Agents Share The Wealth -- As Athletes Make More Money, Their Advisers Cut Off Bigger Slice

In a recent 12-month period, Herb Rudoy represented seven professional athletes who were signed to a total of $60 million in contracts. Four percent of that is $2.4 million.

Agents get 4 percent.

``I would say I was hot,'' the Chicago agent said.

In lockstep with the rapid growth of player salaries, agents never have been so richly rewarded for negotiating contracts. Even Don King, the front-running boxing promoter, was compelled to join the ranks of the certified this year.

But dazzling commission fees also are the reason union leaders, players and even some agents are reluctant to say abuses by sports agents have diminished in the 20 months since the celebrated federal trial and convictions of Norby Walters and Lloyd Bloom. If anything, they say, the practice has become more cutthroat as the stakes - player salaries - have risen.

In the midst of eroding regulation of agents by player unions, and without a concerted effort by colleges to prepare their athletes for big-money matters, players are more vulnerable than ever to financial abuse and poor representation.

``People (agents) are covering themselves more carefully, but they continue to be bad actors,'' said Edward King, a San Francisco attorney who has handled cases for more than 20 athletes seeking to recover losses from agents.

``Walters and Bloom were the most egregious of the bunch, and they had the highest number of insidious abuses. But they're the only ones ever federally prosecuted for their activities. So long as the odds are that small (against prosecution), nothing is going to change.''

The nature of the worst abuses appears to have shifted since Walters and Bloom were found guilty on racketeering, conspiracy and fraud charges relating to their recruitment of college players. With the jump in salaries to an average of $950,000 in the NBA, $597,000 in major-league baseball and $360,000 in the NFL, players' association officials say they are focusing more on providing guidance on investment issues.

While competition to handle contracts of top players is as rugged as ever, now there is more incentive for the agent to retain rights to a player's financial services, where even greater money can be made and there are no fee guidelines.

``We've seen a definite increase in the last two to three years of players expressing dissatisfaction about the financial and tax advice they've been receiving,'' said George Cohen, general counsel of the NBA Players' Association.

``That may be a reflection of more money being available, or of more education and awareness on the players' part.''

The NBA Players' Association investigated more than 10 civil court suits against agents in the past three years, according to Cohen. The NBAPA and NFLPA, fielding more complaints than are pursued legally, have responded by aggressively recommending that

players parcel out their investment services to separate advisers.

But officials in both unions say little progress has been made with rookies and the youngest players, whose financial needs have grown more sophisticated than their ability to choose money managers.

Most are inclined to hand over their finances to an agent and let him organize everything from investments to wills, trusts, insurance programs, taxes, commercial endorsements, autobiographies, television appearances, corporate structures, pre-nuptial agreements and divorce settlements.

Boston agent Bob Woolf, for instance, has the players' paychecks sent to his office, where he handles their bills - mortgages, credit cards, electric bills, anything - and deposits an agreed-to allowance in the bank for spending money.

``When the players come out of the schools, most of them want one-stop shopping,'' said Charles Grantham, executive director of the NBAPA. ``It's natural at that age.

``If you think of all the investments out there, you'd hope you invested with a good, solid adviser. But athletes, by and large, are entrusting too much to the people who do contracts. And the agents don't want to share the money (services) because they're afraid they'll lose the athlete to someone else.''

The NBAPA decertified Lance Luchnick last September after an arbitrator found him guilty of several violations, including the overcharging of Philadelphia 76er forward Charles Barkley for services, and failing to pay $50,000 a Texas jury awarded another former client of his, Chicago Bulls forward Cliff Levingston.

In exchange for agreeing not to invest money for players anymore, Luchnick, who was named in 11 bankruptcy filings in Texas, will be allowed to negotiate NBA player contracts again after 18 months.

In the meantime, Luchnick will work the NFL beat, where he represents Tampa Bay rookie Keith McCants, who signed a $6.1 million contract this year. Luchnick need not worry about censure there.

Since the NFLPA formally agreed to stop acting as a union last November, agents are not legally required to register with the association. They are able to charge more than the previous 5 percent maximum fee on contracts.

However, increased competition among agents kept commission fees below 5 percent on average this year, said Doug Allen, assistant executive director of the NFLPA. (Cortez Kennedy, the Seahawks' first-round draft pick, said he agreed to give 2 1/2 percent of his $6.7-million contract to agents Robert Fraley and Mike Moye of Orlando.)

But without any regulation body in place, agents cannot be disciplined by the NFLPA. Especially in the area of finance, the athlete is left alone. Luchnick is the first, and only, agent ever suspended by a players' association.

``As soon as you hear the agent tell you that he'll take care of everything, that all you have to worry about is football, that's your sign to get out,'' said Seahawk linebacker Tony Woods, who accepted money from Walters and Bloom when he came out of the University of Pittsburgh in 1987. ``Get rid of him.''

Woods did just that, dumping the disgraced duo before signing with the Seahawks. He feels fortunate he did not lose any money to Walters or Bloom. But he estimates that 70 percent of all NFL players have bad experiences with agents, through either incompetent or self-serving investment advice or negligence of services.

Craig ``Ironhead'' Heyward, a teammate of Woods at Pitt, sued Arizona agent Bruce Allen in September for more than $3 million in investment losses and damages stemming from a real-estate deal gone sour. A running back with the New Orleans Saints, Heyward charged Allen with placing his money in a high-risk promissory note instead of a condominium development as he was allegedly told.

Another former NFL player, Vince Amoia, alleged in a separate court suit that Allen resold him a house in Tempe, Ariz., for $170,000 three days after buying it for $100,000 and covertly transferring it to another enterprise.

``It's just ignorance,'' Woods said. ``The people (athletes) just don't know.''

Magic Johnson learned from the experience of Kareem Abdul-Jabbar, his former Los Angeles Laker teammate who allegedly lost $59 million by handing his finances over to agent Tom Collins. Johnson divides his financial services among five independent advisers.

To tend his estimated income of $12 million this year - $3 million from salary - Johnson employs an investment counselor in New York; an accountant who pays his bills; an agent who handles more than 10 endorsement deals; and an appropriately named attorney, John Argue, for legal matters.

Periodically, all are called together to exchange notes and pass on recommendations to Johnson, much of whose fortune is in tax-free municipal bonds and other conservative investments.

``It's really a checks-and-balances system,'' said Lon Rosen, the agent.

For those players more concerned about the checks than the balances, usually the decision on agents is based on a ``leap of faith,'' said King.

Increasingly, the top athletes appear to be gravitating to established agents such as Woolf, who offer the full range of negotiating and investing services and have been referred by other players.

But the supermarket approach to services, with agents overseeing all financial and contractual needs of athletes, is the ``greatest problem'' in the business, said Arn Tellem, a Los Angeles-based agent who represents former Mariner pitcher Mark Langston.

``If you were Nelson Rockefeller or some prominent businessman, would you go to Bob Woolf or any other sports agent to manage your money?'' Tellem said. ``No, you wouldn't. Any agent doing that is not doing his client a favor.''

Woolf never has been sued, but the second-largest sports firm in the country, ProServ of Arlington, Va., is fighting a lawsuit from tennis player Gene Mayer alleging mismanagement of his money.

Cohen said the NBAPA is monitoring the suit against ProServ, which has represented 43 first-round picks since 1976, including Sonic Dale Ellis and former Sonic Xavier McDaniel.

The University of Washington, with more than 30 players currently in the NFL, has taken the common approach to preparing their athletes for professional sports. Pete Liske, Husky associate director, said the school put a three-member panel in place last year that is willing to offer advice on agents to graduating seniors. But the panel has gone unused.

Woods said schools need to be more aggressive about financially educating their professional prospects, and doing it earlier, when agents are approaching them in their freshmen and sophomore years.

``There's a difference between exposing someone to education, and teaching them,'' said King, who represented former UW lineman Reggie Rogers in a suit against Walters. ``You can give someone all the books in the world, but if you don't tell them why they need them, you're not preparing them for life.''

After Rogers signed with at least two agents and accepted money in college from Walters, a potential NCAA violation, Husky Coach Don James supported a state bill regulating agents. Agents would have had to pass an exam on agency law and ethics, pay a $250 fee and place a $25,000 bond to practice in the state. Violators would have faced a fine of up to $10,000 or a prison sentence of up to five years. The bill failed.

Meanwhile, being a sports agent has become an enviable pursuit. Woolf said he usually gets 50 applications a week from Harvard Law and other college graduates wanting to work in his firm. Woolf released his second book, ``Friendly Persuasion,'' this year.

Almost anyone can become a sports agent, unless the person is going in or coming out of jail. Don King, the boxing promoter, was certified by the NBAPA by paying an $800 application fee, promising to attend a yearly seminar and agreeing to a background check.

Cohen of the NBAPA, which has denied certification to only 10 or so applicants, said the problem is that labor organizations are restricted legally in their ability to weed out agents on the grounds of quality control.

``The powers that be - the unions and management - just are not very serious about the problem,'' Edward King, the attorney, counters. ``There is a lot they can do.''

He recommends these basic services:

-- Insurance against fraudulent agents. None of the leagues or unions have set aside legal funds for players who believe they may have been ripped off. To pursue an unscrupulous or incompetent agent, a player must use his own money - if he has any left, and if he dares hire another attorney.

-- Team-wide audits of players' personal portfolios. King suggests that a union-endorsed investment expert be made available for any player who wants his financial situation reviewed. Fee percentages on non-contract matters vary from 1 percent to more than 20 percent.

``They all pay too much for agents' services,'' King said. ``In the broadest sense, they're all getting ripped off.''

King contends that in an era of standardized player contracts and salary slotting - the system whereby players are paid relative to their peers' figures - the need for a savvy negotiator has diminished.

Signings from the recent NBA draft support the notion that slotting, not an agent, determines a player's value. Salaries were uniformly staircased among those players taken in the first round, with only six of the 27 players getting an average salary less than the player below him.

The agents' take? At 4 percent of the $139 million in contracts awarded to first-rounders, agents can expect to share more than $5.57 million, or about $206,000 per deal. With the explosive growth of salaries, King said players should scrap the percentage formula in favor of an hourly rate for attorney's services, or charge a flat fee of $10,000 per contract.

``He's talking about what's maybe true for 90 percent of the guys in this business,'' said David Falk, vice chairman of ProServ, which represented Atlanta's Rumeal Robinson and three other first-rounders. ``But the top players need an expert.''

Agents still can have a noticeable effect in the areas of guaranteed money, deferred money and option years. Falk points out the example of Dennis Scott, the No. 4 pick in the NBA draft.

Scott signed with Orlando for an average of $2.4 million per year over five seasons, less than the $2.5 million Chris Jackson, the No. 3 pick, later received from Denver. Scott has $12 million in guaranteed money. Jackson, represented by a family friend, has only $6 million in guaranteed money.

``Not every agent is a cheap, money-grubbing guy trying to steal from the player,'' Falk said, ``just as not every player is a cheap, money-grubbing guy only concerned about his next contract.''

In the absence of regulation in sports representation, the crooks and princes are often distinguished only by shadows, however.

`` `Set for life' is like a term of art,'' King said. ``It's what every agent tells his athlete. But there are very few guys who aren't getting their money stolen from them.''

Tomorrow in the Times

As the income gap between professional athletes and fans grows wider - and player salaries surely aren't going to go down - both sides risk losing touch with each other.

JUSTICE FOR ALL

Player contracts have become largely standardized in language, but most of the top sports agents are attorneys. A look at several of the leading agents:

Doug Baldwin

Age: 47

Expertise: Seattle-based agent specializes in baseball players.

Education: Law degree from University of Illinois.

Prominent clients: Baseball players Kirk Gibson, Dave Henderson and Ken Dayley; NFL players Dave Krieg and Blair Bush; PGA golfer Jody Mudd.

Tom Condon

Age: 38

Expertise: Heads football division for International Management Group, the largest sports representation firm in U.S.

Education: Law degree from University of Baltimore.

Prominent clients: NFL players Joe Montana, Herschel Walker, Gary Anderson, Leonard Marshall, Bill Fralic, Trace Armstrong, Chris Spielman and Aaron Wallace.

David Falk

Age: 40

Expertise: NBA and NFL players at ProServ, second-largest sports representation firm to IMG.

Education: Law degree from George Washington University.

Prominent clients: NBA players Michael Jordan, Patrick Ewing, Dennis Scott, James Worthy, Dominique Wilkins, Xavier McDaniel and Dale Ellis; NFL players Boomer Esiason and Chris Doleman.

Ron Grinker

Age: 51

Expertise: NBA players.

Education: Law degree from University of Cincinnati.

Prominent clients: NBA players Danny Manning, Craig Ehlo, Tyrone Hill, Kevin Gamble, Jeff Grayer, Brad Lohaus and Steve Johnson; NFL kicker Rich Karlis.

Tom Reich

Age: 50

Expertise: Handles baseball and hockey players at IMG.

Education: Law degree from Duquesne University.

Prominent clients: Baseball players Jack Clark, Willie McGee, Tony Pena, Tim Raines, Jose Rijo and Steve Sax; NHL players Mario Lemieux, Paul Coffey and Luc Robitaille.

Leigh Steinberg

Age: 41

Expertise: NFL quarterbacks, with 17 as clients.

Education: Law degree from University of California-Berkeley.

Prominent clients: NFL players Troy Aikman, Cary Conklin, Jeff George, Jim Harbaugh, Ron Holmes, Warren Moon, Andre Ware and Steve Young; baseball players Will Clark, Matt Williams and Lee Guetterman.

Arn Tellem

Age: 36

Expertise: Former general counsel to the Los Angeles Clippers.

Education: Law degree from University of Michigan.

Prominent clients: Baseball players Mark Langston, Darren Doulton and Matt Nokes; NBA players Reggie Miller and Pooh Richardson; and NFL player Eric Dickerson.

Bob Woolf

Age: 62

Expertise: Considered the first sports agent, he has represented more than 500 athletes since 1964, including Julius Erving, Carl Yastrzemski, John Havlicek, and Luis Tiant.

Education: Law degree from Boston University.

Prominent clients: NBA players Larry Bird, Sean Elliott, Thurl Bailey and Robert Parish; NFL players Anthony Carter, Dexter Manley and Don Majkowski; baseball players Bob Stanley and B.J. Surhoff.

IN THE MONEY

More than $139 million were awarded to first-round draftees in the June NBA draft. The agents' take, at four percent, was $5.57 million, or about $206,000 per deal. Below are contracts for players selected in the first round. The signings support the notion that slotting, not an agent, determines a player's value.

NO. NAME TEAM CONTRACT TOTAL WORTH

LENGTH (in millions)

1 Derrick Coleman New Jersey 5 years $15

2 Gary Payton Seattle 6 years $13.5

3 Chris Jackson Denver 4 years $10

4 Dennis Scott Orlando 5 years $12

5 Kendall Gill Charlotte; 4 years $7.2

6 Felton Spencer Minnesota 5 years $7.6

7 Lionel Simmons Sacramento 5 years $7

8 Bo Kimble LA Clippers 5 years $7.25

9 Willie Burton Miami 5 years $6.25

10 Rumeal Robinson Atlanta 4 years $4.29

11 Tyrone Hill Golden State 4 years $5.2

12 Alec Kessler Miami 6 years $7.4

13 Loy Vaught LA Clippers 4 years $4.125

14 Travis Mays Sacramento 3 years $3

15 Dave Jamerson Houston 4 years $3.75

16 Terry Mills Denver 2 years $1.35

17 Jerrod Mustaf New York 4 years $3.28

18 Duane Causwell Sacramento 2 years $1.45

19 Dee Brown Boston 4 years $3.142

20 Gerald Glass Minnesota 3 years $2.16

21 Jayson Williams Phoenix 3 years $1.95

22 Tate George New Jersey 5 years $2.725

23 Anthony Bonner Sacramento 3 years $1.7

24 Dwayne Schintzius San Antonio 3 years $1.85

25 Alaa Abdelnaby Portland 4 years $2.287

26 Lance Blanks Detroit 5 years $2.5

27 Elden Campbell LA Lakers 3 years $1.5 .