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Why Athlete Agents Should Enter The World Of NIL Representation With Caution

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No athlete agents have been punished for their recruitment of college athletes . . . yet. (Photo by Ulrich Baumgarten via Getty Images)

College athletes have had the capacity to exploit their names, images, and likenesses (NIL) for commercial gain for roughly 1.5 months and it has not led to the anarchy or chaos that some suggested leading up to July 1. Since that date, numerous athletes including top incoming quarterback Quinn Ewers, have decided to retain the assistance of professional service providers such as sports agents who traditionally represent athletes throughout their professional careers. The representation is limited (while the athletes retain intercollegiate athletics eligibility) to procuring and negotiating marketing deals and there cannot be any agreement surrounding the agent’s potential future representation of the athlete for his/her professional contracts.

While I have yet to see any proof of it, some people have questioned or even stated with certainty that agents are already violating various laws. Vague finger-pointing has occured behind closed doors with accusations that there must be at least a few agents who are providing or offering improper benefits to college athletes to entice them into signing NIL representation agreements. These NIL representation agreements are technically construed as agency contracts under many state athlete agent laws and the Sports Agent Responsibility and Trust Act (SPARTA, 15 U.S.C. §7801-7807). Per SPARTA, a federal law that is intended to be enforced by the Federal Trade Commission, an “agency contract” includes an oral or written agreement in which a college athlete authorizes a person to negotiate or solicit an endorsement contract on behalf of the athlete. That is absolutely within the scope of the services that are being and will be provided by athlete agents on behalf of their college athlete clients.

The federal law states that it is unlawful for an athlete agent to directly or indirectly recruit or solicit a college athlete to enter into such an agency contract by providing anything of value to the athlete or anyone associated with the athlete before the athlete enters into an agency contract, including any consideration in the form of a loan, or acting in the capacity of a guarantor or co-guarantor for any debt. The attorney general of a state can bring a civil action against an agent who is believed to have violated this law.

While rare, states have enforced their own athlete agent acts against individuals who were alleged to have provided things of value to athletes prior to the athletes entering into agency contracts. In April 2017, football agent Terry Watson pleaded guilty to violating North Carolina’s athlete agent law, which also prohibits athlete agents from furnishing anything of value to college athletes before they enter into agency contracts. Violation of that law is deemed to be a Class I felony.

Watson, based in Georgia but punished under North Carolina law due to his dealings in the state, admitted to violating North Carolina’s law by providing approximately $24,000 in cash and travel accomodations to former UNC football players Robert Quinn, Marvin Austin, and Greg Little. His punishment was 30 months of probation and a $5,000 fine, as well as a suspended jail sentence of six to eight months.

At the time, college athletes did not have NIL rights and agents could not sign college athletes to any form of an agency contract. Thus, Watson was accused of providing these benefits to college athletes in anticipation of signing them to be clients once they turned pro. However, that does not mean agents are now off-the-hook for the type of activities undertaken by Watson. If an agent provides cash or travel accomodations to athletes prior to those athletes signing NIL representation agreements, then that agent can ultimately end up in the same situation Watson found himself in, particularly in a state that aggressively enforces its athlete agent law, such as North Carolina.

In 2017, North Carolina Secretary of State Elaine F. Marshall, who has served in that position since 1997, said “years ago when this all began, people in the athlete agent industry scoffed at us for looking into these cases,” referencing the case against Watson. She added, “but today, everyone in that business knows that when you come to North Carolina, you had better follow the law. And if you don’t, we can and we will enforce the law.”

Thus, anyone who may be recruiting a college athlete to represent the athlete’s interests for the purpose of procuring and negotiating NIL deals should be extra cautious about offering those athletes anything of value prior to signing a NIL representation agreement. If an inducement is deemed to have been provided, then the agent could be subject to the same type of punishment, or worse, received by Watson merely four years ago.

Written by Darren Heitner

Darren Heitner is the founder of Heitner Legal. He is the author of How to Play the Game: What Every Sports Attorney Needs to Know, published by the American Bar Association, and is an adjunct professor at the University of Florida Levin College of Law. You can reach him by email at heitner@gmail.com and follow him on Twitter at @DarrenHeitner.

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