the athletes, not the agents. In effect, the smaller schools shouldn’t be hurt at all.

  • Guest

    From the NCAA’s perspective, the problem is that once you allow agents to pay players, you allow anybody to pay a player. We all know it is very easy to become a registered agent – so now all I have to do is get a quick certification and I can pay anybody I want. This becomes a problem when I am also a wealthy booster. I pay players under my unregulated “agent” guise and soon enough, I can tag team with other boosters to start paying the entire team. This flies in the face of everything the NCAA is about, which is why they are so adamently against it.

    Better solution from NCAA perspective is to increase scholarship up to cost of attendance and pay stipends for other common expenses. Agents will still pay players, but at least lessens the argument that the NCAA is not treating student-athletes fairly.

  • MBH11

    Allowing amateur athletes to be compensated financially would be a disaster. Contrary to popular belief there is still a lot of integrity in college sports. Were talking about a very small percentage of athletes that have a chance to play professionally, and allowing agents to pay those players would greatly hurt teams ass a whole. If you have ever spent time around a college football team, then you know they have it MUCH better than a regular college kid. A normal kid comes out of school with more debt then he/she can think of and struggles to find a job, with 80-some scholarships on a football team, that’s a lot of free education! Don’t let these athletes fool you with “i didn’t get compensated for my time” crap. I work in college athletics and know how it is. You go into a D1 college football headquarters and there are flat screens with video games everywhere! Its ridiculous. Compared to a normal college kid, they have it great. A free education, if taken advantage of, its worth so much more.

    • http://www.darrenheitner.com Darren Heitner

      How exactly would it hurt the teams? Further, it’s not a matter of who “has it better” between a student-athlete and a non-student-athlete. It’s a matter of fair compensation for the value the individual is providing. The non-student-athlete is free to receive compensation for his/her talents, why not the student-athlete?

      Talking about flat screens and video games is skirting the issue.

  • http://twitter.com/tryan314 Ryan McNeil

    Good Post. Proposes the simplest, most efficient, and most equitable solution to the “problem” of players receiving benefits or inequity of not being paid a fair share. The argument that players are getting fair compensation in the form of a college degree doesn’t hold any water because the definition of fair is defined by the NCAA and not the market. I think most of these parade of horribles arguments would prove unfounded and that ultimately agents and boosters would pay top dollar for 5 star prospects and everyone else would get a few thousand dollars of walking around money similar to what many college students get from part-time jobs and parents, and even the fears were realized it would be easy to respond to.

    Additionally, I think the problem it would present for young agents could be overcome by aligning with powerful boosters who will inevitably want to funnel money into the system and will need people to serve as liaisons to the players.

    Lastly, on a somewhat unrelated note, the value of a college education is vastly overstated as it pertains to the college athlete. The value of a college degree has been diluted in general, aside from a few majors such as engineering, finance, etc., majors that very few football players take, or could take given the rigors of DI sports.

  • Pingback: Problems with Paying College Athletes «