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The Problem with NFL Player Agents

By Jeffrey Standen

The NFL Players Association recently found itself in front of a Congressional committee over its suspension of agent Carl Poston. Poston is the agent who mishandled linebacker Lavar Arrington's contract with the Washington Redskins, leading to the apparent forfeiture of a six-million dollar bonus. Poston's was a problem of ineptitude, not honesty. But the latter has been an issue too. The NFLPA also had a problem with agent Tank Black, who when last heard from was being sentenced to five years federal time for swindling money from his player-clients. Why does the NFLPA seem to have so much trouble with (certain of) its agents? Why do the agents for Major League Baseball players seem so effective and ethical, by comparison? What can be done?

Pay the NFLPA agents more money, that's what.

1. Let's start with baseball. Lots of pages have been devoted to weepy tributes to America's pastime. Baseball, it is said, hearkens back to our pastoral history, to the uniquely American sense of open fields and grassy, flat spaces. Unlike the time-regulated sports of basketball or football, baseball with its potentially limitless contests brings to mind the endless summer afternoon. Maybe. But baseball is uniquely American in another way: with very few formal limitations, its players can hire virtually anybody to serve as an agent in negotiating a contract. (Although the MLBPA does require agents to be certified, certification requirements are minimal.) In addition, the agents are free to charge players what the market will bear for their services. You get it: a free market.

2. As a result of this free market in baseball agents, we have some very wealthy player agents, most notably Scott Boras, who routinely grants media interviews from his mansion overlooking the Pacific. But the presence and success of Boras sets a bar for other baseball agents, and the bar is a high one. Boras serves his clients with vigor, relying on modern statistical analysis, thorough preparation and glossy presentation to sell his players to bidding teams. I don't know the man personally, and maybe we wouldn't be friends if we met (TSLP lays way back, whereas from all accounts Boras doesn't, not at all), but if I were a professional baseball player looking to maximize my earnings from a short career, Boras would certainly be tops on my list of preferred agents. Other baseball agents, if they want to compete with Boras and make Boras-style money, have to deliver representation of equal or superior competence.

3. Now let's check out the NFLPA. Like most unions, the NFLPA claims to be the exclusive bargaining agent for NFL players. No problem with that. The problem is this: unlike its baseball counterparts, the NFLPA doesn't trust the free market. It doesn't allow its players to select their own representatives (at least not as easily: the NFLPA has a pretty serious certification process, with obligatory continuing education obligations). More importantly, it doesn't allow the players and their selected agents to agree to a price for the agent's services. Instead, agent compensation is capped at three percent of the contract value, or even less, in certain circumstances. See here, if you want to read the nitty-gritty.

4. Should it surprise us if a talented, industrious and effective sports agent, looking to profit from his work, opts to represent baseball players instead of football players? Why should the NFLPA set a price that it knows will tend to drive the best agents to other sports?

5. How do NFL agents compete for players? In baseball, Boras and his ilk show the players their organizational competence and marketing acumen. See this story from ESPN magazine, describing Boras' wooing of a young Alex Rodriguez. In football, of course some of the same goes on. But football agents must operate closer to the margin, making the kind of bells and whistles Boras has on hand marginally less affordable. A uniform price ceiling prevents a player from paying more for better representation, even if he wants to. Players can't pay for the best even if they want to. All of which leaves player agents competing with each other selling players on less important goods, such as friendship or relationships or what have you. Is it any wonder football players are notably famous for picking agents on the basis of a perceived compatibility (such as friendship or shared backgrounds) that probably has little payoff in terms of contract value? On what other basis can football agents compete? How can player agents say they're the best if they don't charge (and maintain) a fee that would tell players they are the best?

6. The NFLPA's limitation on the number of agents and its ceiling on the prices agents may charge has another problematic consequence: it leads to ethics problems. Limiting the profit an agent may collect from a single player means that the agent, to make money, has to spread himself thin. Lots of clients; volume sales; quantity over quality. At the same time, players compete for a finite number of roster positions. Effectively diminishing the number of agents means more agents will represent more than one player who might be suitable for a particular job opening. In addition, because the NFLPA rules promote volume sales, the necessity for those agents who survive in the industry is to take on as many clients as feasible, not just to make money, but also to be perceived as an important or effective representative. Most agents can't devote tons of resources and time to representing a small handful of players: there's not enough money in it. So agents have to become prominent to attract clients and survive; prominence is ensured by a long client list.

7. The 3% compensation limitation causes another problem: for some would-be agents, a guaranteed three percent of a lucrative NFL contract might be overpayment. These substandard agents might try to sell their inferior goods for more than they're worth: the NFLPA stipulated maximum in effect sets an artificial price for all representations. Indeed, it is not uncommon in the NFL for player agents to represent rookies for free, as a loss leader for subsequent representation when the stipulated rookie deal expires. One could see this practice and think that the player agents are nice people. One could also see this as predatory pricing aimed to try to up the barriers to entry for those agents selling lemons (and to keep out all agents, as again survival in the NFL depends in part on volume). Maybe this predation works. Or maybe the lemon-sellers re-target their enticements to players at the end of their rookie contracts instead of at the beginning. The fixed agent fee makes it difficult for players to assess the quality of agents: the best predictor of quality (a higher price) is precluded. Fixed fees draw to the NFL exactly those agents who will want to take advantage of the players' comparative inability to distinguish the good from the bad.

8. I understand the NFLPA's motivation: it wants to save its players as much money as possible. Indeed, the PA may look to the plethora of credentialed agents and think its system and compensation limits are sufficiently generous to attract numerous agents and ensure adequate contract bargaining representation to its players. But this belief assumes one fact, erroneously: it assumes that the players, not the owners, are the ones paying the agents, and that the percentage agent fees come from the player. Not so, at least not probably. Assume the NFLPA is "successful" in generating wages above market wages (else, why have a union?). Some players are more important than others; starting football players are for the most part rather unique athletes; perhaps the reserves are more interchangeable. Put another way, the demand for star players is clearly inelastic (hard to find a substitute). Where teams cannot find a substitute, then the bulk of the agent's fee will be borne by the team (since the player has more negotiating leverage); the opposite is the case where demand is elastic, as would be the case for comparatively fungible special-team players. The result of all this is that teams, not players, bear most of the cost of paying agents precisely in those cases where the NFLPA would probably fear the agent's compensation would be unconscionably high: with star players drawing large contracts. Only where players earn compensation at or just above the mandated minimum wage are agents effectively paid out of the pockets of players. (Interestingly, it is here, with respect to minimum wage players, that the Major League Baseball PA prohibits agents from collecting a fee; a similar restriction could protect journeymen NFL players as well.)

9. But to the free market the NFLPA will not turn. Instead, in the wake of recent scandals and Congressional oversight, the football union will likely adopt more certification and continuing education requirements and more limits on the ability of players to contract freely with agents. Further regulation will only create additional costs to entry, exacerbating the NFLPA's problem. The NFLPA should try to draw the best agents to professional football, not push them away.

Full post as published by The Sports Law Professor on October 08, 2007 (boomark / email).