The main issue in CBA negotiations has, and will be, the percentage of NFL revenues to player salaries.  Other major concerns include, NFL rookie salaries and the legal inability of franchises to recoup signing bonuses from players who breach contracts or refuse to perform.

The authors of the article take the position that the owners cared so much about labor peace and preventing a potential labor stoppage back in 2006, that they agreed to a CBA that had unfavorable terms.  There is a thought that former NFL Commissioner, Paul Tagliabue, lobbied ownership to accept the deal because he wanted his legacy to be that he presided over almost two decades of uninterrupted labor peace.

Many pages are dedicated to providing a formal history of the NFLPA, its major players, and the numerous legal actions it has been a part of over the years of its existence.  It certainly is not a short read, but I believe that it is important to have a good understanding of the history of negotiations between the NFL and the Players Association in order to have a full grasp on what is going through the minds of the bargaining parties today.

The use of media by both sides of the negotiation table is nothing new.  In fact, it was heavily used in the NHL’s battle with the NHLPA earlier this decade.  It is also being heavily employed by the NFL and the NFLPA during this round of CBA negotiations.  This time, new media in the form of blogs and Tweets are involved, as well.

In such contentious negotiations, it is very difficult, and sometimes impossible, to determine which side has a better case.  And at the end of the day, it does not matter; everyone suffers if a season, or part of a season, is lost due to a labor battle.  Is the NFL bargaining in good faith?  Should there be a rookie salary cap?  Does the union truly have all the financial information it needs to bargain?

Interestingly, when the authors released the piece, they wrote that there is no need to create artificial deadlines, “as  these will obstruct the natural development of negotiations between the parties.”  DeMaurice Smith certainly did not agree, as the NFLPA had an “internal deadline” for agreeing to a new CBA, which apparently has already passed.  Going back to my previous point about new media, check out where the news was posted – on the League’s own blog focused mainly on labor issues.

Skip to the end of the IPLJ article and you will see the authors’ predictions, which includes the belief that Ownership will lockout the players.  And then there is decertification talk, which has been gaining momentum as of late.  Every NFL team has approved of a plan to decertify the NFLPA if there is not a new CBA agreed to by March 3, 2011.  I assume that the date is subject to change.  Decertification would mean that the NFLPA is no longer a union; players could then sue the league under an antitrust claim.

Will There Be A 2011 NFL Season? from Sports Agent Blog - Sports Business, Sports Law, Sports Negotiations, NCAA Rules

Scott Boras

But what we really care about here is that these disbursements might contravene MLB Players Association Rules and Regulations.  If the loans were registered with the union, then the MLBPA would move on.  But if Boras Corp. did not first consult with the union regarding these loans, there could be consequences for the company’s prior actions.

As always, my colleague Gabe Feldman, head of the sports law department at Tulane Law School, has some insightful comments on the matter.

“You worry that these agents are gaining ownership over these prospects.  And the prospects then feel so indebted to the agents that the prospects feel that they cannot leave the agent for another.”

And I agree.  But instead of talking too much about the exploitation of innocent Dominican players, let’s stay focused on the MLBPA Rules and Regulations, which Boras and his team of lawyers should be combing over a few times this holiday weekend.

The MLBPA Regulations Governing Player Agents were amended as of October 1, 2010.  Unfortunately, I do not have a good uploaded copy of the old Regulations, which would have been the regulations that Boras Corp. was operating under when it provided any money to Dominican prospects.  The new Regs may be found at the end of this post.  Pay specific attention to Pages 20 and 21.

These rules state that no money or other thing of value may be provided to a player, or any person related to the player, for the purpose of inducing or encouraging the player to use or continue to use any person’s or firm’s services as a Player Agent, Representative, or Draft Advisor.  Read everything that follows that statement and quickly see that this issue could become one of interpretation.  My money is on Boras coming out of this unscathed.

Looking Into Potential Improper Inducements By Boras Corp. from Sports Agent Blog - Sports Business, Sports Law, Sports Negotiations, NCAA Rules

The NCAA requires that a player selected in the Major League Baseball First-Year Player Draft pay his advisor at his or her normal rate for such services if the player hopes to maintain his eligibility at an NCAA school.  Thus, if Troy Caradonna of SFX was to follow that rule, which many people say goes ignored by quite a few baseball advisors, Caradonna could have expected to earn quite a bit of money based on Karsten Whitson’s signing bonus.  Whitson was selected #9 overall in the 2010 Draft by the San Diego Padres.  An offer of $2.1 million was not enough to convince Whitson to go pro out of high school instead of attend my alma mater, the University of Florida.

Soon after the signing deadline passed, Padres owner, Jeff Moorad, stated that he was disappointed that Caradonna first gave the team a number concerning what was needed to sign Whitson only 15 minutes prior to the deadline.  Moorad said that he felt sorry for Whitson and felt that he was misled by Caradonna.  But maybe Moorad should not feel that bad for Whitson.  Apparently, Whitson’s decision is working out for the best (although maybe not the best from the Padres standpoint).

Baseball advisors have the very difficult task of advising their clients whether they should take the offer presented by the drafting team or forgo the offer and go to college.  It is very rare to see a high pick like Whitson decline an offer in excess of $1 million, but no two players are the same.  Players come from different socio-economic backgrounds, have different levels of physical and psychological development, and have different needs and desires.  As reported by Yahoo!’s Kendall Rogers, Whitson flat out did not think he was ready for pro ball and wanted to play baseball for the Florida Gators.  I’ll take a stab at it and assume that his family is not hurting for money.

Whitson might not make $2.1 million again in 2013, which is the first year that he will once again be eligible to be selected in the MLB First-Year Player Draft, but maybe that is not such a big concern to him.  Three years from now, he will hopefully have received a good education, excellent training, and had the chance to mature and become a great professional athlete.  His arm could blow out before then, but maybe he is the type of man who thinks there will be other opportunities out there for him should the unfortunate occur.

None of us can comment on whether it was a good or bad decision, because it was a personal decision that was unique to Karsten Whitson.  These decisions must be made on a case-by-case basis; there is no objective answer based on money and slot alone.  That is why having a competent advisor to help out is so very important.  I hope that Whitson is happy with his decision; he is the only person that he has to please.

Case Study: Karsten Whitson’s Decision Not To Sign With The Padres from Sports Agent Blog - Sports Business, Sports Law, Sports Negotiations, NCAA Rules

Since many people within the business of baseball have been talking up the 2011 Draft and downplaying this year’s draft talent, it appears that this year’s draft picks might have benefited a bit from teams just willing to spend more cash on their selections.  Bryce Harper received $9.9 million ($6.25 of that being a signing bonus), but he was certainly not the only bonus baby of the draft.  Overall, bonuses were up $5.5 million from last year.  If you include the guaranteed money for Bryce Harper, Yasmani Grandal, and Zach Cox, the disparity is even greater.  Players will take a total of $200.9 million from MLB teams just based on being drafted.

And it was not just the Yankees and the Red Sox spending money on their picks.  While The Red Sox were the #4 spender, they were beat out by the Washington Nationals, Pittsburgh Pirates, and Toronto Blue Jays.  Next time those teams claim to be “small market teams”, you can remind them of their draft budgets.  You could also just bring up Deadspin’s leaked financial documents.

Even though a vast majority of teams ignored MLB’s recommended slot values, The Atlanta Braves and Minnesota Twins remained extremely conservative, not going over slot with any of its picks.  But even the Braves and Twins might not be able to refrain from becoming big spenders next year; a year where it should be quite nice to be advising the top players in the draft.

“If you thought we were aggressive this year, wait until you see next year,” an American League scouting director said. “It may be our last chance to sign a lot of the high school players, and we’re going to take advantage. A lot of other teams will, too.”

If that’s the case, draft spending will surge further upward in 2011.

MLB Teams = Big Spenders from Sports Agent Blog - Sports Business, Sports Law, Sports Negotiations, NCAA Rules

It is highlighted beautifully in the piece that I linked to yesterday (Minor League Baseball: Investing In The Future), in the section, On-Field Impact of Money.

Richie Robnett knows both sides of how money can affect things between the lines. Selected with the 26th overall pick of the 2004 draft by the Oakland Athletics, the outfielder commanded a reported $1.325 million bonus.

There were times with Oakland, he says, where his performance didn’t warrant the playing time he received.

“There’s times where I went through really bad streaks with hitting, and I got frustrated,” Robnett said. “And when I get frustrated, I just make it worse for myself instead of trying to fix the problem. But they’d keep throwing me out there, keep throwing me out there.

Part of that frustration was not being able to live up to the gaudy contract he signed. With that frustration came pressure. With that pressure came poor performance. All of it regrettable for the 26-year-old, who topped out at Triple-A.

“I felt like I probably put a little bit more pressure on myself, because I felt like I had to live up to (the contract),” he said.

“But at the same time, now that I think back to it, there really wasn’t pressure, because they show a whole bunch of interest in you and they’re telling you that they want you in the big leagues with them. That’s when it was time for me to relax, instead of putting added pressure on myself, like I’ve got to do more now because you’ve got to live up to the first round draft pick and stuff like that. But really, that’s when I should have stepped back and just focused on trying to get better.”

When Robnett started falling out of favor in the A’s organization, and even when he was traded from Oakland to the Cubs prior to the start of the 2009 season, he got an even better understanding of the impact that both the draft and the bonuses that players receive have on the game.

“The draft comes every year, so you’ve got guys with high draft status and they might have received big signing bonuses. Well, when teams do that, that’s their investment and they’ve got to protect their investment,” he said.

“A lot of times, regardless of how badly one of their big prospects is doing, he’s got to play because that’s who they put their money into. Even if somebody’s on the bench and does well, well he can’t play today because we don’t have anything invested in him. That’s where the whole business side of it comes into it. I’ve seen in my career where guys would even get released or sent down from a team because they’re outplaying the prospects and they don’t want that embarrassment and stuff like that, they don’t like that at all. I’ve seen situations like that before. But I think it’s really huge. Baseball is a business, and I understand from the business aspect, you’ve got to protect your investment.”

Baseball Is A Business And Many Are Pot Committed from Sports Agent Blog - Sports Business, Sports Law, Sports Negotiations, NCAA Rules

The other day, I was negotiating with a General Manager of a Winter Ball team that is interested in signing one of my clients to play for him.  He originally offered my client $1,000 less than I was hoping for, but included a shared apartment.  The stated offer is not a figure to complain about, but is less than what I would expect the client to be paid based on what the team paid its players last year.  My goal is to get him some extra cash, even if it is $1,000 more per month.  While it may not seem like a large increase, to a minor league player, an extra $1,000 a month quite a jump.

As we were talking on the phone, I remembered an article that I recently read titled, Minor League Baseball: Investing In The Future, which is a fantastic piece that should be read in its entirety by all baseball players and people who wish to represent them.

Minor League players are lucky to earn not much more than $10,000 per season; Winter Ball can be a nice bonus for strong in-season performance.  More importantly, it helps players fine-tune their skills in the off-season.  But back to the money, Winter Ball cash is likely even more important to a player drafted in a later round who did not have great leverage when negotiating his first contract.  That player might not have much of a signing bonus to rely on as he makes his way through his organization’s farm system.  The bonus babies do not have the same concern over a thousand dollars in a Winter Ball contract.

It is something that is not highly documented, but players within each team’s farm system come from different socioeconomic backgrounds and receive different signing bonuses after being drafted.  The latter part of that statement affects not only what kind of economic situation a player might be dealing with, but it also changes the type of attention and number of chaces that the player will have to perform, even though he might be going through a slump or two in his career.  It is the politics of baseball, and it is the reason why I spend my time seeking even the slightest increase in salary for a later-round client, just so that he might be able to live just a little bit more comfortably throughout the year.

What Money Means To Minor Leaguers from Sports Agent Blog - Sports Business, Sports Law, Sports Negotiations, NCAA Rules

I have been fortunate enough to receive an email that the NCAA has been sending out to its baseball student-athletes titled, NCAA Amateurism Review – Baseball.  Imagine that you are a talented baseball player in college and you receive this email.  Do you answer it with complete honesty?  Do you answer it at all?  How does something like this actually promote the benefits of going to college to high schoolers who are wondering whether they should sign with a team straight out of high school or go to college for a few years first?  In light of the questionnaire, would an advisor ever be crazy enough to have a written agreement with his advisee?

—

Dear Baseball Prospective Student-Athlete:

This e-mail is being sent to gather initial information from you regarding your request for amateurism certification by the NCAA Eligibility Center.  It is our staff’s understanding that you were selected by a Major League Baseball (MLB) club in the June 2010 Rule 4 Draft and have decided not to sign a professional contract.  Please provide the following information relating to your contact with MLB clubs and your relationship with your advisor:

1. Provide the name and contact information (e-mail address and phone number) of your advisor.
2. Is your advisor an attorney?
3. Did your advisor have any direct communications with any MLB clubs on your behalf?
4. Did your advisor discuss your signability with any clubs?
5. Provide a detailed description of the services provided to you by your advisor (for example, discussions regarding your signability number, continuing in school versus signing a professional contract, contract offers, MLB questionnaires, medical history, performance, etc.):
   1. Estimate the number of times you talked with your advisor.
   2. Explain the subject matter of each of your conversations with your advisor.
6. List all individuals or entities, including MLB clubs, with whom your advisor spoke with on your behalf.
7. Have you ever agreed with your advisor that he would serve as your agent if you signed a contract with a club or if you are drafted again in the future?
8. Did your advisor provide anything to you or your family in addition to the services listed above (e.g., meals, transportation to showcases, tryout expenses)?
9. How much was the fee you paid for your advisor’s services?
10. What percentage of your signing bonus would your advisor have received had you signed?  (This would have been discussed during your initial meeting(s) with your advisor).
11. If you have a written agreement with your advisor, please fax a copy of this agreement to 317-968-5103 as soon as possible (attn: Stephen Webb).
12. If you have a verbal agreement with your advisor, please provide a detailed description of the terms of this agreement.  (What did you and your advisor agree he would do on your behalf?)
13. Did your advisor talk to the MLB club that drafted you regarding your contract offer?
14. List all individuals within the MLB organization that drafted you with whom you spoke after the 2010 draft.
15. Provide the name and contact information (e-mail address and phone number) of your area scout from the team that drafted you.

Please note that NCAA regulations require you to provide complete and accurate information to the NCAA Eligibility Center relating to your amateurism certification request.  Any failure to do so could amount to an NCAA Bylaw 10.1 violation which would negatively affect your eligibility at NCAA institutions.

Please include your name in the subject line of the reply e-mail.

Finally, for the NCAA institutions that have received this e-mail (which was sent as a blast to ensure that the certification reviews began as soon as possible after this year’s signing deadline) – your institution has one or more of the baseball prospects to whom this e-mail is being sent on your active IRLs.  If you would like to know which of your prospects received this e-mail, please feel free to contact the amateurism certification baseball inquiry line at 317/223-0707.

Prospective Baseball Student-Athlete Questionnaire from Sports Agent Blog - Sports Business, Sports Law, Sports Negotiations, NCAA Rules

Prior to August 16, this year’s deadline day, only 15 players selected in the first round had signed a contract.  That left a whopping 17 players still negotiating deals at some point yesterday.  In 2007, the first year that the signing deadline was moved up to August 15, changing the previous deadline of a week prior to the following draft, only 7 players had not signed when deadline day began.  It is safe to assume that players and their savvy advisors have adapted to the nature of the beast and learned how to most effectively find the best agreement possible.

If you are interested in seeing which picks have signed and which ones have not, round by round, MLB.com has done a fantastic job organizing it and providing the date of when the player signed.  Unfortunately, the site does not include signing bonuses, but that information, at least for the top 10 rounds, is available elsewhere.

An interesting point that has been raised by various agents and sports law scholars is based on the strong possibility that baseball’s new collective bargaining agreement, likely to begin after the 2011 championship season, will include a mandatory (instead of the current “recommended”) slotting system, similar to what is used in the NBA and is currently being considered by the NFL.  That point is that some of the big spending teams (i.e. Red Sox, Yankees) will be more willing to dish out cash to its top picks now and take chances later in the draft on players passed up by the smaller market/more stingy teams, while they still have the opportunity to pay the best players the money they deserve (or claim they deserve).  This can be a nice short term gain for the players’ advisors, but in the long run, advisors representing top picks under a slotting system have a lot to lose if you take into consideration their large compensation under the status quo.

Sports Law Blog’s Michael McCann gives some good insight as to how an advisor’s role may change in a world where baseball is bound by a slotting system:

In that setting, the goal of the agent would clearly be to have his or her player drafted as high as possible. So agents could still play a role — they could tell teams that unless a represented player who has remaining college eligibility is drafted in the first round (or by whatever threshold), teams would be better off drafting other players since the represented player will attend college or in some cases continue to play college baseball. The slotted money has to be good enough to turn pro.

And perhaps there will be a lot of advisors, who oftentimes are also attorneys, charging a flat fee or by the hour for their services instead of invoicing a player for a particular commission of the signing bonus.  This would seem like almost a must for a college senior looking to have assistance in a draft bound by a slotting system.

The 2010 MLB Draft And Possible Future Changes from Sports Agent Blog - Sports Business, Sports Law, Sports Negotiations, NCAA Rules

As you can see, 30% of the total salary in 2010 is $195,000. Therefore, in the new deal the total salary each year can only increase or decrease by $195,000, and nothing more. Here is how the rule will be applied after signing a new deal:

Some of you may be asking why we sometimes see players like Patrick Willis getting these mega deals while still on his rookie contract. Well, that is what signing bonuses and escalators are for. Teams often give a player like Willis a huge signing bonus and a lot of easily achievable escalators.

Let’s face it – The rules in the NFL CBA are mostly on the side of the individual teams and not the players. This is mostly evident in the fact that a club can end a player’s contract if he doesn’t perform well enough. The player cannot just terminate his contract if he’s not happy, so that’s why we hear a lot about holdouts. When I was younger boy entering my teens, I would often stage holdouts at my house. I knew I had no say in my household and the rules heavily favored my parents. In order to combat that, I would refuse to go out when my parents wanted to. That’s kind of a random example, but hopefully makes the situation more clear.

Anatomy of the NFL 30-Percent Rule from Sports Agent Blog - Sports Business, Sports Law, Sports Negotiations, NCAA Rules

I’m just reporting the facts on this one, so if you are a party involved in this matter, don’t get upset (there is no malice involved in my write-up).  Anyway, in my MLB Draft Day 1 breakdown, I listed the advisors next to the players who were fortunate to be early draftees.  With pick #22 overall, the Texas Rangers selected Kellin Deglan, a Canadian catcher committed to Florida International University who was being advised by Double Diamond Sports Management.  Deglan ended up being the 1st player selected in the 1st round to sign with a team, albeit for a below-slot deal ($1 million).  No matter what Deglan signed for, it is likely that Double Diamond expected its advising commission of whatever was agreed to by the advisor and advisee prior to the draft.  It is not uncommon for that commission to be set at 5% of the player’s signing bonus.

In a post titled, You don’t say: Player in Scott Rothstein Ponzi scheme ripped off!, Jose Lambiet wrote (I did not change a single word or add emphasis on any phrases),

One of the alleged players in the Scott Rothstein Ponzi scheme is going to spend what could be his last few months of freedom chasing a professional baseball player who, he said, ripped him off!

Howard Kusnick, a partner in Rothstein’s now-defunct Fort Lauderdale-Boca Raton lawfirm expected to be indicted for his role in the $1.4 billion scam, last week filed a breach-of-contract lawsuit in a Palm Beach County court.

The lawsuit alleges that Kusnick’s Double Diamond Sports Management represented Major League baseball first-round draftee Kellin Deglan, a catcher prospect of the Texas Rangers. Kusnick supposedly babysat Deglan through the pre-draft weeks — and now Deglan won’t pay the $50,000 he allegedly owes Double Diamond for the work.

That amount of money, according to the lawsuit, represents five percent of the 18-year-old Deglan’s $1 million-signing bonus.

In the lawsuit, Kusnick is also kvetching about the fact he had to buy all kinds of baseball equipment for Deglan, including a $110-Oakley glasses.

When a 1st round draft pick does not pay his advising fee, it is probably worth it to go after that kind of money in court.  I do not see the suit as being bad publicity, instead, I commend the filing of the suit because it may serve to let players understand that advisors provide a time-consuming and research-intensive service that deserves just compensation.  One can argue about whether 5% is fair compensation, but since it is fairly solid custom in the industry to charge that amount, that defense probably won’t have strong legs.

I assume that Deglan and Kusnick will settle prior to a hearing for something slightly less than $50,000, but if Deglan decides to see this through, I would be very interested to follow the case and see what the outcome will be.

Kellin Deglan Being Sued For Advising Fees from Sports Agent Blog - Sports Business, Sports Law, Sports Negotiations, NCAA Rules