Every agent who represents NFL players must abide by the terms of the NFL Players Association's Regulations Governing Contract Advisors, an updated version of which will go into effect on November 1, 2016. A recently released memorandum from the NFLPA highlights some of the important changes made to the Regulations that govern the profession of representing NFL players.
Agents representing NFL players will be most concerned with the second item highlighted by the memorandum -- a section titled "Fees." It states that "The default fee for contract advisor's services is 1.5% of compensation received by player. The contract advisor and player may agree to a greater fee (up to 3%) or a lesser fee by initialing the appropriate line on the SRA."
In a sense, the provision changes nothing. Agents and players had been able to negotiate the fees paid for Contract Advisors' services in the past, and the maximum fee that an agent could receive was 3% prior to the adoption of new Regulations. However, in an industry with small margins, the fine print could have a devastating effect on many agents.
Now, NFL players have even more leverage to negotiate that 3% Contract Advisor fee downward. In fact, unless an agent is able to convince a player to enhance the fee, the standard commission will be a mere 1.5% on team contracts. In an industry embroiled by hefty competition and agents already negotiating against each other by cutting fees, this reduction could be a huge detriment to practicing as an agent for NFL players.
The NFL already had the most stringent regulations when it came to Contract Advisor fees. No other American professional league has limits in place that restricts an agent to earning 3% at most from clients' team contracts. The NBA has a cap of 4% on player agent fees.
Some argue that there already exist too many agents licensed to represent NFL players. In 2013, roughly 800 agents were certified to represent 1,800 NFL players. This year alone, 103 new agentswere certified by the NFLPA. Perhaps the NFLPA's new Regulations, which will undoubtedly cut into agent margins, will cause a reduction in the amount of individuals apply for certification and continue to pay to remain certified agents. But is that a good thing?
If competent advocates will be dissuaded from being certified Contract Advisors, then the NFL players -- the unit of individuals that the NFLPA is formed to protect -- will plausibly suffer as a consequence. It could be an instance wherein the NFLPA believes it is taking an action in the best interests of the players, but the outcome leads to deterioration of services provided to athletes whom need fiduciaries that truly have their best interests in mind.
Many NFLPA Contract Advisors have expressed extreme concern with the new Regulation concerning Fees. While most refuse to speak on the record, Cleodis Floyd is not shy in sharing his thoughts. He says that the new Fees regulation is exactly why he is contemplating not being an agent anymore.
"It's a shame I can make much more money representing an injured person in a car accident than I can representing a mid to late round draft pick," says Floyd. "It's a joke to be expected to recruit players with a default fee of 1.5%. It's so much work to sign players. It's extremely expensive and almost impossible to make money. I'm lucky to break even."