Money Players

The unintended consequences of trying to protect athletes

Darren Heitner, who is on top of all things agent related, provides an excellent analysis about yet-another- college athlete/agent situation. It is definitely not as high profile as O.J. Mayo, but it does raise some interesting issues. It involves Oklahoma State University sophomore star pitcher Andy Oliver, who was declared ineligible in the middle of the College World Series. Rather than set up the situation, read Darren's story and analysis.

Let the judgment begin...except here
The facts surrounding Andy Oliver's are not clear to take sides, but my views expressed in the O.J. Mayo situation apply here: Don't rush to judgment, wait for the facts to come out and let the appropriate authorities conduct their investigation.

My analysis will focus on amateur baseball players and their involvement with so-called "family advisers" and NCAA rules governing these relationships. For most student-athletes agent prohibitions make sense. However, baseball players drafted by MLB teams are unique from other college athletes because they are automatically entered in MLB's amateur draft (rather than declaring for the draft like basketball and football players). While I am a big fan of MLB's system for drafting players, drafted ballplayers should have the opportunity to receive quality representation in negotiating their first professional contract. Maybe I am alone on this, but I think everyone's interests (players, schools, NCAA, agents) would be well served if the system for "advising" amateur baseball players is brought above board, rather than devising ways around NCAA rules (athletes and agents certainly aren't the only ones figuring out loopholes).

Not all agents wear horns
The intersection of amateur athletes, agents and the NCAA is complex. There are bad agents out there. The overarching question is, How can we come up with ways to improve the system? I would love to think that education is the primary tool to deal with the "agent problem," especially since my book, Money Players, would, of course, be an essential part of the solution. But it will take more than just well-constructed educational programs laced with strong admonitions to refrain from taking money from agents and runners. (No, I am not advocating that athletes be paid.) I'm actually not sure what the solution is for college basketball and football. But I firmly believe the rules governing agents for amateur baseball players need to be restructured.

NCAA rules are supposed to protect student-athletes. And for the most part they do. NCAA rules prohibit an NCAA athlete from having any oral or written agreement for representation by an agent. They also prohibit an athlete from retaining an agent to represent his athletic interests. These rules make sense for amateur football and basketball players. But baseball players drafted by MLB teams are in a completely different situation, yet governed by the same agent prohibitions.

IMO, amateur baseball players absolutely need above-board, expert representation by someone who is not only well versed in the legalese of MLB contracts, but also understands the marketplace. And who possesses these skills? Agents! But student-athletes who wish to retain their amateur status are not allowed to retain agents. A baseball player drafted by a MLB team, even with the help of his family, is unlikely to be capable of effectively negotiating a contract, let alone obtaining full market value. It would be so sensible -- and truly demonstrate that the NCAA is more "kinder, gentler" these days -- if they would allow a small window for agents to negotiate MLB deals on behalf of drafted baseball players.

So-called family advisers
In doing research for my book Money Players, I spoke to a several baseball agents. They all agree that the concept of "family adviser" is a sham. Baseball players selected by major league teams need some form of professional counsel. What they really need is an agent, but NCAA rules prohibit amateur athletes from retaining. So these advisers work behind the scenes, but they do not sit at the negotiating table (probably the most essential agent function). Good, reputable agents won't do anything to jeopardize an athlete's collegiate eligibility. They'll do whatever they possibly can to assist an athlete and their families, but they won't "agent" an amateur athlete. Of course, that's all a fine line and open to wide interpretation. My primary advice to athletes is: Don't break NCAA rules. Secondary: Don't scorn a b-list agent!

Who says it doesn't pay to be an alleged student-athlete?
Interestingly NCAA rules empower individuals from members institutions to negotiate with professional sports teams. There are obvious conflict of interests, although I find most coaches and athletic directors honorable when it comes to advising athletes on the decision to stay or go pro. But baseball is different: For players drafted after their senior year in high school and/or their college junior year, they are in the unique and enviable situation where they can negotiate with a MLB team and use the leverage of another offer (the opportunity to go to college) against the MLB team. And, magic, baseball teams offer more money rather than risk losing the rights to a coveted draft pick.

Fiduciary responsibility of those negotiating professional sports contracts

NCAA bylaws empower athletic departments to act as agents.

12.2.4.3 Negotiations. An individual may request information about professional market value without affecting his or her amateur status. Further, the individual, his or her legal guardians or the institution's professional sports counseling panel may enter into negotiations with a professional sports organization without the loss of the individual's amateur status. An individual who retains an agent shall lose amateur status.

Let's look at the concept of fiduciary. The word comes from the Latin fides, meaning faith. It has been said that fiduciaries must conduct themselves "at a level higher than that trodden by the crowd." A fiduciary is legally required to put their clients' interests above all else, and is certainly not allowed to profit at the expense of his or her clients.

I am not familiar enough with baseball to know if it is commonplace for a representative from a school's professional sports counseling panel to negotiate with MLB teams, but is hard to fathom that a university employee, even with impeccable academic and practical experience, could be a fiduciary for a student-athlete. Knowing the potential liability, would a school's legal counsel even allow? And what about players associations' regulations that stipulate that only "certified" agents negotiate playing contracts?

The early analysis
The only reason the public knows about Andy Oliver's alleged involvement with an agent is because one agent was left at the altar for another agent (the fact that it is Scott Boras certainly gives this story added juice). What about all the other baseball agents who acted as "family advisers"? The only difference is they typically do not send 6-figure invoices. And to compound the issue, it probably was not a good idea to have Boras's deputies intervene on behalf of an amateur ballplayer in the middle of his college baseball season. Scott Boras, George Vujovich and Ryan Lubner are attorneys and, I assume, licensed to provide legal services. Keep in mind this issue is over a legal bill, not whether an agency relationship has or has not be established.

Of course, there's an alternative approach to this problem...

"Agents, please keep away from our student-athletes!"

--Marc Isenberg

Building a better mouse-release

In an article on the "one and done" phenomena in the The Athens Banner-Herald, Tennessee basketball coach Bruce Pearl is quoted:

"It's not working. Both the NBA and the NCAA coaches, we all want a good system that gives the players an opportunity and the colleges some sanity and let the NBA be able to have the best players that can play. We know that what we have now isn't working for us and we don't think it's working for the players."

Amen, my fellow lonsman. The current system that doesn't work. This issue is not that complicated, folks. Players who want to go to college and play basketball should. And players who don't should have viable options. This whole issue has been often framed in absolute terms by the stakeholders: Players believe they should have the right to earn a living whenever the market signals they are ready. The NBA wants mature, pre-marketed players entering the Association. The NCAA wants real student athletes. Boosters just want to win. And athletic departments have to find the proper balance: Keep well-heeled boosters happy without completely abandoning their academic mission.

It's like Baseketball, but better
The amateur baseball draft is the best system. Players are eligible to be drafted after their senior year of high school. They don't declare for the draft. They are simply drafted. Then if a Major League team offers them enough money, they sign. Otherwise, if they are not offered a sufficient contract they can go to an NCAA school...BUT THE PLAYERS MUST AGREE TO A 3-YEAR ENLISTMENT. Perhaps the NBA should consider this approach.

The marketplace decides who's ready. What a concept! And players don't have to rely on an agent or runner promises and hype. Everybody wins. Why not hold a supplemental NBA draft for high school players? NBA teams select players they think are worth signing. Drafted players either sign according to a rookie scale or they go to college. If a player signs, he goes to the NBDL for at least one season. If he opts to go to an NCAA school, he is not eligible for the NBA draft for three years. And to boot we can rid  "declaring for the draft," "testing the waters" and "agent/outside influence" from our sports vernacular.

Feasting on agents and runners
And finally...along with James Tanner, David Thorpe, and Jason Levien, I participated in TrueHoop's "Runners and Recruiting: A Roundtable." There's so much to chew on, it took two sittings. Second helping is expected on Thursday.

--Marc Isenberg

Hold the Mayo judgment

Our sports-obsessed nation is all over the O.J. Mayo story. ESPN got the ball rolling with its explosive investigative report by Kelly Naqi; the LA Times quickly followed with the eerily similar story of Rodney Guillory's relationships with Tito Maddox and Jeff Trapagnier. Even NCAA president Myles Brand can't resist letting us know that the NCAA has "new information."

Many are calling for the firing of USC's coach, athletic director, compliance staff, and school president for lack of institutional control. Most extreme, ESPN's Pat Forde called for USC to get the death penalty.

There's also the cumulative effect the yet-to-be-resolved Reggie Bush case taking place at the same school.

Look, Guillory, Mayo, BDA and USC may be guilty as sin, but they all deserve an opportunity to state their case to the NCAA and whatever other authorities may have an interest in this case.

For anyone who wants a break from the 24/7 cycle of deciding the appropriate penalty, here's a lifeline thrown by Michael Wilbon followed by questions I have about the case and then a link to an interview radio I did on the subject.

Michael Wilbon on meeting O.J. Mayo at the Laker-Jazz playoff game:

"He was the nicest, sweetest kid you could hope to meet. Said hello and then hugged me, even though he'd seen me call him a 'punk' on television. He was polite, engaging, answered every question with 'Yes, sir' or 'No, sir.' He said: 'I would just love for you to spend some time with me, just talking. . . . Could I have your card and just be able to call or talk to you? I've got the pre-draft camp [in Chicago] coming up, a whole new world.' I realized instantly I was wrong for attacking Mayo the way I had. While Mayo isn't an innocent, he's absolutely the product of a subculture in which the ability to play basketball at an elite level is valued more than being a good father, more than formal education, more than almost anything that appears to be within his grasp. Mayo, like so many who've come before him, simply is doing the only thing he knows to negotiate the road before him."

Questions I have before I am ready to decide in my own court of opinion...
1) Why did Johnson go to media? I assume there was some kind of falling out involving Johnson and Guillory. Was there an attempt to reconcile privately? Did Johnson ask for or demand money before unloading on ESPN  (similar to Lloyd Lake in the Reggie Bush case)? I think Louis Johnson's motives are absolutely fair game.
2) Louis Johnson GUESSED that OJ got $30,000 from Guillory. He produced some receipts, but several were expenses related to Johnson and Guillory courting OJ, which is not an NCAA violation.
3) Show me the money trail between BDA and OJ. Remember, it is not remotely illegal for a sports agency to employ a runner. The $250,000 figure Johnson threw out there sounds like a lot of money, but it's really not in the grand scheme of the business of professional basketball. I would have a problem if Guillory did not disclose his relationship with BDA to OJ, but that's a private matter and definitely not an NCAA issue.
4) Regarding the cell phone and other receipts--that might be damaging evidence, but there are several instances where the NCAA has restored eligibility after an athlete serves a suspension and repays the benefit or makes a charitable donation (as OJ was required to do when he received free NBA tickets from Carmelo Anthony).
5) Is it possible that Bill Duffy and Calvin Andrews were duped by Guillory? Duffy is a smart guy. Until I see how this shakes out, I will give the benefit to Bill and Calvin that they would not so blatantly jeopardize their sports empire. It's not like OJ is BDA's breakthrough client. They represent some of the NBA's biggest stars: Yao Ming, Steve Nash, Melo, Greg Oden, etc.

Lastly I was a guest yesterday on the Petros and Money Show discussing the situation.

Cheating accusations are not cheating...

and why college athlete cheaters won't prosper

Earlier I posted on CNBC's Darren Rovell interview with sports agent David Falk. Falk laments that the "sports agent business has become so corrupt." Falk made a vague accusation that an unnamed agent paid an unspecified player college player $500,000. Now that the rumor is out there it will undoubtedly pick up steam quickly, particularly since there are only a few likely candidates.

Cheating explains a lot, especially when some event doesn't quite make sense. Examples: A 170-pound shortstop hits 30 home runs; ergo he took steroids. A McDonald's All-American signs with Podunk State U; ergo he was paid. It's like the old joke explaining why Sam Bowie stayed at Kentucky five years. Answer: He didn't want to take a pay cut.  It gets a laugh, but was there ever any proof?

Falk's friend says this kid took money from an agent, but why put it out there as rumor rather than produce hard evidence? For sure we know it is an NCAA violation for a college athlete and his family to receive $500,000. There's also a 72% chance that this is a violation of a state's Uniform Athletes Agent Act (UAAA), since it is now against the law in 36 states. The next to last thing I want is for rumors to turn into witchhunts. The last thing I want, however, is for cheating agents to prosper.

I do not agree with every NCAA rule. I have spoken and written extensively about things the NCAA and its members can do to improve college athletics, BUT...I still tell any athlete or parent who listens that it is absolutely foolish to take money from an agent or their representatives.

My reasons:
1) Whatever benefit that is offered is not sufficient compensation to risk their college eligibility. That agent is knowingly exposing an athlete to a minefield of potential hazards (no eligibility = no opportunity to impress pro scouts, lawsuits, etc.)
2) I don't like blanket statements, but here's one: a cheating agent is a bad agent. He can't compete by selling vague concepts such as competency and ethics, so he diverts attention from the real issues and, instead, focuses on cold, hard cash.
3) Payments by agents are not gifts, but loans that must be repaid. $500k might sound like a lot, especially to an unpaid "amateur," but even at a 10% interest rate, this is a $50,000 annual benefit. Chump change to an athlete about to turn pro.
4) Taking money from an agent is a sure-fire way to either sign with a bad agent and/or become a victim of blackmail (see Marcus Camby, Reggie Bush). Cheaters cheat because they believe they won't get caught. However, as the media, rival fans and the Internet become more aggressive, the chances of getting caught, I believe, are increasing. You too can be an NCAA sleuth!!

--Marc Isenberg

UPDATE: David Falk explains his "$500,000 and three years too late" comment to Henry Abbott's True Hoop.

Let the Madness begin

It's NCAA Tourny time. Three great weeks of college basketball players providing one many shining moments. There is much to to get excited about. But first, let's not forget that there are more than few "self anointed incorrigible cynics" who continue to focus on the negative aspects of college sports. Yahoo!'s Dan Wetzel writes about the hypocrisy. It's March Madness, so you know we're going to hear from some of the stark, raving mad members of the Drake Group. Here's Drakie Allen Sack wondering whether college athletes should be paid. And I still remember my friend wasting my time last year one trying to convince me that amateurism is a myth.

I wish people would stop complaining about how unfair the system is for college athletes and focus on the wonderful moments of March Madness. Forget what the mainstream media says. Stephen Colbert, surely a more credible journalist, once said: "The NCAA basketball tournament has everything I like: corporate sponsorship, unpaid labor and blind partisan allegiance." Amen!

Here are my Tournament predictions:

Final Four
UNC
Kansas
Michigan St.
UCLA

And UCLA beating UNC in the Championship game. And Dick Vitale will somehow convince Michael Beasley, OJ Mayo and Kevin Love to all return for their Sophomore seasons. Anyone want to bet that I am wrong?

Tarnished book?

Tarnished Heisman, a new book published by Simon & Schuster, examines Reggie Bush and hid family's relationship with Michael Michaels and Lloyd Lake and their short-lived sports agency, New Era Sports. I haven't read the entire book yet, so I reserve final judgment until I have had a chance to do so. I also have tremendous respect for the book's author, Don Yaeger who has written several eye-opening books on college and professional sports. (Yaeger explains his investigative reporting methodology in an online interview with All Things Trojan blog.)

That said...I have two problems with Tarnished Heisman. One, Lloyd Lake, a convicted criminal, was paid by Simon & Schuster for his "story." Lake clearly had an axe to grind against Reggie Bush for allegedly taking the money and running to a different sports agency. This book falls somewhere in the middle between investigative journalism (Yaeger and his writing partner have solid reputations) and tabloid journalism (paying for sources to cooperate). Two, the book relies heavily on secretly taped conversations that took place between Lake and Bush and Lake and Bush's stepfather, LaMar Griffin. Yaeger on the tapes: "Frankly, without the tapes, I don't think you do this book." Under California Penal Code 632 it is a crime to record a conversation without all other party's consent consent. I brought this point up last January. The bottom line is that much of the most salacious information used to bolster claims made in Tarnished Heisman were obtained in violation of the law.

Judging Reggie Bush in the court of public opinion is absolutely fair game. The question is whether illegally obtained evidence is credible -- and admissible -- in other venues, including the Heisman committee and the NCAA.

In my book, Money Players, I wrote this about the Reggie Bush situation:

Reason #968 to follow NCAA extra benefits rules

Extra-benefit cases involving NCAA athletes often come to light when individuals (typically wannabe agents) claim they are owed money by college athletes...[Lake and Michaels] claimed they provided $100,000 cash and other benefits to the Bush family and invested another $200,000 to start a sports agency that would represent Bush when he turned pro. Bush signed with another agent and another marketing firm. Michaels and Lake demanded Bush pay them $3.2 million to settle their "economic loss." Their demand letter included a not-so-subtle hint that the NCAA and the media would have an interest in this matter. It read in part, "Please advise if it is your intention to involve the University [of Southern California] in these settlement negotiations. We would not object to their participation as...any lawsuit filed might have an adverse effect on them." Can you say extortion?

Despite my criticism, I look forward to reading Yaeger's book. I've already read much of the documents posted on the book's website, tarnishedheisman.com (I particularly enjoyed looking at New Era's biz plan).

--Marc Isenberg

UPDATE: The $25,000 Question

I followed up with Wally Renfro, senior advisor to NCAA president Myles Brand, after he told CNBC's Darren Rovell that NCAA rules would have allowed Drew Tate to accept the $25,000 prize for hitting a hole in one.

Renfro emailed, "It is my understanding that it is not a violation to accept the car. Iowa wouldn't let him keep it, not the NCAA."

See, the NCAA is kindler and gentler. They just need to get the word out to its members to do the same.

The $25,000 Question

By Marc Isenberg

Darren Rovell, who covers the sports biz for CNBC, is at the World Congress of Sports in NYC. He notes that NCAA president Myles Brand isn't opposed to student-athletes filling out NCAA brackets as long as it wasn't for money. Said Brand, "A student-athlete can walk into a supermarket and be the millionth customer and win a prize."

I have no problem with Brand's comment, although I am quite sure that brackets are used to not gamble for money about as much as bongs are used to not smoke pot.

Rovell then wondered what the difference is between Brand's hypothetical and Drew Tate, a University of Iowa football player, who in 2006 hit a hole-in-one worth $25,000, but was told he could not accept the prize money per NCAA rules.

According to Rovell, he then "spoke with the NCAA's Wally Renfro, who told [Darren] that he didn't believe that Tate's accepting of the prize was against NCAA rules."

No wonder we have so many problems understanding NCAA rules. Wally Renfro, senior advisor to NCAA president Myles Brand, has been working at the NCAA since the 1970s, and he just offered an interpretation that contradicted Bob Bowslby, then AD at Iowa. Bowlsby "let Tate know that he couldn't accept the prize. That would be against NCAA regulations, since Tate, the 2004 all-Big Ten quarterback, [had] a year of eligibility left." In Renfro's defense, he works in PR, not in enforcement. I'm guessing Renfro's interpretation is wrong, even if I like what he said.

Why would it have been against NCAA rules for Tate to pocket the $25k? Because the NCAA views a hole-in-one as a function of athletic ability, not luck. Payment for athletic skill violates the NCAA's definition of amateurism. Whereas filling out a winning NCAA bracket is pure luck. In reality, it is the opposite.

I have played golf since I was in high school and, at my best, I was probably a 12-handicap.

Here's my scorecard:

Number of career hole in ones: Zero
Number of NCAA tournament pools won: 2 (and I haven't participated in one in the last 5 or so years)

Hopefully someone from the NCAA can clear up the confusion for Drew Tate. I'm guessing the kind, generous Iowa boosters who organized the golf outing would gladly correct the mistake, if a mistake, in fact, occurred.

Do you believe in amateurism, flossing and miracles?

By Marc Isenberg

I am enjoying the heck out of March Madness, even if I felt deprived of the usual number of 1st round upsets and buzzer beaters.

Thursday night I watched a few first-round games with a friend. After CBS ran the NCAA public service ad ran for the umpteenth time, he blurted out, "That is such bull----." He then launched into the usual arguments against amateurism, including missed class time, poor graduation rates, coaches' salaries, the $6 billion TV deal. He concluded by saying, "Why don't they just forget about selling perceptions and, instead sell more beer?"

As a staunch supporter of the principle of amateurism (at least for the purposes of this conversation), I felt I needed to offer up some NCAA talking points: Blame the media for spreading lies about amateurism, focus on my experiences playing D-3 basketball, and basically continue to philabuster. Nothing worked. The more I played Devil's Advocate, the louder his counter arguments became.

Amateur is a myth, he insisted.

Apparently he is not the only one to hold this belief. Henry Abbott from True Hoops just blogged on The Myth of Amateurism. The Drake Group, a group of feisty faculty interested in reforming college athletics, also cries shamateurism.

These are smart people putting forth well-reasoned arguments, but what about the PSAs I keep hearing on CBS?

"There are 380,000 student-athletes and just about every one of them will go pro in something other than sports."

The ads reminded me of something I remember from a marketing class I took during my MBA days: In a study by marketing professors Patti Williams, Gavan Fitzsimons, and Lauren Block, one test group was asked, "How likely are you to floss your teeth in the next week?" They increased their flossing. Another group was asked the same question, but was told the question was being asked by the "Association of Dental Products Manufacturers." They decreased flossing despite its benefits, because of resentment over perceived manipulation. The study's conclusion: "Very well meaning organizations may have serious and negative impact upon those they intend to help."

Fitzsimons said. “In fact, they flossed significantly less than if they had not been asked a question. This demonstrated that consumers were willing to actually do harm to themselves to avoid being influenced by the sponsor of the question.”

I wonder if this study has any applicability to the NCAA PSAs.

What is the general consensus of people who watch these NCAA PSAs? Does it make you think about the 379,000 or so student-athletes who have nothing to do with the NCAA basketball tournament? Or does it make you think about the very athletes the commercials seem to be trying to draw your attention from?

It's an interesting debate: Rather than draw our attention away the Kevin Durants, the Greg Odens and the Brandan Wrights, the PSAs make many think about the "pink elephant." Ad time that could otherwise be devoted to making more money is now used to manufacture public perception about the NCAA and about amateurism.

At least if the NCAA had more money to spread to the membership, athletic departments could:

• pay down athletic department deficits (since most athletic departments claim to lose money)
• increase the value of an athletic scholarship to the full cost of attendance
• ensure compliance with Title IX
• say no to TV networks who want teams to start games at 9pm

Addressing these problems won't silence the critics, but neither will PSAs.