About 99.9 percent of the football fans gearing up for the ’16 season couldn’t have cared less about the news that broke Monday about the NFLPA effectively dropping agent fees from a max of 3 percent — lower than any of the major sports — to 1.5 percent. OK, they’re not technically cutting it — players can now voluntarily pay 3 percent if they’re incredibly generous — but the players association has set the standard representation agreement to default to 1.5 percent unless otherwise noted.
Of course, if you read this blog, you are not the 99.9 percent. You’re the .1 percent that is focused on the business of football and interested in what shapes the game. I can tell you, based on the phone calls and texts I’ve gotten over the last 24 hours, that the NFLPA’s decision will shape the way agents work and how players are represented.
We spoke to several contract advisors this morning to get their respective takes on this. I won’t give attribution because I don’t want them to be targeted by the NFLPA for retribution, but I will run their responses to our questions in total.
Our questions: How will the new SRA, which allows agents to charge 3 percent but defaults to 1.5 percent, affect the business? Do you see it driving agents out of business? How will you deal with the new SRA/rate?
- “It’s going to drive a lot of small agencies out of the business. The margins in this industry are already small and the risk is already high. This increases both. Volume agencies will be able to cut their fees a la CAA last year, and sign more players that feel they’re getting a better deal. What the players will realize down the road is they also received inferior service in exchange for that reduced fee. If the union is there to help the players, they’re not doing their job in this instance. I may be one of the very few, but all of my clients pay 3 percent, and I’ll stick with that. You get what you pay for and I think the good agents in this industry are worth more than 3 percent. There’s no reason we should settle for any less.”
- “I think it will eventually influence smaller sized firms to stay away from risky Day 3, late-round or UDFA prospects because the risk vs. return on investment may not be business smart. All players want training included, so if you are unable to convince that prospect why your services are worth the 3 percent, then I think an agent may not take that risk on him. The big firms can absorb those losses more than a small firm, but at the end of the day they are all about their bottom line as well, so late-round guys, guys who need agents the most, might suffer from this change. It’s possible (this will drive some agencies out of the business). Small- and mid-sized firms who are not getting Top-100 guys may run out of money before it comes back, based on a 1.5 (percent) agreement. Some agents may sign less prospects by sticking to 3 percent and decide it’s not worth it anymore. I will explain to the prospect that the NFLPA felt it was necessary to make the default 1.5 percent and that the fee has always been negotiable, but the actual maximum is 3 percent, and just have that discussion with the player.”
- “I think that it affects the business by creating a perception among both players and parents that the ‘standard’ fee is 1.5 percent. Obviously, that shouldn’t be the case, as it never has been before; however, when you label it as the default percentage, how can you blame a player or his parents when they tell you that you won’t even enter the equation for their son’s signature unless you charge 1.5 percent? It’s a tough way to do business. I think it could have an affect on agents trying to make their way into the business. Obviously, I’m curious to see how this first year or so goes with the new SRA because it’ll be a good litmus test going forward. However, you have to think that it could be a strong deterrent for a young guy trying to make it as an agent who now comes into the business knowing that the fee has been sliced in half. (As far as how I’ll deal with it), that’s a great question. I’m assuming it’ll be a case-by-case basis. I want to get a feel for the player, and if he has his parents involved or an aunt or uncle or somebody, I want to get a true gauge for them before I decide how I want to approach the rate.”