Agent v. Lawyer, What Do You Really Need?
As a professional athlete, when you hire a contract advisor (a.k.a. agent) what is it that you are paying for?
The NFL Players Association lists the sole duty of the agent to provide contract negotiation services to the player. For his work the agent can earn up to a 3% commission on the total value to the contract.
As most agents are lawyers, the agent’s responsibility to the player is no different than that of a lawyer to a client. That is why for current NFL players, Arora & LaScala, LLC, offer hourly billing for negotiating their contracts. Generally, most agents are lawyers and they should have an understanding of hourly billing. As we all know, legal fees are earned on an hourly basis. So why aren’t the contract negotiation services being done by your agent with the corporation (i.e. the NFL team) not done at a fixed hourly rate?
NFLPA statistics indicate that the median salary for an “average” NFL player is nearly two million dollars. As such, the “average” NFL player would pay nearly $60,000 to that agent for negotiating the contract (3% of two million dollars). However, at a typical hourly rate of $400, that would require the contract advisor/attorney to spend over 150 hours to earn $60,000 in fees. That would come out to nearly a full month of forty-hour work weeks to complete a single contract. With the pro forma nature of the contracts in the NFL, I seriously doubt that any advisor, with a rudimentary understanding of math and the English language, would spend that much time on an individual contract. Most contracts are negotiated over the phone, fax and email, without the expense of travel. Experience teaches us that even the most convoluted or complicated contract could be done for far less money being paid by the player. The “average” player’s contract regardless of it being a re-negotiation, dealing with free agency, etc. would not take more than 30 to 40 hours of actual intellectual work. However, under the current commission based system, the “average” player is paying his agent nearly $2000 an hour to negotiate the contract.
Consider the salary of the upper echelon NFL player (commonly a salary totaling over one hundred million dollars over the life of the contract), those players could be giving their agent, at even a 1% commission, over a million dollars in fees. Even if this contract takes 100 hours of actual work, the elite player could save nine hundred thousand dollars or more if paying by the hour. Unless of course, as an elite player, you want to pay your agent over $10,000 an hour for negotiating the contract.
By utilizing a billable-hours style contract, the “average” NFL player would save over 70% in agent fees ($400/hour times 30 hours equals $12,000 versus $60,000). That is cash money in the players’ pocket. The player gets what he pays for, a certified agent and attorney to negotiate a contract, thereby allowing the NFL player to maximize the money in his pocket.