Categories
Headline

BAT Rules Agent Can Recover Lost NIL Commissions After Exclusivity Breach

Sigma Srl v Maksym Shulga

The Basketball Arbitral Tribunal (BAT) has issued a significant ruling in Sigma Srl v. Maksym Shulga (BAT 2249/24), awarding an Italian sports agency $180,000 in damages after college basketball player Maksym Shulga breached the exclusivity clause in their representation agreement by negotiating a NIL deal without his agent’s involvement.

The Facts

Ukrainian college player Maksym Shulga signed an exclusive representation agreement with Sigma Srl in September 2022, covering NIL opportunities through August 31, 2024. After playing at VCU during the 2023-2024 season, Shulga asked Sigma to explore transfer options for 2024-2025.

Sigma successfully negotiated a Letter of Intent with Friends of Nova (connected to Villanova University) offering $900,000 in NIL compensation. Shulga signed the LOI on May 9, 2024. However, in late May 2024, Shulga reversed course and stayed at VCU, reportedly accepting “a more significant NIL offer” that he negotiated without Sigma’s knowledge or participation.

The Holding

Arbitrator Benny Lo ruled that Shulga breached Article 2 of the Agreement, which granted Sigma representation rights “on a worldwide exclusive basis” and precluded Shulga “from conferring the same appointment to third parties and/or agents and/or representatives.”

Key determinations:

  1. Broad interpretation of exclusivity: The exclusivity clause prohibited Shulga from negotiating NIL deals personally or through others during the contract term. The arbitrator rejected any narrow interpretation that would allow self-representation, finding such a reading would “render the exclusivity provision meaningless or allow for its circumvention through formalistic distinctions.”
  2. Breach timing: Negotiations during the agreement term constituted breach, even if the VCU contract was signed after August 31, 2024. The arbitrator cited BAT 1231/18, noting “negotiations during the term of a representation agreement can amount to a breach of exclusivity even though the player contract is concluded after the expiry of the representation agreement.”
  3. Damages measure: Applying BAT 252/12, the arbitrator awarded Sigma 20% commission on the minimum value Shulga would have earned under VCU’s NIL deal, which was $180,000 based on evidence that the VCU offer exceeded the $900,000 Villanova LOI.

Significant Language

The award contains critical reasoning on exclusivity clauses:

“If article 2 is interpreted to permit the Player to represent himself in his commercial dealings, it would render the exclusivity provision meaningless or allow for its circumvention through formalistic distinctions… the second sentence of article 2 does not limit the broad exclusivity provision in the first sentence, but rather provide for a separate and specific obligation not to appoint other people to represent the Player.”

This broad construction means athletes cannot evade exclusive representation agreements simply by claiming they negotiated deals themselves rather than through competing agents.

Practical Takeaways

For Agents:

  1. Draft clear exclusivity language: Explicitly state that exclusivity prevents the athlete from negotiating personally or through others. Consider adding language like “whether directly or indirectly, personally or through third parties.”
  2. Document your work: Sigma’s meticulous records of negotiations, emails, and the signed Villanova LOI were crucial in proving damages. Maintain detailed paper trails of all opportunities pursued.

For Athletes:

  1. Exclusivity means exclusivity: This ruling makes clear you cannot negotiate deals yourself during an exclusive representation period, even if you don’t hire a competing agent.
  2. Timing matters: Even negotiations that occur during the representation term can trigger liability, regardless of when contracts are actually signed.

By Darren Heitner

Darren Adam Heitner, Esq., is a preeminent sports attorney and the founder of Heitner Legal, P.L.L.C., a Fort Lauderdale-based law firm specializing in sports law, contract negotiations, intellectual property, and arbitration. He earned his Juris Doctor from the University of Florida Levin College of Law in 2010 and a Bachelor of Arts in Political Science, magna cum laude, from the University of Florida in 2007, where he was named Valedictorian of the College of Liberal Arts and Sciences. Admitted to practice in the state bars of Florida, New York, and the District of Columbia, as well as multiple federal courts, Darren also serves as a certified arbitrator with the American Arbitration Association.

As an adjunct professor, Darren imparts his expertise through teaching Sports Law at the University of Florida Levin College of Law and Name, Image, and Likeness (NIL) at the University of Miami School of Law in the Entertainment, Arts, and Sports Law LL.M. program. His scholarly contributions include authoring several books published by the American Bar Association, such as How to Play the Game: What Every Sports Attorney Needs to Know, and numerous articles in prominent publications like Forbes, Inc. Magazine, and Above the Law. His thought leadership in NIL has earned him recognition as one of the foremost experts by The Wall Street Journal, USA TODAY, and On3, and he has been lauded as a “power player in NIL deals” by Action Network and a “top sports trademark attorney” by Sportico.

Darren’s passion for sports law led him to establish Sports Agent Blog on December 31, 2005, initially titled “I Want To Be A Sports Agent.” The platform, created as a New Year’s resolution, has grown into a cornerstone of the sports agency community, offering in-depth analysis of industry trends, legal disputes, and agent-player dynamics. His commitment to the field is further evidenced by his representation of numerous athletes and sports agents, as well as his prior role as an Adjunct Professor at Indiana University Bloomington, where he developed and taught a course on Sport Agency Management from 2011 to 2014.

Darren’s contributions have been recognized with prestigious honors, including the University of Florida’s 40 Under 40 Award, the University of Florida Levin College of Law’s Outstanding Young Alumnus Award, and designation as the best lawyer in Fort Lauderdale by Fort Lauderdale Magazine. He remains an active voice in the sports law community, sharing insights through his weekly NIL newsletter and his X posts, engaging a broad audience on legal developments in sports.