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Thursday, September 06, 2007
Agents Representing Both Players and Coaches and the Increasing Role of Coach as "CEO"

This week's issue of Street & Smith's Sports Business Journal (subscription only) reports that Creative Artists Agency (CAA) has officially moved into the coaches representation business by hiring former NFLPA president Trace Armstrong to start up the practice. Liz Mullen noted that "[i]t is the latest growth spurt from CAA Sports, which was created through the acquisition of the practices of several major agents last year, including NFL player agent Tom Condon, who was Armstrong’s longtime representative." Incidentally, Condon is also the longtime representative of NFLPA executive director Gene Upshaw.

An agent that represents both players and coaches or front office employees can result in a conflict of interest, which I discuss in my law review article, "Solving Problems in the Player Representation Business: Unions Should Be the Exclusive Representatives of the Players." See also Professor Scott Rosner's excellent piece addressing conflicts of interests in the player-agent business, Conflicts of Interest and the Shifting Paradigm of Athlete Representation, 11 UCLA Ent. L. Rev. 193 (2004). Both attorney agents and non-attorney agents have a duty to avoid conflicts of interest. Attorneys are bound by the Model Rules of Professional Conduct, the main purpose of which is to further the overriding values of the legal profession; mainly, loyalty to clients, the maintenance of client confidentiality, and the zealous advancement of client interests. Model Rule 1.7, which specifically addresses conflicts of interest, provides that a lawyer shall not represent a client if (1) the representation of one client will be directly adverse to another client or (2) there is a significant risk that the representation of one or more clients will be materially limited by the lawyer's responsibilities to another client, a former client or a third person or by a personal interest of the lawyer; unless each affected client gives informed consent in writing. Although non-attorney agents are not bound by the Model Rules, they are still obligated to avoid conflicts of interest, but the obligation arises from common law agency requirements. The agent owes the athlete as his principal the fiduciary duty of loyalty, which means that the agent cannot get himself in a situation in which there is an actual, or even apparent, conflict between his interests and the interests of the player he represents.

Coaches are usually involved to some extent in the personnel decisions made by the team, including the acquisition of players. Adverse interests arise between coaches and players in contract negotiations when players are seeking the highest possible salary and coaches are naturally aligning themselves with management and desiring to pay a lesser amount, as well as adverse interests over playing time, the player's role on the team and any number of other issues due to the nature of the coach-player relationship. So the issue is whether an agent can effectively and zealously represent the interests of a player-client if the agent also represents the player's coach, who is now aligned with management on the opposite side of the table.

On this specific topic, ironically also in this week's issuce of SBJ, Bruce Schoenfeld has an excellent piece that addresses the increasing role of NFL head coaches in management decisions ("More NFL coaches are acting like CEOs"). Here are a few excerpts:

[Sean] Payton is one of several NFL coaches — ranging from Denver’s Mike Shanahan, New England’s Bill Belichick and Tennessee’s Jeff Fisher, all of whom have coached in Super Bowls, to newcomers such as San Francisco’s Mike Nolan and the New York Jets’ Eric Mangini — exerting influence well beyond Xs and Os. Some control personnel matters. Others help create marketing plans, or seal sponsorship deals.... The owners who employ these coaches have shown a willingness to modify or even abandon the traditional organizational structure of a pro franchise, in which a coach answers to a general manager or club president.

Shanahan came to the conclusion that a head coach needed to make decisions at the highest level. A hot commodity when Bowlen approached in 1995, he was able to make his case for control. As it happened, he found an owner who wanted to work with his coach directly. “You need an owner willing to say, ‘I trust this guy to run this better than I could,’” Shanahan said. Bowlen gave Shanahan complete control over all football personnel. But as the business has grown over the past decade, Shanahan’s role has deepened. He runs the football side, and his opinions on business carry significant weight. “If there’s ever a business initiative Mike is uncomfortable about,” said Joe Ellis, the team’s executive vice president of business operations, “we don’t proceed.” “There’s a bottom line to our business,” Shanahan said. “So I need to be aware of how everything we do affects our organization. Some coaches have tunnel vision, and I respect that. But I believe that to have a truly great organization, you have to understand everything. You have to be able to talk to people in other departments and know what you’re talking about. I just think that, from a business sense, that’s how any CEO should operate. And I’m like the CEO.”

This conflict of interest has prompted the unions in baseball, basketball and hockey to enact agent regulations that expressly prohibit the dual representation of players and coaches. Thus, representing both players and coaches is only permitted in football. The NFLPA, which has been the one union aggressively enforcing its agent regulations in recent years, does not have such a prohibition in its agent regulations. While its regulations broadly prohibit an agent from engaging in any activity "which creates an actual or potential conflict of interest with the effective representation of NFL players," to my knowledge the NFLPA has not ever interpreted that provision, or invoked that clause, to prohibit an agent from representing both players and coaches.


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