BILL ANALYSIS �
SB 101
Page 1
Date of Hearing: June 14, 2011
ASSEMBLY COMMITTEE ON JUDICIARY
Mike Feuer, Chair
SB 101 (Corbett) - As Introduced: January 11, 2011
Proposed Consent
SENATE VOTE: 36-0
SUBJECT : Athlete Agents: Conflicts of Interest
KEY ISSUE : should the conflict of interest provisions regarding
athlete agents be updated to address conflicts related to AGENCY
representation teams and leagues in matters unrelated to athlete
employment?
FISCAL EFFECT : As currently in print this bill is keyed
non-fiscal.
SYNOPSIS
This non-controversial bill updates the conflict of interest
rules in the Miller-Ayala Athlete Agents Act to remedy potential
conflicts arising from an agency's representation of
professional teams and leagues in situations unrelated to
on-field employment of athletic talent the agency simultaneously
represents. Under existing law an athlete agent cannot have any
ownership or financial interest in any entity that is directly
involved in the same sport or activity as a person that the
agent represents. Further, under existing law athlete agents
cannot divide fees or receive compensation from a professional
sports team, league or other organization if the agent
represents an athlete involved in the same sport or activity.
The author notes that since the enactment of existing law the
talent agent industry has expanded dramatically, and agents now
represent clients in marketing, licensing and other business
development opportunities wholly unrelated to on-field activity
and the employment of athletes. This bill seeks to provide more
flexibility in the industry by prohibiting an agent from having
a financial interest or business relationship with an entity if
that entity directly employs an athlete in the same sport as a
person with whom the agent has entered into an agreement with.
Additionally, this bill lessens the restrictions on agents
receiving compensation from sports teams and leagues whereby
such conduct is barred only when the fee compensation is the
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"direct product" of on-field activity of athletes. This
Committee previously considered and supported these provisions
as a part of its consideration of SB 1098 (Corbett, 2010), which
was vetoed by the previous governor. This bill is narrower,
focusing solely on conflict of interest provisions. This bill
is sponsored by the Association of Talent Agents and it has no
known opposition.
SUMMARY : Clarifies the relationship between talent agencies,
teams and leagues with regards to procuring and negotiating
sponsorship agreements, media rights, endorsements and sales of
a team. Specifically, this bill :
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.
EXISTING LAW :
1)Regulates athlete agents regarding the representation of
professional and student athletes. (Chapter 2, Division 8,
commencing with Section 18895 of the Business and Professions
Code. All references are to this code section unless
otherwise noted.)
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
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athlete. (Section 18895.2.)
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. A talent agency is considered
an "athlete agent" if they engage in above defined activity.
(Section 18895.2.)
4)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. (Section 18897.27.)
5)Requires an athlete agent, if providing financial services to
the athlete, to disclose potential conflicts of interest, as
specified. (Section 18897.3.)
6)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. (Section 18897.47.)
7)Makes the violation of any provisions of the Act a misdemeanor
offense. (Section 18897.93.)
COMMENTS : This non-controversial bill seeks to update current
athlete agent conflict of interest rules to address actual
conflicts of interest related to employment activity, while
still allowing talent agencies to service teams and leagues in
situations unrelated to on-field employment of athletes.
According to the author:
Under current law, an agent is prohibited from having an
ownership or financial interest in any entity that is
directly involved in the same sport as a person the agent
represents.
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However, in the past 15 years, the talent agent business
has grown and expanded beyond traditional television, film
and music businesses. Talent agencies now represent
athletes, corporations and non-traditional TV personalities
and broadcasters. They also provide services that include
marketing, licensing and business development.
Senate Bill 101 clarifies that talent agencies can
represent leagues and teams for procuring and negotiating
sponsorship, endorsements, media rights, and purchase or
sale of a team. Representation of leagues and teams are not
in connection with the representation of professional
athlete for on-field services and does not present a
conflict of interest.
Brings California Law Into Sync With Other States : In the late
1990's a series of incidents involving illegal actions by sports
agents focused national attention on the need to regulate the
athlete agent industry. In order to close loopholes created by
variations in state law the National Conference of Commissioners
on Uniform State Laws (NCCUSL) began work in 1997 on developing
a model state athlete agent law. After consulting various
industry groups, colleges and professional sports teams, the
NCCUSL created the Uniform Athlete Agents Act (UAAA). The model
law provides for important protections for student-athletes and
educational institutions while assisting athlete agents by
standardizing and streamlining the regulations governing the
profession. Under the UAAA there are no prohibitions on athlete
agents representing teams and leagues in matters unrelated to
on-field employment of athletes. This bill brings California
law in line with that of nearly 40 other states.
Prior Legislation : SB 1098 (Corbett, 2010) which was much
broader would have enacted all of the provisions of the Uniform
Athletes Agents Act (UAAA) was vetoed by Governor Schwarzenegger
citing opposition to new regulation in the industry.
REGISTERED SUPPORT / OPPOSITION :
Support
Association of Talent Agents (ATA) (sponsor)
Opposition
SB 101
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None on file
Analysis Prepared by : Drew Liebert and Nicholas Liedtke / JUD.
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