(Carlos M. Saavedra /Sports Illustrated/Getty Images)
(Carlos M. Saavedra /Sports Illustrated/Getty Images)

Agent Zero

After a safety negotiates his own rookie deal, the traditional businessmen of the NFL find themselves in serious trouble

By
Andrew Brandt
· More from Andrew·

Everyone in the class of the 2013 NFL draft has now been signed, with nary a holdout lasting more than a day or two.  And all drafted players are under contract without the opportunity to renegotiate until 2016 at the earliest.  Not only is the four-year length of these contracts mandated, the amount of money for each pick is also predetermined, which is leading to some uncomfortable conversations about agent fees.

When I left the agent business in 1999—just days after losing Ricky Williams as a client to the clutches of Master P—I was already starting to hear people challenging these fees, especially for rookie contracts. The questions from players, their advisers and their family members have only accelerated since the 2011 CBA.

Prior to the most recent CBA, there was some room with rookie contracts (especially for first-rounders) to add incentives such as player options and voids, guaranteed salary advances and escalator clauses that would act as a “second rookie pool” in a legal circumvention of the rookie cap.  These loopholes are now decisively blocked.

Now that we’re in year three of the CBA “correction” for rookie contracts, teams, agents and players have all come to a stark realization: the amount of compensation in rookie contracts is predetermined by draft position.  As a top union official told me, “A trained monkey could negotiate these contracts.”

Thus, “negotiators” for 2013 rookies simply cut and pasted numbers from the corresponding pick in 2012, which had been cut and pasted from the corresponding pick in 2011. Most of these contract negotiations have taken minutes to complete, and the pace of signings for this year’s draft class was the quickest ever.

For example, let’s compare the 15th overall pick—the Saints’ Kenny Vaccaro out of Texas—to the same draft slot in each of the past two years.

brandt-table

The small difference in the total value has nothing to do with teams drafting, in order, a center (the Dolphins’ Mike Pouncey), a defensive end/linebacker (the Seahawks’ Bruce Irvin) and a safety—it’s due only to annual increases in minimum salary per the CBA. This striking similarity can be seen throughout the draft.

Based on the figures above, if an agent were to charge the maximum allowable fee of 3%, he would stand to make approximately $280,000 over the life of the deal. In contrast, if an agent/attorney were to charge in another fashion, perhaps an hourly fee of, say, $500 an hour (with a conservative estimate of 20 hours to negotiate the deal) that fee would approximate $10,000.

Do players even need agents in today’s NFL?

The final pick in the first round of last April's draft, Ravens safety Matt Elam saved himself roughly $200,000 by not using an agent. (Patrick Semansky/AP)
All smiles, and for good reason: A first-round pick in this year’s draft, Matt Elam had little room to negotiate in the NFL’s slotted system, but the Ravens safety saved more than $200,000 by not using an agent. (Patrick Semansky/AP)

Safety Matt Elam, the last pick in the first round, didn’t use one to negotiate with the Ravens.  Elam merely signed for “the slot”—$6.767 million over four years, with a $3.3 million bonus to sign—with three years fully guaranteed and a partial guarantee on the fourth-year. (The two picks above him, Travis Frederick of the Cowboys and Alec Ogletree of the Rams, had the same structure in the fourth year of their deals.) Had Elam used an agent to negotiate that same contract, the 3% fee would have cost him over $200,000.

I corresponded with Elam through email and asked him about his nontraditional choice.  His response: “I did meet with a lot of agents, but negotiating my contract without one was ultimately the best business decision for me.  Once I was drafted it was clear what my contract would be valued at.”

As to negotiating with Ravens’ vice president Pat Moriarty, Elam wrote: “It was definitely an educational experience.  I had a small team of people that helped me with researching comparable deals and determining the language that I wanted to make sure was in there.  I was on the phone with Mr. Moriarty and, honestly, it was a very easy negotiation. I know my contract in and out and I think that makes me a more invested member of the organization.”

Five Things I Think I Think

1. I think the haircut given to rookies at the top of the draft was the easiest item on the 2011 CBA checklist. The rookies had no voice in the negotiations, other than perhaps a handful of agents. The owners were embarrassed by those contracts and veterans, who led the negotiation for the NFLPA, had no problem serving incoming rookies up as sacrificial lambs.


2. I think the problem with the change is that, while the first round was brought into reality, nothing was done to rectify inequities in later rounds. Many of those players are now actually worse off, stuck with mandated four-year deals with no opportunity to renegotiate until after three years of performance. I have seen far too many low-round picks who, despite strong play, never “catch up” financially.


3. I think eventually the fee model for rookie contracts will resemble the NBA model, where agents cannot charge on the 80% of the rookie contracts that are “given” to the player—they're only allowed to charge a fee on monies negotiated above that.  Due to competitive pressure, several NBA agents forego fees on rookie contracts.  


4. I think teams are so intent on offset language because 1) they can; and 2) once they establish the precedent, it's easy to hide behind it.  Teams love to say, “All of our contracts have offset language” and end that discussion. Offset language, in short, can put a team in position to save money toward the end of a player's contract if the front office cuts him.  


5. I think the agents that “win” offset, largely through no effort of their own; will trade on that in recruiting future clients.  Agents for Luke Joeckel, Ziggy Ansah and Tavon Austin—who all avoided offset language—will make sure next year’s crop of rookies knows that.  In truth, they were able to avoid offset simply because the teams (the Jaguars, Lions and Rams) chose to not make it an issue.  

— A.B.

And as to whether his situation may be a model for other incoming rookie players, he responded: “With the slotting system, the contract negotiation is the easy part.  As soon as you become eligible for the draft people are pushing for you to make decisions about your agent, financial adviser, etc. There’s no rush. I benefited from taking my time to determine the best way to form my team.  I’m obviously very happy with the results.”

Time will tell if the “Elam model” becomes more common in the negotiation of rookie contracts. I know there isn’t a lot of sympathy out there for plight of agents, but they do provide real and valuable services.

Despite preset numbers in contract negotiations, agents can provide extra value by wrangling small “wins” to counter the teams’ leveraging its contract structure and stated policy, the offset language (see sidebar), offseason injury protection, workout bonuses, bonus deferrals and cash flow.

Further, there are non-negotiation services that most agents handle for rookies:

• Arranging training and interview preparation for the Combine
• Coordinating Pro Day workouts and interviews
• Managing the player’s family and friends
• Providing a credit line for income prior to signing a contract
• Reviewing lease and other documents presented to the player
• Being a trusted adviser and counselor

Although these services are valuable and facilitate the transition into the NFL, they are managerial and rendered disproportionately during a player’s rookie season. I am now hearing from players in the 2011 or 2012 draft classes who are wondering why they continue to write checks to their agents for cookie-cutter contracts. To them, the agent’s pre-draft services are a distant memory.

And what are those fees exactly? Although agents guard their fees with extreme secrecy, my sense in speaking to several of them is that few, if any, are receiving the maximum 3% for rookies, especially at the top of the draft. This is due to two main reasons: the lack of negotiation required and the competitive nature of the marketplace. After seeing what Elam did, there will be even greater downward pressure on these fees.

The agent business, as I constantly tell hordes of young people wanting to enter it, isn’t a Hollywood movie. There are now approximately 800 certified agents for 1,800 NFL players, not counting another 250 aspiring agents sat for the NFLPA entrance exam last week. It is a business that is difficult to enter and even harder to sustain success in.  As a former agent, I have seen many burn out quickly. I still marvel at the relentlessness of the few who have achieved prolonged success.

There are agents who provide great value as trusted advisers, and negotiators for veteran contracts in a freer marketplace. But just like the rookies they represent, agents are now locked into a sliding scale—that is, assuming they aren’t getting left out of the equation altogether.

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20 comments
eddie767
eddie767

This article,while good,forgot to mention Elam's brother. He is an NFL player,who went through process,with an agent,helped with negotiation process. It's good he went agentless for the right reasons and didn't loose a dime.

Charlie P
Charlie P

Are the agents also responsible for lining up endorsement deals once he is signed?  I would hate to think a player on my favorite team is chasing after those himself instead working on his craft.

If I were an NFL player, I'd offer an agent 1% for all services rendered, and 3% for all endorsement and appearance deals he/she manages to get me.

bobinpowell
bobinpowell

Why do I need that huge photo at the top of this article?

Rickapolis
Rickapolis

I can't help but think that if an UFO beamed all the sports 'agents' aboard and went back to their home planet, sports in America (and maybe the world) would be far better off.  

Oh, and a sister ship could take all the lawyers.

TippiGordon
TippiGordon

If the NFLPA were a union in any real sense, they would negotiate into the CBA a pay scale not only for rookies, but for all players.  They would define a rational base salary for each position based on years played, and put in performance accelerators based on wins and personal statistics (emphasis on the former). Then there would be zero need for agents (as noted by dclive1978), basically giving every player back that 3% they would otherwise be paying the leeches, er, agents.

dclive1978
dclive1978

These things are worth $280,000? 

• Arranging (but not actually conducting) training and interview preparation for the Combine - is IMG not in the phone book?

• Coordinating Pro Day workouts and interviews - most major college programs host Pro Day workouts and interviews for their former players.

• Managing the player’s family and friends - by the time a player has gone through the recruitment process and the scrutiny of being an elite college athlete with no agent around to "manage" their family and friends, I'm sure the vast majority are perfectly capable of handling their family and friends without help. The guys who have had issues in the past, however, do need some assistance, and should look to hire a PR firm or publicist, not an agent. The agent is just going to hire that same PR firm or publicist anyway.

• Providing a credit line for income prior to signing a contract - so pretty much like a loan shark. 

• Reviewing lease and other documents presented to the player - or you can hire an attorney. 

• Being a trusted adviser and counselor - for profit. As opposed to a parent, high school coach, family friend, aunt, grandparent, etc. who may actually view the player as more than just an ATM. 


Agents are glorified hype men. Nothing more, nothing less.

WHO*IS*ESPN
WHO*IS*ESPN

I remember few years ago before this mandate a player went to his college law professor for advice and paid him 50K for it. made a ton more and the professor got 50K for 1 hour work.

RayHuggyBearYoung
RayHuggyBearYoung

Interesting.  I don't know why more players just hire attorneys to go over contracts. Get an agent to get your commercial deals at a cheaper rate that has noting to do with the contract.

Jason55
Jason55

@Charlie P Most NFL agents prior to the new CBA charged rookies 2% of their rookie deal anyway, I would imagine that has dropped because of the slotting.  Most agents charge 15-20% of all marketing deals because they actually have to do work to find and sell these deals.  However most of the large agencies have lower level employees cold calling companies all day long trying to secure deals.  I worked for a company who would contract with players for personal autograph appearances and most of the time the large agencies would never even return a phone call or email, they deem themselves to important to make their client $5k-100k for a couple hours work.  

It always amazes me when a non first round pick chooses one of the major agencies because that agent doesn't spend 5 minutes working for that player on anything outside of his NFL contract.  I have advised numerous players to have a family member or friend call the agency under an alias and ask about booking the player for an appearance and see how responsive the agency is, almost every time they either get blown off or connected to an underling who basically keeps asking "what are you offering?"  One time a player I worked with I told him how hard it was to get the deal done called his agents phone number directly right in front of me to pretend about an inquiry for himself about a potential marketing deal and when he pushed to speak with Mr. Big Time agent who promised to work hard for him about this potential marketing deal the marketing person flat out told him the agent only deals with the big name players and large endorsement deals because he could care less about making 15% of $5,000.  Shortly after he fired the agent.    

mystafugee
mystafugee

@TippiGordon That's one of the dumbest ideas ever, you might as well change the NFLPA flag to a communist flag.  

JMP1
JMP1

@RayHuggyBearYoung 

Agreed, but if you are smart and savvy enough, you can negotiate your own commercial contracts as well. Not all professional athletes are dunces, some are extremely intelligent and don't all these 'handlers'.

Igglesmadness
Igglesmadness

Wow! I'm not surprised. They are lawyers no matter how you slice it. Good for Elam for using his own intelligence to make a sound and beneficial decision.

jojomogir
jojomogir

You are kidding yourself if you think a non-professional can negotiate a legal contract.  A slotted contract like the one described in this story is one thing, but an endorsement deal, for which there is no standard contract, is quite another.  As an attorney who has negotiated these contracts on behalf of marketers, I have spent 25 years learning the ins and outs.  Someone who has never negotiated one before, or even done a few, has no chance.  I would carve you up like a turkey and you wouldn't even know it as it was happening.

charleslfreemn
charleslfreemn

@Igglesmadness Correction: while some agents are lawyers, many are not nor are they CPA or certified financial planners.

MidwestGolfFan
MidwestGolfFan

@jojomogir 

You need to read "The Terrible Truth About Lawyers," by Mark McCormack, founder of IMG and himself a lawyer.  It might open your eyes.

"Carve you up like a turkey."  Nice.  And lawyers wonder why people hate lawyers. 

biggsamson
biggsamson

@jojomogirI think you said it all, as an attorney. You are like a CPA who is angry that tax software came out. Just because you don't have a law degree doesn't mean you don't the acumen or ability to protect yourselves. As an MBA I have negotiated many contracts, as well as having outsmarted attorneys when it came to business language surrounding risks and dependencies. Smart is smart, business is business. 

Rickapolis
Rickapolis

@jojomogir The problem with your comment is that you made it. That it would occur too you to carve anyone up 'like a turkey' tells me you've not only done just that, but think yourself very clever for having done so. In short, you have no honor. Which is why most people don't trust your profession. And in your case, they would be right.  I hope that you are ashamed, but I doubt if it that would even occur to you.

likedoohan
likedoohan

@JMP1 @jojomogir This is like the line realtors always give to dissuade people from selling their own properties. With diligence and adequate research, especially with sources available on the internet, a lot of these professional fee-chargers can be avoided altogether.

JMP1
JMP1

@jojomogir Right, keep telling yourself that. There have been many who have negotiated 'many' different contracts on their own throughout their careers (some with help and advice from family in the know). Heck, some professional sportsmen even have law degrees coupled with minor degrees or extended instruction in contract management and negotiation.

Bottom line, there are athletes who can negotiate their own contracts, regardless of complexity. If they can, they should.

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