Look Out, Jerry Maguire: New California Law Would Change Rules Regulating Sports Agents in California

Hey Jerry Maguire: help me, help you.

California has a new law currently under consideration which may change the way the state regulates sports agents.

In light of the USC football program’s two-year bowl ban due to recruiting violations and North Carolina, South Carolina and Florida acknowledging that the NCAA is investigating their athletic departments, it’s no wonder the state is looking at changing the way it regulates sports agents.

SB 1098, by Sen. Ellen Corbett, has passed the state Senate and is currently being considered in the state Assembly.  For the first time, California would be able to decide who becomes a sports agent and the state would have the ability to deny or revoke a person’s authority to act as an agent.

The law is California’s version of the Uniform Athlete Agents Act (UAAA), which has been enacted already by 38 states.  It would replace the existing Miller-Ayala Athlete Agents Act, the California law that currently regulates sports agents in the state.

The UAAA was drafted at the urging of the the National Collegiate Athletic Association (NCAA), which wanted to create more uniform regulations that would subject all sports agents to the same rules regardless of the state in which they solicit and recruit athletes.  The NCAA, which has been criticized for not doing more to regulate sports agents, also wanted to cut down on sports agents who used inappropriate recruitment techniques.

The bill does not dramatically overhaul the way agents operate. It does, however, make a number of significant changes.

The most significant differences concern registration requirements and the ability of the state to deny or revoke a person’s authority to act as an athlete agent. Existing law only requires a person who wants to act as an agent to file information with the California Secretary of State’s office, but to date there has been no  body or state agency that can prohibit a person from acting as an agent.

That means someone who wanted to become the next Leigh Steinberg, Scott Boras, or Drew Rosenhaus didn’t have much standing in their way (except, of course, a roster of famous athletes).

SB 1098 would require a sports agent to obtain a certificate of registration from the Department of Industrial Relations (DIR), which already regulates talent agents.  The bill would also prohibit anyone from acting as an agent without a certificate, and would give DIR the power to revoke a certificate for specific reasons.

The bill would also:

  • provide greater detail on what information must be included in a contract between a player and a sports agent, including information relating to the basis and method of calculating compensation.
  • Permit a student athlete to rescind a contract within 14 days of signing the contract.
  • Require an agent to disclose the fact that they are a registered agent to a student or professional athlete.
  • Give a professional athlete, student athlete or educational institution a right to sue an agent for damages resulting from a violation of the requirements of the new law.
  • Requires an agent to create a trust fund for any salary or funds received on behalf of a professional athlete.

Sports agents may have a reputation for being only concerned with showing athletes the money. If SB 1098 passes, it should at least help to reduce that reputation, if it doesn’t eliminate it entirely.

John Corcoran is an Associate with Plastiras & Terrizzi law firm in San Rafael, California (Marin County).  He advises clients on real estate matters, small business issues, estate planning, and general civil litigation.  He may be reached at jcorcoran@ptlegal.com or (415) 472-8100 x211.

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