...it's real long, but worth the read...
Agent Games –
One of the Keys to Sports Business: The game within the game these days more often then not is controlled by agents. Agents weren’t a factor thirty-five years ago when it came to multi-million dollar contracts. But when Marvin Miller joined the Major League Players Association in 1965, and within seven years managed to negotiate salary arbitration, followed by free agency in 1975, the face of sports changed forever and the role of agents in sports at the same time. The San Francisco Chronicle offered one of the best reports ever written on the evolution of the sports agent game.
The wheeling and dealing germinates here, from sparkling suites in Brentwood to sprawling offices in Newport Beach. From the prime real estate of Marina Del Rey and Malibu, where sunsets were invented, to the gaudy world of Beverly Hills, this is the haven of the sports agent. But far away, in Winnipeg, Manitoba; McLean, Va.; and, of course, New York, corporations have been gobbling up the sports agent and, in doing so, changing the sporting world as we know it.
Assante, Octagon, SFX - these are the newest players in the game, conglomerates that have spent billions over the past 18 months to acquire prime sports agencies. The business has gone corporate, either through these mergers or in the form of an independent agent with Microsoft-like dominance. This consolidation of influence has resulted in: The Texas Rangers bowing at the altar of agent Scott Boras and committing more than $100 million above the next best offer to land shortstop Alex Rodriguez. Patrick Ewing and Glen Rice changing uniforms in a 12-player trade - just one of many deals driven by superagent David Falk. A single company, entertainment giant SFX, representing about one-sixth of the players in both the NBA and the major leagues. Agents feeling emboldened enough to complain to teams about everything from pitch counts to playing time. Myriad conflicts of interest, including one that spawned a $60 million lawsuit stemming from the owner of the Rangers having connections with SFX.
The men who do the deals now have their hands in everything. Team officials still play a pivotal role in deciding where your favorite players wind up. But the boundless contracts and corporatization now shape what and whom you see, from Pacific Bell Park to Madison Square Garden, from Pro Player Stadium to Wrigley Field.
"I think the power will grow exponentially," Giants assistant general manager Ned Colletti said, "and with that, the agents' grasp and hold over the field."
Scott Boras is not part of a massive conglomerate, but he doesn't need to be. He's a corporation unto himself (in fact, the Scott Boras Corp.).
Other baseball agents have formidable practices with even more clients, but Boras belongs on a different plane. With a stable of 55 players that includes Alex Rodriguez, Greg Maddux, Kevin Brown, Bernie Williams, Juan Gonzalez and, much to the Giants' chagrin, Barry Bonds, Boras has inserted himself into the fabric of the game.
He almost gleefully will recite the many rants directed at him - "wart on a cockroach," "most hated man in baseball," "the Heistmeister, that's a pretty good one" - as if they are badges of honor. Fame earned by negotiating deals such as the 10-year, $252 million covenant he got the Rangers to swallow for the services of Rodriguez.
The numbers, though, have come to mean almost nothing, dollar signs piling up with little perspective. The tangible but elusive nature of the agent's influence goes well beyond the contract. In Boras' case, that means striking up a relationship with Dodgers general manager Kevin Malone that could help land four Boras clients in the team's starting rotation.
"The reality is, I do what's best for my clients," he said, scoffing at any implications. "That's my job."
The Boras-Malone relationship is a hot topic within baseball circles and, in particular, the agent industry. Some of it is jealously, but some, too, is concern the Dodgers are practically under the agent's spell. The two sit together frequently at games and, more pointedly, many remain stunned over the five-year, $55 million deal Malone threw at right-hander Darren Dreifort - that's more than $1 million per victory for the career 39-45 pitcher and Boras client.
In fact, two years ago, then-manager Davey Johnson wanted to move Dreifort to the bullpen, while Malone wanted him to remain a starter. Johnson changed his mind, coincidentally or not, shortly after a one-hour conversation with Boras in full view at Dodger Stadium. Dreifort stayed in the rotation.
"Let's face it, people speculate that Scott Boras could, should and would work for the Dodgers," said television executive Mike Tollin.
How would Tollin know? As the executive producer of the HBO show
"Arli$$," which has a sports agent as its protagonist, Tollin has enlisted the help of several sports agents to work on story lines over the years and, as such, has been privy to plenty of insider gossip.
It was Boras who placed a call to Cardinals GM Walt Jocketty last May after seeing that one of his clients, young left-hander Rick Ankiel, had thrown 121 pitches in a game. Jocketty, manager Tony La Russa and pitching coach Dave Duncan all downplayed the phone call - "No one outside the organization can dictate company policy," Jocketty said - and even expressed understanding of Boras' concerns.
"He never threw over 105 pitches the rest of the season," Boras said. For the record, Ankiel twice exceeded that total (106 and 111) in subsequent starts.
Boras might wield the most power among baseball agents, but, at least in terms of sheer bulk, he isn't baseball's biggest hitter. That title goes to New York-based SFX, which has a baseball wing (under Randy Hendricks) that represents about 15 percent of major-league players. And SFX holds as much if not more clout in the NBA, where it also represents about 15 percent of the talent.
SFX's David Falk is unquestionably the NBA's top power broker, openly celebrating his ability not only to steer players to certain teams but also to orchestrate trades. Because the NBA's collective bargaining agreement is far more restrictive than baseball's - football agents are the most restricted, given the NFL's so-called "hard" cap - basketball agents are more like general managers than contract negotiators.
So Falk takes credit for manufacturing the four-team, 12-player, five-draft pick trade in September that, among other things, sent Ewing from New York to Seattle, Rice from Los Angeles to New York, Horace Grant from Seattle to Los Angeles, and Chris Dudley from New York to Phoenix.
Some insiders claim Falk, who declined interview requests for this story, shapes at least one in five NBA trades.
The presumption by some is that this kind of power, in whatever sport, only will grow as the business continues to shrink.
"At some point in time, somebody like SFX may end up representing 10 players on a team and have 25 free agents," Colletti said. "Now how does that work?"
Still, there are those who see a we-can't-help-ourselves paradigm at work where the owners are concerned.
Said veteran football agent Marvin Demoff: "I've always said that if Charles Manson were representing Alex Rodriguez, they'd all go to San Quentin to tell Manson what a good guy he is if Rodriguez signed with them."
Long before their influence soared into the stratosphere, long before a movie with a sports agent as its central character became the highest-grossing sports film ever ("Jerry Maguire"), long before mega-agencies engulfed the marketplace, agents often heard one sound when they called teams: Click.
Back in 1975, when Leigh Steinberg dived into the business, athletes had no guaranteed right of representation. "So a team could essentially hang up the phone when an agent called, (saying), ÔWe don't deal with agents,' " Steinberg said.
Twenty-six years later, free agency and spiraling salaries, byproducts of fierce labor bargaining, have swung the balance of power to the players. Now contract talks are regular fodder for "SportsCenter," as some star and his attention-thirsty agent hop from city to city, shopping for the best zillion- dollar deal.
Make no mistake: The agent controls this process.
"In the early-to-mid-'80s, the player still made the call," one baseball general manager said. "As it's gotten into the mid-to-late-'90s, I promise you: “The agent is making the call."
Contracts are not the only item on a modern-day agent's plate, either. The menu covers the gamut, everything from badgering teams about playing time to shipping the client's dogs to stealing clients from a rival agent - or keeping your own from being swiped.
As the money explodes and the industry consolidates, competition among agents becomes more ferocious. Just as huge chains squashed the quaint corner bookstore, so too are monstrous agencies shoving independents out of the picture.
"This is the era of very little Mom-and-Pop-ism, and that applies to representation," baseball agent Tom Reich said.
Reich, 61, has been in the business for more than 30 years. He described it as more ruthless and mean-spirited than ever, as honorable agents share the landscape with "other people where there's outright corruption involved . . . every single day, including as we sit here."
Reich's partner, Adam Katz, offered one example: He said agents routinely pay players embarking on pro careers to become their clients. That, of course, is against players association rules - and, in some cases, state law - but that hasn't been much of a deterrent.
"There's more and more at stake, so it's more and more combative," Katz said. "And more mean and more competitive and more unscrupulous and more corrupt."
The excessiveness is perhaps most evident in recruiting. NCAA rules prohibit even contact with an agent before an athlete completes his college career, but that hasn't been a great hindrance. Demoff, who represented John Elway and Dan Marino and still counts Raiders wide receiver Tim Brown among his clients, said agents now cannot begin early enough.
"I often will hear now," Demoff said, ""Where were you when he was a (college) sophomore? Why weren't you interested then?' "
Here, the consolidation in the industry has made a significant impact. Several agents said big-time management group IMG has made a strong push in football, using its marketing clout and deep supply of "runners," or recruiters, to flood college campuses seeking prospective NFL players.
Once an agent lands his mark, then things can become really crazy. Agents perform any number of curious services to keep their clients happy (and keep them, period). Former baseball agent Dennis Gilbert recalled purchasing a McDonald's restaurant for one player's father; bailing the sister of another player's wife out of jail; and routinely getting concert tickets and finding sports memorabilia for clients and their families.
NFL executive George Young, speaking at a recent law seminar, told his audience he understands conflicts of interest better than lawyers do - precisely because he did not attend law school.
One lawyer, sitting next to Young, leaned over and whispered, "George, I think you're right."
Young, former general manager of the New York Giants (1979-97), knows all about the tangled web agents increasingly weave. He painted this common scenario: One agent represents five players on an NFL team, where the salary cap means those players are competing for the same pool of money.
If the agent begins pushing one player for bigger money, he might give that player more bargaining power - and the other four might find themselves squeezed out of the picture.
"So actually the agents get into situations where the more people they represent, the more they cost people jobs," Young said.
In a merger-happy world, the frequency of these potential conflicts grows by the day. This runs deeper than an abundance of players on one team, or several players at the same position.
Add some new, thorny items to the list: Steinberg's firm helping teams (and thus owners) on stadium projects; SFX being acquired by Clear Channel Communications, which has connections to Texas Rangers owner Tom Hicks; SFX teaming with the NBA on developing a minor league; SFX's Falk still working for Wizards president Michael Jordan while also representing guard Rod Strickland, who recently struck a deal with the Wizards for his release; and IMG - which has a baseball wing that got Yankees shortstop Derek Jeter a 10- year, $189 million contract last month - making a marketing pact with the Yankees.
"Are there conflicts? Sure, but the fact is even in the pure legal world, conflicts can always be dealt with by disclosure," said baseball agent Jeff Moorad, in an argument repeated by many of his colleagues.
Still, that does not erase the appearance - and, in many cases, the reality - of conflict.
Consider the scene in Denver last summer, when the Broncos wanted to sign free agent Gus Frerotte to compete against Brian Griese for the starting quarterback job. Ralph Cindrich represented both players.
Cindrich said he informed Griese and Frerotte of the conflict and got their approval to bring Frerotte to Denver (which he did). Cindrich insisted the arrangement was advantageous because it forced the Broncos to be more truthful with him about their plans.
Steinberg knows something about quarterbacks. He built his fame and wealth on the position, from his first client (Steve Bartkowski) to his biggest-name clients (Steve Young and Troy Aikman). Steinberg's firm represents 18 quarterbacks, including nine starters.
This specialty creates sticky situations, such as Steinberg representing Steelers quarterbacks Neil O'Donnell, Kordell Stewart and Mike Tomczak in 1995.
Another agent, asked about the apparent conflict in representing all three quarterbacks on one team, said, "Well, Steinberg works on every side of everything."
Said Steinberg: "There's never been a moment where I've forgotten who employs me."
Steinberg does dip his hand into plenty of pots. He worked on campaigns to keep the Giants in San Francisco and the Rams in Anaheim (well, 1-for-2); he started an Internet company, AthletesDirect, that since has gone out of business; and he said he recently sold a half-hour television show about a day in the life of a football team.
During an interview in his Newport Beach office, Steinberg detailed his ambitions to stretch the boundaries of a traditional agent. His argument centered on this premise: By working with club owners on stadium projects, for example, he can boost the revenue for his clients to receive.
Still, his close relationship with the 49ers placed him and partner Moorad under scrutiny. As part of a settlement with the NFL last December, stemming from alleged 1997 salary-cap violations involving Young and tight end Brent Jones (among others), Steinberg, Moorad and a third agent, Gary Wichard, agreed to contribute $350,000 to charity.
Agents are not the only ones straddling the line. Hicks, who owns the Rangers, also is vice chair for Clear Channel, a powerful communications company with the nation's largest radio presence. Here's the kicker: Clear Channel bought entertainment giant SFX, including its sports-agent business, last August. That puts Hicks on both sides of the ball.
Last month, baseball agents Jim Bronner and Robert Gilhooley - whose firm, "Speakers of Sport," was acquired by SFX in February 2000 - filed a $60 million lawsuit against SFX. Bronner and Gilhooley alleged SFX did not disclose its pending takeover by Clear Channel (and hence the conflict with Hicks) when it acquired their firm.
The lawsuit also alleges Bronner lost star client Juan Gonzalez to Boras because Boras convinced the player "he should have concerns about the conflict of interest" involving Hicks. Boras denied the accusation.
Outside the Brentwood offices of what used to be Tellem & Associates, acquired in September 1999 for untold millions, the nameplate not only acknowledges corporate owner SFX but also pays homage to another corporate entity: Kobe, as in Kobe Family Entertainment.
The industry that is Kobe Bryant actually no longer exists, having been folded under the umbrella of SFX. But the nameplate remains, underscoring the whole point behind this business of acquiring agents.
Bryant is the marketer's dream, save for the small fact he can't get along with his Lakers co-star, Shaquille O'Neal. At any rate, Bryant represents opportunity, be it buying into a basketball team in the Italian League or landing a prime endorsement deal with McDonald's.
Examples like these are the driving forces behind the acquisition fever. "Follow the money," said Dan Fegan, whose basketball practice was bought by Canadian-based Assante in December.
The big businesses did their acquiring because they saw an opportunity to cash in on big-ticket clients. For financial-services giant Assante, that meant gaining access to hundreds of clients worth millions of dollars, and for SFX, it meant an infusion of athletes to use for any number of promotional and commercial purposes.
The agents, meanwhile, saw being acquired as a chance not only for financial security for themselves but as a means to an even broader entry into the worlds of marketing, multimedia, financial planning and, best of all, the entertainment industry.
Agents like to be seen as players, and what better way to be a player than to segue into television and film? So the sales pitch to a prospective client, particularly a superstar, essentially has become, "Look, we'll do your contract for next to nothing, come aboard and we'll get you all sorts of commercial exposure."
"For (agents), the 2-to-3 percent from a contract was peanuts compared to the $50 million coming down the road from the syndication of a show," said Steinberg, who sold his firm, Steinberg, Moorad & Dunn, to Assante for a reported $120 million in October 1999.
Said Arn Tellem, who sold his baseball/basketball practice to SFX about the same time: "You want to have your tentacles in a lot of areas and you recognize that if you want to have access to the chairman of Coke or McDonald's or whatever company . . . it helps to have top athletes who can open those doors."
But can it really work? Can Falk and Tellem, for example, erase what was known to be an adversarial relationship in a cutthroat business to the point they're part of one, big, happy family? Asked about the competition for clients and the structure of SFX, Tellem insisted he and Falk "just try to coordinate who's in the best position" to recruit a certain player. "It's not an issue."
In reality, though, there are said to be bonuses tied to their respective contracts, and it appears the two haven't exactly bridged many gaps. Said one agent, "They were ready to cut each other's nuts off in the draft room (last year)." Said another: "That doesn't have the makings of a long-term marriage."
Steinberg, too, has had to face a merging not only of clients but of divergent minds. As head of Assante Sports Management Group, he brought on Eugene Parker and his nearly 50 NFL clients, and Steinberg sent a mixed message when trying to explain the structure.
He said he and Parker currently were working to integrate their practices and eventually he hoped to be "completely strategically aligned." When asked, though, about the potential problems stemming from having too many clients (nearly 130 between them), Steinberg said, "At this point, we are working autonomously from a day-to-day standpoint."
Nevertheless, there's no denying the power these kinds of one-stop shops create as it relates to the action on the field. It might be only a byproduct to what the agents truly desire, but it's a byproduct that influences the games themselves more than any other.
IMG mastered this years ago, mostly building an empire in-house. The company reached out in all directions, not only representing players but running, owning and dictating some of the events those players competed in. IMG largely has directed its attention to individual sports like tennis, golf and auto racing, though the company has stepped up its efforts to get a large piece of the football and baseball pies.
Lump IMG with SFX, Assante, Octagon and Boras' dominion, and now you're looking at the shadow of the agent spreading even wider over the realm of team sports. Sources: MLB, NBA, NFL players associations
--courtesy The Daily Dose The Truth is in Here @ sportsbusinessnews.com The Industry Leader Tuesday March 27, 2001
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