Player-Agent Agreements: Is your Rollover Clause Legal? Part II

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lawsuit-settlement-fundingThis is the second part of a two-part series on rollover provisions in player-agent agreements. To see the first part, click here.

 

Remedies

 

The point of all this, of course, is how can an agent enforce his player-agent agreement on a) players who go behind the agent’s back to sign with a new agent, and b) agents who poach players under a binding contract.

 

a) Enforcing against Players who Breach

 

How can an agent enforce his player-agent contract against a player? The agent can always petition FIBA to sanction the player.  The FIBA regulations prohibit certain actions by players. “A player may use the services of only one Agent licensed under the terms and conditions of these Regulations.” FIBA Reg. 163.  FIBA has the authority to sanction Players who violate FIBA Regulations: “In the event that a player uses the services of . . . more than one agent at the same time, FIBA acting through the Secretary General is entitled to:

 

a. Take this factor into account when considering the player’s position in any subsequent contractual dispute;

 

b. Sanction the player as follows:

 

i. a reprimand or caution;

 

ii. a fine as stipulated in article 3-303;

 

iii. prohibit the player from obtaining national and/or international transfers.”

 

FIBA Reg. 164. The sanctions may be cumulative. FIBA Reg. 165. According to 3-303 a player may be sanctioned for the above-mentioned violation up to 50,000.00 CHF. FIBA Reg. 3-303.

 

However, in our experience, FIBA has been reluctant to take action against players for this type of action. Therefore, an agent’s remedies against his player may depend solely on the dispute resolution clause, if any, included in the contract.

 

Many FIBA agents include BAT arbitration clauses in the player-agent agreements. But this may only be the best option for agents who consistently sign their players to jobs worth more than $200,000. The full agent fee for a $200,000 job is, of course, 10%, or $20,000. Going to the BAT, where arbitration costs and legal fees may exceed $10,000, is probably worth while when fighting for $20,000. But for anything less than that, the BAT clause may not be your best choice. If the player decides that the agent is not willing to take him to the BAT, the player-agent contract becomes worthless. Therefore, agents may find it more worthwhile to put a provision in their player-agent contracts that allows them, or their favorite lawyer, to run down to the local courthouse and file suit against the player. For more information regarding this, contact us.

 

b) Enforcing against Agents who Poach Players

 

Because there is no contractual relationship between agents, the only realistic remedy may come from FIBA regulations. The FIBA regulations stipulate many duties that agents are required to follow. Many of those are listed under Regulation 158 and are relevant to players under contract with other agents:

 

a. To comply with the statutes and regulations of the member federations, Zones, and FIBA at all times;

 

b. To ensure that every transaction in which he is involved conforms with these Regulations;

 

c. To notify the name of a new client to FIBA within fourteen (14) days of signing a new contract to represent a player or club;

 

e. Never to approach a player who is under contract with another agent so as to persuade him to break his contract or not to adhere to the rights and duties contained in that contract;

 

g. Not to engage in any acts of unfair competition;

 

h. To observe the law.

 

FIBA Reg. 158. FIBA may also sanction Agents who violate FIBA Regulations as follows:

 

a. A reprimand or caution;

 

b. A fine as stipulated in article 3-303;

 

c. Withdrawal of the license.

 

FIBA Reg. 161. The sanctions may be cumulative. FIBA Reg. 162. According to 3-303 an agent may be sanctioned for the above-mentioned violations up to 50,000.00 CHF. FIBA Reg. 3-303.

 

Unfortunately, similar to the players, FIBA appears to be reluctant to enforce these regulations with any real sanctions. FIBA prefers to warn agents instead. Depending on the jurisdiction and the amount in controversy, a suit for tortious interference may be an option, but again, it may only make sense for large contracts.

 

Effect of Illegality of Rollover Provisions

 

The effect of finding rollover provisions illegal may be catastrophic for the agent industry. It is a well-known fact that poaching players is a huge problem in international basketball. Prior to social media and technology, agents had to travel to meet players face-to-face. But the internet has made contacting new players easy and inexpensive. Agents can friend players on facebook, find them on twitter, or email players without ever leaving the office. Because this is already a huge problem in the industry, and most agents assume their rollover provisions are legally binding, imagine how bad poaching players could get if rollover provisions actually are illegal.