BILL ANALYSIS Ó
SB 238
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Date of Hearing: June 14, 2011
ASSEMBLY COMMITTEE ON JUDICIARY
Mike Feuer, Chair
SB 238 (De León) - As Amended: April 13, 2011
PROPOSED CONSENT
SENATE VOTE : 37-0
SUBJECT : athlete agents
KEY ISSUE : should there be mandatory suspensions or revocations
of an athlete agent's privilege to conduct business if that
agent violates the miller-Ayala athlete agents act?
FISCAL EFFECT : As currently in print this bill is keyed fiscal.
SYNOPSIS
This non-controversial bill would increase the mandatory
penalties for athlete agents convicted of violating the
Miller-Ayala Athlete Agents Act. The bill mandates a suspension
of an agent's right to practice for at least one year. The bill
also requires the agent to disgorge all consideration it
received for services provided in violation of the Act. The
bill is designed to remove unscrupulous agents from the industry
and deter agent's misconduct, especially misconduct involving
illegal conduct and interaction with college athletes. The bill
is sponsored by the Los Angeles City Attorney and is supported
by several California universities and university organizations.
The bill has no known opposition.
SUMMARY : Requires courts to impose a suspension on athlete
agents who violate provisions of the Miller-Ayala Athlete Agents
Act (the Act). Specifically, this bill :
1)Requires the court to suspend for a minimum of one year, or
where appropriate, revoke the privilege of a person to conduct
the business of an athlete agent if the person is convicted of
a violation of the Act.
2)Requires the court to order an athlete agent or athlete
agent's representative or employee to disgorge all
consideration received in connection with a violation of the
Act.
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3)Specifies the distribution of all fines and disgorged monies
surrendered by an athlete agent or athlete agent's
representative or employee found in violation of the Act.
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)Makes a violation of the Athlete Agents Act by an athlete
agent or athlete agent's representative or employee a
misdemeanor, punishable by a fine of not more than fifty
thousand dollars ($50,000), or imprisonment in a county jail
not exceeding one year, or by both that fine and imprisonment.
(BPC Sec. 18897.93.)
3)Permits a court to suspend or revoke the privilege of an
athlete agent to conduct business as such if he or she is
convicted of a violation of the Athlete Agents Act. (BPC Sec.
18897.93.)
COMMENTS : This non-controversial bill increases the sanctions
for athlete agents found in violation of the Miller-Ayala
Athlete Agent Act. The bill is designed to provide protections
for impressionable student athletes, especially at the college
level. The author states:
This bill protects student athletes from unscrupulous
athlete agents. Student athletes are continuously
victimized by unscrupulous athlete agents who lie, deceive
and force student athletes to enter into contracts that are
not in their best interest. Additionally, these athlete
agents provide student athletes with cash and secret gifts.
The significant damage that results from the illegal
practices of these agents causes the student athletes to be
made ineligible for participation in National Collegiate
Athletic Association (NCAA) competition and the team and
the university to be subject to harsh penalties (including
the imposition of NCAA sanctions resulting in the repayment
of substantial monies received from NCAA championship
competition, the forfeiture of past contests and
prohibitions against future championship opportunities).
As one athletic director recently stated in testimony
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before a congressional subcommittee on the subject: "These
agents, motivated largely by financial considerations, are
willing to use any means necessary to represent a student
athlete who has even a remote chance of playing
professional sports. They frequently employ tactics that
involve secret payments to friends and relatives who may be
in a position to influence the student athlete, unrealistic
promises, and considerable arm- twisting."
Slowing the Increase in Illegal Agent Activity: California is
home to more athlete agents than all 49 other states combined.
While the majority of agents behave properly, an unnerving
increase in the number of athlete agents violating the laws
regarding college athletes has been seen in recent years. This
bill seeks to strengthen the penalties for agents who violate
the Miller-Ayala Athlete Agent Act and aims to deter agent
misconduct directed at college athletes. As the University of
Southern California, a supporter of this bill, notes, "the
penalties for students and institutions by the ÝNCAA] can be
substantial and do enormous damage, but there is no ÝNCAA]
jurisdiction over athlete agents and their role in any possible
violation." This bill seeks to use state law to, as the Los
Angeles City Attorney notes, "remove the financial incentive to
act illegally" by forcing athlete agents to disgorge any
illegally obtained payments stemming from illegal conduct with a
college athlete. Additionally, the law seeks to ban an agent
from practicing in California for a minimum of one year if found
responsible for violating the law. Together these penalties are
designed to deter agent misconduct, or at a minimum ensure that
agents share in the punishment for misconduct by guaranteeing
that the student athlete is not the only person to suffer as a
result of illegal agent behavior.
Removing Bad Agents from the Industry: The author notes that
more than half of the 42 states that have implemented athlete
agent laws have never revoked the license of an agent found
guilty of misconduct. As such, agents who commit misconduct are
still allowed to practice and continue to potentially target
student athletes who may not know of the agents past, or know of
the illegality of the agent's actions. By imposing a mandatory
minimum one year suspension for any agent or agent's
representative found guilty of violating the law, this bill
seeks to remove unscrupulous agents from practice. This
suspension, in addition to the bill's financial penalties is
aimed at deterring improper conduct before it starts.
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Protecting College Athletes: The National Collegiate Athletic
Association (NCAA) regulates the conduct of student athletes,
coaches and athletic departments and requires students to
maintain amateur status throughout their collegiate career. The
NCAA prohibits students from receiving any gift, compensation or
other "improper benefits." In the wake of recent allegations
against Ohio State University football players (leading to the
resignation of the team's head coach), who were alleged to have
improperly sold memorabilia, some have begun to suggest the NCAA
begin to pay players $2,000-$5,000 annually to cover the
expenses their scholarships do not (Rose, Jalen "Paid College
Athletes: A Reasonable Compromise" The Huffington Post, March
16, 2011.). While the NCAA decides how to proceed, athlete
agents continue to lure student athletes with gifts and other
consideration to help lessen the burden of costs not covered by
student scholarships. Although against the rules, the practice
of agent gifts to students is beneficial to both parties;
students are given money to cover the costs of living on a
college campus not provided for under their scholarship and
agents begin to gain favor and name recognition with college
athletes who will eventually graduate and sign lucrative
contracts with professional sports teams. The agents who
eventually sign these students stand to benefit tremendously, as
the average agent agreement entitles them to three to ten
percent of the athlete's first contract (sometimes worth tens of
millions of dollars). Perhaps even more troublesome, agents
have attempted to give gifts to student's families and friends
in hopes of gaining favor with the student through their social
peers (Dohrmann, George, "Confessions of an Agent" Sports
Ilustrated, October, 10, 2010.) This bill will increase the
penalties on agents who violate NCAA rules and yet fall outside
of the NCAA's jurisdiction. Much like a student athlete who
violates NCAA rules can be barred from playing, this bill will
bar athlete agents who violate the rules from being able to
practice (as agents) for a minimum of one year. While not
preventing the illegal conduct, the enhanced penalties may
discourage agents from breaking NCAA rules and state law.
REGISTERED SUPPORT / OPPOSITION :
Support
Los Angeles City Attorney (sponsor)
University of Southern California
Stanford University
University of California Office of the President
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Association of Independent California Colleges and Universities
California Interscholastic Federation
UCLA Department of Intercollegiate Athletics
Opposition
None on file
Analysis Prepared by : Drew Liebert & Nicholas Liedtke / JUD.
/ (916) 319-2334