Are NFL Player Agents a Roadblock to Instituting a Rookie Wage Scale?

Written by Jeff Nixon

Once upon a time, paying rookies high salaries and bonuses was a necessary part of doing business in the NFL. That was back in the days when the NFL actually had to compete for football players.

When the AFL came into existence and started offering rookies higher salaries to play in their League, they were able to steal some marquee players away from the NFL. As the AFL grew in strength and started putting a competitive product on the field, the NFL Owners were forced to do one of two things: Pay higher salaries, or do what many big corporations in America do; buy out your competitor and merge the companies. We know how that story ended.

The USFL and the World Football League, in their brief tenures, were able to attract some rookies – with NFL talent – and pay them enough money to play for their league, but by that time it was too late, the NFL had already grown too powerful – due in large part to the anti-trust exemption they received from Congress. We all know how the USFL and WFL ended.

The NFL also started another League in Europe, hoping to open new markets while also having the added effect of siphoning off players that might be tempted to play for any new league in the U.S. . The NFL lost a ton of money (est. $30 million annually) in this 13 year venture that ended in 2007, but in the end, it accomplished its mission.

Of course there will always be other leagues like the XFL (now defunct) and the UFL that will try to fill the void during the spring and summer months, but no one will ever again seriously challenge the supremacy of the NFL and attempt to go head-to-head with them. If they do, they must be suffering from Alzheimer’s disease.

So now that the NFL has totally decimated the competition and has cornered the market, why do they still have a system that pays rookies exorbitant bonuses and salaries?

The owners don’t want this to continue…… for obvious reasons. On this issue Roger Goodell said “It’s not that I’m opposed to the rookies getting money, I think that’s great. But I think the veterans that have proven themselves on the NFL level deserve the bulk of the compensation. When a player is drafted and doesn’t make it and he takes that money out of the system, that’s a disadvantage to the other players in the league.”

NFL veteran players don’t want it to continue, even though most of them will not speak about this because they are represented by the player agents and agencies that would be negatively affected. You can imagine the agent’s conversation with the players they represent going something like this “I got you a truckload of money when you were a rookie, so why would you want to deny that to the incoming rookies?”

Even the NFL Players Association halfheartedly offered to institute a rookie salary cap, but they tied it to a two year extension of the CBA and it went nowhere.  The player agents can give a tip-of-the-hat and wink of the eye to DeMaurice Smith on that dead-end, deal-breaking proposal.

Let’s face it, player agents are the only group that really want to see the current system continue. These powerful sports agencies are making millions representing football players, basketball players, hockey players, entertainers and any other professional groups that can put money in their pockets.

Over the past five years a new trend has been taking place in the player agent industry. Some of the best NFL player agents have been lured into “mega-marketing sports and entertainment agencies”.  They have their hands into everything you can imagine……..and some things you can’t.

IF Management Inc., a company that represents radio and television personalities, recently formed a partnership with BEST (Blue Entertainment Sports Television), a division of Blue Equity LLC.  Blue Equity acquired the firm of top NFL player agent Joel Segal. The acquisition brought 50 NFL player clients to Louisville-based Blue Equity and instantly made the firm a major player in representing NFL players.  In their Television division they state ” Our properties and media outlets provide clients with an unmatched array of avenues in which to build brand equity via highly targeted messaging. We develop branded entertainment and sports programs for popular consumer brands utilizing our entire roster of artists and athletes. Creatively integrating brands into entertainment, we leverage TV programs, community events, music, sports, film, video, podcasting, narrowband, broadband and mobile.”

A few years ago, CAA (Creative Artists Association) took in Ben Dogra and Tom Condon. They represent over 130 N.F.L. players in CAA’s Sports Division.  They oversee the most dominant player-representation agency in football. CAA’s “entertainment” clients include Steven Spielberg, Brad Pitt, George Clooney, Oprah Winfrey, Ludacris, Miley Cyrus, Will Ferrell, Will Smith and David Letterman.

As you can see, there’s a lot of rich and powerful forces involved in these agencies, but there are still quite a few agents like Jason Chayat, Drew Rosenhaus, Leigh Steinberg and Eugene Parker that also have the “juice” to influence decisions at the NFLPA.

These agents and their agencies don’t want to see the gravy train slow down because of a rookie salary scale, but what about their NFL veteran clients?  Last year, when QB Matthew Stafford received a six-year, $78M deal, including $41.7M guaranteed,Vikings QB Sage Rosenfels said, “It just blows me away. Right or wrong, he makes twice as much money as [Patriots QB] Tom Brady. To me, it doesn’t make sense.” Vikings DE Jared Allen said “It’s outrageous, absolutely outrageous. The guy’s never taken a snap. I’m happy for him, but we got guys in this league that have played 10, 12 years that earn their wages every day and they don’t see that kind of money.”

It’s unfortunate that we haven’t heard more active players endorse a rookie salary wage scale.  That’s hard to understand, especially when the discussions around the rookie wage scale have also included more money for veteran players.  In a November 11, 2009 Washington Post on-line interview, DeMaurice Smith said “The fundamental problem with any discussion on the rookie wage scale is that there has been no negotiation of a “scale” that would ensure that the money saved would go to veteran players. The veteran players are extremely wary of any restructuring of the compensation structure that does not include an automatic or guaranteed allocation of that money to veterans. If such a scale included putting the money saved into a pool for performance bonuses, veteran retention that has to be paid to vets it is worth discussing.”

Has Mr. Smith proposed an automatic, or guaranteed allocation of that money to veterans?”  Why would veterans be “wary” if they knew exactly what was in Mr. Smith’s proposal? From what he said in the interview, it sounds like the fundamental problem is that he hasn’t bothered to provide a specific “scale” or “allocation method”.

Almost one year ago, DeMaurice Smith said “Our players know the work that goes into making a decision on how much to pay. That’s not a decision that lies on the players and they know that. So, in respect to a rookie (salary) cap, I am very happy with the scenario that we have now” (NFL Network, 4/25/09).

He might be happy with it, but there are a growing number of veteran players that are not.  It’s time for them to speak up.

One last thing.

If the NBA has a Rookie Scale Salary, why doesn’t the NFL?

In the NBA, the 1st-round draft choices are assigned salaries according to their draft position. The first overall pick receives more than the second pick, the second more than the third, and so on. Each contract is for two years, with a team option for the third and fourth seasons, with built-in raises every year to compensate for increases in the average salary.  Sounds like a perfectly reasonable system of compensation.

If NFL rookies knew exactly what they were going to receive in compensation – based on a defined salary scale – there would be no need for a player agent to negotiate “that portion of their contract” and therefore no reason to give that agent 3% of that money.  Last year the NFL player agents raked in approximately 14 million – just on the “bonus” portion of the 32 players selected in the 1^st round of the draft.  That doesn’t include salaries or performance bonuses that agents could earn over the life of a player’s contract.

I’m not suggesting that the NFL needs to get rid of player agents. Most agents do more than negotiate contracts. There will always be a need for their services, especially in contract negotiations, portfolio development,  investments and marketing.

The NFLPA, to its credit, implemented a certification process and a disciplinary process for player agents.  Nonetheless, the time has come to put an end to the needless payment of money to a player that may, or may not perform up to expectations.  To make up for the loss of a rookie’s guaranteed bonus money, they could set up a system that rewards players for meeting certain performance measures.  Oh, that’s right, they already have this type of system in place – it’s called the Player Performance Pool and it paid out over 100 Million to players last year.  This is “benefit” money that comes right off the top of the salary cap and falls into the same category as the Second Career Savings Plan, Annuity Plan, Health Reimbursement Account, Tuition Assistance Plan and other generous benefits that only post 1993 players have enjoyed.

Bottom line:  If the NFL and NFLPA could agree to adopt the rookie salary scale, it would free up money that could be used to immediately increase veteran salaries and retired player’s pensions.

The player agents should look on the bright side of this issue.  Veteran players will love you because now they’ll have a better chance to make more money.  Why? Because some unproven rookie hasn’t gobbled up a huge piece of the team’s Salary Cap!  (note: although there isn’t a Cap this year, trust me, it will be back in 2011 because both the owners and players have too much to lose.

Unfortunately, there is only one major roadblock to getting a rookie salary scale in place -

Player agencies and their not-so-secret agents!