← Most Valuable Agent with Matt Hannaford
Most Valuable Agent with Matt Hannaford
The Dark Side of NIL Contracts: How Athletes Get Trapped
00:51:10
On this episode of the Most Valuable Agent Podcast, Matt Hannaford brings on top sports attorney Ben Levine, who represents high-profile athletes and entertainers. Together, they break down the fast-changing NIL landscape and explain what parents,...
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- [00:13]
A
I'm going to describe you as kind of like a killer, but in the best of ways. So we're joined by Ben Levine. He is an attorney. The reason why I think this introduction is so important is because a lot of my guests are obviously parents of travel baseball parents and players, or travel baseball players, rather, really interested in the travel baseball space, which you're very familiar with. But for everybody listening. So Ben is somebody who represents kind of the who's who in the sports entertainment high profile world. And we've known each other now for a little over 10 years, maybe even longer.
- [00:47]
B
Yeah, it's been a while.
- [00:48]
A
Yeah. Thankfully. And so what I want everybody to kind of grasp and understand is. So my goal for this podcast is I really want to give everybody kind of a behind the scenes look and. And understand that there are consequences to the things that you sign.
- [01:02]
C
Right.
- [01:03]
A
I think that is probably a perfect way to describe things that you're paying attention to every single day with your clients.
- [01:09]
B
It keeps my phone busy.
- [01:10]
A
Yeah, I can only imagine. And so for families out there, what I want to do is I want to help you guys avoid things that are preventable. Things like bad contracts, obviously false promises, you know, and specifically as it relates to the nil space. So kind of big picture. Ben, one of the things that has obviously happened and changed recently with the July 5 house settlement is there's obviously a new agreement in place. How have you seen this new agreement affect a lot of these younger athletes that are going into college today?
- [01:46]
B
Yeah, I mean, first, Matt, I mean, big fan of the podcast, so thank you for having me.
- [01:50]
A
Yeah, thank you.
- [01:51]
B
It's been awesome. You know, watch you build this. I'm glad to be here.
- [01:54]
C
Appreciate it.
- [01:54]
B
Appreciate it. Yeah. I mean, it's crazy. It's a whole new world with NIL and sort of all the changes in college sports and youth, you know, students being able to sort of monetize their nil over the last few years, obviously culminating with the house settlement. It's crazy. I mean, I've been practicing for probably about 15 years now. And I remember, I'm, you know, if you remember the whole story with Jameis Winston and the crab legs.
- [02:21]
A
Sure.
- [02:21]
B
I think I was the first person to get the email that said Jamis was snagged with $32 of seafood, and that became like, the biggest story in the world. And now looking what happened in this short period of time where, you know, he was sort of demonized for literally getting free seafood at a restaurant.
- [02:39]
A
Right.
- [02:40]
B
At a Publix. I mean, I apologize. And now, you know, you have quarterbacks in college making two, three, four million dollars a year. So, yeah, I mean, I think a big thing with it is like, it's still evolving, the nil, even with the House settlement. You know, I saw, I, you know, everybody's following. There's a new college sports commission, obviously in baseball. If you've dealt with Brian Seely, he was running investigations. Awesome, brilliant guy. He's now running that. And again, I think it's one of these situations that there's no federal legislation. You know, Trump's been discussing potentially putting a commission together, doing something, but it's really state by state. Right. So that's the first thing I would sort of advise, you know, younger, especially high school students before they get into college, depending where you are, is whether or not you can monetize your nil, you know, at a certain level, at certain age. But, yeah, now we're in the era now where post House settlement schools could directly pay players.
- [03:35]
A
What's interesting too is you brought up like a state by state thing. And so I have a client who lives in Missouri and you know, he was at a Team USA event and, you know, one of the components of this event was, hey, we're going to have you sign these baseball cards.
- [03:47]
C
Right.
- [03:47]
A
And what was interesting about that, and this is to your point, is here's a player who's from Missouri who doesn't have the opportunity to make money off of the signing. But if you're from a different state, you actually do. And it's, it's the same thing, but state by state, it obviously changes. So I will say that is certainly it's a good call out because if you're not looking into this stuff, you're just seeing other players do it, you may assume, oh, then I'm fine, that's, that's not the case. So definitely be mindful of that.
- [04:14]
B
Yeah, and the other thing that's crazy too is, you know, and this is why I think it is important to have counsel and have lawyers at a young age. You got to remember too, the college athletes or high school athletes generally are not unionized. They're not protected by, you know, the MLBPA in baseball, the NFLPA in the NFL. So there's no one really governing agents.
- [04:33]
C
For.
- [04:36]
B
Players or high school after. So you have a situation. Again, this is state by state. Some states do require that. But you might be, you might have somebody that's like your buddy that wants to, quote, unquote, be your agent and is negotiating a deal. But doesn't really know what they're doing.
- [04:50]
C
Right.
- [04:50]
B
Because you don't have that component where there's somebody sort of overseeing like there is in baseball, how you have to get certified by the MLBPA and they oversee the agents. You have people without the experience negotiating some. Negotiating some of these deals and binding kids to where you said they signed something that turns out to be a real problem for.
- [05:09]
A
Right. Well, I mean, and you speak specifically about. Yeah, like, are they registered in the state, obviously, as agents. You know, if you're advising a player in a certain state, you need to be. And just based on experience, I've seen guys who. Yeah, they're representing somebody in Texas, for example, and they're not registered in Texas. So that is definitely something to be concerned about and mindful of. You know, as I think about kind of the House settlement and some of these changes that were passed down. Obviously, before all of this, the way that everybody I felt like would describe kind of this nil landscape was like the wild, wild west.
- [05:41]
C
Right.
- [05:41]
A
And you brought up James Winston. You know, I think we all kind of remember Reggie Bush.
- [05:46]
C
Right.
- [05:46]
A
He had his Heisman Trophy taken away. And so now we're in this place where, okay, so they've come to this agreement. It's definitely. It's cleaned up in a lot of ways, but there's still so much misinformation out there. And from the. Even the university standpoint, it's not like everybody has a clear view into exactly how it works. It's kind of like we're learning as we go. At least that's how it seems from, like, everybody who's involved from the university on down, everybody's trying to, like, feel their way through this for the first time.
- [06:16]
B
No 100%. And I think you're seeing a lot of litigation sort of pop up. You know, whether it's legal as restrict somebody going in the transfer portal. Can they claw back money? Because really, you got to remember, too, even though the schools can now pay the players, they're still not employees.
- [06:31]
C
Right, Right.
- [06:31]
B
Because that opens up a whole new canal.
- [06:33]
A
The pay for play thing.
- [06:34]
B
Right, the pay for play thing. And then also that goes to another component of, like, where we talk about unionization and if college athletes should have a union, you can't really have a union to the extent you're not an employee. And then that, again, it opens a whole can of worms with workers comp. And different things that, you know, employees fight for. Just like, you know, you have players in the mlbpa, they're Unionized and they could bargain as a collective group, whereas you don't really have that right now in college sports. And yeah, I mean, generally what the house settlement says is every school now is a cap. They could share certain revenue with the players. Think it's about 20 and a half or $22 million around there each school has as a cap. But that's for all the sports, right?
- [07:15]
A
The athletic department, basically.
- [07:16]
B
Yeah. And I think it's actually, this is. I think it's going to be very interesting how, you know, certain schools, like, look, I'm in New York with St. John's I actually think they might have an advantage because they don't really have a football program. So they could really put all their money towards the basketball.
- [07:30]
A
Sure.
- [07:30]
B
Program where it's like UNC for instance. I saw their numbers today. I think they're giving 13 million to the football team, 7 million the basketball. But what you're going to see like soon is part of the house settlement too. There's a Deloitte, the accounting firm has a clearinghouse called Nil Go. And any deal over $600 has to be, quote, unquote, cleared by them. And that's where, you know, Brian Seely and the College Sports Commission, they're going to really be looking at each of these things to see if schools are circumventing that cap or if these are like sort of BS deals that are going forward. And again, I, part of me is like sort of a problem with that because again, people should be able to contract their NIL rights. And schools, look, schools, everybody should be happy that players are finally being compensated. I mean, this is sport, college sports, a billion dollar, multibillion dollar business. And for so long, you know, we were having this debate that the ncaa, I think, did a really good job of sort of arguing the sole component of student athletes. Meanwhile, if you were ever on a college campus for a, you know, power five conference for football or UNC baseball or Tennessee baseball or Vanderbilt baseball, those are, I mean, their priority is a sport. It's not going to, you know, econ one on one.
- [08:42]
C
Right.
- [08:43]
B
So it's. I'm glad that this is happening, but it's a. Anybody that tells you exactly where things stand is sort of lying to you because this is going to be a two, three, four year process, in my opinion, of seeing how this all shakes out, what works, what doesn't work. So, yes, I mean, it's a very interesting time and like, like it keeps us super busy in the sense because we have both the Universities and the players are reaching out to us and quite sometimes we're just honest. It's. This is the best advice we could give you. But no one knows for sure whether or not how this is all going to sort of play out well.
- [09:14]
A
And this is why I wanted to have you on the podcast, because you are somebody who's seen clearly into kind of like both sides, which I do think is an important thing.
- [09:22]
C
Right.
- [09:22]
A
If you're just somebody who sees it from the, let's say, the athlete side, it's going to be one sided. If you just see it from the university side, it's going to be one sided. But the way that I would describe kind of the environment today, it almost, and this is how it feels like to me is so before, in the old way of doing things, prior to Nil even being acceptable, you know, it was. Everybody would feel like this is unfair.
- [09:43]
C
Right.
- [09:43]
A
You got the universities making all this money. The players who have no money can't take a girlfriend out to eat.
- [09:48]
B
Yep.
- [09:49]
C
Right.
- [09:50]
A
You know, can't get on a golf cart of a coach that's like, you know, you're getting something of value. And, and then today it's instead of us creating a situation, an environment that is what I would say kind of like the most ideal for both parties. It's like we've kind of placed a bunch of band aids on everything. Like, okay, well, this is the best given the circumstances, but I don't think it's still the most ideal situation for either side. The thing that you said, which is hilarious, is, yeah, so I'm obviously aware of Nil Go. In my experience, NIO Go has, you know, they've been reasonable with getting back to you quickly, things getting approved relatively fast. But when you think about 600, you're like, 600 is nothing.
- [10:32]
C
Right.
- [10:33]
A
And the fact that all of these deals are getting submitted, I do find it. I'm. I guess I'm curious to see how these things continue to develop. And like, at what point is there, you know, maybe it's holding things up that now it becomes a problem. But what I want to ask you, I guess, is so leverage is a lot of what as an agent, you're aware of, as a lawyer, you're also aware of.
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C
Right?
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B
Yep.
- [10:58]
A
You want to find ways to create leverage. These kids who are in high school, you know, 16 to 18 years old, they go through the draft process, they don't sign, they go to college, they've agreed to some figure. And then after they get to college, they're Given this agreement that they're expected to sign.
- [11:16]
C
Right.
- [11:17]
A
And these agreements, what I've seen, what you've seen are all over the place. Some of them are just absolutely ridiculous. And I know a lot of players who, let's just say, aren't at the highest level where maybe they feel like, look, do I really need to hire a lawyer to look at this? I'm sure it's fine, nothing's ever going to happen. But when you look at the agreement, you're like, wait a second, like there are things in these agreements as an example where let's just say the school says, all right, I'm going to give you X number of dollars and I'm going to, you know, it's going to be over two years.
- [11:46]
C
Right.
- [11:47]
A
If after year one, at any point, if you violate a team rule that we, the university say is a violation of the team rule, we have the ability to claw back or bring back the 100% of, of the nil money paid deal.
- [12:03]
C
Right.
- [12:03]
A
Y And so there's all these different things that players need to be aware of because again, going back to the leverage, like what is the players leverage after they're already on campus. So I do think one of the most important things is figuring out as we get deeper into this space of getting those agreements as early as possible so that when you're having the conversation, you actually have leverage. It's not like, well, what am I going to do now? I'm at school, like, I'm not going to go to school here now what am I, I'm going to transfer, I'm going to leave.
- [12:34]
B
Yeah. And then also you have the issue with, you know, roster sizes and once you're there, it's harder to find a place. I mean, there's the quarterback at Tennessee that had a dispute over his, you know, nil income and this happened I think in like February.
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C
Yeah.
- [12:47]
B
And he ended up at ucla. But know, it sort of dried up a lot of his options. And especially now if you have a cap, right. It's going to dilute what's available later in the pro, later in the process. But yeah, one interesting thing just when going backwards real quick with the $600 is the threshold for nil go. It's crazy when you think about like the college football coaches, I think in like 30 states are the highest paid employee in the, in the state.
- [13:12]
C
Right.
- [13:13]
B
So why is there not a, you know, there's a $600 cap for that for like some level of review. So it does make you scratch your.
- [13:21]
A
Head like, yeah, is this about fairness or what is this really about?
- [13:24]
B
Yeah, and I think so. We're talking about leverage and like just dealing with contractual things. You have to remember too is most people, you know, unfortunately don't have access to a lawyer.
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C
Right.
- [13:34]
B
Or don't have access to the resources required or understand some of the things that, you know, you need to. You don't know what you don't know.
- [13:43]
C
Right.
- [13:43]
B
I tell a lot of people that, I tell clients that's not that they're. They shouldn't know this stuff. I couldn't throw a fastball.
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C
Right.
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B
Why would they know what a liquidated damages clause is?
- [13:53]
A
Right.
- [13:54]
B
And I think there's a component you, when you go to school and you're negotiating against these universities, they have hundreds of lawyers on retainer. They have, you know, huge law firms that they have on retainer. And you look at some of these agreements that have come out that they're handing to the players or the student athletes that are coming to school, they're incredibly one sided.
- [14:17]
C
Right.
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B
Even things in the sense of like, you know, confidentiality, it's one sided. Like they, they could. You can't say anything about the deal, but they could talk about. They're not mutual provisions. Like even little ass that you at little things that you would seek at the outset of negotiating a contract are in there because they want to see if there's any pushback. And like you said, 90% of the time they're banking on the player. Just saying, you know what? A lawyer's gonna cost me a few thousand dollars. You know, I don't have that cash to sort of spend right now. I'll just sign it. How bad could it be?
- [14:46]
C
Right? Right.
- [14:47]
B
The, you know, I was listening to the Travis Kelsey Taylor Swift podcast that broke the Internet. This is. Did we're gonna make that. Yeah, we're gonna bring this to listen. This is the next New Heights, this podcast here. But it was funny.
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A
You're my Taylor Swift.
- [15:01]
B
Maybe the. I don't know if I could sell out. I don't know if I could sell out my living room, let alone msg, but I'll try. But she was talking about her whole issue with her master's recordings. And that was a deal that was signed when she was super young.
- [15:16]
C
Right.
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B
Like when she was a minor. And she, I believe, had to have her like, dad sign it. Cause she didn't even have the ability to consent into a contract. And now, you know, 25 years later, she's dealing with it.
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C
Right.
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B
And or 20 years later. So like there are repercussions and real world consequences. To the extent you sign a deal, even if you're, you know, 17, 18 years old, that could really impact you for your career. I mean, some of the nil deals taken out, even with the university component, you know, if you do a deal with say a Rawlings, right. Or Dick Sporting, just any of these big companies, you don't know, if you look at the agreements, if it's in perpetuity, they own your nil rights.
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C
Right.
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B
And if you don't realize that and you sign that deal at 18, will that be enforceable? I don't know. Probably not. But to get out of that contract is going to cost you a lot of money because you don't have to fight them.
- [16:05]
A
So I want to bring this up because this is a lot of the people that maybe aren't in the space where they're dealing with lawyers, often they may not know this. You bring up a good point. It was like, you're reading my mind because the in perpetuity was the next thing I was going to get to. But oftentimes what people think about is you said something saying we don't know if it's enforceable. You know, it's, it'll be determined at some point. I think everybody, when they oftentimes think about agreements, it's like black or white, right? Like, oh, it's in there. So if I sign it, then it's has to be enforceable and that's not necessarily the case. Right. Like, so if, if we go deeper into the future, if someone tries to fight the fact that they sign this agreement and they want to, you know, argue against it, then they hire a lawyer. The lawyer obviously, you know, files a lawsuit and you go through the process of determining is this actually enforceable or not. So that's something for everybody to be mindful too. It doesn't mean that you should act like it's not enforceable, but it is something that's like to be determined in a sense.
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B
Oh no, a hundred percent. And I mean, if you go to any court in the country, you know, probably one of the number one claims that's filed, at least in the commercial component, are probably breach of contract cases.
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A
Yeah.
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B
So a lot of people like to think that the world is like black and white, but quite frankly, like a lot of things are gray. And the problem is it's probably gonna make me a poor, a bad salesperson here. But a lot of times the only people that win are the lawyers.
- [17:26]
A
Right.
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B
Arguing it back and forth. So it's super expensive. And I have to tell clients a lot, Look, I don't think this is enforceable, this agreement that you guys signed however many years ago, but you're gonna spend so much money on me and my firm that it just might not make sense to sort of fight it. So you're working under this, like, oppressive contract, in a sense, but there's really very few ways to get out of it unless you want to spend a bunch of money. And, you know, look, we're. I've been lucky to have a pretty good track record of good wins and successes, but anybody that tells you guarantees that they could what the outcome is going to be, you know, it's. It's just not true.
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C
Right, right.
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B
Because it's. It's impossible to predict exactly what everybody's going to do or how anybody's gonna interpret things. Because again, by its nature, breach of contract case is two sides disagreeing over what the terms of the contract are.
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A
Yeah. Can you share with everybody a little bit about the different. Like when we hear nil, that's. It's all under the nil. But the revenue share component is different than, let's just say like a. A company like you brought up, Rawlings, doing a deal with Rawlings at a lot of these universities is. There are these two separate sides to it. So can you talk a little bit about the difference?
- [18:39]
B
Yeah. So the component with the house settlement, that's generally just what the school is going to directly pay you to play at the university. The other deal. So that's one bucket. That's what we were talking about, the University of North Carolina. That's what the University of North Carolina is going to pay its starting pitcher to, you know, play at unc. But if you want to do a deal with Rawlings, that's where the nil go component comes in. That's a private contract that player is going to have with Rawlings.
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C
Right.
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B
And that's another way to supplement your income. Monetize your name, image, and likeness. You could have trading cards. You could have baseballs that are signed. You could have T shirts that, you know, have the player's name on it. And you can monetize that. You could have the NCAA college football game.
- [19:23]
C
Right.
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B
Everybody's in it now. And every. Every player to have their name in it is, you know, gets a free game and like a thousand bucks or something. And that's money that's not directly paid from the school, but it's paid from other people. The nil go component is our school is going to try to supplement. Circumvent their salary cap.
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C
Yeah, right.
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B
By finding friendly partners to do certain deals. So schools could go above that cap, finding, you know, certain nil deals. But those are going to be like, those are going to be private contracts between, you know, that company and the athlete. And then if you don't, right now you have this commission that's sort of governing the schools. But Rawlings, you know, they're not going to care. If they think you breach that contract, they'll file a lawsuit against you. And again, you're going to have to. Whether you're right or wrong, you're going to have to hire an attorney or have to fight it. And that's sort of.
- [20:14]
A
So what is the. What is the process for a parent who says, okay, I've heard enough. I know you're right. I need to have somebody review my son's agreement. What does that process look like from your experience communicating with the university? Is this something that you're doing directly or you helping the family have that conversation or the advisor?
- [20:34]
B
Yeah, I think it's. It's not paint by numbers. It's, you know, it's always different from each person and each client that we have because it ranges. You have parents that are super involved. You do have now. It's crazy, but. And I know you've been super successful. A lot of these younger kids now have agents at a much lower. At a much younger age. It used to be you weren't really the agent for a player in baseball. You're the draft advisor, advise them, but you never wanted to actually sign paperwork because you didn't want to jeopardize the. Jeopardize their eligibility, their amateur status. But now, you know, you have agents, so sometimes you'll deal with the agent directly. And that's, you know, where we work, obviously, hand in hand with a bunch of different agencies. Like, you know, sometimes you're dealing with the parents. They don't have an agent yet. Sometimes you meet people that are just like, we want you to do everything. Because again, they haven't had. They don't know what they don't know. And then you tell them, and it's like all of a sudden things they weren't thinking about that are like the ABCs for me, just because I'm doing this every day is. They're not in this world. It's like speaking another language. Some of these contractual terms, like, I wouldn't be able to go to. Like, we have A trip coming up. We're going to Europe, my wife and me. I'm not going to be able to speak Italian when we're there, but I'll know that I want to. I know what I want is I want a piece of pizza, right? So I have to figure, you know, hopefully find somebody who speaks English and you, that's what you want. They know, these families know, they want their sons protected, their sons and daughters protected, but they don't know how to do it. They don't know how to speak that language. So again, a lot of the time is more educated. Like a lot of my job is education at the outset and it's stuff that comes more simple to me just from experience. But I didn't know a lot of stuff. I didn't know a lot of stuff. Even forgot law school until I started practicing for a couple years. So.
- [22:14]
A
Well, that's a little, I mean, I think everybody could say that, right? Like even in my world, you know, you can be a sports management major and you're not like equipped to be an agent, right? And that's something that every family needs to understand because you may meet somebody in your local town who has ambitions of being an agent, goes to school for it. That does not mean he's necessarily prepared because a life experience, relationships, all those things, you know, have an effect.
- [22:39]
B
No. Ian, you had a very nice intro to me, so I'll throw you some flowers here. A lot of people, you know, take the MLBPA certification test and their agents in that context, but not a lot of people, but you're one of them, has negotiated a 200 something million dollar contract. So until you're doing that deal, you know you're going to be ready for the next one. Because you were in the trenches doing this deal that look, there's probably less than half a percent of the population has ever probably done a contract in any industry of that magnitude. So congrats to you.
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A
No, I appreciate it. So I guess let's talk, I guess generally about some, some bullet points of these deals, right? Obviously we have like what is the typical length of these deals that you found?
- [23:27]
B
So they try to. What you're going to have is a lot of these deals are similar to sort of when you're negotiating a player contract with a team is who you're negotiating with wants all the leverage. They want the option to get rid of you. If that's not working, and that's whether it's going to be a university or it's going to be a private company A lot of people don't know this. Before this whole revolution with college sports, athletic scholarships were just one year deals.
- [23:53]
C
Right.
- [23:53]
B
So people think you're committing to go play football at the University of Texas for four years if they decide they don't want to. If you weren't as good as they thought you were, they could get rid of your scholarship after a year. And you're now paying tuition that you may or may not be able to afford.
- [24:08]
C
Mm.
- [24:10]
B
So you want to have a limitation obviously on the length of it. Especially if you're not getting guaranteed money. You don't want it to be one sided that they could get out of it. But you know, you're sort of stuck in this at a below market component if you do blow up and do well. So there's that and then a lot of things like in it, you want to make sure they don't have the ability to get out of the contract. Forget even if you know they have the option to get the option, just the term. A lot of the times like you'll see morals clauses for instance, and they're written super broadly and you want to make sure in that component like it's very defined, they could only get rid of you. Say you know, you got arrested for a felony or something, they could get rid of you. But it can't just be they didn't, you missed the class one day. So you get, they can now cite this morals clause to get out of it. You want to also have like where you've been, you made a comment before over like if you breach the contract, they could take every dollar they ever paid back. That's like a liquidated damages provision. You want to make sure that's super limited. You also, to the extent it's nil related, you want it to be super defined what they're allowed to do.
- [25:16]
C
Right.
- [25:16]
B
You don't want it to be. You thought you were doing a trading card, but now they're able to put billboards on you on a billboard. They're able to put you in, you know, their promotional videos. Like you want to have that super divine because again, you might be willing to offer all these things and have it more broad, but you should be paid more money for that.
- [25:36]
C
Right.
- [25:37]
B
So it's a lot of things like that. You just have to be looking at and look the thing that's very important where you mentioned, I think it was a great catch by you, where they're trying to say it's in perpetuity. That's generally a lot of Times these companies, they write these contracts that are so one sided, hoping you just sign it.
- [25:53]
C
Yep.
- [25:54]
B
And if you even push back a little bit, they'll realize how, you know, nonsensical it is. But unfortunately a lot of people just sign it.
- [26:00]
A
Yeah. They trust that. Oh, well, this is what everybody else is doing.
- [26:03]
C
Yeah, right.
- [26:04]
A
All my teammates did the same thing. Or they're saying, well, this is just our agreement, so if you want to be here, you have to sign it.
- [26:09]
B
Yeah. No. So you have very little bargaining power in that or you think you have very little bargaining power. But yeah, no, it's a, it's crazy. Some of the stuff that you see in these agreements, especially in this world now, because it makes you like shake your head. You're like somebody literally thought they really were banking on somebody just signing their name.
- [26:30]
A
Yeah.
- [26:30]
B
If that's how one sided it is.
- [26:32]
A
Well, the intention of the universities when they've created these one sided deals, it wasn't, let's create something that's fair for both parties. It's truly, what are all the things that we want? Here you go. Sign it.
- [26:45]
B
Oh yeah, no, it's 100 and look, a lot of the, look, I think a lot of the power of, you know, I'm fortunate to be an attorney, be able to be an advocate for somebody. Is that the most valuable? I think it is when you hire an attorney is that first phone call or that first letter that goes out and they know that you're represented.
- [27:03]
C
Right.
- [27:03]
B
And that's because again, they know, they're like, oh crap, like we can't, we're not going to get away with what we initially wanted to get away with.
- [27:12]
A
Yeah. So what happens when there actually is an issue? Let's just say one of these players casually signs this one sided deal, they actually have this clause in there where they missed the class or they violated a team rule. And look, I, I think there are instances if you're like the best player on the team where they're like, okay, we're obviously not going to avoid this contract. But if you're somebody else who maybe hasn't played and they realize, hey, we're upside down on this thing, this kid has not developed like we expected. If they were to take advantage of the fact that the, that the contract says what it says now what does that look like from a player's perspective? And I don't mean like, oh, the team does X, Y and Z. It's like, okay, if the team chooses to, you know, basically, you know, enforce it, what are like what should players be aware of? I mean, the first thing I think about is a. Hire a lawyer, right?
- [28:08]
B
Yeah, no, the, it's a great point. Also the other piece now, post house settlement, it used to be like all you were really dealing with those schools were the roster sizes. They had a finite amount of roster sizes. But now you have a cap.
- [28:21]
C
Right?
- [28:21]
B
So there's a market component too. So if schools could get a million, $2 million off their cap and replace you or the player with somebody that they deem more suitable or better, you know, there's, they're going to be trying to do that. It's in a competitive world of college athletics. That's an interesting point. And it depends because another thing to look for in these agreements is what the remedy for a breach is. Is it an, is there an arbitration provision? Is there mandatory mediation? And the benefits of those two things are it's a little bit quicker. I mean arbitrations are many trials. Mediation is you have a private, you have a mediator that comes in. They try to bridge the gap back and forth. Or you know, it might be, you have to file a lawsuit to sort of.
- [29:03]
A
Which of the two would you recommend? If it was between arbitration and mediation, like if they could go ask for one over the other, where should they start?
- [29:12]
B
I don't think it's, it's not really neither or you could have both. A lot of the contracts we draft up, you'll have something that, you know, before you could file an arbitration demand, there's mandatory mediation. And the benefit of that is it's.
- [29:24]
A
A lot quicker saving money.
- [29:26]
B
Saving money. And again, the other pieces where I think it's, this is a benefit to both sides, but quite frankly probably more of a benefit to the university. But you go to arbitration or you're in arbitrate, when you have an arbitration, the rules of evidence still apply and you open yourself up to discovery and depositions. And it could be finances too. And again, a lot of these schools that are trying to get creative for the most polite way to say it, how to circumvent their cap to the extent a player has a dispute with a school and it's in arbitration or court, and a lot of this stuff could be discoverable, know at school, I don't think is really going to want a lot of that coming out.
- [30:04]
A
Yeah, that's a good, good call Out. So, okay, let's just say a player does a deal and again, more generally just want to give these families and these players more general advice. They do a deal and A payment isn't made.
- [30:23]
C
Right.
- [30:25]
A
What do. What should the player do?
- [30:29]
B
So if a payment's missed again, you would want to first look at the contract and there might be a cure period. And what that is is, hey, if there's a breach, you've put somebody on notice that you breached it, you have X amount of days to cure it. But yeah, if they breach the contract and they're not getting paid, go find an attorney. And another thing that going to like a provision that you put in when we're talking about arbitration or mediation, there's something called the prevailing party provision, which is sort of a very valuable tool in contracts if you think you're going to get bullied at some point or you're in risk.
- [31:00]
A
Explain. Yeah, explain what that is.
- [31:01]
B
Yeah. So especially if you're the one receiving money because a prevailing party provision, what that says is that if I have to litigate this to get paid or for a breach that you did, then I want my attorney's fees.
- [31:14]
C
Right.
- [31:14]
B
Because that makes it a lot more attractive for a law firm or a lawyer to take a case. Even if the amount isn't going to exceed what the legal fees are, it's somebody's going to want to take that case because they get their attorney's fees paid.
- [31:26]
A
Well, and it also makes it from the university's perspective, feel like, oh wait, there's a lot more at risk here.
- [31:31]
B
Yeah.
- [31:31]
A
Than just paying them X number of dollars that we owed them for this one thing.
- [31:34]
B
Oh, yeah, no, we've had, I mean we very, very fortunate. But we had a, we just had a pretty big win in New Jersey for Sauce Gardner on the Jets. There's a crazy defamation case. You look it up, it's all public, but our attorney's fee as award probably would have exceeded what, you know, it's probably going to end up exceeding what the plaintiff in that case would have won had they won. We ended up winning the case because it was a fee shifting statute. Good for you. Yeah, no, it was a very. It's a crazy.
- [32:04]
A
I said you're a killer. I mean a crazy.
- [32:07]
B
It's a Twitter fight that turned out to be. It turned out to be a New Jersey state court. But yeah, I think we created the law on the anti slap statute there. So exciting stuff.
- [32:18]
A
So what, what about if it's an nil deal and it's with a company and the company misses the payment and the company says, hey, you know, we're gonna get you next month, but they expect that you continue to follow you Know, live up to your end of the bargain. You still have. They're expecting that you're gonna still post on social media. What would you advise a player at that point to do? Would you tell them to keep posting? Would you say no? Send a letter? What would be the.
- [32:46]
B
Yeah, I would immediately put that. Again, you have to review the contract, exactly what it says, but immediately put them on notice that they're in breach. And again, at that point, I would retain counsel. And again, you might want a penalty for them missing a payment. You might want sweeteners in the deal, you might want interest. You might want your attorney's fees paid. But if they're missing a payment, you know, August 1st, who's to say they're going to make it September 1st. Right. That's usually a clear sign when, when you see a company having money issues like that. And unfortunately, we've seen, we've been in this situation quite a bit on behalf of clients. It's usually the tip of the iceberg.
- [33:20]
A
Have you seen agreements where they've said, all right, you, as you know, the contract, obviously, between the university and the player, and the university asked that if you ever violate a team rule, you have to let them know. Have you seen that?
- [33:35]
B
Yeah, there. I mean, they're. Again, that goes to what's going to be enforceable or not. But yeah, no, they're trying to almost like what, quote, unquote, rat yourself out in a weird way. Look, you might have a cooperation provision in your contract, and that's. Generally, you see that a lot in the employee employer relationship. You know, a lot of people. It's funny, I joke with a lot of my friends that they go to work and you, the first day you start, you get one of those employee handbooks that they make you sign. People don't realize there's a. That's a contract you're signing.
- [34:06]
C
Right.
- [34:06]
B
So a huge tool in litigation, but in that generally you'll have a cooperation provision. If there's ever a workplace investigation, you have to cooperate whether you implicate it yourself or not. It's weird in the context of college athletes because you have a code of conduct with the school that's probably pretty similar. You have to cooperate, but in the context of, like, whether or not your agreement is valid or not, you know, you're not an employee. It's. You're not. It's not an employee employer relationship, like we said earlier. So I know it's weird that this stuff's put in there. And again, that goes to the school Putting everything, throwing everything in the kitchen sink in it.
- [34:40]
C
Right.
- [34:40]
B
And saying, we're gonna try to see what works, we're gonna see what sticks, and hopefully nobody pushes back on it. If you push back a little bit, you'll probably be able to get much more clear language there.
- [34:51]
A
All right, so I have a question that it's gonna sound like a pivot, and then I want to go back to the college stuff, but I do think, given what we're talking about, it's important. So some of these major league organizations, when they're dealing with kids that they're scouting in the draft, they're going to invite you to a. A workout at the big league stadium before the draft. In order to participate in the workout, you need to sign this waiver.
- [35:11]
B
Y.
- [35:11]
C
Right.
- [35:12]
A
If you refuse to sign the waiver, then you can't participate in. In the workout. What are your thoughts on those waivers?
- [35:20]
C
It.
- [35:20]
B
It depends a lot. It's similar to almost when you go to like a. A game and if you get hit with a baseball on the back of the ticket, it says you've. You go to a Yankee game, you get hit in the head with a baseball, the ticket pretty much says you're limited. You can't really do anything. You're, you know, you assume the assumption of the risk. You know, again, I don't think that's going to be super enforceable. The extent you have litigation, probably those situations end up resolving out of court settlements that you never hear about. But. Yeah, I mean, I would just make sure anything you sign. And this goes to, like, the theme of what you're saying at the outset of this is anything you're signing that is a contract, like, make sure you review it. And like, especially in the context if you're so good that you're. You're potentially being drafted by a major league baseball team, you know, really be careful because again, you don't know what's in these things.
- [36:08]
A
Yeah.
- [36:09]
B
And it's, it's hilarious to me sometimes where, like, they'll send something over and you go, it's like, oh, we have something quick for you to sign, and you've probably seen this. And then you open it up and you see like, the slow hourglass opening it because you thought it was gonna be a one sheet page. It's like 35 pages, and you have like 10 minutes to review it.
- [36:26]
A
No, it's so true. Yeah. I mean, one of the things that I've said to parents as long as I've been an agent is it's Always so comfortable and convenient to think about. Best case scenario.
- [36:38]
C
Right.
- [36:39]
A
You don't need to waste any time on best case scenario because that's easy.
- [36:43]
C
Right.
- [36:43]
A
We know the answer to that. So think about worst case scenarios. So in these waivers, think about, well, what if something were to happen? What does this agreement actually say about that?
- [36:54]
C
Right.
- [36:54]
A
Same applies for the college stuff. Don't look at it thinking, oh well, I'm never gonna have to worry about this if something happens. What does this mean? That like that needs to be the lens by which you look at these?
- [37:05]
B
No. A million percent. I, you know, and a lot of times I joke with people that like I'm, I come in, I'm like the wet blanket a lot because everybody's super excited and I'm worried about, you know, what's behind all these different doors. But like nobody gets married thinking you're going to get divorced.
- [37:18]
C
Right? Right.
- [37:19]
B
And that's the sort of way that I explain that to a lot of new clients and parents because everybody knows somebody that's been divorced. You have to be thinking about the exit of these deals in a worst case scenario if it goes south, rather than all the great things that you will celebrate when it's signed and you're happy and you're protected. But when you're negotiating this, you have to think about what happens if this company goes bankrupt. What happens if, God forbid, I have a really bad injury, what happens if a new coach gets hired?
- [37:46]
C
Right, right.
- [37:46]
B
And he doesn't think that this coach doesn't think I'm as good as the previous regime. Like all that stuff is, you know, it's negative energy to think talk about at the outset when you're so excited about a new partnership. But you know, it's important because everybody starts with the best intentions and unfortunately it doesn't always work out that way.
- [38:05]
A
So let's you, you brought up liquidated damages before. Let's kind of jump into that a little bit. Help, help everybody understand when they see that in the contract. Like what, what is that referring to?
- [38:13]
B
Okay, so liquidated damages provision is a situation where you contract, you do a deal saying if one side breaches, it's going to be pretty hard to figure out what the damages are. And a lot of the times this comes in the context of like reputation and nil. You could argue that is your reputation.
- [38:30]
C
Right.
- [38:32]
B
And so it's really on point in that component. So you say at the outset, hey, if there's a breach, I'm going to get X amount of dollars or I'M going to be let out of this agreement. This is if the contract's breach. This paragraph says what the side, the breaching side's going to owe the other side. What you have to be careful about. That could work both ways. So what a university could do is, you know, if you violate a team rule, say they've paid you $100,000 and you violate a team rule the last game of the season, they could say, we're pet. We want all that money back.
- [39:04]
C
Yep. Right.
- [39:04]
B
And that's the provision that's pretty. You know, we've seen that in a lot of agreements that universities are drafting.
- [39:11]
A
I've even seen it go so far as to say even. Even if it happens a week after the last game.
- [39:16]
B
Oh, yeah, no, it's. It's crazy. And again, this all goes to the component, like how it's going to be the whole cap and trying to figure out how they properly manage everything. But again, that's put in there and that. You talked about leverage earlier. Think about what kind of leverage you have there, that all the money they've already paid, you have to pay back. And even if you had spent that money already, Right. They could still try to come after you. And who knows if you have that money when you're going to be able to earn it back to pay it well.
- [39:40]
A
And think about the university whose response to you wanting something to change is, hey, well, look, well, if we change it for you now, we got to change it for everybody else. So we're not going to change it.
- [39:52]
B
Oh, yeah, no, it's the. What's it called? It's very manipulative.
- [39:57]
C
Right.
- [39:57]
B
And there's, you know, I joke. It's like doing a lot of these deals, it's like the psychoanalysis of, you know, who you're talking to, because they do. They try to manipulate you in that sense. And they try to, you know, they try to really deal in an emotional component where it's really a business decision. It's a pretty important decision where you're going to go to college, if you're a college athlete, or who you're going to decide to partner with, you know, for brand deals, like, these are big decisions. It's like this shouldn't be. You shouldn't be like, tricked or, you know, try to be manipulated in the sense that, like, this is what everybody else is doing because quite frankly, it's you individually, it's. You are literally the most important thing you have. Your name, your image, your likeness.
- [40:37]
C
Right.
- [40:40]
A
So as we think about the Liquidated damages. One of the components of these deals that I think schools are really trying to get a handle on is, well, you know, we're doing a multi year agreement with you and you come to this school for one year and we want to prevent you or at least make it really hard for you to transfer. So what we're going to do is we're going to put this provision in there which basically says if you transfer at any point then you have to pay back, you know, whatever percentage of the amount of money you received or just a flat fee or whatever it is to make it so that like, yeah, you, you can't at that point, am I really going to transfer? I'm gonna have to pay back 30 to 40 to $50,000. Like that's crazy. And with that being said, a lot of people talk or a lot of these universities also have these things where it says and you can't post about you transferring because they don't want.
- [41:30]
C
Yeah, right.
- [41:31]
A
The bad juju out there in the world saying so and so left the school. I don't know if you have any thoughts on that, but those are things that I see in almost every one of these agreements when it's sent the first time.
- [41:42]
B
Yeah, no, I think it's going to be, I think that's an open ended issue and I think there's a lot of people that think that's going to be unenforceable, that you could prevent somebody from like going into the transfer portal to go to a new school. So again, this goes the initial component. You're still a student, student athlete.
- [41:57]
C
Right.
- [41:59]
B
And you're not an employee of the university. So like who could stop movement and like say you can't go to. This wasn't a fit. I want to go to this school or for whatever reason, it could be academic, it could be, you know, from, it's a better athletic opportunity. But I think that's going to end up being like an open ended issue of what's enforceable and what's not. And I, I see both sides of it.
- [42:19]
C
Right.
- [42:19]
B
The school wants to be protected, but also you only get one shot of being a college athlete. And you really should sort of try to maximize, you know, where you want to be, where you're going to be happy. But no, that's going to be an interesting sort of, and trust me, there's a lot of litigation, sort of ongoing or threatened litigation about these.
- [42:37]
A
And you could think about it from both sides too, where it's like, okay, wait a second. So if I come here and I transfer. I have to pay back this money plus some. But then if you let me go, there's no. You can just do that and you.
- [42:48]
B
Can just do whatever you want.
- [42:49]
A
Yeah. And so that's where it's, it's always fascinating. And even when you raise this with the attorneys at the university, there's no answer. They don't have like this great answer that says, this is why we have this. It's like, yeah, that's, that's what we have.
- [43:02]
B
No, it's, yeah, it's just the, that's the worst thing. It's like, so why do you have this? Just the way we do it, I go, yeah, but why?
- [43:08]
A
Yeah.
- [43:08]
B
And you're not getting the answer you want, so you just might as well hang up the phone at that point.
- [43:14]
A
So let's talk a little bit, just briefly, about offsets.
- [43:16]
B
Yep.
- [43:17]
A
Or I guess clawbacks. Offsets. What's been your experience with the amount of schools that asked for those?
- [43:24]
B
Yeah, I mean, again, this goes to, I think that's what universities are going to want. Because again, when you have, like I said, it's not just about the roster sizes anymore. It goes to what the actual cap is. So if like every dollar that you could get off your cap could go to somebody else. It's just the market. It's literally, this is like every professional sport except mlb.
- [43:44]
C
Right.
- [43:44]
B
There's a salary cap now and you have a finite amount of money and that's what we have to fund and make our team. So all schools are going to want offsets that they could get those numbers off their books.
- [43:53]
A
Yeah.
- [43:54]
B
So again, that just. You could negotiate. These are all things that have to just get negotiated out. Because again, in perfect world, if you're the athlete, obviously you want no offset. You want the ability to double dip.
- [44:04]
A
Well, and, and help everybody understand. So when we talk about offset, obviously it's like, okay, I'm getting an amount of money from the university. And the offset essentially says, and I'll just give you a hypothetical. We do this deal and I get a deal with, through the school with an airline. I'm just using them as an example. Okay, the airline's gonna pay you $50,000. All right. So player, do you want to do this fifty thousand dollar deal? Well, what's it require me to do? Let's just say he says yes.
- [44:35]
B
Yep.
- [44:35]
A
Okay, so you do the deal, you'll get the $50,000, but the university no longer is able to pay or no longer needs to pay. Yeah, whatever the Total amount was. It's whatever that amount was minus the $50,000 that you got from the university. So everyone hearing that may say, well, that sounds terrible. Why would I ever do that? Why wouldn't the guy just say, no, I don't want to do the deal? Because if they don't do the deal, then the school still gets the ability to offset it.
- [45:01]
B
Y.
- [45:01]
A
And that's where the player now no longer is guaranteed. If they were guaranteed 100 grand, it's no longer 100. Now it's whatever that amount was, minus the 50, which would be 50 grand.
- [45:09]
B
Yeah. And that's what. So again, this goes to, like, a lot of those deals have offsets, and the schools are trying to get them nil deals to sort of offset that money, going to the part getting that number off their books, quote, unquote. And yeah, I mean, it's. It's probably easier to like, sort of articulate in the context like, of college coaches in the sense where you hear these stories where, like, coach gets fired. He's making $10 million a year at, you know, Jimbo Fisher gets fired from Texas A and M. And I think he negotiated no offset. But had he made $10 million a year, he gets hired now at Florida state and makes 5 million. The team. The school's only on the hook for $5 million now. But yeah, I mean, a lot of schools are gonna just try and to do that because again, it's. I know I like, sound like a broken record here, but when you're dealing with a market, if they could get the money off their books from what that cap is, it opens the door for them to, you know, sign more players.
- [46:00]
A
Okay, last question for you. What is the. I want you to picture you have a son. You don't have the. Well, you have the experience you have. I'm representing him and you're talking to me. Let's say I'm negotiating his nil deal. What is like. If there was one thing. We're like, matt, this deal cannot have this. Is there. Is there one thing where you're like, look, if we only. If we can only choose one thing, this is the one thing I would say, we cannot agree to this.
- [46:28]
B
Yeah, it would be. For me, it'd be the mobility. So it'd be making sure that if the deal goes south, there's an easy mechanism for my son to get out of it, because I don't want. I wouldn't want my son to be stuck in a deal for multiple years and be unhappy and unable to get out of it. And again, thankfully, we would. I would know lawyers that could probably help me sort of navigate this, but I wouldn't want my son, especially if they don't have the resources to be in a situation that they wouldn't be able to stand up for themselves and fight for themselves, to get out of something that, quite frankly, is just making them unhappy.
- [46:59]
A
Yeah.
- [46:59]
B
Not fair and not happy. And again, college is a. Especially if we're talking about in the college component, that's a really special time in somebody's life.
- [47:07]
C
Right.
- [47:07]
B
And to be somewhere that you're unhappy, that would kill me. Right. So even for any of my clients, family or not, it would be mobility.
- [47:16]
A
Okay. Is there anything that I didn't talk about that you think would be something you'd want to bring up tonight? Wait, right now? Anything?
- [47:25]
B
No, I mean, this was great. I mean, I. Like I said, I just.
- [47:29]
C
Was.
- [47:30]
B
I say. I mean, just again, giving you sort of your flowers here. I mean, they think this is awesome that you're doing this. I think it's super educational, and you give a lot of people fans and people that just want to learn stuff about, you know, professional sports, real inside look and how it shakes out. And, you know, you have great guests. I'm lucky that. I'm not saying I'm one of them, but. No, you've had really impressive guests. I'm just. I'm just happy to have a seat at the table here.
- [47:54]
A
No, and I was. I was really looking forward to this episode. I know some of the stuff we've talked about for all the families listening are probably like, oh, man, that was a lot of information. Watch it multiple times. Right?
- [48:04]
B
Yeah.
- [48:05]
A
The company you work with, you are a partner at Gordon Reese, if anyone. And I. I want to just, like, level set here, like this company and Ben, they work with the best of the best. If a family actually has interest in hiring a lawyer, what. Just tell them, like, what's the thing that they need to do to reach out to a lawyer?
- [48:24]
B
Yeah. So we're. We're the only law firm in the country that has an office in all 50 states. You know, we have almost 1800 attorneys. I'm based in Manhattan, so you could easily look up our information. But look, it's like anything when you hire a lawyer, whether it's me or anybody else, you have to really get a good feel for it because you want somebody that they don't really separate their problems and your problems. You're all in this together. Right. And I think it takes a look I've known you for a long time, and I know how much you. Your relationship with your clients. It's like family.
- [48:58]
C
Yeah, right.
- [48:58]
B
I mean, I saw one of your clients at the Gold Glove dinner two years ago, and I said, that's my friend. And they were just. Him and his wife were, like, gushing over you.
- [49:06]
C
Right.
- [49:06]
B
And I just think that's really important for the parents out there that are listening. Like, meet somebody that's going to be in the trenches with you, because that's the most important thing. You want somebody that's not transactional. It's. They're in this with you. They're part of your. Your son's team or your team. And again, it's a stressful. It's all high stakes. It's super stressful. But that's the only way to do it. It's like you have to live the case or live the situation with your client or quite frankly, like, I don't know, A, why you're doing it.
- [49:34]
C
Yeah.
- [49:34]
B
Or B, how effective you could be because you really do have to take it a bit. That you have to take it as if, like, this is happening to you, in my opinion.
- [49:44]
A
All right, so the. The reason why I think you're so good, there's a lot of different things that come to mind, but you possess something that I. I would say, like every agent would aspire to possess, which is part, like, aggressive advocacy, met with this kind of, like, behind the scenes finesse.
- [50:05]
C
Right.
- [50:05]
A
Where it's like you're dealing with a lot of different personalities. As you said, high stakes. So you want to advocate as much as humanly possible, but you could also do that as a lawyer or even as an agent and have terrible reputations and nobody wants to get a deal done with you. So you have to figure out a way, like, I need to advocate for my client, but I need to build relationships to where these guys know there's a deal to be had. And that's something that you've done maybe better than anybody I've ever seen that does what you do. So I want to commend you for it, brother. I appreciate you.
- [50:33]
B
Yeah, no, that's. I really appreciate that. I think exactly what you said is like, look, we have a bunch of cases that people talk about, and they know about 90% of the cases that we end up having. Nobody ever hears about it. A lot of our clients, because like you said, we get deals done before anything goes public, so.
- [50:52]
A
Yeah. Well, thank you, bro.
- [50:54]
B
No, thank you for this. This is great.
- [50:55]
A
Appreciate.