Before getting into Cornwell’s arguments, it is worth taking a moment to consider who David Cornwell is and how he is so delicately connected to the NFLPA and the players that the association represents.  First of all, Cornwell went up against DeMaurice Smith for the title of Executive Director after the late Gene Upshaw had passed away, leaving an opening at the top position in the NFLPA.  Cornwell has over 20 years of expertise in the professional sports industry, representing professional athletes and sports agents in their legal affairs.  To be clear, Cornwell is not an NFLPA Contract Advisor himself, but he has been retained by NFL players and NFLPA Contract Advisors for various types of legal matters, including representation with regards to grievances through the NFLPA’s mandatory arbitration process.  In the past, Cornwell was Vice President and General Counsel of Upper Deck Company and Assistant General Counsel for the National Football League.  Suffice it to say, Cornwell knows the ins and outs in the world of professional football.

Cornwell’s observations are cleanly broken up into various sections.  The longest section of his memo concerns the new NFL Collective Bargaining Agreement (CBA) that was signed in 2011.  The other sections include a discussion of Terrelle Pryor’s suspension, the new NFL Drug Policy, the NFL’s Conduct Policy, and the NFLPA’s apparent lack of care for enforcing agent regulations.

As stated, the bulk of Cornwell’s memo reveals his dismay about the newly established NFL CBA.  He explains that players were misguided into believing that they would receive 47% of literally all NFL revenues, when in fact, that percentage is based on net revenues, and not gross revenues as was contemplated by the previous agreement.  Cornwell also states that the use of the term “True up” is misleading and that the idea of “Revenue Buckets” is a red herring.  Other issues are discussed at length.

Cornwell was tacitly involved in Terrelle Pryor’s suspension as Pryor’s retained attorney.  Cornwell’s main issue is the way that DeMaurice Smith accepted a five game suspension for Pryor without following up with Pryor and/or Cornwell after Pryor answered some questions posed to him by Smith.  The way that Cornwell explains it, the NFLPA advised the media that the NFLPA urged Pryor and Cornwell to reject the five game suspension (which Cornwell says was false), Cornwell announced that he would appeal the decision, and then DeMaurice Smith demanded Pryor’s agent to provide Smith with a letter promising that the suspension would not be appealed.  Cornwell uses words like “baffling” and “deceptive” in his memo.  The story he paints makes me question what was going on behind closed doors.

I’ll skip the Drug Testing and Conduct Policy issues and jump right to Cornwell’s final section: Agent Regulations.  The following excerpt from Cornwell’s memo will probably not surprise the readers of this website.

In the Conclusion section of Cornwell’s memo, he wrote, “Despite my greatest hopes, my personal experience reveals that De’s vision in 2008 was little more than an inside Washington political campaign — high on style, low on substance. De’s grandiose pronouncments did not translate into meaningful progress in the business of playing football. Rather than  advancing the partnership between players and team owners, the new 10 year CBA relegated NFL players’ status to mere employees.”  Cornwell is “stunned at what the NFLPA has become under De’s leadership.”  Cornwell recognizes that DeMaurice Smith is not required to answer the memo, and in all likelihood, Smith will probably resist making any comment.

David Cornwell Stunned At What NFLPA Has Become Under DeMaurice Smith’s Leadership from Sports Agent Blog - Sports Business, Sports Law, Sports Negotiations, NCAA Rules

Dontari Poe

While Poe admits that the decision to leave Memphis after his Junior season was the most difficult decision of his life, at least the player made an informed decision.  After Collegiate Sports Advisors visited Memphis to set up its Professional Sports Counseling Panel and informed Poe and his family about the NFL’s College Advisory Committee, Poe submitted his information to get his draft grade.  He received his grade (2nd round) prior to signing with Sexton and entering his name into the 2012 NFL Draft.  Many scouts believe that Poe could actually end up being a 1st rounder.

Memphis Defensive Tackle Dontari Poe Signs With Jimmy Sexton from Sports Agent Blog - Sports Business, Sports Law, Sports Negotiations, NCAA Rules

When I was contacted over the weekend by Brian Walton of TheCardinalNation.com and Scout.com with about six questions related to the baseball agent profession, I had no idea just why he was asking me those specific questions.  Now, after Walton published his piece titled, Dan Lozano and Albert Pujols’ 2004 Contract, it all makes sense.

Walton’s piece stemmed from an accusation embedded within the Deadspin story about Pujols’ agent Dan Lozano, which has attracted the eyes of everybody in the sports agent industry.  The accusation was that Lozano’s unfortunate financial situation led him to negotiate an unfavorable, below-market value contract for Pujols in 2004.  Walton’s article digs deep to try to determine whether that was actually the case.  Based on his findings, it appears that even if Lozano was truly interested in making a quick buck to save himself from financial straits, he certainly did not display such through his negotiation of Pujols’ contract.

Go ahead and read Walton’s article, because he does a fantastic job of looking into the 2004 Pujols deal, and he provides some nice space for my contributions.

Looking Back At Albert Pujols’ 2004 Contract from Sports Agent Blog - Sports Business, Sports Law, Sports Negotiations, NCAA Rules

With speculation circling that Matt Kemp will sign a 8-year $160 million contract with the Los Angeles Dodgers and an ESPN report stating that the Dodgers and Kemp’s agent are “moving in a positive direction and that he is optimistic an agreement will be reached,” I started thinking about some comments that Kemp’s agent, Dave Stewart, made to the media in the past.  Whereas this week, Stewart is talking about positive and productive discussions with the Dodgers, little over a year ago, Stewart’s tone was quite the opposite.

On August 21, 2010, T.J. Simers of the Los Angeles Times wrote an article titled, “Matt Kemp’s agent is an albatross around his neck.”  The title is mild compared to the first sentence of the piece, which reads, “Matt Kemp has a problem, one as big as his own half-hearted play at times and inability to hit an outside pitch — his agent Dave Stewart.”  Simers alleged that Stewart wrote the following to the LA Times: “Do you think for one moment I care about the town of L.A. or the fans there?”

I have a feeling that Stewart’s attitude has changed, with the Dodgers contemplating giving Kemp a hefty contract offer.

Matt Kemp May Have 160 Million Reasons To Care About The Town Of L.A. from Sports Agent Blog - Sports Business, Sports Law, Sports Negotiations, NCAA Rules

Source: Herald Sun

A lot of uncertainty came with the introduction of the new Australian Football League (AFL) franchise Greater Western Sydney (GWS). As seen in the previous season with the Gold Coast Suns, players were able to be ‘poached’ from other clubs with the clubs who lost players receiving one or two compensation picks.

The news of Tom Scully defecting from Melbourne, the club who drafted him No.1 overall two years ago, should not be a surprise. There was no way Melbourne was willing to match the $6 million over 6 year deal put forth by GWS, with $2 million being paid in the first year. Many Melbourne faithful were outraged by a player only drafted two years before leaving so easily. But Melbourne fans shouldn’t be hasty at thinking they were the ones left punished.

Melbourne has received two picks in lieu of Scully leaving; a first round pick selection and a mid first round selection. The first round selection will fall after their initial first pick. So if Melbourne receives pick 9 in the draft, it could use this compensatory pick at pick 10. The mid first round pick will be slotted in after the pick of the team who just missed the finals, which is likely to be around 11-15, depending on how teams use their picks. The bonus of these picks is they can be used anywhere between the 2012-2015 drafts.

With this in mind, the 2012 draft is shaping to be a ‘Super Draft’ – a draft stacked with immense talent that will help a club like Melbourne, who is rebuilding for the future. Having a total of three picks in the first round will certainly give the team an advantage over other teams in the same position. Alternatively, having three bargaining chips in trade week will certainly help bringing high quality players from other teams to the club.

Now let’s take a quick look at what Melbourne lost – Tom Scully. Having played 31 games for the club, the midfielder missed several games because of a knee injury; one that Dr Peter Larkins believes may hinder him from playing a full season. Scully had surgery on his left knee before he was drafted, and that injury plagued him this season, allowing him to only play 10 games.

So while many Melbourne fans may be up in arms about the prospect of losing their prized player, it appears things are not as bad as they seem.

Why Melbourne Won Out In The Tom Scully Deal from Sports Agent Blog - Sports Business, Sports Law, Sports Negotiations, NCAA Rules

After what seemed an eternity, Australian’s superstar Harry Kewell has finally signed for Melbourne Victory. In what is a massive coup for the A-League, the Socceroo has decided, at 32, that the time is right to come back to his home.

But his deal is a lot more complicated than your standard contract, and sets quite the precedent. Whilst no exact terms have been released by either side, several media outlets have reported the following terms:

First and foremost, the Football Federation of Australia (FFA) is paying Kewell $500,000 per year. It is not uncommon for leagues to pay a portion of a player’s salary (See the AFL). However, Kewell had his image rights clause amended. Instead of the A-League holding all rights over the use of his image, it can only use his image in situations where it doesn’t conflict with his sponsors. No doubt the FFA won’t be happy with this, but it still leaves some wiggle room.

In terms of his Melbourne Victory deal, it is understood he will be receiving a base salary with heavy incentive clauses tied into the club’s revenue. Harry will receive 70% of any monies generated from him being at the club. The way this will be distinguished is by using last year’s figures. This includes areas such as memberships, gate receipts and merchandise.

So looking at these figures, one can make some assumptions. The membership figure pre Harry Kewell was hovering just under 10,000. Now that Kewell is at the club, the phone has been ringing off the hook for new memberships, with the entry level for an Adult being $190. It is not out of the question that Harry will bring in between 7000-10000 members, putting his cut at around the 1.1-1.3 million dollar mark.

In terms of attendance, Melbourne Victory averaged a little over 15,000 a game last year. Taking into account that a) 7-10k members won’t need gate tickets and b) most of the games are played at a 32,500 seat stadium, it is possible that the attendance may rise to 25-27k a game, with the bigger games attracting 40k. The bigger games are played at the roughly 53,000 seat Etihad Stadium. There are 14 home games this season. If he plays every one of them, and the gate increases by an average of about 12,000 a game, he could be looking at a figure over $1.5 million.  With more memberships comes more jersey and general merchandise sales, which Harry will receive a percentage of as well.

Adding all these factors up, it is quite possible that Kewell may make over $3 million in the first year, with a slight decline in the following two years. This would still equate to a higher pay packet than what he would receive overseas. However, there is the possibility that this groundbreaking deal could backfire and he ultimately could receive less than what he is worth.

The A-League itself is a pretty big winner too. With the caliber of players such as Harry Kewell and Brett Emerton returning home, it gives them quite a bit of leverage when re-negotiating its TV rights deal, which is due to expire in 3 years.

However, it’s the precedent that has been set which is a concern to some. While there is no one near as marketable as Harry Kewell in the realm of football in Australia, what’s stopping an international star from commanding the same deal? When players can command this sort of revenue sharing deal, it can leave clubs in financial turmoil, struggling to pay for other expenses after the star has taken his cut.

Breaking Down The Harry Kewell Deal from Sports Agent Blog - Sports Business, Sports Law, Sports Negotiations, NCAA Rules

Watch the entire Bartelstein interview below and leave your thoughts in our Comments section.

Mark Bartelstein Speaks About NFL Free Agent Deals from Sports Agent Blog - Sports Business, Sports Law, Sports Negotiations, NCAA Rules

Some of the hottest baseball players who are eligible for free agency after the 2011 MLB season include Prince Fielder, Jose Reyes, and Albert Pujols (go here for a list of all 2012 MLB free agents).  However, one of the most sought after baseball players may be someone who is currently in MLB affiliated ball.  His name is Yu Darvish and he is from Japan.  He and his agents (Arn Tellem of Wasserman Media Group and Don Nomura) could soon be selling him to the highest bidder, as long as Darvish’s current team (the Hokkaido Nippon-Ham Fighters of Japan) posts him, which would allow him to be picked up by an MLB team.  Darvish would be exempt from the posting system if he had 9 or more years of Japan’s Nippon Professional Baseball (NPB) service (which he does not).

The MLB posting system is an instrument that regulates the movement of players from the NPB to the MLB.  It effectively provides NPB teams a windfall for losing their best players to the United States.  Instead of NPB players having their choice of what MLB team to go to, MLB teams submit bids to merely win the right to negotiate with the NPB players for 30 days.  This negotiation in the 30 day window is where agents like Arn Tellem and Don Nomura really assist the player.  If a posted NPB player signs a contract with the MLB team in that 30 day window, the player’s former NPB team receives the money from the original bid, which earned the MLB team the limited exclusive right to negotiate with the player and his agents.  The Mariners made a bid of $13.125 million for Ichiro Suzuki and the Red Sox made a bid of $51.1 million for Daisuke Matsuzaka.

Darvish has an interesting background.  His mother is Japanese while his father is Iranian.  His parents met at a small liberal arts school in St. Petersburg, Florida.  Kazuhiro Sasaki of the Seattle Mariners and Takashi Saito of the Milwaukee Brewers went to Darvish’s high school.  Hideki Okajima of the Boston Red Sox and Yoshinori Tateyama of the Texas Rangers played for Darvish’s current professional team in Japan.  And Darvish just happens to be rocking the following numbers this year in the NPB: 1.56 ERA, 10.2 K/9, 1.4 BB/9, and 0.20 HR/9.  He also will only be 25-years-old if/when he is posted.

Arn Tellem/Don Nomura Planning For Yu Darvish’s Posting from Sports Agent Blog - Sports Business, Sports Law, Sports Negotiations, NCAA Rules

I know a lot of agents who love to boast about the fact that they rarely, if ever, get any sleep.  In fact, my friend Mook Williams of National Sports Management made his Facebook profile name, Mook NoSleepneeded Williams.

Judy Battista of the New York Times recently wrote an article titled, Sleep? For N.F.L. Agents, the Action Is Nonstop.  In that article, Battista mentioned David Canter, who can operate on 45 minutes of sleep (and is being talked about by many in the business after negotiating a whopper of a deal for client Eric Weddle), the CAA Football duo of Tom Condon and Ben Dogra, who have the daunting task of representing 5 first rounders in addition to Antonio Cromartie, Peyton Manning, and Nnamdi Asomugha (imagine how much time they spent on Asomugha alone!), and Joel Segal of Lagardere Unlimited, who summed up last week with the line, “Literally, no sleep!”

For more reading on the hectic weeks of various agents:

• Rick Reilly sat on Peter Schaffer’s stool for an entire day [NFL back in business].  Check out the blurb from 1:41 p.m.  4:03 p.m. blurb = Swedish hookers?  I have my guess of the agent.  I’ll keep it to myself.
• Andrew Astleford tracked down Harold Lewis’ every move at his agency’s offices in a mansion [A day in the life of an NFL agent].
• And a story we linked to in last week’s Shabbat Shalom: Friday Wrap-Up, GQ’s 72-hour binge with David Canter [An Insider's Look at the NFL Free Agent Frenzy].

NFL Agents Have Been Getting Very Little Sleep from Sports Agent Blog - Sports Business, Sports Law, Sports Negotiations, NCAA Rules

Before 31 NFL team owners approved (1 owner, Al David of the Oakland Raiders, abstained in the vote) what they called a comprehensive agreement, there were a lot of rumblings on Twitter regarding sources telling reporters that the new deal will include a reduction of the ceiling for NFL agent fees on negotiated rookie contracts.  Prior to the lockout, no agent could take more than a 3% commission on any negotiated team contract, rookie or veteran.  The rumor is that for rookie contracts alone, the new cap on agent fees will be 2%.  This could have far reaching negative effects on the agent community.

While initially it may seem as though a mere reduction of a single percentage point is negligible, realize that we are talking about percentage points on contracts worth 6-to-8 figures.  Let’s throw round values and length of contracts out of the window.  If you represent someone who is making $10,000,000 and you take 3%, you earn $300,000.  A mere one percentage point reduction and you forfeit $100,000.  Maybe that is not a big deal to a large agency with a huge client base, but to the smaller agents who are struggling to pay training costs alone and representing players who are drafted in the later rounds without those large contracts, that percentage point could be the difference between surviving to practice another year and calling it quits.

People who think that most agents have not been charging the 3% maximum commission are wrong.  The NFLPA has stated that the average commission charged by a certified contract advisor is roughly 2.9%.  Further, the fees that are typically reduced are for players selected in the top 10 picks of the first round.  Again, we are not talking about the small agents here.

It remains to be seen whether the rumor of a change in the commission cap on rookie deals turns out to be true.  As of right now, there is no deal in place – the players believe that the owners have voted on a collective bargaining agreement with provisions that were never agreed to by the players.  However, in the meantime, there are many people who are less than thrilled with the rumor of reducing the cap on agent fees.

I have provided some of the better Tweets from last night on this subject, below.

If true, and #NFLPA caps #agent fees @ 2% on rookie deals - #agents will be more inclined to poach veterans - sqeeze small agents #nfl

July 21, 2011 7:44 pm via Twitter for BlackBerry®ReplyRetweetFavorite

@jayreisinger

Jay Reisinger

Agent fees drop from 3% to 2% on Rookie deals? Glad I'm outta the business. How can Agents afford 2 pay 4 draft prep? http://bit.ly/r5VRXm

July 21, 2011 7:18 pm via TweetDeckReplyRetweetFavorite

@Joshluchs

josh Luchs

And my favorite:

CBA-drop agent rookie fees from 3 to 2 percent. Sounds fair. Is #NCAA a signatory to the agreement or just a farm system pay back? Geesh!

July 21, 2011 6:50 pm via webReplyRetweetFavorite

@RalphCindrich

Ralph Cindrich

Rumor: NFL Rookie Deal Agent Fees To Be Capped At 2% from Sports Agent Blog - Sports Business, Sports Law, Sports Negotiations, NCAA Rules