BILL ANALYSIS
SB 1652
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Date of Hearing: June 18, 2002
ASSEMBLY COMMITTEE ON ARTS, ENTERTAINMENT, SPORTS, TOURISM, AND
INTERNET MEDIA
Rebecca Cohn, Chair
SB 1652 (Sher) - As Amended: June 12, 2002
SENATE VOTE : 23-9
SUBJECT : Athlete Agents
SUMMARY : Conforms the Miller-Ayala Athlete Agent Act
(Miller-Ayala) to the Uniform Athlete Agents Act (UAAA) adopted
by the National Conference of Commissioners on Uniform State
Laws (NCCUSL). Specifically, this bill :
1)Repeals the Miller-Ayala Athlete Agent Act.
2)Conforms definitions of athlete agent, negotiate, agent
contract, student athlete and specified contracts.
3)Defines "contact" as a communication, direct or indirect,
between an athlete agent and a student or professional
athlete, to recruit or solicit the student or professional
athlete to enter into an agency contract.
4)Defines "intercollegiate sport" as a sport played at the
collegiate level for which eligibility requirements for
participation by a student athlete are established by a
national association for the promotion or regulation of
collegiate athletics.
5)Requires an athlete agent to obtain a certificate of
registration from the Department of Industrial Relations
(DIR).
6)Specifies that an athlete agent submit an application for
registration within seven days after an initial contact as an
athlete agent or a contract resulting from violation of this
requirement will be void.
7)Requires an athlete agent to submit specified information to
the DIR regarding the agent's background, criminal and
disciplinary record, training, experience and education as an
athlete agent.
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8)Requires the athlete agent to disclose the fact of
registration to a student or professional athlete and where
information may be obtained regarding the agent.
9)Specifies that an application for a certificate of
registration is a public record.
10)Allows the DIR to refuse to issue a certificate of
registration under specific circumstances.
11)Requires renewal of registration every two years.
12)Allows the DIR to issue a temporary certificate of
registration while an application for registration or renewal
or registration is pending.
13)Specifies that the DIR may suspend, revoke, or refuse to
renew a registration for conduct specified and shall provide
notice and an opportunity for a hearing in accordance with
current law.
14)Specifies that agency contracts include a prominent notice to
a student athlete of the implications of signing the contract
and makes a contract that does not conform to the requirements
of the UAAA voidable.
15)Requires notice, within 72 hours, to the athletic director of
the educational institution at which a student athlete is
admitted or enrolled upon entering into an agency contract and
the ability of the student athlete to cancel a contract within
14 days.
16)Provides an educational institution with a right of action
against an athlete agent for damages caused by violation of
the UAAA.
17)Allows the DIR to assess a civil penalty against an athlete
agent not to exceed $25,000 for violation of the UAAA and
creates a misdemeanor punishable by a fine of $25,000 and no
more than one year in county jail.
18)Creates the Athlete Agent Registration Fund and allows for
the DIR to establish by regulation a fee to fund the costs of
the registration program.
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19)Requires athlete agents to maintain certain records.
20)Incorporates other technical and substantive provisions from
Miller-Ayala.
EXISTING LAW :
1)Defines "athlete agent" as any person who, directly or
indirectly, recruits or solicits a professional or student
athlete to enter into any specified type of contract, or for
compensation procures, offers, promises, attempts, or
negotiates to obtain employment for any person with a
professional sports team or organization or as a professional
athlete.
2)Defines "student athlete" as any individual admitted to or
enrolled as a student in an elementary or secondary school,
college or university or other educational institution if the
student participates as an athlete in a sports program.
3)Prohibits an athlete agent from initiating personal contact
with a student athlete or specified family member.
4)Requires an athlete agent to notify specified representatives
of an educational institution to which a student athlete has
been admitted or enrolled if an athlete agent initiates
written contact with a student athlete or the student athlete
initiates any contact with an athlete agent.
5)Defines "agent contract" as any contract or agreement in which
a person authorizes or empowers an athlete agent to negotiate
or solicit on behalf of the person, with one or more
professional sports teams or organizations, for the employment
of the person by one or more professional sports teams or
organizations, or to negotiate or solicit on behalf of the
person for the employment of the person as a professional
athlete.
6)Requires an athlete agent to file with the Secretary of State
specified information about his or her background, criminal
and disciplinary record, training and experience, and to
advise a professional or student athlete of the availability
of this information.
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7)Requires an athlete agent to establish a trust fund and
deposit all funds received on behalf of the professional or
student athlete and, if providing financial services to the
athlete, to disclose potential conflicts of interest, as
specified.
8)Requires a contract between an athlete agent and a student
athlete to include a warning that the student athlete may lose
eligibility to compete in interscholastic or intercollegiate
sports upon entering into the contract and allowing the
student athlete to rescind the contract within 15 days.
9)Allows for civil action to recover damages resulting from a
violation and makes void any contract that fails to comply
with its requirements.
10)Requires every athlete agent to provide security for claims
against them in the amount of $100,000.
11)Makes the violation of any provisions of the act a
misdemeanor offense.
FISCAL EFFECT : According to the Senate Appropriations
Committee a temporary and minor General Fund impact is created
as a result of a loan to the program to fund start-up costs
which is required to be repaid my January 1, 2006.
COMMENTS :
1)Background . According to the author, this bill enacts the
UAAA, which creates a nationally uniform state-registration
system for sports agents who recruit on college campuses. It
requires agents to make substantial disclosures to the state
as part of registration, creates contractual protections for
student athletes, creates a cause of action for school who are
harmed by agent misdeeds, and allows for substantive oversight
by the DIR.
2)Necessity . According to the author, first, this bill is
needed because existing law does not provide for the
substantive review of agent filings. The DIR will have the
authority to review a potential registrant agent's business
and criminal history disclosures (which are filed under
penalty of perjury) and make a determination that this person
is unsuitable to practice as an agent in California. Existing
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law does not provide for such a determination.
Second, the bill is needed to deal with significant compliance
failures under the existing system. The National Collegiate
Athletic Association (NCAA) has claimed that, based on
registrations with national professional players associations,
at least 1,200 individually identified sports agents are
currently practicing in this state. This is a low estimate,
and does not include those who work for an agent and might be
required to register as well. As of 2001, after several years
of operation, the Secretary of State's office had only 77
agents registered under Miller-Ayala. Given the fact that all
sports agents are covered by that act, and that failure to
comply will void contracts in a competitive field, the only
reasonable explanations for this low compliance rate are
ignorance of the law or lack of enforcement by the state.
3)National Conference of Commissioners on Uniform State Laws
(conference) . Through 2000, 28 states had statutes regulating
athlete agents that varied significantly. The lack of
uniformity was believed to have an impact on the number of
agents registering across the nation. Additionally, an agent
doing business in more than one of the 28 states may have been
required to have knowledge of multiple regulatory schemes and
register and pay fees in each jurisdiction. The model act
incorporated into this bill was adopted by the conference on
the recommendations of an 11-member committee that conducted
drafting sessions over a three-year period concluding in 2000.
The sessions were public and attendees included
representatives from the NCAA, staff from the professional
league players associations and athlete agents. The
conference adopted a model act that provides for uniformity of
state laws, reciprocal registration, consumer information, and
notice to educational institutions of a student contract.
Since the conference concluded its work, 15 states and 2
territories have adopted the model act.
4)Miller-Ayala vs. Model Act & UAAA . When the conference
started its work in 1997, California had just enacted
Miller-Ayala that became the foundation for the conference's
work. Consequently, major policy differences are few:
a) Contact vs. Contract - Miller-Ayala prohibits an athlete
agent from initiating personal contact with a student
athlete and, in the case of any contact between an athlete
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agent and student athlete, an educational institution in
which the student athlete is admitted or enrolled must be
notified of the contact. This bill and the model act allow
for unrestricted contact between a student athlete and an
athlete agent with no notice to the educational
institution. However, if the athlete agent and student
athlete enter into a contract (most of which jeopardize the
student's standing with the NCAA), both parties would be
required to notify the athletic director of the educational
institution at which the student athlete is admitted or
enrolled. The conference debated this distinction at
length ultimately deciding that any restrictions on an
athlete agent's contact with a student athlete are an
unconstitutional abridgement of free speech.
b) Reciprocity - Miller-Ayala does not acknowledge an
athlete agent's standing in any other state. This bill and
the model act allow an agent's valid certificate of
registration from one state to be honored in all other
states that have adopted the model act. The conference
advises that the success of reciprocity is contingent on
states establishing a reasonable fee schedule, including
lower registration fees for reciprocal applications and
renewals. Therefore, more agents are likely to register
due to the efficiency of the process, its practical cost
saving implications for the athlete agent and the benefits
of complying with a single set of regulations.
c) No E&O Policy - Miller-Ayala requires athlete agents to
maintain insurance against errors and omissions for
$100,000 for each claim. The primary need for coverage is
to protect the athlete from an athlete agent's
mismanagement of the athlete's income. Consequently, the
model act and this bill require a surety bond to be posted
in an amount set by regulation.
d) Professional agents - the model act only requires
registration of athlete agent activity with student
athletes, not professional athletes. This bill retains
Miller-Ayala's oversight of all professional agents.
5)Related Pending Legislation . SB 1866 (Costa) is nearly
identical to this measure but was dropped earlier this year.
Senator Costa is a co-author of this bill.
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6)Prior Legislation . In 2001, the Governor vetoed SB 694 (Sher)
indicating that the program should be located under the DIR,
which also oversees talent agents, rather than with the
Department of Consumer Affairs.
REGISTERED SUPPORT / OPPOSITION :
Support
National Conference of Commissioners on Uniform State Laws
SportsLoop
Opposition
None on file
Analysis Prepared by : Kellie Smith / A.,E.,S.,T. & I.M. /
(916) 319-3450