Sport Agency and Athlete RepresentationWhat Most Know About AgentsJerry MaguireAri GoldIntroductionMany sports agencies began by representing athletesLarge multiservice agency firms have evolved to include sport marketing and event managementLaw of agency imposes fiduciary (legal obligations) duties on the sport agentA highly competitive businessMany agents have no clients or are doing agency work part-timeHistory of Sport Agency IndustryUntil the 1970s it was extremely rare for pro team sport athletes to have an agentTeams generally refused to deal with agentsNo free agency until 1976, so little leverage to negotiate (explosion of sports entertainment)Agents have existed in individual sport such as golf and tennis for a longer timeSport Agency: Seven Factors That Influenced Growth1. Evolution of player’s associations (unions)1970: MLBPA negotiated through collective bargaining for right for players to be represented by agents2. Free agency granted to players through Messersmith-McNally arbitration decisionCurt Flood3. Growth of sport broadcasting industry lead to greater media revenues for leagues and teams4. Need for tax planning increased as salaries increased5. Development of competing leagues created competition for players and thus higher salaries6. Increased number of tournaments/tours for individual-sport athletes7. Increased opportunity for athletes to increase income with opening up of television and entertainment industriesRevenue Streams for AthletesIncome dependent on consistent performance in events, appearance fees from events, and the ability to promote and market athlete’s imageEndorsement incomeEndemic deals (it is something prevalent to your performance/participation)More competitive (especially in consumer goods/services)Legal issuesMorals clause (in all endorsement contracts, it gives a company a legal out)Athlete (Brand/Business)Revenue opportunitiesMarketing PlanEndorsementsCategories (International/National/Local)Goods and servicesRepresenting Individual AthletesAgent often travels with athlete, tending to daily distractions so that the athlete can stay focused on playingLarge firms doing individual representation are often involved in all aspects of the sport (event management/marketing, broadcasting, consulting)Sport Agency FirmsFreestanding sport management firm: A full-service firm providing a wide range of services to athletes (Octagon)Law practice-only firm: Lawyer performs many legal tasks (contract negotiations, arbitration, legal counseling, dispute resolution, and the preparation of tax forms)Sport management firm affiliated with a law firm: Each fills a void by providing the services the other does not offerBoutique vs. Large ConglomeratesBoutique firmsSmall firms find greater success representing athletes in one sport and focusing on one or two services for the athletes or coachesIn smaller firms, an agent works alone or with a small group of employeesAdvantage: Athletes receive increased attentionDisadvantage: May be that a solo agent often cannot offer as many services as a large firmConglomerate firmsAgent may be part international conglomerate with many athletes in a broad range of sportsAdvantage: Large firms employ professionals from many disciplines to provide serviceLarge firms have many contracts throughout the sport industryDisadvantage: Often a large stable of clients, and an athlete may be a “small fish in a big pond”Fees Charged by Agents/AgenciesFour Methods1. Flat fee arrangementAthlete must pay agent an amount of money agreed upon before the agent acts for the athlete2. Percentage of compensation methodOften covers negotiation plus all of the work related to the provisions of the contract over its term3. Hourly rate4. Hourly rate with a compensation capFunctions of the Sport Agent:Player/Coach contract negotiationUsually seek product endorsements before nonproduct endorsements—easier to obtainShould develop a plan in which each endorsement creates an image consistent with clientAgent must keep in mind that client’s career and public persona may be short-livedFinancial planningCareer and Postcareer PlanningAgent must help a client with transition into a professional career and again with the transition into retirement from the sportAgent must maximize the client’s earning potential during and after his or her playing career, but avoid overexposureAgent may take on the establishment of sport camps or charitable organizations under the athlete’s or coach’s nameMajor Full Service FirmsIMGOctagonSFX (was part of group founded by David Falk, has recently been divested)Industry TrendsFull service agencies moving away from focus on athlete representationUnreliable source of revenueSport marketing and event management more reliable and lucrativePreston Shytle (Guest Speaker)Director of Major Gifts UMD AthleticsUntraditional route to where he is now#1 priority is to pay for athletic scholarships$10.3B (paid for by Annual Fund such as ticket sales)8,000 Terrapin Club membersThe new turf field at Byrd is a “major gift”Sales and OutsourcingAspire and Ticket SalesSales is the best way to go to get to the topOutsourcing is a hot topic in college athleticsFundraisingSimilar to sales but not exactly the sameSales would be making 100 calls a dayYou get out what you put inFundraising is about building a relationship and usually a longer processAnnual Giving vs. Major Gifts#1 thing when looking at prospective donors are affiliations to UMD or notAll about building a relationship and making somebody feel important and involved with somethingTax deductions can be a huge swing factors to getting moneyIt is not who you know, it is who knows you and what you are capable ofNetworkingYou have to be open to change if you want to be successfulInternships and sales are the best ways to get into the sports industryDo not burn bridgesA sale a dayFrank Zecca and Kelly Wolfe (Guest Speakers)OctagonAthletes and Personalities Event ManagementFinancial ManagementTrends with companies expanding and declining in sizeIMGEndemic dealsTwo types of star athletesSuccessfulTranscenders of their sport“Front office” for individual athletesIf the athlete’s business off the field is taken care of, then they will play better and make more moneyThe challenges with athletes:Short-term money streamAverage athlete career is 3.5 years but for IMG athletes it is 9 yearsNo professional advice when they sign the contract30-30-30-10Every $100,000 somebody