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VOL. 36 | NO. 3 | Friday, January 20, 2012

Sports agent law doubles the number of state registrations

By Judy Sarles

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An increase in college sports scandals prompted Tennessee to broaden its definition of an athlete agent last year, resulting in an increase in the number of people seeking athlete agent licenses.

Since July 1, when The Athlete Agent Reform Act of 2011 went into effect, there have been 22 new agent registrations. Previously, agent registrations had been averaging about 10 to 12 per year. The new registrants are from 21 states plus the District of Columbia.

“It was getting out of hand, really, all across the country,” says Sen. Jim Tracy (R-Shelbyville), a former high school coach and NCAA official who introduced the Athlete Agent Reform bill in the state Senate.

“There had been loopholes where people had been getting away with it, where they said they weren’t an agent and they really were, and this included all those people, those runners and so forth.”

Tracy says the Secretary of State’s office brought the issue of unlicensed athlete agents to his attention.

“I think as we continued to read about different stories around the country,” Tennessee Secretary of State Tre Hargett explains. “We thought that our agent licensing law needed to be updated to protect student athletes and the schools in Tennessee.”

College athletes who transact with agents and the universities the students represent are subject to sanctions, but previously, the agents were not. National Collegiate Athletic Association (NCAA) regulations forbid players from accepting transportation or other benefits from agents or entering agreements from agents while currently participating in an intercollegiate sport. Now, with Tennessee’s revised law in place, the agents can also face sanctions.

By expanding the definition of sports agent and requiring anyone acting as an agent in Tennessee to register and abide by the rules of registered agents, the Reform Act prohibits agents from using the former practice of having unlicensed go-betweens (runners) connect with athletes.

“Runners are a third party that kind of act as an intermediary between an athlete and an agent,” Hargett says. “In my mind, when we talked to the Legislature, that person may not be called an agent, but they’re functioning as one. It was an opportunity to really say, if it walks like a duck and quacks like a duck, it’s probably a duck. I think in some cases maybe an agent would use a runner to do some of the work they’re not willing to do.”

The revised law calls for agents to provide written notification to the educational institution at which the student athlete is enrolled or intends to enroll 48 hours before that agent can contact the student athlete or the athlete’s close relative, foster parent or guardian.

Agents also must reveal if they have a compensated relationship with colleges from which they are trying to get high school students to accept scholarships. Failure to do so is considered a Class E felony punishable by a fine of no more than $25,000, one to six years in prison, or both.

The change in the law is expected to offer enhanced safeguards for educational institutions and student athletes and their families. Some students have lost their amateur status and eligibility to play college sports because of interactions with agents. In the 2010 college football season, there were numerous investigations into alleged inappropriate contact between players and agents at several schools.

The state defines athlete agent as “an individual who enters into an agency contract with a student athlete or, directly or indirectly, recruits or solicits a student athlete to enter into an agency contract, or, for compensation or anything of value, procures, offers, promises, negotiates, or attempts to procure, offer, promise, or negotiate on behalf of a student athlete, employment with a professional sports team or organization as a professional athlete or enrollment at any college, university, community or junior college that offers an athletic scholarship to the student athlete.”

Besides actual agents and runners, the revised law includes as athlete agents managers, marketing representatives, financial advisors, employees, and independent contractors. The new sports agent definition also encompasses parents and guardians who seek payments or other compensation on behalf of a student athlete or themselves that are forbidden by NCAA regulations and bylaws.

Student athletes must also meet certain requirements of the revised law. They have to provide written notice to their athletic director or educational institution within 48 hours after entering into or verbally agreeing to enter into an agency contract, or prior to taking part in the next athletic event, whichever happens first. Student athletes who don’t submit written notice could face disciplinary action as set forth in the educational institution’s rules and regulations for student conduct.

Additionally, the revamped law puts the power of enforcement under the purview of the Secretary of State’s office, which will look into possible illegal activity by athlete agents and request punitive measures for wrongdoers.

Andrew Dodd, athlete agent registrar in the Secretary of State’s Office, has been working with colleges around the state to ensure that student athletes and athlete agents are well-informed about the Reform Act. On Dec. 3, The University of Memphis invited agents to campus to talk to the school’s student athletes in an open and transparent setting.

“So the school knew who their kids were talking to,” Dodd says. “The athletes’ families were invited to be part of the process. It was a situation where that information was able to flow freely, instead of happening under the table for these runners. So what we’re hoping is that more schools around the state take a more open door approach to the agents, and then by having them in those controlled settings, we’ll be able to avoid some of the pitfalls we’ve seen in other states.”

So far, the act has not had any impact on Belmont University’s interaction with people now defined as athlete agents, but Greg Sage, a spokesman for the university, says the changes that were made to the existing act will be beneficial.

“I think that the definition now encompasses all that are acting as ‘agents’ and will further protect the student athletes,” Sage says.

Several Tennessee agencies didn’t immediately return requests for comment about the revised law. One Nashville agency representative did respond, but asked that his name and his agency’s name remain anonymous. He said the law hasn’t had much of an effect on his agency.

“Not anything other than obviously making sure we follow the law,” he says.

Tennessee’s original law applying to athlete agents was based on the Uniform Athlete Agents Act (UAAA), a model state law providing a standardized system for regulating the conduct of agents. The model law was devised by the National Conference of Commissioners on Uniform State Laws and completed in 2000 at the behest of the NCAA and a number of major academic institutions. At the present time, almost all 50 states have the UAAA in place, or similar regulations, allowing for an agent reciprocal registration process.

Tennessee has not revoked any agent licenses or invoked penalties since the act took effect, nor, as far as Hargett knows, did it revoke any agent licenses or invoke any penalties prior to the establishment of the law.

The NCAA itself is considering broadening the definition of an athlete agent following the college sports investigations of 2010. The definition of athlete agent would expand to include any person who profits from an athlete enrolling at a certain college or turning pro. Also possibly in the works is the formation of a national agent registry to permit educational institutions, state regulators, and athletes to confirm whether an athlete agent is properly licensed.

Hargett has been made aware of the NCAA’s proposed broadening of its definition of an athlete agent, but says he needs to research the NCAA plan a little bit more to know its full impact on Tennessee’s Reform Act.

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