According to the Baltimore Sun Matt Elam, the Ravens 2013 first-round NFL Draft pick, saved over $200k in commission fees by negotiating his five year $6.7M contract without an agent. Elam reportedly relied solely on the advice of his older brother, former NFL safety Abram Elam, NFL Players Association officials and a team of advisors, to educate himself about the business of football. “It was beneficial to me and my family,” said Elam. “I built the team that helped me, that gave me the knowledge and taught me a lot of things for me to look over in the contract and know it to a T.” “#EatGreedy“, a phrase coined by Elam, has since rapidly spread in the social media world. But was Elam really greedy or is it the Sports Agent, who typically receives between 3% – 10% of an athletes contract? In this three part series, SportsMoney will examine the true role of the sports agent, perceptions versus realities when it comes to industry, and why more pro athletes should consider their representation options. What worked for Matt Elam may not work for every player, but we believe that every professional athlete should ask the question, “Do I really need an Agent?” throughout his or her career.
The Sports Agent is not a new profession. Professional athletes have been represented by “promoters” for over a century. While the “promoter” or agent’s primary role is to determine a players value and find that player the best deal as far as compensation for their talent, success in the business through the years has become increasing tied to an agents ability to be “all things” — friend, life coach, investment advisor, legal advisor, concierge, etc. — to young athletes. Things that no one person is qualified to do. Based on the surge in player salaries due to unions, advertising, media and the technologies that have enable the public greater access to sports, the sports agent business has become both competitive and extremely lucrative. The agents who can convince the player they will “take care of everything” are the ones who are most successful. BUT are they really equipped to “take care of everything”? The answer is no. The problem is the false perception in professional athlete culture that you are not going anywhere if you don’t have an agent. It has become a status symbol to be represented. The vary thing that many of the most successful individual agents and large agencies take advantage of. Take Jay-Z’s recent venture into the business.
The truth as demonstrated by Matt Elam, Ray Allen, Ricky Williams, Alexander Ovechkin, and many other well known and lesser known players is that you don’t need an agent to get a contract. Further, you don’t need an agent to determine your true value in your respective sport. Owners, GMs, coaches, etc. know what you are worth and you can negotiate a fair deal if you inform yourself as Elam did. While an agent may be extremely helpful because of his or her connections or knowledge, the reality experienced by so many athletes who rely on their agents to “take care of everything” is often plagued by tax issues, legal issues, and poor financial decisions. That said, it is not entirely fair to blame the agents for the over half of athletes who go broke. They are business people, many honest, hardworking and committed to the success of those they represent, who have chosen their respective career to make a living. But it is the athlete who must ultimately take control and responsibility for his or her success both on and off the field.
Next week we will take a look at the realities of how agents are typically compensated.
View Part 2