tag:blogger.com,1999:blog-5090411330469470782024-02-20T09:36:59.914-08:00Baseball LawKevin A. Pollock, J.D., LL.M.http://www.blogger.com/profile/08329649326376128858noreply@blogger.comBlogger15125tag:blogger.com,1999:blog-509041133046947078.post-67185141161686070632016-04-15T21:42:00.001-07:002016-04-15T21:42:44.233-07:00MLB Quietly Fighting Wage Discrimination Case Brought by Former Minor League Player Aaron Senne I'm a bit surprised that the <a href="http://koreintillery.com/wp-content/uploads/2015/03/MLB-Complaint.pdf">lawsuit</a> brought by former minor league baseball players Aaron Senne, Michael Liberto and Oliver Odle against various Major League Baseball teams in California is not getting more attention because so far the minor league players are putting up quite a good case.<br />
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The lawsuit by the Plaintiffs claims that Major League Baseball teams are routinely paying minor league players less than the minimum wage in California and are in violation of the Fair Labor Standards Act. In case you are wondering why the lawsuit is not against the minor league teams, that is because major league teams actually control and pay the salaries of all players. Minor league teams have no control over personnel. <br />
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It should also be noted that minor league players are not benefiting at all from the collective bargaining agreement between the Major League Players Union and Major League Baseball. Minor league baseball players have no union.<br />
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The plaintiffs claim that most minor league baseball players earn about $3000 to $7500 per YEAR, but that they routinely work in excess of 50 hours per week during the five month season, not including travel. Additionally, the players are required to stay in shape during the offseason and often they must also participate in other team related activities. <br />
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California's minimum wage is currently $10/hour, and that is climbing to $15/hour over the next five years. Let's calculate some of these numbers rough-hand, after all, I'm not the legendary <a href="http://fivethirtyeight.com/contributors/nate-silver/" target="_blank">Nate Silver</a>. If the average minor league player is required to attend every game and practice including spring training, they would to work approximately 185 days per year. Most seasons are about 140-144 games, except for players playing in lower levels. <br />
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Well, if a player is working 185 days per year, multiply that by $10/hour by 8 hours/day, that should be a salary of $14,800. Now most workers are limited to a 40/hour work week, otherwise they are entitled to overtime - not minor league baseball players. On average, a player is only getting 1 day off per week during the season, so we should calculate that at least once a week for 26 weeks that a player should be entitled to overtime. So, $5 (overtime) multiplied by 26 (days) multiplied by 8 (hours) equals another $1040, for a total of $15,840/year... still barely above the poverty line, but way above the current average. <br />
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I'm having trouble figuring out exactly how many minor league players there are, but I think it is around 5300. Let's be generous and say that there are 5300 players earning an average of $7500 per year now, that comes a cost of $40M. (Note, even though some players earn a signing bonus, they are generally relatively small and most still are paid a fixed minor league salary, which is different from the signing bonus.)<br />
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Increasing the average salary to $15,840 would result in a cost of $84M, or increase of $44M. That may sound like a lot, but that is going to be divided up over 30 teams, so per team there would be an increase of less than $1.5M per team. <br />
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According to the web site, <a href="http://www.statista.com/statistics/193645/revenue-of-major-league-baseball-teams-in-2010/">Statista.com</a><span id="goog_1332028870"></span><span id="goog_1332028871"></span><a href="https://www.blogger.com/"></a>, in 2015, the average major league baseball team had gross revenues of $280M. This does not include private revenue that most owners receive via ownership interests in cable TV stations that have rights to the teams' games. The Yankees earned the most with $516M in revenue and Tampa Bay earned the least, at $193M in revenue. <br />
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Clubs do not release their expenses, so it is difficult to know how profitable these teams really are and whether or not they can afford to pay more in minor league salaries without making major cuts elsewhere. However, they should start thinking about how they are going to be able to afford to pay more, as I sense change is coming. <br />
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Two important separate decisions have already been reached in this case:<br />
1) <a href="http://www.lexislegalnews.com/articles/3435/minor-league-baseball-players-granted-conditional-certification-in-wage-row" target="_blank">The Court has allowed the action to go forward as a class action suit</a>; and<br />
2) <a href="http://www.ettdefenseinsight.com/wp-content/uploads/2015/08/Senne-v.-Kan.-City-Royals-Baseball-Corp._-2015-U.S.-Dis.pdf" target="_blank">The Court has ruled that some teams that do not have offices or minor league teams in California are still viable defendants based upon their contacts with players and potential players in California</a>.<br />
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Additionally, many other major lawsuits by college and professional athletes are trigger closer scrutiny at the way the professional sports business is being run. Heck, we are even paying college athletes now. Surely it won't be long before we pay professional baseball players the minimum wage.Kevin A. Pollock, J.D., LL.M.http://www.blogger.com/profile/08329649326376128858noreply@blogger.com0tag:blogger.com,1999:blog-509041133046947078.post-34812579102690733692015-09-09T17:06:00.000-07:002015-09-09T17:06:55.316-07:00Weighing in on the Matt Harvey Contract SituationIt's been a while since I've felt like there's been something worthwhile to talk about regarding baseball law, but with the Mets being in first place and bit of a controversy surrounding Matt Harvey, I thought I'd put in my two cents.<br />
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In case you haven't heard, Scott Boras, the agent for Matt Harvey, recently contacted the Mets to remind them that Matt was reaching his 180 inning pitch limit for the season. Matt, who had Tommy John surgery in 2013, was out all of last year recovering. His doctors, while apparently not giving the Mets a hard limit, have advised that his innings be capped to avoid further damage to his very valuable pitching arm.<br />
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From a fan's perspective, I really do understand how this looks as if Matt is putting himself ahead of the team when the team is making its first playoff run in a while. But remember, an agent's job is to look out for his client. While I think Scott Boras' tone could have been a little better, the reality is that he is just doing his job. <br />
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Matt is young, he should be thinking about baseball. His agent is the one pushing the Mets to make sure that Matt is healthy enough to sign a mega-million dollar contract. Matt is not eligible for free agency for three years, so unless the Mets agree to buy out his arbitration years and sign him to a long term contract, he does not have that ability to make the type of money where he never has to worry about finances again.<br />
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Now here's the reason I'm writing this article, no one is talking about an obvious solution to the problem. Everyone is just blasting Matt for being selfish. However, if the Mets sign Matt to a long term deal now, he will have the confidence to pitch throughout the playoffs without wondering if his financial well being is going to be permanently damaged. <br />
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Unfortunately, the Mets probably won't sign Matt to a long-term deal now for three reasons:<br />
1) The Mets are still recovering from the Bernie Madoff disaster and probably can't afford to pay Matt big-time money (as well as Yoenis Cespedis who has shown he deserves to be re-signed);<br />
2) Boras will request more than others are typically getting when a team buys out a player's free agency years, making it difficult to come to terms; and<br />
3) Matt is a financial bargain to the Mets right now and it is a big risk to sign him to a long term deal. They have plenty of pitching, so he is probably better utilized as trade bait to get someone good in return and let the other team worry about the big payday.<br />
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Currently Matt is only making $614,125 for 2015. That is not a lot compared to what others of his caliber are making. As Grantland.com pointed out in a <a href="http://grantland.com/the-triangle/2015-mlb-new-york-mets-matt-harvey-innings-limit/" target="_blank">nice article</a>, the Mets are able to decide when to use Matt, but Matt bears the physical risk of overusage. It's not as if Major League Baseball, with it's court approved monopoly, allows him to change employers at this point in his career.<br />
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While you may not care about Matt's state of mind or his financial well being, the reality is that if you are fan of the Mets, you have to understand that he likely won't perform at his peak and throw as hard as he might or put as much bite on that slider if he's worried it will blow his arm. That could be the difference between a quick exit from the playoffs and a World Series victory. How much would that be worth to the Wilpons?Kevin A. Pollock, J.D., LL.M.http://www.blogger.com/profile/08329649326376128858noreply@blogger.com1tag:blogger.com,1999:blog-509041133046947078.post-44684415249106715022010-11-29T06:22:00.000-08:002010-11-29T08:38:22.710-08:00Drayton McLane Theoretically Selling Astros Because of Estate Planning Issues?<span style="font-family: verdana;">I've read a few articles on the internet lately, including this </span><a style="font-family: verdana;" href="http://mlb.mlb.com/news/article.jsp?ymd=20101119&content_id=16154662&vkey=news_mlb&c_id=mlb">one</a><span style="font-family: verdana;"> at MLB.com, which report that Drayton McLane, owner of the Houston Astros, is selling the team for "Estate Planning Reasons".</span><br /><br /><span style="font-family: verdana;">Now, I've never met the man, and I do not know the man's business nor do I know much about the man's personal wealth other than what is in the public domain, but something really bugs me about the reason he is giving for wanting to sell the team. Frankly, I think it is a public relations snowjob - and here's why:</span><br /><br /><span style="font-family: verdana;">1) Drayton McLane has been trying to sell the team for years, unsuccessfully. He had a deal fall through just a few years ago because the buyer, Jim Crane, was concerned about the economy.</span><br /><br /><span style="font-family: verdana;">2) There may be a very large estate tax when the </span><span style="font-weight: bold; font-style: italic; font-family: verdana;">SURVIVOR</span><span style="font-family: verdana;"> of Drayton and his wife, Elizabeth, dies - but there will be a large</span><span style="font-family: verdana;"> capital gains as soon as he sells the team. Moreover, the Drayton family will still have a super large taxable estate. So let's talk taxes:</span><br /><ul style="font-family: verdana;"><li>Let's say the McLanes are worth about <a href="http://www.forbes.com/profile/drayton-mclane">$1.5 Billion</a>. and the Astros make up about $450 million of that. If they were both to pass in 2012, and the estate tax law reverts to pre-2001 levels, they would owe an estate tax of about $825 million assuming nothing goes to charity. (Incidentally, I believe that they would donate substantial sums to charity.)</li><li>Now let's say Drayton McLane sells the team for $450 million and pays a $70 million capital gains tax (because he bought the franchise for about $100 million and there is a 20% capital gains tax in 2011). The McLanes would then have an estate worth $1.43 Billion. If they were both to pass in 2012, then the estate tax would be $786.5 million - a savings of $38.5 Million. However, because of the payment of the capital gains tax, there is a net loss of $31.5 million in taxes.</li><li>If the McLanes wait until Drayton passes before selling his interest in the Astros, it will receive a step-up in basis. This means that there will not be any capital gains tax due because the team will receive a basis equal to the fair market value on Drayton's death.</li><li>One might argue that if Drayton McLane does not sell the team while he is alive, his estate must sell it in a firesale to raise capital to pay the taxman. This argument really only works if Drayton and Elizabeth die in the same year because if they were working with even a semi-competent estate planning attorney, they could guarantee the tax gets postponed until the second to die.</li><li>Well - what if they did both die within the next two years, then there would be a firesale and they wouldn't receive as much for the team. This may be true, but would that firesale cost them $38.5 million PLUS the time value of the interest? Probably not.</li></ul><span style="font-family: verdana;">3) There is a throwaway line at the end of the MLB article which reports that Drayton's children "never entertained taking over the club." To me, this is far more important than any tax planning reason they could have for selling the team. If the children wanted the business, Drayton and his attorneys could easily have found a way. Most likely he would have borrowed heavily against the team to reduce its value, transferred it in a part sale-part gift transaction, and then used the liquidity to pay any taxes.<br /><br />There are many reasons to sell an asset like a baseball team, but estate planning should not be one of them - except to the extent that the McLanes wish to simplify their life and have come to the realization that their children do not wish to be in the family business.<br /><br />So why does the MLB article upset me so? Mainly because of the implication that he's selling off the team to avoid the estate tax and for the reasons stated above, I think that would be a bad decision. Since I believe Mr. McLane is a smart man who doesn't make many bad decisions, I think he's selling the team for personal and business reasons - not estate planning reasons.</span>Kevin A. Pollock, J.D., LL.M.http://www.blogger.com/profile/08329649326376128858noreply@blogger.com0tag:blogger.com,1999:blog-509041133046947078.post-915164304113025472010-11-12T08:06:00.000-08:002010-11-12T10:04:20.598-08:00Should Baseball have a Worldwide Draft?<span style="font-family:verdana;">I recently came across a very thoughtful law review <a href="http://elr.lls.edu/documents/07.Hauptman.pdf">article</a> by Daniel Hauptman arguing that Major League Baseball (MLB) should have a worldwide draft. Currently, MLB only drafts players from the United States of America, Canada, Puerto Rico and other U.S. territories.<br /><br />The crux of Hauptman's argument is that since MLB does not have a worldwide draft, they are engaged in a type of reverse discrimination.<br /><br /><span style="font-weight: bold;"><u>Background</u></span><br />The MLB draft acts as an orderly way for teams to bring in new talent. It has the effect of reducing competition for a particular player. Normally this would be an anti-trust violation, but MLB enjoys a long-standing exemption from the anti-trust laws.<br /><br />No super talented player actually wants to be drafted. MLB has rules, both formal and informal, that dictate how much a drafted player should be compensated. If a players signed as a free agent, the player would be have more control over the team he signs with, the salary and the contract terms. The effect of this for very talented players is that they could earn a lot more money if there were no draft because there would be competition for their services.<br /><br />Since the MLB draft only affects players from the United States of America, Canada, Puerto Rico and other U.S. territories, they are at a competitive disadvantage compared to players from other parts of the world who can sign as free agents.<br /><br />To be clear though, free agency really only helps top athletes. Everyone else has to take what they can get and teams will not bid up these players.<br /><br /><span style="font-weight: bold;"><u>The Law</u></span><br />The draft, as it stands, is something that arrived at as part of the collective bargaining agreement between MLB and the Major League Baseball Player's Association (MLBPA). It is important to note that players who have not signed a major league contract can not be part of the union.<br /><br />Collective bargaining agreements are governed by federal labor law and it has been traditionally very difficult for individuals who are not a party to the agreement to affect them. Read Hauptman's article for more details.<br /><br />One argument that can be made to challenge the agreement is that the draft violates a federal or state employment discrimination law. However, these anti-discrimination laws may be preempted by the national labor law which encourages employers and employees to come up with their own agreements - i.e. the collective bargaining agreement.<br /><br /><span style="font-weight: bold;"><u>Non-Legal Issues</u></span><br />Hauptman goes to great lengths in discussing the history of the draft and the effect of the draft on the economies of Latin American countries. In particular, MLB teams used to spend a lot of money developing players in Puerto Rico. Once teams could draft players from Puerto Rico instead of having to bid on their services, teams stopped investing time and resources there and moved to places like the Dominican Republic.<br /><br />In these Latin American countries where there is no draft, teams are able to sign many players as free agents, but terms and conditions highly favorable to the teams and at very low cost. It also gives large market teams a tremendous advantage because they can sign more players hoping a tiny fraction of them work out.<br /><br /><span style="font-weight: bold;"><u>What a Worldwide Draft Would Accomplish</u></span><br />In the end, Hauptman argues it would be a good idea to have a worldwide draft. He thinks it would result in players being treated equally regardless of where they are from. He also believes it would result in better competition on the field. This is not to say that the draft itself is fair, but it would level the playing field for teams and the individual players.<br /><br /><span style="font-weight: bold;"><u>What if we Did Not Have a Draft?</u></span><br />If a draft bad for the players, many argue we should get rid of it. After all, it suppresses competition for the player's services. The problem with getting rid of the draft is that it serves one very important legitimate purpose - it provides for competitive balance. For that reason alone, MLB will never give it up. The fact that they use it to keep salaries down and provide an orderly method of hiring players is merely a great side benefit.<br /><br /><span style="font-weight: bold;"><u>Final Thoughts</u></span><br />Although MLB and the MLBPA has stated publicly since 2002 that they want a worldwide draft, there are no plans at this time to introduce one. I personally don't see anyone challenging baseball's draft because of the cost of a suit and the potentially deleterious affect it might have on the player filing the suit.</span>Kevin A. Pollock, J.D., LL.M.http://www.blogger.com/profile/08329649326376128858noreply@blogger.com0tag:blogger.com,1999:blog-509041133046947078.post-53940766651760918622010-07-13T13:15:00.001-07:002010-07-13T13:56:32.785-07:00Passing of a Legend - George Steinbrenner<span style="font-family:verdana;">Regardless of whether you are a Yankees fan or not, we should all pause for a moment to reflect on the valuable contributions that Mr. Steinbrenner has give to baseball. He was a great promoter who heavily invested in his team. He single handedly reshaped the way owners thought about free agency and owning their own television rights. And, perhaps most importantly for other owners, he helped steer baseball into its greatest era of profitability.<br /><br />George Steinbrenner, and minority partner E. Michael Burke, bought the New York Yankees (and some parking garages) from CBS in January of 1973 for $10 million. In 2009, the Yankees were valued at $1.5 billion by <a href="http://www.forbes.com/2009/04/22/yankees-mets-baseball-values-09-business-sports-intro.html">Forbes magazine</a>. I am uncertain as to how much of the franchise Mr. Steinbrenner owned at his death, but according to the <a href="http://www.forbes.com/lists/2009/54/rich-list-09_George-Steinbrenner_OJ49.html">Forbes 400</a>, he was worth $1.15 billion in 2009.<br /><br />It is interesting to note that the Yankees franchise itself is very heavily leveraged, and that most of his wealth is tied up in the YES Network. I'm sure that this was done on purpose so that the franchise could be passed on to his children more easily.<br /><br />It is a bit gruesome to think about, but by George - he passed away in the correct year as far as taxes go. This year, there is no federal estate tax (unless Congress tries to enact a retroactive tax). Moreover, since Mr. Steinbrenner passed away while he was domiciled in Florida, his estate does not owe a state Estate tax either.<br /><br />What does this mean? Well - in almost any other year his estate would owe the federal government upwards of $500 million in estate taxes. Instead, his heirs merely have to pay a modified capital gains tax when and if they sell George's assets.<br /><br />Proper estate planning is important, but sometimes it helps to be lucky too.<br /></span>Kevin A. Pollock, J.D., LL.M.http://www.blogger.com/profile/08329649326376128858noreply@blogger.com0tag:blogger.com,1999:blog-509041133046947078.post-34982437662839579572009-07-28T11:46:00.000-07:002009-07-28T11:58:26.226-07:00Should my child choose college or go pro?<span style="font-family: verdana;">Professional baseball scouts like to point out that of all the thousands of players who play baseball each year, only a few are chosen in the draft.<br /><br />Ultimately, your high school graduate will have to decide one of three things: Does he go pro? Does he go to college? Does he quit and do something else? </span><br /><br /><span style="font-family: verdana; font-weight: bold;">Some of the reasons to go to college include: </span><br /><span style="font-family: verdana;">a) the fact that a player drafted out of college has a higher chance of making it to the majors;</span><br /><span style="font-family: verdana;">b) the college experience;</span><br /><span style="font-family: verdana;">c) the professional team is not offering enough of a signing bonus to justify losing your amateur status;</span><br /><span style="font-family: verdana;">d) your child is not confident enough in his own abilities to think he can make it to the pros and he wants a solid backup plan; </span><br /><span style="font-family: verdana;">e) your child is a multisport athlete and is not sure which sport he wants to play yet; and</span><br /><span style="font-family: verdana;">f) your child is not sure if he wants a career in professional baseball.</span><br /><br /><span style="font-family: verdana; font-weight: bold;">Some of the reasons to go professional include:</span><br /><span style="font-family: verdana;">a) your child is not a good student, and is more likely to have a successful career in professional baseball;</span><br /><span style="font-family: verdana;">b) your child receives a significant signing bonus;</span><br /><span style="font-family: verdana;">c) your child cannot get a scholarship and does not have the resources to go to college;</span><br /><span style="font-family: verdana;">d) your child has lost his amateur eligibility;</span><br /><span style="font-family: verdana;">e) the coaches are generally better on the professional teams;</span><br /><span style="font-family: verdana;">f) the professional team guarantees to pay for college for your child after his baseball career is over; and</span><br /><span style="font-family: verdana;">g) baseball is a young man’s game and the sooner your son gets started the quicker he can develop and fulfill his dream.</span><br /><br /><span style="font-family: verdana;">A reason that can cut both ways is injuries. If a player has a bad injury while in school, he will need to do something other than baseball with his life. On the flip side, a scout once told me, “Injuries and age have never stopped anyone from getting an education but they have stopped a promising career in sports, so it is best to start early.” (I apologize, but I can no longer find the source for this quote.)</span><br /><br /><span style="font-family: verdana;"><span style="font-weight: bold;">So what do the experts say?</span><br /><br />Jack Cust & Keith Dilgard, of Jack Cust Baseball Academy, suggest that for most position players, it is best to go to college. However, for pitchers, due to the high risk for injury, going professional has additional advantages. They also cautioned that a player must be careful where he goes to college as some places expect you to leave by the end of your junior year.</span><br /><br /><span style="font-family: verdana;">George (Curvy) Ramos suggests that if a player is drafted in the top three rounds, it is best to sign with a professional team. </span><br /><span style="font-family: verdana;"> </span><br /><span style="font-family: verdana;">Joe Barth’s best advise is to “go where you are wanted.” You will be happier as a result, especially if you are choosing among colleges. He warns that a player’s scholarship can be pulled for a variety of reasons, so it is important to have a good relationship with the coaches. <br /><br /></span><span style="font-family: verdana;">In the end, your child should not make this decision until he has all the good offers on the table from the colleges and the professional team that has drafted your son. At a certain point, if the drafting team offers enough money, it will make sense to play professional ball rather than go to college. This number is different for everyone and I will discuss what draft picks are receiving in more detail in the next installment.</span><br /><br /><span style="font-family: verdana;">Next issue: <span style="font-weight: bold;">Who is eligible to be drafted?</span></span><br /><br /><span style="font-family: verdana;">Special thanks to Jack Cust, Sr., Keith Dilgard, Joe Barth, and George (Curvy) Ramos for providing valuable time and resources in the preparation of this article.</span>Kevin A. Pollock, J.D., LL.M.http://www.blogger.com/profile/08329649326376128858noreply@blogger.com0tag:blogger.com,1999:blog-509041133046947078.post-48699377101637742222009-02-19T12:24:00.000-08:002009-02-19T14:45:58.310-08:00Follow up on Oliver v. NCAA<span style="font-family:verdana;">If the NCAA has to change their amateur eligibility rules in light of the Oliver ruling, here is an idea as to how they might do it:<br /><br />My personal suggestion would be to change the definition of what it means to be an amateur so that student athletes lives aren’t ruined so easily by a mistake. A player shouldn't become professional the second he/she signs a professional contract, but the second he/she plays as a professional or receives money under the contract. (The NCAA can create a window such as before college and during the summer when the player may sign and/or negotiate a professional contract. If it is still in place when the college sport starts, then they lose their eligibility.)<br /><br />I welcome your thoughts.</span>Kevin A. Pollock, J.D., LL.M.http://www.blogger.com/profile/08329649326376128858noreply@blogger.com0tag:blogger.com,1999:blog-509041133046947078.post-10371473090553717692009-02-17T07:44:00.000-08:002009-02-17T14:28:45.598-08:00When does an Attorney become an Athlete Agent?<span style="font-family:verdana;">Many attorneys routinely provide legal counsel to athletes. So the question is, when does an attorney become an athlete agent subject to registration. The rules vary slightly by state, so let's start with the <a href="http://www.law.upenn.edu/bll/archives/ulc/uaaa/aaa1130.htm">Uniform Athlete Agents Act</a> (the "UAAA") which most states have adopted.<br /><br />According to the comments under Section 5 in the UAAA: <blockquote>"If an attorney's role is limited to providing legal services to a student-athlete, the attorney is not required to register as an athlete agent or comply with this act. <span style="font-style: italic;">An attorney's actions as an <span style="font-weight: bold;">athlete agent</span>, however, are outside the scope of legal services, there is no privilege and the attorney must comply with this act.</span>" (emphasis added) </blockquote>An athlete agent is defined as: <blockquote>"an individual who enters into an agency contract with a student-athlete or, directly or indirectly, recruits or solicits a student-athlete to enter into an agency contract. The term includes an individual who represents to the public that the individual is an athlete agent. The term does not include a spouse, parent, sibling, [or] grandparent[, or guardian] of the student-athlete or an individual acting solely on behalf of a professional sports team or professional sports organization."</blockquote>This begs the question of what is an agency contract. An agency contract is defined as: <blockquote>"an agreement in which a student-athlete authorizes a person to negotiate or solicit on behalf of the student-athlete a professional-sports-services contract or an endorsement contract."</blockquote>A student athlete is: <blockquote>"an individual who engages in, is eligible to engage in, or may be eligible in the future to engage in, any intercollegiate sport. If an individual is permanently ineligible to participate in a particular intercollegiate sport, the individual is not a student-athlete for purposes of that sport."</blockquote>So it's pretty clear that soliciting clients, soliciting employment for a client and holding oneself out as an agent will require an attorney to register. The other item that is pretty clear is that the UAAA is not intended to apply to attorneys representing athletes who no longer have college eligibility, providing that they are not otherwise holding themselves out as agents.<br /><br />However, let's focus a little bit more on the phrase "negotiate... a professional sports-services contract or an endorsement contract."<br /><br />As a starting point, the UAAA clearly states that when a person communicates with a student athlete such person is not required to register as an agent if that person is not recruiting or soliciting and only providing information to the student athlete. (This is the reason why so many athletes have advisers and handlers now.)<br /><br />Next, I followed up with representatives from three of the states where I'm licensed to ask more. Florida's statute is slightly different and defines an agent contract as: "a contract or agreement in which a student athlete authorizes an athlete agent to represent the student in the marketing of the student's athletic ability or athletic reputation."<br /><br />In a conversation with a representative from the <a href="http://www.myflorida.com/dbpr/pro/athlete/">Florida Department of Business & Professional Regulation</a>, Robert (no last name given) stated that he does not believe the <a href="http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=Ch0468/PART09.HTM">Florida Act</a> requires an attorney to register if he/she is reviewing contracts and/or negotiating the professional sports contract because the Florida Act talks about marketing student athletes. Registration becomes a requirement when soliciting athletes and seeking employment for the athletes - NOT when negotiating contracts.<br /><br />The <a href="http://www.dos.state.ny.us/lcns/lawbooks/athlete_agnt.htm">New York Act</a> more closely resembles the UAAA. In a conversation with a representative from the <a href="http://www.dos.state.ny.us/lcns/professions/athleteagents/athleteagnfaq.htm">New York Division of Licensing</a>, Jeff Stats stated that he does not believe the New York Act requires an attorney to register if he/she is merely reviewing contracts, but left open the possibility that anything more will result in an attorney having to register.<br /><br />The <a href="http://www.dos.state.pa.us/sac/lib/sac/laws/athletic_code_part_ii_athlete_agents.pdf">Pennsylvania Athlete Agents Act</a> also closely resembles the UAAA. In a conversation with the Executive Director of the <a href="http://www.dos.state.pa.us/sac/cwp/view.asp?a=1090&q=430433">Pennsylvania State Athletic Commission</a>, Gregory Sirb stated that he does not believe the Pennsylvania Act requires an attorney to register if he/she is merely reviewing contracts, but was very clear that anything more will result in an attorney having to register. I asked what if a professional team calls about a client to discuss a provision in the contract, and he said that would be enough to trigger registration in his mind. (As an aside, it did not sound like he was 100% convinced that it would stand up if challenged, but he left no doubt as to how he interpreted the law.)<br /><br />I also contacted <a href="http://lgst.wharton.upenn.edu/srosner/">Professor Scott Rosner</a>, who is an Associate Director of the Wharton Sports Business Initiative. He noted that there are a lot of ways an attorney can represent an athlete. He did not think mere review will require registration, but was more cautious as to what would trigger registration.<br /><br />To conclude my investigation into this, I contacted Richard C. Hite, of <a href="http://www.hitefanning.com/">Hite, Fanning & Honeyman</a>, who was the Chair Person of the Committee that created the UAAA. He stated that there were lengthy discussions about this particular issue. He graciously took the time to find his notes from his time on the Committee and advised me that the official comment in Section 5 of the UAAA was inserted to ensure that an attorney who only acts as an attorney is not subject to the registration requirements. Specifically, he stated that he disagrees with idea that an attorney cannot negotiate a contract without registering. Moreover, he mentioned that the word "negotiate" in the definition of "agency contract" was not designed to prevent an attorney from negotiating the terms of a contract on behalf of an athlete, but from negotiating employment for an athlete. <br /><br />So, to sum up, an attorney who merely reviews contracts for athletes is not subject to any registration requirements; but one who negotiates a contract <span style="font-style: italic;">may or may not</span> be required to register.<br /><br />This leads to my big question, if the statute requires an attorney to register as an agent for merely negotiating the terms of a contract, did the legislature step beyond it's legal authority in regulating attorneys? (Almost all states have similar provisions in their State Constitution that declare the State Supreme Court has exclusive authority to regulate the lawyers in such State.)<br /><br />Clearly when a lawyer is not acting in his/her capacity as an attorney, a state may regulate the person, but negotiating contracts is unequivocally in the job description of an attorney. So isn't the legislature overreaching?<br /><br />The main penalty for a person failing to register as an agent is that the contract between the person and the athlete is void (meaning that the agent is not entitled to any fees). Additionally, some states have pretty hefty fines as well.<br /><br />Additional note: In New Jersey, the legislature proposed a <a href="http://www.njleg.state.nj.us/2008/Bills/S2500/2405_I1.PDF">bill</a> in December of 2008 that would require athlete agents to register with the State. It has not yet been signed into law.<br /><br />Update: In a conversation with Alexis Antonacci, a spokesperson for the Florida Department of Business & Professional Development, she stated that she thought attorneys who negotiated contracts were required to register, but did not give me any authority for that assertion.<br /><br /></span>Kevin A. Pollock, J.D., LL.M.http://www.blogger.com/profile/08329649326376128858noreply@blogger.com2tag:blogger.com,1999:blog-509041133046947078.post-62182839390344445902009-02-13T08:53:00.000-08:002009-02-16T08:45:59.957-08:00Humorous Note to Oliver v. NCAA<span style="font-family:verdana;">Clearly Judge Tone has a bit of a funny bone:<br /><br />"For a student-athlete to be permitted to have an attorney and then to tell that student athlete that his attorney cannot be present during the discussion of an offer from a professional organization, is akin to a patient hiring a doctor but the doctor is told by the hospital board and the insurance company that he (the doctor) cannot be present when the patient meets with a surgeon because the conference may improve his patient's decision making power. Bylaw 12.3.2.1 is unreliable (capricious) and illogical (arbitrary) and indeed stifles what attorneys are trained and retained to do."<br /></span>Kevin A. Pollock, J.D., LL.M.http://www.blogger.com/profile/08329649326376128858noreply@blogger.com0tag:blogger.com,1999:blog-509041133046947078.post-81061282858383321822009-02-13T07:50:00.000-08:002009-02-16T08:45:33.616-08:00Judge Tosses NCAA Rule Preventing College Baseball Players From Hiring Advisors During Negotiations<span style="font-family:verdana;">In a potentially far-reaching decision, Ohio Judge Tygh Tone <a href="http://www.scribd.com/doc/12309586/Oliver-v-NCAA-Opinion-JE6">ruled</a> in favor of Andrew Oliver against the NCAA</span><span style="font-family:verdana;">. The legal impact of this ruling may allow college (and high school) baseball players to be represented by legal counsel when negotiating contracts with professional teams.<br /><br />Here's the background. Andrew is a pitcher for Oklahoma State University who was ruled ineligible to play because the NCAA claimed that he had violated their "no agent" rule. Specifically, the NCAA said that Andrew's advisors listened in on contract negotiations between Andrew and the Minnesota Twins in 2006 after he was drafted out of high school. (Andrew decided to take a full scholarship to OSU rather than sign with the Twins at that time.)<br /><br />Under current NCAA Bylaw 12.3.2, players are allowed to have attorneys or advisors, so long as they do not have direct contact with professional clubs. Judge Tone's ruling stated that the NCAA should not restrict a player's right to have legal help when negotiating a contract for both legal reasons and reasons of public policy.<br /><br />The legal reason that the NCAA should not restrict a player's right to have legal help is because the right to legal counsel is subject to the exclusive regulation of the [State] Supreme Court. Judge Tone also reasoned that as a matter of public policy, allowing players to hire a lawyer but prohibiting them from negotiating contracts is impossible to enforce and allows for players to be exploited. Accordingly, he labeled the ban "arbitrary and capricious." This term is important as the NCAA is technically an organization of voluntary members, and in order for its rules to be invalidated, they must be "arbitrary and capricious."<br /><br />The judge concludes that "no entity, other than one designated by the state, can dictate to an attorney where, what, how or when he should represent his client." This includes the NCAA, regardless of their reason for having the rule.<br /><br />As a separate matter relating to this case, the judge sternly criticized the NCAA for effectively refusing to let Andrew play by threatening financial punishment upon OSU if they complied with the injunction to let Andrew play.<br /><br />This is not the final word, however, as the NCAA has stated that they are unhappy with the ruling and will likely appeal. If the ruling stands, it will likely require a change in how the NCAA handles eligibility rules for other sports as well.<br /></span>Kevin A. Pollock, J.D., LL.M.http://www.blogger.com/profile/08329649326376128858noreply@blogger.com0tag:blogger.com,1999:blog-509041133046947078.post-90300107206580196342008-05-29T12:51:00.000-07:002008-05-29T13:34:04.753-07:00My son is being scouted, now what?If you have an athletically gifted child in high school that is being scouted by colleges and professional sports teams, be prepared to deal with a lot of intrusion in your life and the life of your child. Your child may have to deal with college recruiters, baseball scouts, agents, financial consultants, lawyers, the media and of course long lost “friends”.<br /><br />While college baseball in no way competes financially with college football, it is still big business. This fact must not be forgotten when scouts, whether professional or college, come to look at your child.<br /><br />Players being touted as a high draft picks can expect many requests from major league scouts for in-home visits and psychological tests. Scouts and coaches recommend athletes can save themselves a lot of grief by having the information they want to know readily available, such as medical records, eye tests, baseball schedules, signability forms and player information cards. They also suggest the athletes leave a game schedule with their baseball coaches and on your answering machine.<br /><br />Filling out all the player information cards and psychological tests can take an incredible amount of time. The psychological tests can vary from about 80 to 275 questions depending on the team or school giving them. Players can save some time by signing a waiver on the Caliber Test and have the results released to all the teams that use that test.<br /><br />In terms of increasing your child’s likelihood of getting drafted or offered a scholarship, the most important thing you need to learn is the phrase “signability”. A player’s signability is a combination of the player’s contract demands and the team or college’s ability to pay. For a college, the ability to pay means their ability to offer a scholarship, provide a good education, a safe environment and top notch training.<br /><br />When discussing signability with scouts and college recruiters, athletes will be asked whether they want to turn pro and how much of a signing bonus it will take to commit to going pro. Your child should be honest, but he should not be too definitive in his future plans.<br /><br />The worst thing an athlete can do is give a definitive answer to these questions unless he is really sure because the more adamant the stance the more he will lose bargaining power. For example, if he tells everyone that he has no intention of going to college, he may be drafted much lower and almost assuredly would be offered a much smaller signing bonus because any threats to hold out would be in vein. Moreover, no college will bother offering him a scholarship. Alternatively, if he tells everyone that he wants to go to college regardless of where he is drafted, what team in their right mind would waste a high draft pick on him?<br /><br />So what can a player say? He can tell them which way he is leaning, but if the right offer came along he would reconsider. He can tell them money is not important as long as it is a fair amount. He can say that he would be willing to sign for a bonus similar to what others in nearby draft slots are getting. And he can also tell them that if he gets drafted below a certain round, he is likely to head to college instead.<br /><br />Be careful about saying too much to the media as well. It is always better for a player to stay quiet and polite than to say things that could hurt their chances at being drafted or offered a scholarship. Stick with the clichés about hard work. A player should avoid any indication of how much of a signing bonus he is expecting as scouts say that this can kill his signability if he has unrealistic expectations.<br /><br />Regardless of which way your child is leaning, it is important that you and he go through all the motions with the colleges and scouts in order to keep your child’s options open and to obtain the best for your child. This means visiting the colleges, filling out applications and financial aid forms, taking any necessary scholastic tests, keeping in good condition and keeping grades up. Failure to keep in good condition or to keep grades up may be considered a serious character flaw.<br /><br />A few wayward scouts or college recruiters may promise the world, but most are quite honest and willing to assist and provide good advice. It is a small community, and for the most part a collegial one. Word gets around pretty quickly if there is a bad recruiter out there or if your child is looking to cheat the system. If your child ever gets caught requesting money upfront to play, he may never play professionally or on an amateur level again.<br /><br />Whatever you child does, don’t let them hire a baseball agent unless they are 100% sure they are not going to college! They will lose their ability to play collegiate baseball forever if they do.<br /><br />Next issue: Should my child choose college or go pro?<br /><br />Special thanks to Jack Cust, Sr., Keith Dilgard, Joe Barth, and George (Curvy) Ramos for providing valuable time and resources in the preparation of this article.Kevin A. Pollock, J.D., LL.M.http://www.blogger.com/profile/08329649326376128858noreply@blogger.com0tag:blogger.com,1999:blog-509041133046947078.post-51191376998388040422007-03-29T13:03:00.000-07:002007-03-29T13:05:38.902-07:00My child is a talented athlete, now what?Spring is here and it is time for another season of our national pastime to begin. As the professional baseball players get geared up to play and get in shape, so do high school and college students. <br /><br />If you have a child who is a gifted baseball player, it can be both a blessing and a curse. Your child will likely be the recipient of a lot of attention from the school, local reporters, and possibly even college or professional scouts. This can be a major source of distraction for anyone, let alone someone who has not even completed high school. Also, it is not uncommon for both the children and parents to obsess over unrealistic success and income.<br /><br />For some parents of gifted athletes, there may also be a curse of inattention. There are only a limited number of college and professional scouts, and they cannot be everywhere at once. So for some, the question then becomes what can you do to ensure that your child gets noticed to make him or her eligible for a scholarship or minor league contract.<br /><br />New Jersey is fortunate in that it has many resources to provide future athletes to help train both body and mind. There are numerous baseball academies from Jack Cust’s sparkling new facility in Flemington to Joe Barth’s Hit Doctor Clinic in Cherry Hill to Garett Teel’s Academy. Additionally, there are also many semi-retired coaches and baseball players who teach and coach local children. The baseball community is generally a close community, and the good word of an unbiased and fair coach can carry a lot of weight with scouts and college recruiters.<br /><br />If you have not been to a baseball clinic or seen a personal coach, you will be amazed by the technology that is being used to help these young athletes. Gone are the days when a little metal arm throws out an oversized golf ball. Nowadays, the children receive batting practice from video screens that simulate a pitcher’s motion. In addition, a player’s movements are taped, played back and analyzed to help improve his or her performance. Some facilities have specially equipped study rooms and gymnasiums.<br /><br />Many of the area coaches work together to schedule major events that showcase the children’s talent, including the very popular NJ Super 17 Baseball Program. During these events, some of the best local players gather to show their skills before numerous college and professional scouts.<br /><br />For those that may not be at the highest level, but still dream of getting a scholarship to college because of their baseball skills, these clinics and coaches can help film recruiting tapes. Now, coaches who never would have been able to make the trip to see your child play can easily evaluate the ability of many athletes online. <br /><br />Players who are serious about competing professionally (and often collegially) must now face psychological exams as well as physical and educational tests. As the great Yogi Berra once said, “Baseball is 90% mental, and the other half is physical.” Well, the good coaches will also teach your children discipline and how to deal with the mental and emotional stresses that they will inevitably face.<br /><br />Baseball and softball coaches are not only for athletes who dream of becoming professionals. Many players simply want to perform better for their own self esteem. Indeed, some coaches prefer to teach players (especially young players), who simply want to play for the love of the game.<br /><br />The experts may vary in how they train future baseball and softball players, but they all agree that the child’s hard work, dedication and love of the game is imperative if he or she truly wants to move on to the next level – whether that is college or professional.<br /><br />Next article: My child is being scouted, now what?<br /><br />Special thanks to Jack Cust, Sr., Keith Dilgard, Joe Barth, and George (Curvy) Ramos for providing valuable time and resources in the preparation of this article.Kevin A. Pollock, J.D., LL.M.http://www.blogger.com/profile/08329649326376128858noreply@blogger.com0tag:blogger.com,1999:blog-509041133046947078.post-56261586034301250452007-02-02T10:59:00.000-08:002007-02-02T12:34:01.977-08:00CBA Supercedes Individual Player ContractsRecently, there has been a lot of press about how MLB has voided Barry Bonds' latest contract with the San Francisco Giants. The question is why was this done? To understand, we need to start by looking at the history behind collective bargaining agreements.<br /><br />The reason why similarly situated individuals come together (a bargaining unit) to form a union is because there is strength in numbers. Management can't tell one person that if he doesn't agree to a salary of peanuts, he can just hire someone else who will work for peanuts. If Management does do that, the group of workers can threaten to strike.<br /><br />Typically, the union leaders work with management to create a collective bargaining agreement that neither side likes, but that both the employees and Management can live with. The CBA will have provisions for salaries, terms of employment and the time frame for which the CBA covers. Once these terms are agreed to by Management, it cannot hire anyone to work for them on terms inconsistent with such agreement. To do so would be a violation of National Labor Relations Act.<br /><br />Collective bargaining agreements in the sports world are different from collective bargaining agreements in almost every other industry because when it comes to discussing salary, the CBA in sports leagues only sets a floor that Management can't go below and allows each player to negotiate his top salary. <br /><br />However, like all CBAs, once terms of employment are established in the CBA, an employee (player) and management may not override those terms of employment with a side agreement. Many of the terms of employment for MLB are established through the Uniform Player's Contract. Specifically, Article III – Uniform Player's Contract states:<br /><blockquote> <span style="font-style:italic;">During the term of this Agreement, no other form of Uniform Player’s Contract will be utilized. Should the provisions of any Contract between any individual Player and any of the Clubs be inconsistent with the terms of this Agreement, the provisions of this Agreement shall govern. Subject to the limitations set forth in Article IV below, nothing herein contained shall limit the right of any Club and Player to enter into Special Covenants in the space provided in a manner not inconsistent with the provisions of this Agreement.</span></blockquote><br />Now, despite all the hoopla surrounding Barry Bonds' steriod and drug problems, the contract was reportedly voided by MLB because it violated the CBA's provision with regard to promotional activies. That CBA provision states:<br /><blockquote><span style="font-style:italic;"><span style="font-weight:bold;">Baseball Promotion</span><br />3.(b) In addition to his services in connection with the actual playing of baseball, the Player agrees to cooperate with the Club and participate in any and all reasonable promotional activities of the Club and Major League Baseball, which, in the opinion of the Club, will promote the welfare of the Club or professional baseball, and to observe and comply with all reasonable requirements of the Club respecting conduct and service of its team and its players, at all times whether on or off the field.</span></blockquote><br />While I am unaware of the exact language that the Giants put in the contract that was in violation of the CBA, it must have required an unreasonable amount public relations service time. Again, I have no proof, but it could only have been done for one of two reasons: 1) to try and make up for his tarnished image; or 2) to take advantage of Bonds breaking Hank Aaron's home run record.<br /><br />Barry's contract also had provisions that would give the Giants the ability to terminate the contract in the event that Barry's legal troubles caught up with him. According to reports by the Associated Press, Barry's contract reads:<br /><blockquote><span style="font-style:italic;">Player acknowledges and agrees that an indictment for any criminal act... is proper grounds for termination of this contract.<br /><br />Player also acknowledges and agrees that he will not grieve, appeal or otherwise challenge any club action to terminate this contract as a result of player's indictment for any criminal acts [specified] ... nor will he cause or authorize any third party, such as the Major League Baseball Players Association, to grieve, appeal or otherwise challenge any club action to terminate this contract as a result of players' indictment for any [specified] criminal acts.</span></blockquote><br />No official decision has been made with respect to these provisions, but this language also likely violates both the grievance procedure and the termination procedures established in the CBA. In particular, the language that states neither Bonds nor the MLB Players Association will appeal any club action to terminate the contract has little chance of surviving. <br /><br />Technically, this contract is governed by the new Collective Bargaining Agreement which, as far as I know, has not been reduced to writing. Accordingly, my analysis has been base upon my reading of the CBA from 2002-2006. It is likely that the same provisions will be included in the new CBA.Kevin A. Pollock, J.D., LL.M.http://www.blogger.com/profile/08329649326376128858noreply@blogger.com0tag:blogger.com,1999:blog-509041133046947078.post-10654443856395667692007-01-25T07:30:00.000-08:002007-01-25T07:37:30.910-08:00Baseball's New Collective Bargaining AgreementI've been waiting for a while now to receive a copy of Baseball's new CBA. However, I am not sure it has been reduced to writing yet. I received an email from my old Sports Law Professor, Gary Roberts (formerly of Tulane, now Indiana School of Law), that he has not received a written copy yet either and he thinks it will be a little while longer before the fine details are formalized.<br /><br />Accordingly, I will take what I can from MLB's website as well as other trustworthy sources to start some of my analysis shortly.<br /><br />However, if anyone has any information on the new CBA, I would appreciate it if you could drop me a line.<br /><br />Thank you.Kevin A. Pollock, J.D., LL.M.http://www.blogger.com/profile/08329649326376128858noreply@blogger.com0tag:blogger.com,1999:blog-509041133046947078.post-33089929540964663412007-01-24T09:47:00.000-08:002007-01-24T09:51:27.547-08:00Starting offIt may be a little bit before I start posting to this site. <br /><br />Once I get going, I am hoping to write extensively about the laws that that baseball athletes must be aware of. In particular, how the athlete is affected by NCAA rules and regulations, the minor league draft, any contracts the player may sign (minor league, major league or independent league), and of course the new Major League Baseball collective bargaining agreement.<br /><br />Comments and feedback are welcomed.Kevin A. Pollock, J.D., LL.M.http://www.blogger.com/profile/08329649326376128858noreply@blogger.com0