Tuesday, July 20, 2010

"Show me the Sanctions!": More Scandals, the Uniform Athlete Agent Act, and an Institution’s Cause of Action Against Agents and Former Players

Yesterday’s revelation of NCAA investigations at the University of Florida for former player Maurkice Pouncey’s alleged receipt of $100,000 from an agent, as well as possible investigations for agent-related issues at North Carolina and South Carolina, once again raises the question: how can the agent-student athlete scandal be eliminated from college sports?

Just last week, Illinois became the 39th state to pass legislation based on the Uniform Athletes Agent Act, (the “Act” or the “UAAA”) a model law promulgated by the National Conference of Commissioners on Uniform State Law. The legislation is aimed at regulating the relationship between sports agents and student-athletes with professional prospects and educational institutions by providing for uniform registration, certification and background check of sports agents, as well as establishing criminal and civil penalties for agents who offer benefits to student-athletes. The Act also imposes certain disclosure requirements and specified contract terms on agreements between agents and student-athletes with remaining eligibility in order to protect institutions and their student-athletes. All agency contracts must include a conspicuous warning, in specified language, that a student-athlete who signs an agency agreement loses any remaining eligibility to participate in intercollegiate sport.

The UAAA is certainly a well-intentioned piece of legislation, and it could hardly be argued that the sports world would be better off without it. One of the more interesting aspects of the UAAA is a provision that gives an educational institution a right of action against an athlete agent or student athlete for damages sustained as a result of conduct that violates the act. Under this provision, a school would be able to sue for losses sustained as a result of penalties levied by the NCAA and/or athletic conference of which the school is a member, or penalties imposed by the school itself.

In light of the heavy sanctions imposed by the NCAA on USC as a result of the Reggie Bush scandal, as well as the self-imposed sanctions stemming from OJ Mayo’s receipt of benefits from a sports agency, one has to wonder whether USC will pursue actions against the agents involved in these incidents. California has not yet adopted the UAAA (the adoption of the Act is pending in the California legislature), but has in place its own version of an athlete agent law, the Miller Ayala Act, which creates a presumption of damage if an athlete is suspended or disqualified, or if an educational institution is suspended or disqualified by the NCAA due to acts of an athlete. (The UAAA does not provide for the same presumption). The damage done by NCAA sanctions as a result of the Reggie Bush scandal are of a magnitude that it’s a pretty safe bet that USC has at least kicked the tires on a lawsuit against Michael Michaels and Lloyd Lake, the two agents who are alleged to have funneled impermissible benefits to Bush while he was enrolled at USC. As for OJ Mayo, that scandal possibly implicates the highly successful Bill Duffy Agency.

It is worth noting that the UAAA in most states permit a school to sue the agent AND the student. It is also worth noting that the Miller Ayala Act in California, and Florida’s version of the Act, do not permit a school to sue the former student-athlete whose conduct in concert with an athlete agent resulted in a violation under those states’ respective laws. University of Southern California v. Reggie Bush, and the University of Florida v. Maurkice Pouncey are two cases that are unlikely to show up on the dockets.

But even if the UAAA is designed to protect educational institutions, why aren’t the schools suing the agents? Perhaps the answer lies in the fact that student athletes such as Bush and Mayo create such a windfall of profits for their schools that the educational institutions cannot show any discernable damages. Another possible explanation may be that questionable athlete-agent interaction is simply not as prevalent an issue as it is portrayed in the media. Certainly the cases of Bush and Mayo have created a media firestorm, but most NCAA student athletes are not in line to make millions in professional leagues and are unlikely to even face such temptation. Schools are probably satisfied to simply move on and repair their images rather than engage in drawn out litigation. This perhaps explains USC’s heretofore reticence to sue, as the NCAA’s sanctions were not just for Bush’s contacts, but also for what the NCAA described as a “lack of institutional control.”

All of the examples mentioned herein manifest the intrinsic impossibility of fully policing the sports agent industry, and certainly invite skepticism with regard to the efficacy of the UAAA. There is simply too much money involved, and greed and immorality will at least occasionally trump honesty and integrity. To be sure, the UAAA is not a panacea for the problems that face the industry, and it certainly is not going to stop all corrupt behavior, but the Act at least represents a step in the right direction. What remains to be seen is if the threat of a suit by a NCAA school is a credible one that would give agents and student-athletes pause before making any agreements about future representation.

For more information about this topic, please check out Darren Heitner’s entries about the Florida and UNC investigations at Sports Agent Blog.

Hat tip to my law clerks Luke LeSaffre and Brian Konkel for their work on this piece.