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Agency relationships and restatements

This is an excerpt from Introduction to Sport Law With Case Studies in Sport Law-2nd Edition by John O. Spengler,Paul Anderson,Dan Connaughton & Thomas Baker.

Sport Agents

Determining when the first person in the sport industry entered into an agency relationship is impossible. A clearer historical record can be established related to player agents. The first well-known player to hire an agent to represent him in contract negotiations was early football star Red Grange. In 1925 Grange hired an agent to negotiate his contract with the NFL's Chicago Bears. Still, the profession did not truly expand until the 1960s, when attorney Mark McCormack began to work with legendary golfer Arnold Palmer. As Palmer began to make more money from sponsorship and endorsement deals, athletes from other sports began to seek the representation of player agents.

At the time, not all teams were excited about working with player agents. In the early 1960s NFL Hall of Fame center Jim Ringo of the Green Bay Packers hired an agent to renegotiate his contract with legendary Packers coach Vince Lombardi. When Lombardi saw the agent, he left the room for a short time and returned to tell Ringo that the negotiations were over because he had been traded to the Washington Redskins.

The player agent profession did not see explosive growth until the 1970s. Until then, most athletes in professional team sports were bound by reserve clauses (discussed further in chapter 10) in their contracts stipulating that if the player did not automatically sign a new contract with the team for the next season, all the provisions of his present contract would be automatically renewed. Therefore, players had no freedom to move from team to team seeking higher salaries. In the 1970s the professional sports leagues adopted free agency, and players were free to offer their services to other teams and often relied on agents to help them in their negotiations.

Continuous growth has occurred in the field of sport agency. Each of the four major professional sports leagues in the United States currently has hundreds of registered player agents, although many individual agents represent multiple players (see table 4.1).For instance, notorious baseball player agent Scott Boras represents more than 100 baseball players at the major and minor league level (Wikipedia, n.d.), and football player agent Drew Rosenhaus represents over 100 football players ("Drew Rosenhaus Net Worth," n.d.).

Sport agents assume many roles for the player, team, coach, or owner for whom they work. These roles include the following:

• Negotiating employment contracts
• Negotiating concession agreements with concessionaires
• Representing an organization in negotiations with sponsors, advertisers, and media outlets
• Representing an organization, athlete, or coach in negotiations with endorsers
• Entering the team or organization into events
• Entering into contracts with security, ushers, merchandisers, and others associated with games and other events
• Managing the relationship with outside entities including community organizations, facility boards, and charitable foundations
• Conducting estate, tax, and financial planning for athlete, coach, and organization clients
• Securing investment and appearance opportunities for the athlete or coach
• Working as the conduit between an athlete, coach, or organization in developing an Internet presence or marketing campaign

To understand the nature of this relationship, we next look at the principles of agency law.

Concepts in Agency Law

The law of agency is often understood by reference to the Restatements of the Law. Written by legal scholars who are members of the American Law Institute, the Restatements explain what the law is in a certain area and how it is changing. Courts often rely on the Restatements to provide consistent explanations of certain areas of law. One of the most widely used Restatements is the Restatement of Agency.

The Restatement defines an agency as "the fiduciary relationship that arises when one person (a ‘principal') manifests assent to another person (an ‘agent') that the agent shall act on the principal's behalf and subject to the principal's control, and the agent manifests assent or otherwise consents so to act"(Restatement [Third] of Agency,§ 1.01, 2006). In simpler terms, agency refers to the relationship between two parties in which one party, known as the agent, agrees to act as the representative of the other party, known as the principal. Of particular note, the agent should act for the benefit of the principal and subject to the control of the principal. In sport, these relationships are everywhere:

• Students who sell their university's merchandise at a game are acting as agents of their school (the principal).
• Ticket sellers who sell tickets for games or other events are acting as agents of the team (the principal) they work for.
• Sport managers who promote a facility as a possible location for playoff or other games and events are acting as agents of the facility (the principal).
• Health club workers who try to draw in clients for the club are acting as agents of that club (the principal).

Agency law refers to the law that applies to and explains these situations and specifically defines the rights and responsibilities of both principals and agents, the authority of the agent as she works for the principal, and the creation of the agency relationship itself. This relationship between the agent and the principal is governed by law and bears further examination.

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