BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  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 







                                                                  SB 101
                                                                  Page  2

          "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 







                                                                  SB 101
                                                                  Page  3

            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.







                                                                  SB 101
                                                                  Page  4


               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
                                                                  Page  5

          None on file


           Analysis Prepared by  :   Drew Liebert and Nicholas Liedtke / JUD. 
          / (916) 319-2334