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Black agents compete for blue chip athletes.

More black agents are negotiating contracts for superstar athletes. But the real money is in cutting endorsement deals and providing financial services.

Their clients read like a who's in professional team sports. Michael Jordan and Patrick Ewing. Bobby Bonilla and Dwight Gooden. Herschel Walker and Randall Cunningham. Pick a player, any player, among the 10 highest-paid black athletes in the National Basketball Association (NBA), the National Football League (NFL) or Major Legue Baseball, and 29 out of 30 have an agent who is anything but black.

In basketball, total rejection: not David Robinson, not even Hakeem Olajuwon. In baseball, a complete shut-out: not Barry Bonds, not Cecil Fielder. Throw in football and except for 1988 Heisman Trophy winner Barry Sanders, black sports agents would be 0-for-30 in their bid to represent the cream of the crop.

But oh, the times are changing. Just ask Los Angeles-based sports agents Leigh Steinberg and Marvin Demoff, who in the past three years have lost out to black agents in the race to represent Sanders, whose estimated $700,000 in annual endorsements makes him one of the hottest properties in the NFL, and Raghib "Rocket" Ismail, the kick return specialist from Notre Dame who now pulls in a guaranteed $4.55 million per year with the Toronto Argonauts of the Canadian Football League. Or try asking Chicago-based agent Steve Zucker and Orange Country-based agent Barry Axelrod, who last year received word that their services would no longer be needed by two-sports star Deion Sanders of the Atlanta Braves and Falcons, the heir apparent to Bo Jackson.

Go ahead and bet the bank on this one: More black sports agents are negotiating contracts and providing financial services for the superstars of sports, where the real pot of gold is in endorsement packages. But it remains an uphill battle--despite the fact that team sports are dominated by black athletes. Of the roughly 3,000 athletes in professional team sports, 50% are black, but less than 15% are represented exclusively by black sports agents.

"Unfortunately, some of the star black players have swallowed the line that you've got to have a white agent and maybe a white, Jewish agent to get the very best deal," says Raymond E. Anderson of five-year-old Anderson Reynolds (AR) Sports Inc.

"For the most part, they're indoctrinated from the time they're in high school," adds R. David Ware, a partner with Atlanta-based Thomas, Kennedy, Sampson, Edwards & Patterson, who co-negotiated Barry Sanders contracts with agent Charles Lamont Smith and also represents Mark Clayton of the Miami Dolphins. "They're pretty much told it's the white agent and white attorney who can get you the most money," he says. "Like all black business people, we not only have to be good to get a client, we have to be great."

Despite these and other obstacles, the profit motive has inspired more blacks to dare to be great. "As long as the sports industry itself is thriving, the opportunity is going to be there for black sports agents," says Fort-Wayne, Ind.-based Eugene E. Parker, 36, whose clients include Tim Brown of the Los Angeles Raiders, Rod Woodson of the Pittsburgh Steelers and "Prime Time" himself, Deion Sanders.

And boy, is the industry thriving--thanks in no small part to black athletes. However, even as they excel on the courts, diamonds and gridirons of the world, African-Americans continue to be largely excluded from the executive suites and boardrooms of the multi-billion-dollar sports industry. Thus, African-Americans still do not enjoy an ownership stake that is representative of their contributions as loyal consumers and reliable, often highly specialized laborers in the industry. In this, first installment of a special report examining black progress in the business of sports, BLACK ENTERPRISE looks at the gains made by African-American sports agents.

Getting A Piece Of The Action

In 1990, sports-related companies, stadiums and performers produced over $60 billion in revenues, making sports the nation's 22nd largest industry, according to Martin J. Greenberg, coauthor of Sport$biz: An Irreverant Look At Big Business in Pro Sports (Leisure Press, Champagne, 111., $19.95) and director of the National Sports Law Institute at Marquette University Law School in Milwaukee. Approximately $580 million came from professional athletes' endorsement contracts, of which agents typically get 20% to 25%--as much as $145 million annually--in commissions. Throw in the 3% to 5% (potentially $70 million a year) in commissions that represents the agents cut of the $1.4 billion in salaries that team-sport athletes earned in 1991, and it's easy to see why sports agents outnumber athletes virtually two to one. "It can be a lucrative field because you're taking a piece of the player's income, a piece of his action," Greenberg observes. "If you represent a guy who's making $5 million over four years, that's $200,000 in commissions. Fifty thousand dollars a year is a living for a lot of people."

That fact has not gone unnoticed by African-Americans. For example, C. Lamont Smith, 35, founder, CEO and president of All Pro Sports and Entertainment Inc., a black-owned, full-service sports management company, grossed an estimated $2 million in revenues in 1991. With a staff of nine people, the Denver-based company's client portfolio includes Denver Broncos safety Steve Atwater, Cincinnati Bengals defensive end Alfred Williams and Detroit running back Barry Sanders, whose $1.9 million a year contract and endorsement deals with Wheaties breakfast cereal and Nintendo home video games, among others, make him the firm's crown jewel.

And Alameda, California-based AR Sports, which specializes solely in contract negotiations under the watchful eye of co-founder and President Raymond Anderson, grossed $500,000 last year with such clients as Jose Oquendo of the St. Louis Cardinals, Minnesota Vikings head coach Dennis Green and Harold Reynolds, second baseman with the Seattle Mariners (and the brother of Anderson's partner, Larry D. Reynolds).

Plus, consider these success stories:

* William Strickland was instrumental in recruting Michael Jordan for Washington, D.C.-based ProServ Inc., the second-largest sports management firm in the country with a work force of some 120 employees. Strickland recently left ProServe to become president of basketball operations for Cleveland-based, sports management industry king International Management Group (IMG), taking with him such prized clients as Mitch Richmond of the Sacramento Kings and Pervis Ellison of the Washington Bullets. Ellison was the first overall No. 1 draft pick in the NBA to have black representation.

* Fred L. Slaughter, a self-employed, Santa Monica, Calif-based, 22-year veteran sports agent who represents not only athletes such as the Indiana Pacers' LaSalle Thompson, but also the 53-member National Association of Basketball Referees.

* Edward Abram, the Oakland-based agent and 50% partner with Morcom Sports Enterprises, negotiated Raghib Ismail's four-year, $18.2 million contract, the largest first-year contract in sports history.

Black sports agents are beginning to get a bigger piece of the action in the wake of skyrocketing player salaries and marketing opportunities that have more than doubled during the past three years. In 1989, the average player salary was $750,000 in basketball, $497,000 in baseball and $299,000 in football. Today, it's a whopping $1 million in basketball, $851,492 in baseball and $420,000 in football, according to the major sports leagues' respective players associations. Also, three years ago, the top three highest-paid black athletes combined raked in less than $12 million in endorsement income. In 1991, Chicago Bulls guard Michael Jordan pulled in $13.2 million alone, making him king of the nation's sports endorsers.

Traditionally, that crown has been reserved for golfers like Arnold Palmer and Greg Norman or tennis players like Boris Becker and Steffi Graf, athletes whose professions lend themselves to more international visibility and therefore more appeal. And since golf and tennis pros are also less likely to rely on agents, given that tournament purses and appearance fees drive their markets, the majority of sports agents are forced to vie for a share of the crowded team sports market, where the competition can be tough, especially if you're black.

Of the 200 registered baseball agents at the start of the 1992 season, only 150 had active clients. And of those 150 base-ball agents only five, or 3.3%, were black. Of the 675 registered NFL agents in 1991, only 320 had active clients. And of those agents, only 45, or 14%, were black. "It's a tough field to break into," says Kenneth L. Shropshire, an associate professor at the University of Pennsylvania's Wharton School of Business in Philadelphia and author of Agents of Opportunity: Sports Agents and Corruption in Collegiate Sports (University of Pennsylvania Press, Philadelphia, $24.95). "Maybe 5% of the people that call themselves agents are doing it full time. It's sort of like playing the lottery: If you do get that $5 million a year player, you're on your way to a career. If not...."

Then you'd better not quit that day job.

Actually, becoming an agent isn't that difficult--which is a major flaw with the system according to some basketball agents who find it hard to accept that boxing promoter Don King is now registered with the NBA. At last count, 24 states require agent registration. Six others are considering legislation in the wake of widespread corruption by sports agents who attempted to contract with players before their college eligibility expired. Of those 24 states with laws on the books, Oklahoma has the most stringent upfront requirements--a $1,000 registration fee and a $100,000 surety bond. Indiana has the toughest penalties--a maximum $50,000 fine and two years in jail. In order to represent a player on a professional team, an agent has to be certified by the repective sports' players associations. For the NFL, compliance, which is voluntary, entails filling out an application, paying a $400 application fee and $200 in annual dues. The NBA has no application fee but charges $800 annual dues. Major League Baseball has no application fee and no dues.

A few years ago, agents locked players into long-term contracts and threatened to initiate costly court battles if the athlete wanted out. But the players unions now require that the player-agent agreements be contractually binding for no longer than one year and that all disputes be handled by arbitration. Also, agents were once able to charge clients whatever commission they could get. The players unions now limit commissions to no more than 4% to 5%.

It's almost imperative though, to have some kind of legal or financial training. "If you're going to deal with contract law and labor law, you've got to have some legal know-how and ability," says Fred Slaughter, who represented Dennis Johnson and Norm Nixon during their playing days. Slaughter, 50, holds a law degree from Columbia University, as well as a B.A. and MBA from the University of California at Los Angeles. "If you're not an attorney," he says, "you will limit yourself severely."

That's the advice that Clark Atlanta University graudate Charles Lamont Smith got from former Atlanta Hawks general manager Lewis Schaffel back in 1979, when Smith first considered sports representation while working as a production assistant with WATL-TV in Atlanta and ushering at Hawks basketball games. Says Smith: "He said to me, "You're bright and articulate, but there's one problem. You're black. And for some reason, blacks have not gravitated to or trusted black representatives. Don't try to do it as an agent. Go back to law school and have something else to offer."

No sooner had Smith graduated from Howard University Law School, when the Denver law firm of Gorsuch, Kirgis, Campbell, Walker & Grover hired him at the same time it was creating a sports marketing branch. Three years later Smith started All Pro Sports and Entertainment with $10,000 of his own money and a $100,000 commitment from a white investor (a $90,000 loan at 10% and $10,000 to purchase 10% equity in the firm). Smith is calling on the next wave of black sports agents to be daring enough to take a similar path. "I learned how the business was done, how to speak the language, and I used it to my benefit," says Smith. "That has to be the mission of this next wave of blacks. Learn how to do it, start your own, and then you don't have to have your hand out."

The Agent's Ethic: Just Win Baby

Sports agents come in all shapes and sizes, from the giant IMG, with about 1,300 employees and more than $700 million revenues in 1991, to the recent law school grad trying to make a go of it on his own. In between are a myriad of firms and private practitioners that either deal strictly with contract negotiations or offer the full array of money management, tax planning and endorsement services. AR Sports, for instance, concentrates primarily on contract negotiations, while Eugene Parker and most other agents have a team of in-house professionals to help with any service their clients might request.

Without question, though, IMG is in a league of its own. The 32-year-old company has its fingers in everything from A to Z, including promoting the Pope's 1982 tour of Great Britain and producing such sports-oriented shows as "American Gladiators" and "The Superstars" through its television branch. With such clients as Arnold Palmer, Greg Norman, Andre Agassi and Martina Navratilova, golf and tennis have been the backbone of its client management division. But the recent hiring of Bill Strickland away from ProServ can do nothing but increase IMG's credibility in basketball.

Strickland became one of the nation's most well-known black basketball agents during his eight-year tenure as senior vice president of team sports at ProServ, but was always in the shadow of vice-chairman David Falk, who takes credit for the recruitment of

NBA stars Jordan and Patrick Ewing. Strickland makes no bones about the fact that he left ProServ last fall out of personal frustration, but is quick to add that the position at IMG was also a much more appealing alternative to striking out on his own. "Most of the young men I've known have struggled to handle one or two players. They have to do everything for that client, as well as run a business," he says. "There's a major difference in the resources available in a company like IMG. For me, it creates an opportunity to use the synergy of television with other things we are doing. I think that access is important."

But, despite Strickland's degree from Georgetown Law School and his years of experience, there are those in the industry who charge that he and other blacks working for white-owned sports management firms are merely tokens who help procure young, black talent. Such charges are reminiscent of the early days of the athlete-representation business, when blacks were relegated to jobs as "runners" sent by white agents to recruit black athletes as clients. A runner's primary qualification was having the same skin color as the potential client.

Still others, including AR Sports Executive Vice President Larry Reynolds, conted that there have been too many conflicts of interest with companies and individuals who try to handle contract negotiations and investment deals under the same umbrella. "A lot of guys are doing everything in-house and they're putting players in certain investment deals that are going to benefit the company," says Reynolds. "This is really where guys mess up-why they're out of sports and have no money."

Too often, the overriding concern in the industry is consistent with the worst in all of sport: "Whatever it takes-just win, baby." Over the past six years there has been case after case of players pointing at their agents and crying foul.

For example, in 1986, NBA great Kareem Abdul-Jabbar filed a $55 million lawsuit accusing his business manager, Thomas Collins, of mishandling his finances to such a degree that the $2 million-a-year, perennial all-star center had to borrow money to pay his bills. After giving Collins power of attorney "to endorse, sign and deposit all checks... and to perform whatever services you deem necessary and appropriate" in regards to business expenditures, Abdul-Jabbar claimed, among other things, that Collins had Abdul-Jabbar purchase $498,000 worth of cattle feed as a tax write off. He also charged that Collins cost him $182,000 by not filing the athlete's 1982 income tax return until 1985. The case was eventually settled out of court.

One of the more recent cases led to the 1990 conviction of 38-year-old, Atlanta-based Shearson Lehman Brothers broker Oscar Ayala, Jr., who deposited nearly $1.6 million into his private account from 1986 through 1990. Among the more than 30 athletes who claimed they were defrauded in the case, Philadelphia Eagles linebacker Alonzo Johnson saw his $112,500 account lose $202.67 while generating commissions for Ayala of $46,099.42.

Ware also came under scrutiny, because he had done some legal work for Ayala and had also referred several of his clients to the broker. He continues to deny knowledge of any wrongdoing, but knows the case will continue to haunt him in an industry where competitors will stop at nothing to get an edge in landing a client.

San Francisco attorney Edward King Jr., the undisputed leader in representing players in suits against agents, says the problem is epidemic. "There's no scientific study of the percentage of players that have been abused somehow in their investments, but it's in the high 90s," he asserts. "Virtually all of them are abused. The question is to what degree."

None of which helps general managers and league administrators feel any fondness toward agents. "Overall I have no axes to grind, but it's not the most reputable business to be in," says Chuck Schmidt, executive vice president and chief operating officer of the Detroit Lions and the team's chief negotiator with Ware and Smith on Sanders' contract.

But there's a chance that agents may not be allowed to keep operating under the current conditions, according to Charles Grantham, executive director of the NBA Players Association. The NBA, like other leagues, got more involved in the agent process in 1986 "because of the atrocies that were happening," recalls Grantham. "So many players' funds were being mismanaged. Players were entering into illegal contracts. We felt it was important as a service to the players that we set some standards."

Now, some six years later, the NBA is considering such safeguards as educational requirements for all agents and conducting agent audits. Until then, the leagues will work with the National Collegiate Athletic Association (NCAA) and its member colleges to help educate players on the agent selection process.

What can't be overlooked, however, is that a lot of agents work very hard to make sure the athlete's decision isn't an objective one. Many get their hooks in early and never let go. If they can't buy a player off in high school, then they get to them in college with offers of money, cars, drugs and women. Parents are vulnerable, too, with many of them getting everything from "pocket money" to plane tickets during the recruiting process. Deion Sanders says he and his teammates at Florida State University were wise to the game and milked a lot of agents for everything they were worth. "There wasn't a week that I didn't walk around college without five grand in my pocket from an agent, he says. "But I didn't go with those who gave me money because I knew they weren't honest."

However, the primary characteristic Deion says he was looking for when he hired separate agents for baseball (Barry Axelrod) and for football (Steve Zucker) was "people who were hungry." As Sanders' attorney, Parker's role initially was to coordinate the two agents' activities, but Deion says he and Parker developed such a close relationship that he felt safe letting Zucker and Axelrod go. "Eugene has all my trust and faith. He doesn't work for me, he works with me," says Sanders. "We're friends. It's more than just player and agent."

Barry Sanders says he was looking for a similar situation: "Someone I could be confident of and someone I could be friends with. A lot of the agents I talked to were father types, and I didn't know how I could relate to them. Lamont and David, I like them both and thought both could go in and do a pretty good job. I just felt like two heads were better than one."

Sanders' father, who was very involved in the process, expresses it even more strongly. "I wasn't going to raise my son his whole life and then turn him over to some white people and let them run his life," says William Sanders. "A lot of them called me and told me how well they knew all the owners, how they played golf with them, but to me that's the worst thing for a player if the agent and owner are that close. I was looking for somebody honest, somebody I could communicate with and go to church with. I just felt more comfortable with blacks. Some people might say that's prejudice, but it's not. Plus, their kids don't sign with black agents; why should ours sign with white agents?"

Better Eat Your Wheaties

In addition to his $1.9 million salary, even more money, in endorsements, is coming Sanders' way. Starting next year, he will be on Wheaties cereal boxes in a deal valued at an estimated $200,000. His Nintendo package is worth roughly $100,000. Deals with Foot Locker athletic wear outlets, Wilson sporting goods and Armitron watches are worth about $80,000 each. And a trading card appearance schedule could be worth more than the Wheaties deal based on a $16,000 to $20,000 appearance fee.

Deion Sanders, on the other hand, is expected to earn seven figures in endorsements this year, according to Parker, who is putting the final touches on a national shoe endorsement contract with Nike, which he hopes to follow with a national food chain and a national soft drink deal. Parker is quick to point out, however, that marketable players like Deion and Barry are few and far between. "As far as my particular situation, I think Deion could be the one client who gets a lot of endorsements, and he's doing something only a couple of people have done--play two sports," says Parker. "As far as teamsport sport athletes, black athletes are still a little behind in getting endorsements based on their accomplishments."

This may be a reflection of how Madison Avenue undervalues not only black athletes, but black consumers as well. "Advertisers cater more to mainstream whites and feel that the white athlete can command the advertising dollars," says Parker. "Plus, the decision makers--the advertising agencies, the marketing reps--tend to be white."

In light of that, Parker figures the best strategy for an average black player is to aim for local and regional endorsement packages: say a cup deal with a local fast food chain that could bring in $25,000 to $30,000, or grand openings and autograph sessions that can bring in more than $3,000 each. He also points out that there is a growing market for motivational speakers. The dilemma he has with Sanders is that calls are coming in so fast that he has to be careful to exercise a little patience. "You don't want to commit to a regional fast food ad that will make $75,000 to $100,000 and miss out on a national one that will bring is seven figures. You have to be disciplined, look at the big picture, have foresight and long-term thinking," he says.

Discipline, foresight and a clear view of the big picture are also the keys to the future for black agents, as well as for the athletes--particularly African-American athletes--they seek to represent. As more blacks gain the legal and financial expertise to compete for blue chip sports stars, fewer will be relegated to the role of "runner," and more will assume the far more lucrative position of financial quarterback for their athlete clients.
COPYRIGHT 1992 Earl G. Graves Publishing Co., Inc.
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Copyright 1992, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Title Annotation:includes an article on football player Mike Singletary; sports agents
Author:Clay, Bobby
Publication:Black Enterprise
Article Type:Cover Story
Date:Jul 1, 1992
Previous Article:The cost of bank bias.
Next Article:Establishing a political agenda for African-Americans.

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