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Contract Negotiation Sports Agents

Taxation With Representation

Is a certain team’s offer is better than another’s but your client prefers to play for the team offering a lower salary? Can state income taxes bridge the gap?

Three days ago, I had the privilege of listening to and meeting NFL agent Hadley Engelhard of Enter-Sports Management. The University of Florida College of Law Entertainment, Arts, and Sports Law Society hosted Mr. Engelhard in a setting that included about 60-80 audience members (seemed to be pretty much all law students besides me). Mr. Engelhard was in town anyway due to Wednesday’s Pro Day at the University of Florida (he represents Gators Reggie Nelson and Earl Everett in this year’s NFL Draft).

The speech was very insightful and covered a variety of issues, many of which I have covered in the past and a few that I hope to post on in the future. As a side note, Hadley is a graduate of my college and happens to also be alumnus of my high school (Nova High).

Besides touching on all the important facets of being a Sports Agent like post-career planning, understanding contracts, negotiation skills, being ethical, etc., Hadley brought up a point that I had never thought about: state income taxes.

When negotiating a deal for your client, there are a lot of factors that go into making a decision on what team he/she plays for. Money is not always the prime motivation for a player to move to a certain city. Some players want to play where their family lives, prefer a certain climate, do not want to change time zones, etc. These factors can all play a role in deciding to take a smaller monetary deal for your client. But Hadley brought up an interesting point; just because a team is offering less money, does not mean that in the end, your client will be seeing less money in the bank.

States differ on their income taxes. Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming all have absolutely no state income tax [Individual Income Tax Rates-2006]. In a state that does have an income tax, your client is going to fall into the high bracket for payments. In California, if your client is making over $1 million per year, you can count on shipping 10.3% of his/her income to the state.

So let’s think of a hypothetical. You have a client who has his family in Miami and really would prefer to play for the Miami Dolphins instead of the San Fransisco 49ers. The 49ers are offering a 5-year $30-million contract with $12-million guaranteed while the Dolphins are offering a 5-year $28-million contract with $10-million guaranteed. After state income taxes are factored in, is it really worth it to ship your client out to San Fransisco when he really wants to play in Miami? Probably not (you can still try to bump up the Dolphins offer by threatening to sign with the 49ers, though).

Your client will have to pay federal income taxes no matter what state he/she plays for, but factoring individual state income taxes into the decision of where your client signs can benefit your client in many ways. Thanks to Hadley Engelhard for bringing up this excellent point in his speech.

-Darren Heitner

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.

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