BILL ANALYSIS                                                                                                                                                                                                    Ó







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        |Hearing Date:April 4, 2011         |Bill No:SB                         |
        |                                   |101                                |
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                      SENATE COMMITTEE ON BUSINESS, PROFESSIONS 
                               AND ECONOMIC DEVELOPMENT
                          Senator Curren D. Price, Jr., Chair
                                           

                         Bill No:        SB 101Author:Corbett
                    As Introduced:     January 11, 2011  Fiscal: No

        
        SUBJECT:  Athlete agents: conflicts of interest.
        
        SUMMARY:  This bill updates provisions in the Miller-Ayala Athlete 
        Agents Act (Athlete Agents Act) to address potential conflicts of 
        interest related to agencies servicing professional athletic teams and 
        leagues in situations where they are not related to the employment of 
        athletes an agency may also represent. 

        Existing Law, Labor Code:  Defines "talent agent" as a person or 
        corporation who engages in the occupation of procuring, offering, 
        promising, or attempting to procure employment or engagements for an 
        artist or artists. Talent agencies may, in addition, counsel or direct 
        artists in the development of their professional careers.  (Labor Code 
        §1700.4.)
        
        Existing Law: 
        
        1) Regulates specified activities of an athlete agent in representing 
           student and professional athletes.  (Chapter 2, Division 8, 
           commencing with Section 18895 of the Business and Professions Code 
           (BPC)) 

        2) 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.  (BPC §18895.2.)






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        3) Defines "athlete agent" as any person who, directly or indirectly, 
           recruits or solicits an 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.  (Id.)  

        4) Includes a talent agency as an "athlete agent" if they engage in 
           the activities of an athlete agent as defined.  (Id.)   

        5) Defines particular types of contracts entered into by athlete 
           agents on their own behalf or with others, and when persons may be 
           considered as participating in negotiations to enter into a 
           contract (Id).

        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 an 
           athlete of the availability of this information. (BPC §18896 to 
           §18896.6.)

        7) Prohibits an athlete agent from owning or having a financial 
           interest in any entity that is directly involved in the same sport 
           as a person with whom the athlete agent has entered into an 
           agreement contract for the purposes of negotiating an endorsement 
           contract, financial services contract or professional sports 
           service contract, or providing advice concerning potential or 
           actual employment as a professional athlete.  (BPC §18897.27.)

        8) Requires an athlete agent, if providing financial services to the 
           athlete, to disclose potential conflicts of interest, as specified. 
            (BPC §18897.3.)

        9) Prohibits an athlete agent from dividing fees with or receiving 
           compensation from a professional sports league, team, or other 
           organization or its representatives or employee, or offer or allow 
           any full-time employee of a union or players' association connected 
           with professional sports to own or participate in any of the 
           revenues of the athlete agent. 
        (BPC §18897.47.)

        10)Makes the violation of any provisions of the Act a misdemeanor 
           offense. (BPC §18897.93.)

        
        This bill:





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        1) Prohibits an athlete agent from having an ownership or financial 
           interest in any entity, only if that entity directly employs an 
           athlete in the same sport as a person with whom the athlete agent 
           has entered into an agent contract.


        2) Prohibits an athlete agent from dividing fees with, or receiving 
           compensation from, a professional sports league, team, or other 
           organization, or its representatives or employees, only if the fees 
           or compensation are directly related to on-field activities of 
           athletes or other representation of the league, team, or 
           organization as it directly relates to the employment of athletes. 

        3) Prohibits an athlete agent from offering or allowing any full-time 
           employee of a union or players' association connected with 
           professional sports to own or participate in any of the revenues of 
           the athlete agent.

        FISCAL EFFECT:  None. Legislative Counsel has keyed this bill as 
        "non-fiscal."
        
        COMMENTS:
        
        1. Purpose.  The  Association of Talent Agents  is the sponsor of this 
           bill.  According to the Author, the talent agency business has 
           grown since the implementation of the Athlete Agents Act and many 
           agents "now represent leagues and teams, not in connection with the 
           employment of athletes, but for marketing, sponsorship, 
           endorsement, media rights, and purchase or sale of a team." The 
           Author additionally asserts that "representation in these areas 
           does not interfere with the representation of an athlete against 
           such teams."  This measure aims to reflect these changes in the 
           industry.

        2. Athlete Agents Act.  In 1996, the Senate Business and Professions 
           Committee's Subcommittee on Sports heard testimony from university 
           officials and coaches, interscholastic sports governing bodies, 
           attorneys, and former college athletes.  All of these witnesses 
           spoke of a growing pattern of various abusive practices on the part 
           of athlete agents.  All emphasized that such abusive practices have 
           great harmful effects on the athletes and their families and 
           friends, athletic programs and schools generally, including alumni 
           and fans.  All decried the lack of meaningful oversight of athlete 
           agents, citing insufficient penalties in current law and apparent 
           inattention and/or inability of any agency to take action against 





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           athlete agents.  

           That same year, the Athlete Agents Act was passed to enact a 
           comprehensive set of provisions governing the conduct and practice 
           of individuals who work as athlete agents. Included in the Athlete 
           Agents Act was the provision that prohibits athlete agents from 
           owning or having a financial interest in any entity that is 
           directly involved in the same sport as a person with whom the 
           athlete agent has entered into an agreement contract. 

        3. Uniform Athlete Agents Act (UAAA).  Problems associated with 
           illegal athlete agent conduct are national in scope.  Far too 
           often, the actions of athlete agents in other states results in the 
           loss of student-athlete eligibility, the imposition of financial 
           penalties on the student-athlete's institution and the taint of a 
           "scandal" on both the institution and the larger intercollegiate 
           sports community.  In an effort to address these problems, the 
           National Conference of Commissioners on Uniform State Laws (NCCUSL) 
           began work in 1997 on developing a model state athlete agent law.  
           At the time, there were 28 state athlete agent laws each with a 
           different set of fees, bonding and registration requirements, and a 
           list of prohibitive acts.  Many of the laws were ineffective and, 
           as a result, were sporadically enforced.  In addition, agents 
           expressed frustration over the differing state regulations and the 
           time and costs associated with registering in many of the 
           jurisdictions.  Many agents simply ignored most the state agent 
           laws and the corresponding registration requirements.  After three 
           years of work, that included input from sports agents, 
           representatives of the professional sports leagues players' 
           associations, the NCAA, and the NCCUSL completed its work in 
           drafting the UAAA.  The model law provides for important 
           protections for student-athletes and educational institutions and 
           it also seeks to assist athlete agents by standardizing and 
           streamlining the regulations governing the profession. 

           The UAAA has been enacted in 40 states and the District of 
           Columbia.  Conduct currently prohibited by the UAAA does not 
           mention conflicts of interest for athlete agents who represent 
           athletes and their employers for marketing and other related 
           purposes. 
        
        4. Previous Legislation.  Last year, this Committee heard  SB 1098  , 
           also by the Author, which attempted to conform California law 
           regarding the regulation of athletes to the UAAA, replacing the 
           Athlete Agents Act.  After passage in this Committee, the bill was 
           amended to add the specific conflict of interest provisions now 





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           contained in this bill.  SB 1098 was vetoed by Governor 
           Schwarzenegger.

         SB 694  (Sher) of 2001 and  SB 1652  (Sher) of 2002 were also aimed at 
           enacting the UAAA.  Both measures were vetoed by Governor Gray 
           Davis.

         AB 1987  (Miller, Chapter 857, Statutes of 1996) established the Agents 
           Act in California.
        5. This Measure Addresses Conflicts of Interest Which Can Arise When 
           Agents Represent Both Athletes and the Event(s) and/or Team Sports 
           League(s).  As agencies consolidate into larger firms, there are 
           instances where a sports agency will manage both a professional 
           athlete as well as sporting events in which those athletes compete. 
            In a UCLA Entertainment Law Review article in 2004, the Author 
           considered the examples of Octogon, SFX Sports and IMG; three types 
           of superagencies borne out of the consolidation of the sports 
           agencies.  The consolidation of different firms resulted in all 
           three agencies being involved in the management of both golf and 
           tennis events and athletes. These agents may be negotiating 
           appearance fees and other agreements for both the athlete and the 
           sporting event.  In the case of Lendl v. ProServ, Inc., tennis 
           player Ivan Lendl sued his management company for allegedly taking 
           advantage of his star status by packaging its other clients in his 
           merchandising contracts, appearances and events in order to 
           increase ProServ's revenues.  
        
           Additionally, in the DePaul University Law Journal of Sports and 
           Contemporary Problems, an article was written in 2006 addressing 
           the issue of the right to publicity in sports.  The author 
           considered the competing interests of team sports leagues, such as 
           the NBA, NFL, MBA and NHL, which profits from marketing campaigns 
           using players' names and likeness and players' independent 
           endorsement efforts.  Leagues and teams often retain rights to use 
           a player's image and name to promote the sport, league or team in 
           marketing campaigns and other promotional efforts.  For example, in 
           the NFL, the league has a separate business development division 
           that enters into contracts with players to use their name and 
           likeness. No other third party may use these without an agreement 
           with the NFL.  However, the player may also sign independent 
           endorsement deals for their own profit, which often requires the 
           services of an agent.  

           Under the above circumstances, current law is not clear about what 
           role an agent can play with numerous types of representation in the 
           same sport, including events and teams, and when conflicts of 





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           interest may arise, this bill clarifies and restricts an agents' 
           role in representing different types of entities to protect the 
           interests of all parties. 
             
        6. Arguments in Support.  The  Association of Talent Agents  believes 
           that representation of leagues and teams are not connected with the 
           representation of professional athletes for on-field services and 
           do not present a conflict of interest.  Rather, success in such 
           efforts generates increased revenue for teams and leagues, which 
           benefits athletes by keeping team franchises healthy and viable. 


        SUPPORT AND OPPOSITION:
        
         Support:   Association of Talent Agents (Sponsor)

         Opposition:   None on file as of March 30, 2011.



        Consultant:Sarah Mason/Candace Choe