Shestrong Coleman @chris_shestrong - Twitter Profile

over 1 year ago

The latest phone call earlier today: from a dear friend who is advising a transfer portal basketball player, apparently a “NIL agent” from a known sports agency was trying to stake claim to a percentage of NIL contract from a NIL collective that was originated by the athlete himself, not the “NIL agent.” The NIL collective offered the player a $200,000 contract. After learning of the contract from the player, they “NIL agent” demanded his percentage - 15% - as “compensation” for the “NIL agent’s” “exclusive rights” to market the player. A number of pitfalls in this “NIL agent” agreement. To name a few: 1. The player could terminate the agreement for ONLY cause, meaning, there must be an actual reason why the player wanted to terminate the contract. Unreal. Even NBA agent agreements don’t do that. 2. The “exclusive marketing rights” language was so broadly written that it otherwise included the player’s own origination of his own NIL opportunities and, coincidentally, the agreement with the NIL collective. 3. Compensating the “NIL agent” 15% for all NIL contracts and expressly included NIL collective contracts. So, let’s do the math. $200,000 x 15% = $30,000. What does a “NIL agent” do to receive $30,000 for a $200,000 NIL collective contract?!? NOTHING. Players, parents - let me explain EXACTLY what happens with a NIL collective contract and a revenue-sharing agreement. To originate those types of contracts, “NIL agents” call a couple of assistant or head coaches with whom they have relationships and ask, “how much do you have for this player?” They negotiate the money and most negotiate nothing else because the overwhelming majority of “NIL agents” have zero day-to-day experience as a practicing lawyer to actually negotiate the most important aspects of the agreements - all of the rights subsumed within the agreements. And you’re going to pay $30k for that?!? Cmon. Most legitimate NIL agents - notice, no quotes around NIL agents there - with whom I work charge no more than 5%. Why? Because that’s readily justifiable. The agent commission rates in the NBA are 2%-4%; the NFL is 3%; MLB are 4%-5%; and NHL are 3%-5%, but you’re going to pay a “NIL agent” 10%-20%???? Even a real estate agent charges 6% or less. Long story short, after reviewing the “NIL agency’s” agreement, we effectively used the language of the agency’s own contract against it to not only reject the commission demand but also to ultimately terminate the agreement. The “NIL agent” agreement expressly provided that it could be terminated based on “acts of dishonesty undertaken by [agency] and intended to result in substantial enrichment, at Player’s material expense, of [agency].” Charging 15% for anything - and, here, for literally having done nothing - not only unjustly and substantially enriched the agency at the material expense of the player but, worse, it was inherently predatory. And, without a confidentiality provision, rest assured it would have resulted in a public relations problem for the “NIL agent” and the “NIL agency” [and still might because I intend to use it to educate college athletes on what to watch out for] in addition to a legal problem had they not relented on their demands. Players, Parents of Players: PLEASE do NOT sign ANYTHING - revenue sharing agreement, NIL collective agreement, or a “NIL agent” agreement - unless you FIRST have those agreements reviewed and redlined by a LAWYER. Believe me - there will be redlines (I can promise you that if I’m reviewing them). A lawyer charges hourly rates - not obscene, unjustifiable and predatory percentages - and are ethically bound by rules of professional conduct to safeguard your interests over any other interests. And, some of us lawyers know legitimate and credible NIL agents who not only negotiate NIL collective agreements at reasonable commissions, but also negotiate third-party NIL brand deals (and, yes, those agreements typically come with higher percentages).

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