BILL ANALYSIS
SB 1098
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Date of Hearing: June 22, 2010
ASSEMBLY COMMITTEE ON ARTS, ENTERTAINMENT, SPORTS, TOURISM, AND
INTERNET MEDIA
Mike Davis, Chair
SB 1098 (Corbett) - As Amended: May 24, 2010
SENATE VOTE : 23-12
SUBJECT : Athlete agents
SUMMARY : This bill enacts the Uniform Athlete Agents Act which
regulates the activities of an athlete agent in soliciting or
contracting to represent a student or professional athlete.
Specifically, this bill :
1)Conforms existing law regarding the regulation of athlete
agents to the Uniform Athlete Agents Act (UAAA) on July 1,
2011, and makes the existing Miller-Ayala Athlete Agents Act
(Act) inoperative on July 1, 2011.
2)Makes conforming changes to definitions of athlete agent,
negotiate, agent contract, student athlete and definitions
regarding 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 athlete agents to register with and obtain a
certificate of registration from the Department of Industrial
Relations (Department), rather than the Secretary of State and
provide 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.
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6)Specifies that the agent must submit an application for
registration within seven days after an initial act as an
athlete agent or a contract resulting from violation of this
requirement will be void.
7)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.
8)Specifies that an application for a certificate of
registration is a public record.
9)Requires renewal of registration every two years. Creates a
registration renewal process that includes either a form
prescribed by the Department or a copy of the application for
renewal and valid certificate of registration from another
state, according to certain conditions.
10)Allows the Department to issue a temporary certificate of
registration while an application for registration or renewal
or registration is pending.
11)Specifies that the Department 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.
12)Specifies what an agency contract shall state or contain with
a prominent notice to students of what the implications are to
signing the contract and voids a contract that does not
conform to any other requirements within the UAAA.
13)Provides for notice within 72 hours to the athletic director
of the educational institution upon entering into an agency
contract and the ability of the student athlete to cancel a
contract within 14 days.
14)Delineates what conduct of the athlete agent would subject
the agent to criminal and civil penalties and allows a court
to suspend or revoke the registration of the agent for
criminal violations, as specified.
15)Provides a professional athlete, student athlete or
educational institution with a right of action against an
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athlete agent for damages caused by violation of the UAAA.
16)Allows the Department to assess a civil penalty against an
athlete agent not to exceed twenty-five thousand dollars
($25,000) for violation of the UAAA. Specifies this penalty
shall become operative on January 1, 2012.
17)Creates the Athlete Agent Registration Fund and allows for
the Department to establish by regulation a fee to fund the
costs of the registration program.
18)Requires athlete agents to maintain certain records.
19)Incorporates other technical and substantive provisions from
the Miller-Ayala Athlete Agents Act.
EXISTING LAW , the Miller-Ayala Athlete Agents Act:
1)Regulates specified activities of an athlete agent in
representing or to represent student and professional
athletes.
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.
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.
Includes a talent agency as an "athlete agent" if they engage
in the activities of an athlete agent, as defined.
4)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.
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5)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.
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.
7)Requires an athlete agent to establish a trust fund and
deposit into it all funds received on behalf of the athlete
and, if providing financial services to the athlete, to
disclose potential conflicts of interest, as specified.
8)Imposes additional requirements pertaining to an athlete
agent's transactions with a student athlete, specifying the
circumstances under which an athlete agent may contact a
student athlete, or his/her family.
9)Requires the athlete agent to include a disclosure in a
contract with a student athlete, warning the student that he
or she 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.
10)Allows for civil action to recover damages resulting from a
violation and makes void any contract that fails to comply
with its requirements.
11)Requires every athlete agent to provide security for claims
against them in the amount of $100,000.
12)Makes the violation of any provisions of the Act a
misdemeanor offense.
FISCAL EFFECT : Unknown
COMMENTS :
1)Background: The Miller-Ayala Athlete Agents Act : In 1996, in
response to reports of a sports agent paying college students
in exchange for representation, the Senate Business and
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Professions Committee Subcommittee on Sports held a hearing
wherein they heard testimony from university officials and
coaches, interscholastic sports governing bodies, attorneys,
and former college athletes on the topic of athlete agents.
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, their
athletic programs, and their 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 athlete agents.
That same year, the Miller-Ayala Athlete Agents Act [AB 1987
(Miller), Chapter 957, Statutes of 1996], was passed to enact
a comprehensive set of provisions governing the conduct and
practice of individuals who work as athlete agents. However,
it did not include a registration program, but rather required
filing of information regarding the background and business
practices of the athlete agent with the Secretary of State's
Office.
According to the Secretary of State Special Filing Unit, 400
athlete agents or athlete agent companies have filed
information. It is unknown whether any action has been taken
against athlete agents pursuant to this Act.
2)Uniform Athlete Agents Act (UAAA ): According to information
provided by the Uniform Law Commission and the NCAA, problems
associated with illegal athlete agent conduct are national in
scope. Far too often, they assert, the actions of athlete
agents in other states result 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,
Uniform Law Commission (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. In 2000, after three years of work, that
included input from sports agents, representatives of the
professional sports leagues players' associations and the
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NCAA, 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 39 states and is currently
pending enactment in at 3 states, including this measure in
California.
3)Support and Stated Need for Legislation : According to the
author, currently, there is no state regulatory body empowered
to deny or revoke an applicant's authority to act as an
athlete agent based upon an evaluation of the person's conduct
to determine his or her fitness to represent athletes. The
author states she has introduced this measure to conform
California law to the UAAA in order to increase protections
for student-athletes and educational institutions and
streamline the regulations governing athlete agents.
The NCCUSL asserts in support that "the UAAA provides
extremely important protections for student athletes and the
educational institution where they compete, creates a uniform
body of agent registration information for use by state
agencies, simplifies the regulatory environment faced by
legitimate sports agents and provides public and private
recourse against unscrupulous actors." The NCCUSL further
states, "With the proliferation of professional sports
franchises in the United States, and the immense sums now paid
to athletes for commercial endorsement contracts, it is no
surprise that the commercial marketplace in which athlete
agents operate has become very competitive. And while
maximizing the income of one's clients is certainly a sound
business practice, the recruitment of a student athlete while
he or she is still enrolled in an educational institution may
cause substantial eligibility or other problems for both the
student and the school."
San Diego State University states in further support of the
measure, "We believe Senate Bill 1098 is an improvement over
the Miller-Ayala Athlete Agents Act for the following reasons.
First, SB 1098 will bring California in line with the 40
jurisdictions that have enacted the UAAA by providing for
consistent registration requirements and notice provisions for
student-athletes and their educational institutions. This is
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important because most agents work across state lines.
Second, SB 1098 will provide for enhanced registration
requirements and will authorize a state regulatory body to
deny or revoke an individual's authority to be an athlete
agent based on that person's conduct. The Miller-Ayala Act
does not contain such a provision. Finally, SB 1098 will
mandate more detail regarding the required content of the
agency contracts between student-athletes and agents. Since
it will provide better protection to intercollegiate
student-athletes and their educational institutions, we
support Senate Bill 1098, the Uniform Athlete Agents Act."
The NCAA ads that "Unprincipled agent conduct presents a
legitimate threat to the vitality of amateur athletics" and
the "safeguards provided under the UAAA are vital for student
athletes and educational institutions."
4)Opposition from Department of Industrial Relations (DIR) :
This bill is opposed by the DIR, who write the committee to
say, "This bill would add regulatory and oversight functions,
and new costs to the DIR's regulatory role. It adds duties to
DIR outside of an employment context as a contract between an
athlete agent and a student or professional athlete does not
involve an employer-employee relationship. While at least 38
other states have adopted the uniform oversight called for in
this bill, DIR is aware of no other states that manage the
Uniform Athlete Agent Act program through the state's labor
and workforce agency. Although the new expenditures could
potentially be offset by the proposed fee, any new program and
financial burdens are problematic in the existing
environment."
5)Double-referral : Should this bill pass this committee, it
will be re-referred to the Assembly Committee on Judiciary.
6)Prior Related Legislation : This bill is virtually identical
to SB 694 (Sher) of 2001 and SB 1652 (Sher) of 2002. Status:
Both measures were vetoed.
REGISTERED SUPPORT / OPPOSITION :
Support
California Commission on Uniform State Laws (Sponsor)
Association of Talent Agents
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California State University, San Diego
National Collegiate Athletic Association
National Conference of Commissioners on Uniform State Laws,
Uniform Law Commission
University of California Los Angeles, Department of
Intercollegiate Athletics
University of California
Opposition
California Department of Industrial Relations
Analysis Prepared by : Dana Mitchell / A.,E.,S.,T. & I.M. /
(916) 319-3450