Sports Agency Business

Introduction

It all started forty years ago between one of the greatest golfers of all time and a successful international entrepreneur (1). Mark Hume McCormick and golf great Arnold Palmer sealed a deal with a gentleman’s agreement, a handshake, and never looked back. Mark McCormick has single handedly developed the sports management industry into the industry we know today. His company, IMG, is now one of the leaders in the sports management industry and controls the careers of many top professional athletes.

Today the life of a professional athlete holds second to none. The lavish life styles consisting of expensive cars, elegant homes, over priced vacations, and yes the Gatorade contract are just a few of the perks. Much of this has to do with the athlete’s ability, but how much? Today athletes are getting agents at younger and younger ages. One has a hard time ignoring this when fourteen years old boys are being signed to multi-year soccer contracts, but it didn’t just start. This trend of signing young athletes has been around since the time of Bobby Oar and Bobby Hull (2), arguable two the greatest hockey players ever. At young ages these two future superstars were flagged by professional hockey teams. But a lot has changed in professional sports over the past fifty years. Contracts are becoming more and more exorbitant and players are being marketed in so many different ways. Company’s such as IMG, Octagon, Assente and AKT have played major rolls in the marketing of such athletes.

Today contracts have become more and more complex and it is imperative to have an agent that knows the process. Companies such as IMG offer well known and respected agents that can aid an athlete throughout his or her career. IMG manages the careers of many top athlete’s such as Tiger Woods, Charles Barkley, Derek Jeter, and the Williams sisters to name a few (3). As well as being some of the top performers in their sports each athlete has also made his/her contribution to the endorsement world. Only Tiger Woods could turn Nike into a leading golf name that now rivals that of Taylor Made and Calloway. With the help of companies such as IMG these athletes can fully benefit from their athletic ability.

Today there are many pressures that come about when becoming a professional athlete. From the negotiation of a contract to the financial planning of the athlete, an agents job has become so much more. At the professional level, agents services range from contract negotiation and maintenance, marketing, promotion and media relations, to assisting the client with financial planning and investments. Agents also network with team management and scouts to find opportunities for players to play. In short the agent does as much as possible to further the career of his/her client.

The Economy and the Effects on Salaries and Contracts

Over the years one has seen the average salaries of players skyrocket(4); however one must also take into account the state of the economy when looking at athletic contracts. Today’s salaries are much different they even five years ago. Let us examine two of the most influential contract negotiations in recent history. In 1999, in the midst of a bull market fueled by the internet boom, Alex Rodriguez and Manny Ramirez signed multiyear contracts each for more than fifteen million dollars a year.

As stated early these contracts were signed in a booming economy with no signs of slowing. In the sports management world, one would think that these were signs of continued increase in these over-inflated multiyear contracts. But as a whole the growth of salaries began to slow. Starting in 2001 with the bursting of the internet bubble and the events of September 11, growth in contracts began to decline. Besides growing concerns of an economic downturn, one might hypothesize that the new terrorism threat at sporting events must even be taken into account during salary arbitration. Looking at contracts in recent years, one does not see the same amount of money being thrown around as you say in economic boom during the late nineties. According to Marc Perman of IMG, “contracts of that nature will not be seen for a very long time” (5). Executives are less likely to commit money long term to players given both the uncertainty of the economy. It seems over the last couple of years in this bear market professional sports contracts have become shorter. Even today with all leading indicators saying that we are moving into a bull market, one is not seeing the same money as in the pervious bull market. Perhaps the best example of this is the in the case of Manny Ramirez who was placed on waivers by the Boston Red Sox (6). Even after posting consecutive All-Star appearances, Ramirez was not picked up by any ball clubs.

It is apparent to this researcher