Sports Agent Responsibility and Trust Act

Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 361) to designate certain conduct by sports agents relating to the signing of contracts with student athletes as unfair and deceptive acts or practices to be regulated by the Federal Trade Commission, as amended.

Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks and include extraneous material on H.R. 361, as amended.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I rise in support of H.R. 361, the Sports Agent Trust and Responsibility Act.

Mr. Speaker, this legislation is sponsored by my friend and colleague on the Committee on Energy and Commerce, the gentleman from Tennessee (Mr. Gordon), for whom this has been a long-standing concern. Additionally, our colleague, the gentleman from Nebraska (Mr. Osborne), also has firsthand experience in dealing with the problem in this bill in his prior career and is a major cosponsor.

The Subcommittee on Commerce, Trade and Consumer Protection held hearings on this legislation last year and heard from many experts regarding the problems facing promising student athletes in this country. My colleagues and I on the Committee on Energy and Commerce agree there is a problem and that this bill, H.R. 361, is a responsible and necessary legislative solution. We passed the legislation out of our committee unanimously in the 107th Congress.

For my colleagues who may be unaware of the nature of the problem, let me briefly explain this afternoon. I am sure the gentleman from Tennessee (Mr. Gordon) and the gentleman from Nebraska (Mr. Osborne) will also amplify my comments on how destructive this behavior can be to the student athletes, their families, and to the schools.

I share their concern that student athletes are often targeted by unscrupulous agents who suffer little or no consequence for their continued deception. In today's multibillion dollar professional sports industry, collegiate athletes with even the slightest potential of becoming a highly paid professional athlete often find themselves in the cross hairs of sports agents. Because the odds of an athlete making it to the professional ranks is very, very low, the financial reward for those who do make it can be extraordinary, and the financial windfall to an agent representing the athlete is highly significant.

For an agent who may not be an established name in the business, success for this agent may be dependent upon either signing a superstar or playing the simple percentages and representing multiple promising athletes in hopes of at least one making it to the professional leagues.

Unfortunately, Mr. Speaker, the agents looking to make a quick buck are often the same ones who do not have the athlete's best interest in mind. While the reputable agents respect the athletes, and, of course, they follow the rules, the unscrupulous agents have been reported to take extreme measures to sign the athlete with little regard for the consequences to the athlete. Why do they do this? For those agents lacking any integrity, the financial payout can be very, very large; and there are few, if any, consequences to dissuade them.

While we do not currently have a Federal remedy to address these problems, many of our States do. They have recognized the problem and have varying State laws to address the behavior of these sports agents. Because the inconsistency of the State laws has prevented meaningful enforcement, the States recently approved a uniform State athlete agent act in the Year 2000. More than a dozen States have since enacted the law, and it is working its way through many other State legislatures.

As promising as this sounds, it is a long process that does not guarantee that all of the States will adopt it. While this may not sound significant to my colleagues, the law can only be completely effective if it is enforced uniformly in every State in this Nation.

The States deserve credit for addressing this problem. Yet, Mr. Speaker, the reality is that there is still a gaping hole that this legislation will finally fill. Not only does this legislation provide the Federal Trade Commission with the authority to enforce the act, but it also provides the States with the authority to bring civil action against violators in the Federal courts. Additionally, the legislation requires a new disclosure to the student athlete, and, finally, places a measure of responsibility on the agent himself so that there should be no misunderstanding regarding the signing of a contract.

Mr. Speaker, this legislation provides a Federal remedy to a problem that many of us did not know about, but it is no less deserving of a cure this afternoon. H.R. 361 provides a measured response. I urge my colleagues to support it.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield 4 minutes to the gentleman from Wisconsin (Mr. Sensenbrenner), the distinguished chairman of the Committee on the Judiciary.

Mr. Speaker, I yield 5 minutes to the gentleman from Nebraska (Mr. Osborne), who has actually run premier athletic programs and has run multiple national college football championships at the University of Nebraska. If anyone knows about this problem of unscrupulous sports agents, the gentleman from Nebraska would know that.

Mr. Speaker, I yield 4 minutes to the gentleman from Utah (Mr. Cannon).

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, just in conclusion, maybe just a quick history on this bill.

The gentleman from Tennessee (Mr. Gordon) dropped the bill in the 107th Congress. We had a hearing out of the subcommittee that I chair, the Subcommittee on Commerce, Trade, and Consumer Protection. We had the NCAA and we had lots of witnesses. Everybody endorsed this bill.

I think for those who are worried that this is a Federal mandate, it is basically a bill to give a little bit more support to the States, particularly those States, perhaps in Nebraska, where they do not have any law, and give those State attorneys general the opportunity to prosecute those unscrupulous sports agents.

I think the gentleman from Tennessee (Mr. Gordon) is to be commended for his hard work on this over a long period of time, and for pushing it forward.

Also, I want to thank the gentleman from Louisiana (Mr. Tauzin) for allowing a hearing on this. Eventually we are here this afternoon. I wish we could have passed this in the 107th Congress, but we are here in the 108th Congress, and hopefully we will get this bill passed.

Again, I commend all those who have been involved.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I intend to make a few brief remarks in support of H.R. 361, the Sports Agent Responsibility and Trust Act, or SPARTA. The combination of a patchwork of weak State laws and the lure of big money has made student athletes an irresistible target for certain unscrupulous sports agents willing to break the rules concerning amateur athletics. Such agents use any means necessary to convince a student athlete who has even a remote chance of playing professional sports to drop out of school and go pro early, including deceptive information about their chances in the draft, secret payments to their friends and families, lavish gifts, and sometimes even blackmail.

This kind of elicit behavior can quickly cost student athletes their scholarships and eligibility to play college sports. The school may face substantial fines and other economic losses.

The only person not held accountable is the sports agent. Unfortunately, under the current patchwork of State sports agent laws, the agents face little or no consequences for damages they have caused.

H.R. 361 addresses this problem head on by providing baseline Federal remedies to protect student athletes and educational institutions, particularly in those States with no existing law regulating sports agent conduct.

Specifically, the bill would make a number of unethical recruiting tactics unfair and deceptive trade practices under the Federal Trade Act. This includes making false or misleading promises or representations, providing anything of value to the student athletes or anyone associated with the athlete in order to entice them into an agency contract, failing to tell the student signing the contract that it will end their college eligibility, and pre-dating or post-dating contracts.

The pressures on student athletes and colleges are tremendous. We have a responsibility to educate our student athletes and protect them from unscrupulous sports agents who try to trick or trap them into dropping out of school. This legislation will send a strong signal to the rotten apple agents that they will be held accountable for unethical recruiting practices. I urge all Members to support this bill.

Finally, Mr. Speaker, let me give my sincere thanks to the gentleman from the State and University of Nebraska (Mr. Osborne). The gentleman has brought a unique perspective to this bill and persuasiveness that has helped us get this passed.

Also I want to thank the subcommittee chairman from the Committee on Energy and Commerce, the gentleman from Florida (Mr. Stearns), for expediting this procedure and helping us move through his committee, as well as the ranking member, the gentleman from New York (Mr. Towns).

I also want to thank the gentleman from Louisiana (Chairman Tauzin) and the ranking member, the gentleman from Michigan (Mr. Dingell), for their help. Certainly with joint jurisdiction with the Committee on the Judiciary, the gentleman from Wisconsin (Chairman Sensenbrenner) should be thanked for his help; as well as the subcommittee chairman, the gentleman from Utah (Mr. Cannon); the ranking member, the gentleman from North Carolina (Mr. Watt); and the ranking member, the gentleman from Michigan (Mr. Conyers).

Finally, let me thank a diligent member of my staff, Dana Lichtenberg, who has done an outstanding job with her tenaciousness in moving this bill forward, and also a friend of mine from home, Ken Shipp. Coach Shipp came by my office a few years ago on the Square in Murfreesboro and told me about this problem; and, like so many things, I get my best advice from home, and so I thank Coach Shipp for his advice.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield 2 minutes to the gentlewoman from Texas (Ms. Jackson-Lee).

(Ms. JACKSON-LEE of Texas asked and was given permission to revise and extend her remarks.)

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, let me once again thank the gentleman from Nebraska (Mr. Osborne) for his efforts. To just elaborate a little on his comments, this legislation has been endorsed by virtually every organization that is affected in the country, by the American Football Coaching Association, the Black Coaches Association, the Knight Foundation Commission on Intercollegiate Athletics, the National Association of Basketball Coaches, the National Association of College Directors of Athletics, the NCAA, the Junior College Athletic Association, the Big 12, the Big East, the Pac-10, the Sunbelt Conference, and coaches and athletic departments all across the country.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself the balance of my time.

Finally, Mr. Speaker, let me just say that this bill does not penalize the many legitimate sports agents. This bill does not stop any athlete from, with full information, going pro. Also, this bill does not set up a national sports police.

What it does is it deputizes the various States' attorneys general to follow up on the deceptive acts, and deal with these incidents or these problems on a local basis.

Once again, my thanks to all the Members that have made this bill possible to come to the floor and possibly pass today.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, last weekend, the National Football League draft was conducted. Over 200 players were selected in the draft. Each player eventually will be represented by an agent. The difficult thing is that many of these people who call themselves agents have no special qualifications.

We find that many of them have no legal training, no expertise in writing contracts, some misrepresent themselves, some offer illegal inducements, particularly to undergraduates, such as cars, cash, clothes, and sometimes even drugs, to get young people to commit to a contract while they still have eligibility, which makes them ineligible, of course. A few even have criminal records. Most of them will tell a player that they will get them drafted higher.

The NFL committee will say, well, you are going to be a fourth-round pick; and these agents say, well, if you come with me, I will get you a trainer and a nutritionist, and we will make you a first-round pick, which obviously does not happen. And then some even get the power of attorney, which sometimes bankrupts these individuals.

The National Football League Players Association currently says that roughly one-half of the players leaving the National Football League have no money. The minimum salary is several hundred thousand dollars. Some guys make millions of dollars; some sign for $10 million or $11 million. Yet at the end of their career, nearly one-half have no money left. A lot of that is due simply to the issue of the way they are treated by their agents.

Every coach and athletic director that I know says this is a huge problem and that we need some type of uniform standards and regulations to govern sports agents. One of the biggest problems that we have is these people come on the campus and nobody knows they are there. They see the players in the dorms; they harass them and call them on the phone. Some of the better players end up having to get unlisted phone numbers because of all the harassment.

Currently, Mr. Speaker, there are only 15 States that have tough laws regulating actions by sports agents. There are 17 States, including my home State of Nebraska, that have no laws at all regulating sports agents, and then there are 18 States remaining that have some laws. It is kind of a hodgepodge, a patchwork; and there is no consistency and no teeth in the regulations. So the majority of young people coming out of college really are not protected by any laws that would govern sports agents.

With this problem in mind, the gentleman from Tennessee (Mr. Gordon) and I have introduced H.R. 361, the Sports Agent Responsibility and Trust Act, which is also known as SPARTA. SPARTA protects student athletes by making it illegal for sports agents to entice student athletes with false or misleading information, promises, or representations in order to lure them into a contract. SPARTA would protect student athletes when they travel to other States.

Some student athletes are in States with some laws, but once they go home for the summer in another State or go to a bowl game, sometimes they are preyed upon by sports agents in those areas. So this provides a uniform Federal backstop. It does not supplant State laws, and we feel it is a very sound piece of legislation.

As of April 2002, the National Football League Players Association reported 1,200 certified football agents. Eight hundred of those represent no clients. Now, those are the guys that are really not very well qualified, and they are particularly dangerous because they are desperate to represent somebody. So they will make almost any kind of a deal, any kind of a promise to get someone committed.

We think, of course, that this is obviously a huge problem. But let me just cite two cases from my own experience. One: we were getting on the bus to go to the Orange Bowl, and I could not find my quarterback two hours before kickoff. I finally located him in one corner of the lobby cornered by two agents that he had never seen before, I had never heard of before, and were obviously unscrupulous; and they are hammering this guy to try to get him to sign a contract right before a kickoff. Well, of course, this did not do the quarterback any good, and it did not do me any good either.

In one other case we had a young man who was contacted at his home during the summer and he signed a contract. He did not really understand what he signed, but buried in the fine print was a 13 percent commission for the agent. So the agent got several hundred thousand dollars from this young man. Fortunately, the agent was from a State that did have some laws governing agents, and this agent had not registered. So we were able to recover $300,000 of this young man's money because of some sports agent legislation.

So what we are saying is we need this kind of protection for all athletes in all States. It is a Federal backstop. We think this is sound legislation, and I urge my colleagues to cosponsor H.R. 361, the Sports Agent Responsibility and Trust Act.

Mr. Speaker, I thank the chairman for yielding time to me, and I appreciate his help very much.

I would also like to thank the gentleman from Tennessee (Mr. Gordon) and his staff for all the work they have put in; the gentleman from Louisiana (Chairman Tauzin) and the gentleman from Wisconsin (Chairman Sensenbrenner) and their staffs; and also Lisa Knott from my staff. Many people have cooperated.

As has been mentioned, currently only 20 States have comprehensive laws regulating sports agents; 17 States have no laws at all. My State, Nebraska, is one of those. Thirteen States have a patchwork of laws governing sports agents.

Here is the problem. I will use primarily a football illustration, because that is what I understand the best. As of April, 2002, the National Football League Players Association reported 1,200 certified agents to represent NFL players. The problem is that of those 1,200, only 400 had clients, so we have 800 people who say they are agents and they have nobody to represent.

There are also several hundred other agents who are not even certified by the National Football League who also call themselves agents. So if they call themselves agents and do not have a client, they are pretty desperate. What these guys do is, they will go after undergraduates, and they will sometimes be very unscrupulous in doing so. There are some good agents, but many are not. So here are some of the things that happen.

They will offer an undergraduate athlete cars, clothes, cash, sometimes even drugs, to sign an agency contract. Of course, immediately this renders the student athlete ineligible.

They promise an athlete that he will be drafted higher. The National Football League tells them they will be drafted in the fourth round, and the agent says, that is a lot of baloney. I will get you a personal trainer, I will get you a nutritionist, we will go to California, we will work hard, you are going to get bigger, faster, stronger, you are going to be a first-round pick, and you are going to make $6 million just to sign your name.

Of course, that is totally untrue. They cannot get a player drafted higher because of the agent's activities. So the player drops out of school at that point, and he gets a nutritionist, and nothing happens.

They use runners, as has been mentioned. These are usually former players. These are student athletes in the school. Sometimes they are simply students in the school. The player has no idea that he is dealing with somebody who represents an agent. So the runner takes him out to dinner and gets him obligated.

They sometimes threaten athletes with physical harm.

Lastly, they often tell a student athlete they will predate or postdate a contract so they will not jeopardize their eligibility, which is absolutely untrue. The minute they verbally agree to a contract or sign it, no matter whether it is predated or postdated, they are ineligible. These are some of the problems.

With these problems in mind, the gentleman from Tennessee (Mr. Gordon) and I have introduced H.R. 361, which has been referred to previously as SPARTA. It makes it illegal for sports agents to entice student athletes with false or misleading information, promises, or representations.

SPARTA requires the agent to inform the undergraduate athlete and his school in writing that the player has signed an agency contract and is ineligible. What often happens is a school does not know that they have got a guy out there playing who is ineligible, that he has already signed a contract, so this forces the agent to let the school know in writing that he has a player under contract and that player is ineligible.

Under SPARTA, sports agents who engage in illegal recruiting will be fined up to $11,000 per incident per day. The Committee on Energy and Commerce passed this legislation by voice vote. The Committee on the Judiciary passed SPARTA by voice vote. So this legislation is bipartisan and it is noncontroversial.

I urge my colleagues to support this legislation. I do not know any college athletic director, coach, reputable athlete, or most reputable agents themselves who would oppose this legislation.

Again, I want to thank my colleague, the gentleman from Tennessee (Mr. Gordon), all those involved, and urge passage of this, what I think is a very important Federal backstop, very important legislation.

Mr. Speaker, I rise in support of H.R. 361.

This bill is important for all of the reasons that have already been discussed. An athletic agent is in a unique position in that while he stands to gain from his relationship with the student athlete, that student athlete client shoulders much of the risk when rules are not followed.

H.R. 361 evens the responsibilities and will help to act as a deterrent for agents who would otherwise not play by the rules of the game.

H.R. 361 will prohibit an athlete agent from recruiting or soliciting a student athlete to enter into an agency contract through the use of false or misleading information, or by the provision of anything of value to the athlete or those associated with him.

In addition, the bill would require the contract between the agent and the student athlete to have a conspicuous notice in bold typeface stating that the agreement for agent representation may result in the termination of the student athlete's eligibility to compete in collegiate sports.

Violations of this act may be addressed by the Federal Trade Commission or the attorney general of the State of occurrence. The FTC may pursue an action as an unfair or deceptive act or practice. States are authorized to commence civil actions against the agent who is in violation of this act and seek remedies, including enjoining the practice, enforcing compliance, obtaining damages, restitution, or other compensation on behalf of the State's residents.

In addition, this bill allows for educational institutions to seek damages in the event that a university athletic director is not informed of a new contractual relationship within 72 hours, either of the signing or the first event that the athlete is eligible to participate in.

Failure to so instruct may allow the ineligible athlete to compete, thus causing exposure for the institution to be liable or penalized under sanctions, fines, forfeitures, or disqualifications. The bill allows the institution to file suit against the agent for his failure to disclose, and to seek compensation for those damages which the educational institution suffered.

At the subcommittee, with the support of the gentleman from Tennessee (Mr. Gordon) and the gentleman from Nebraska (Mr. Osborne), working with the minority and with the distinguished ranking subcommittee member, the gentleman from North Carolina (Mr. Watt), I offered an amendment in the nature of a substitute which made this bill better.

The amendment clarified several portions of the bill to make it clear what behavior will and will not be tolerated. The amendment clarified that the only representation to be prohibited is that of an agent, and should not otherwise prohibit or discourage an athlete from seeking legal representation.

Further, the amendment included a specific ban on the giving of loans or acting as guarantor or co-guarantor for anything of value to the athlete or those associated with those athletes. This subterfuge is currently a common way of skirting NCAA rules.

Finally, the amendment clarified that nothing in this bill was meant to prohibit an individual from seeking Federal, State, or equity remedies under existing law, thus strengthening the student athlete's right to pursue a claim under existing contractual law.

Mr. Speaker, I join with my colleagues in urging the House to give its full support to the adoption of H.R. 361.