Loans and Marketing Guarantees in Athlete Agent Recruiting

Abstract

Athlete agents use various means to recruit prospective clients. Controversial yet common methods include offering loans and marketing guarantees to prospective clients. In each transaction, the agent provides his client with money, in some cases amounting to millions of dollars. The agent typically expects repayment of the loan whereas the marketing guarantee is an advance on future marketing income that the agent will arrange for the athlete. While both National Football League Players Association (“NFLPA”) agent regulations and state athlete agent laws prohibit agents from offering inducements to prospective clients, neither authority considers loans or marketing guarantees illicit or prohibits them. This Article details the use of loans and marketing guarantees in the football agent recruiting process. The Article also explores both NFLPA and state athlete agent law, which is based on the Uniform Athlete Agents Act or its revised version’s prohibitions on athlete agents providing inducements to prospective clients. It describes the fiduciary relationship between athlete agents and their clients and the duties that result under agency law. Next, the Article applies agency law to the provision of loans and marketing guarantees by athlete agents to their clients, determining that agency law seeks to prohibit such transactions. The Article then discusses the application of attorney ethics regulations to attorneys who serve as athlete agents and provide loans and marketing guarantees, finding that attorney-agents who engage in this activity violate ethics regulations. The Article concludes by explaining why both athlete agents and athletes should be leery of these dealings and by urging the NFLPA and individual states to expressly prohibit them.