BILL ANALYSIS �
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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