Inside the rules: the NCAA “no agent” rule

“Make no mistake, this is a civil rights struggle, where there are vested monied interests powerfully aligned against student-athletes, who generally have no ability to fight the system on their own, and who for some reason have not been organized, so that they can fight as a group.” – Richard G. Johnson

This article will step away from the field of play, and away from Major League Baseball’s rulebook. It will still try to examine a few rules, just not rules dealing with balks, base paths or balls and strikes. In fact, one of the rules is not even set by MLB, but instead by the National Collegiate Athletic Association.

However, just because an entity outside of MLB’s realm created the NCAA’s “No Agent” rule, it does not diminish that rule’s impact on professional baseball. Or, more specifically, it does not diminish its impact on the players’ bargaining power against an organization that has spent 65 years ensuring that its clubs have the upper hand in negotiations.

Bob Feller famously signed with the Cleveland Indians for a one dollar bonus in 1936. Since then, MLB has seemingly fought to make that amount the standard signing bonus for all amateur players.

Actually, that’s not fair.

Yes, MLB has tried several ways to keep spending on amateur players as low as possible over the years. Yes, it has put caps on the amount of money clubs could spend. Yes, it has made rules forcing clubs to immediately roster first-year players signed to large deals to discourage clubs from big investments in young players.

But, in defense of MLB, one can argue that it didn’t actually do all that just to save money for its teams. It’s more likely that baseball was in search of the ever-elusive level playing field. Unfortunately, those who arguably suffer in that quest are the players looking to maximize their salaries.

In 1946, baseball started setting rules to cap bonuses. That year it also instituted a bonus rule that forced big league clubs to immediately roster players that exceeded the set amount. Baseball officials repealed the rule four years later after clubs allegedly made under-the-table deals to attract coveted players. They repeated the cycle in 1953, when they set a bonus cap at $4,000. Clubs abused the rule for four years before MLB gave up on it again.

Starting in 1958, teams paid hundreds of thousands of dollars to sign amateurs. And that’s in 1960s money. Players benefited from the open market and could field offers from multiple teams, which drove prices for their services higher.

Of course, the teams were trying to compete with the New York Yankees, who won pennants almost every year at that time. That also drove prices higher. While the top prospects profited from this system, the amount of money invested in them stunted player development, and the depth of the minor league systems suffered.

Finally, in 1965, baseball held its first amateur draft, dubbed the Rule 4 draft. The draft gave teams at the bottom of the standings first shot at top-shelf talent and offered an opportunity to better compete in upcoming seasons. It also kept the Yankees from courting every top amateur on the strength of their annual spot in the playoffs and national branding.

But, while beneficial to several teams, the players themselves lost considerable leverage since they had to negotiate with only one team instead of shopping their services to several clubs for the highest bid.

The draft reduced the number of six-figure bonuses dramatically and also allowed better player development since clubs no longer had to immediately roster many of their best prospects. Rick Monday signed for $104,000 in 1965 as the first pick in the first Rule 4 draft. After several six-figure bonuses just the year before, Monday’s was the only one in 1965 and was not surpassed for ten years.

For a long time, MLB held drafts twice a year, in January and June. In 1987, they did away with the January draft and gave supplemental picks to clubs that failed to sign their picks from the previous draft.

The draft worked as planned until bonuses slowly started growing more and more, and surged upward in the late 1980s. In response, MLB implemented a suggested slotting system in 2000 that called for bonuses to fall in line generally with where a team picks a player. But teams currently work around this latest effort for bonus regulation by pretty much ignoring it.

Allan Simpson, of Baseball America, pointed out in 2005 that MLB’s clandestine drafts during the 1980s and 1990s were basically geared to keep college coaches in the dark about the availability of top high school players. They also kept agents guessing about who professional baseball’s top targets were, so clubs could negotiate on their own terms as much as possible.

But agents would eventually find many of the best players eligible for the draft and offer their services as advisors. An MLB.com article on the history of the draft called a player’s use of an advisor a “conundrum” for professional teams and lamented the shift from dads negotiating with clubs to those more qualified fighting for more money for players.

Evidently, inexperienced negotiators like dad help keep players costs down.

Since draftees include high school graduates and college juniors, players (and their advisors) began to use college scholarship offers as a bargaining tool to negotiate a higher bonus. Players have the option of going to college for three years to work on their games (or for college juniors, returning for their senior year) to try to raise their draft stock.

These options led to a new consideration for MLB clubs—a player’s “signability.” A player who makes it known publicly, as well as to interested scouts, that he’s considering college tempts clubs to make offers in excess of the suggested slot amount.

If that stance is well known, the player will often fall to later rounds, which amplifies the problem as teams with later picks will see an opportunity to get top-level talent if they can convince the player to sign with them and skip college.

This is a strategy the Detroit Tigers have used in the past few years to get highly-rated prospects like Justin Verlander, Casey Crosby, Rick Porcello, and Andrew Miller. Last year the Tigers paid above MLB recommendations for Jacob Turner and Andrew Oliver.

Oliver had been courted the year before, and his alleged use of an agent and subsequent fight against the NCAA may force changes to the long-awaited primary subject of this article, the “No Agent” rule. The rule appears in the NCAAs regulations as bylaw 12.3.2.1, and states:

A lawyer may not be present during discussions of a contract offer with a professional organization or have any direct contact (in person, by telephone or by mail) with a professional sports organization on behalf of the individual. A lawyer’s presence during such discussions is considered representation by an agent.

MLB is not exclusive in its opposition to players seeking professional advice. While professional baseball protects the best interest of their organizations, the NCAA wants to count help with contract negotiations as proof of professionalism and a loss of amateur status. To the NCAA, it doesn’t matter if the player never takes payment, or if he even intends to become a professional at that time. Simply put, both organizations value their own interests above that of the players.

The rule above emerged in 1974, when the NCAA made a concession that allowed players to seek professional advice, but prohibited a player’s advisor from negotiating directly with professional teams. While this rule seems cut and dry, several problems materialize upon closer inspection.

First, this NCAA rule applies to high school seniors as well as college juniors. For the former, their future baseball opportunities may rest on decisions made in the summer before they actually begin their college careers under NCAA jurisdiction.

While the NCAA’s decisions are only binding for their organization, the timing of the draft in June creates problems for all involved—MLB teams, college coaches, and agents. The threat of losing future eligibility for an enrolling freshman adds unwanted stress to a huge decision that could be worth millions of dollars.

The rule is also is a little more ambiguous than it sounds. Think of the lawyer advising a player, but not allowed direct contact with a club. An agent could theoretically operate within the rules if he is in the player’s kitchen while the family is on speakerphone in the living room mulling an offer from a general manager.

Then there’s the question of the purpose of the rule. If amateur status is the NCAA’s impetus for rules like this, then a player should remain eligible for college if he remains unpaid by a team or agent.

It’s not like using a lawyer to negotiate a potential contract with a team means a player is suddenly a professional, at least in any definition outside of the NCAA, that is. Retaining an agent for advice simply means a young man can make an informed decision in talks with a baseball club—a club, by the way, that employs a team of lawyers, scouts, and statisticians meant to leave them well informed on their end.

The only thing that rivals the NCAA’s inconsistency in the punishment that it administers for violators of its “No Agent” rule is the inconsistency of enforcement. MLB officials and scouts have repeatedly described player representation as an open secret among those who deal with the Rule 4 draft. In fact, many told Baseball America that nearly every draft prospect violates this (the “No Agent”) rule.”

The NCAA, in a seemingly arbitrary manner, investigated pitcher Jeremy Sowers in regards to the “No Agent” rule in 2001. Sowers had passed on an offer from the Cincinnati Reds and enrolled at Vanderbilt. But, the NCAA found out that Sowers’ advisor had contact with at least one member of the Reds and suspended him for the first six games of his collegiate career.

Former University of Kentucky pitcher James Paxton lost his entire senior year when he refused to sit for an interview with the NCAA after he declined an offer from the Toronto Blue Jays after they selected him in the 2009 draft. Paxton’s counsel, Richard Johnson, claims the NCAA’s request for information was a violation of Paxton’s rights, both as a student at the university and as any citizen of the United States who is afforded the right to counsel. Anything the NCAA could have asked Paxton, argued Johnson, was protected by the attorney-client privilege.

Paxton unsuccessfully sued the university, asking for an injunction that would allow him to play. The court ruled against him, even though Johnson believed demands made by the NCAA violated Paxton’s rights under the Code of Student Conduct at his school.

So far, the most famous example of the NCAA’s run-ins with its student-athletes involved the aforementioned Detroit Tiger pitcher, Andy Oliver. In 2008, the NCAA suspended Oliver for violations surrounding negotiations two years before with the Minnesota Twins. Two years before! And as they say on the infomercials, wait, there’s more!

Oliver fired his attorneys in 2008; the ones that helped him negotiate with the Twins. Then he hired Scott Boras. This prompted his jilted employees to call the NCAA and tell the story of how the Olivers owed them six figures for negotiating with the Twins and violating NCAA rules.

Oliver sued, and a judge in Ohio ruled the NCAA bylaw as arbitrary and capricious. However, the NCAA settled in exchange for the court essentially sweeping the ruling under the rug. For the time being, this frees the NCAA to continue what some writers call a “war on its own players.”

Keith Law, in the article linked above, wonders where the harm lies in student-athletes seeking professional advice regarding MLB contract offers. Jordan Kobritz goes a step further and likens the NCAA Eligibility Center to “a gestapo arm of the governing body (the NCAA).”

Some may see such criticism as harsh, since players could simply play it safe in regard to their eligibility and keep advisors away from any real-time negotiating. However, the problem becomes a question of fairness for these young adults.

As noted, each major league team employs an army of experts ranging from lawyers to economists and statisticians. How fair is it to force families, some with limited educational backgrounds, to negotiate their son’s future without as much help as possible?

It’s not often as simple as either taking a six-figure bonus or going to college. Indeed, many players must weigh their current market value, their potential market value, the value of their scholarship offer, and a myriad of other factors. While it’s swell that the NCAA doesn’t forbid all advice on such a decision, the limits they impose on that advice is simply not fair and is atypical of any other big-money contract a person may have the good fortune of negotiating.

Then there’s the NCAA’s ability to retroactively punish a player or school if its happens to impulsively investigate a player’s negotiation with a team. They suspended Andy Oliver two years after his negotiations in question took place, on a tip from lawyers that he’d recently replaced.

The NCAA tried to force James Paxton to an interview, presumably about his eligibility, apparently based on an article in a Toronto news outlet. Paxton’s eligibility hinged solely on the NCAA’s implicit understanding of a remark made to a reporter.

The University of Kentucky found out about this development by doing a Google search. The university had to “Google” it because the NCAA wouldn’t tell it or Paxton, what the interview was about. Once the NCAA demanded Paxton sit for an interview, in his eyes he could not win since NCAA officials had intimated to the university that he would likely be suspended whether he attended it or not.

From what Paxton understood, the only question was how long the suspension would be, and that’s the type of unchecked power the NCAA holds over its players. Is there any way to reign in this organization and find a solution to their often arbitrary and seemingly limitless ability to dole out punishment?

Richard Karcher, a lawyer and professor well versed in sports law, has offered one. He recommends that the NCAA simply allow players to use representation. Karcher suggests a standardized agreement that the NCAA can authorize. Something like that could allow amateurs the benefit of professional negotiators.

Such an agreement would bind an agent to work under NCAA guidelines and theoretically relieve the student-athlete of any culpability. As Karcher points out, allowing an authorized agent to deal with a club on an athlete’s behalf should in no way jeopardize his amateur status, so long as that athlete does not sign a contract or take payment from the agent.

Aaron Fitt recently wrote that college baseball’s resurgent marketability means the NCAA may soon reexamine its “No Agent” rule. Hopefully that will be the case and amateur players will be afforded the maximum legal representation possible for such critical decisions in regard to their future.

As Dennis Poppe, NCAA managing director of football and baseball, said in the article, the NCAA needs to find a way for a player to make an informed decision and still remain an amateur. He went on to add:

“I often say if I had a son who was lefthanded and threw 95, I’d want to know what his worth was.”

For many fathers out there, the feeling is mutual.

References & Resources
Baseball America, The New York Times, The Biz of Baseball, ESPN.com, The NCAA’s Regulations Related to the Use of Agents in the Sport of Baseball (Richard Karcher)

Some links in this article may require access through a paywall for the full article.

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Comments

  1. David Wade said...

    David- thanks for reading, and for the comment.  I agree with your opinion on Oliver’s attorneys. 

    In the Paxton case, Richard Johnson argued against the NCAA holding any type of contract or agreement with Paxton because he played collegiate baseball for an NCAA member school.  Johnson’s point was that the school is member of the NCAA and beholden to its rules, but not the individuals. 

    He used the example of the member institution (the school) being held responsible by the NCAA for investigating and doling out punishment regarding the eligibility of their student-athletes. 

    Johnson felt that if the NCAA puts the onus on the school to force Paxton to sit for an interview (which they do), then the school had to follow procedures set in their own student contracts when dealing with Paxton, such as submitting in writing the purpose of the investigation.

    The judge ruled that since Paxton had not violated anything specifically listed in the Student Code, that his rights as a student with the school weren’t relevant in the matter.

    At least, that’s how I understand it.

  2. David P. Stokes said...

    Hmm.

    “Paxton’s counsel, Richard Johnson, claims the NCAA’s request for information was a violation of Paxton’s rights, both as a student at the university and as any citizen of the United States who is afforded the right to counsel. Anything the NCAA could have asked Paxton, argued Johnson, was protected by the attorney-client privilege.”

    American citizens have a legal right to counsel in criminal proceedings.  We don’t have a constitutionally protected right to counsel in contract negotiatios per se, so I don’t buy that part of the argument.  But the privilege argument seems to have some merit.  OTOH, the client (but not the attorney) can waive privilege, and since we also don’t have a constitutionally protected right to play collegiate sports, it could be argued that by taking part in college athletics, a student-athlete agrees to abide by NCAA rules, and that includes co-operating with an investigation even if that requies that you waive privilege.

    Andy Oliver’s attorneys seem pretty clearly to have violated privilege, and should have been sanctioned by the bar association.

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