Sports Agent and Sports Lawyer Blog

Athletes who start foundations must pay careful attention to their foundation's efforts. Many successful professional athletes have started their own charitable foundations. Derek Jeter, for example, began the Turn 2 Foundation to help children and teenagers avoid drug and alcohol use along with rewarding those with high academic achievements. Others such as Dwayne Wade, who founded Wade's World, and Peyton Manning, who started PeyBack, also use these foundations to give back and promote successful futures to the youth in their communities and across the country.

Although these are examples of successful foundations, some athletes have had trouble managing their own foundations. This became the problem for former Chicago Bear Chris Zorich.

Zorich founded his charity in 1993, and received numerous accolades and awards throughout the years for helping disadvantage children. His charity included toy drives during Christmas, providing dinners on Thanksgiving, and making regular hospital visits. But in 2002 things started to go downhill for the Chris Zorich Charitable Foundation.

In April the Internal Revenue Service filed a $10,000 lien against the charity. And the Illinois attorney general's office, which canceled the charity's registration six years ago, said it was trying to reach Zorich regarding the charity's operations after the Tribune asked about its status.
The foundation reported $864,645 in assets on its 2002 tax return, apparently the last one filed. Zorich said he forgot about the money and assumes it's still there. When the Tribune asked to see a bank statement listing the funds, Zorich responded that he did not have one available.

Zorich, who retired from the NFL and now works in the University of Notre Dame's athletic office, said the charity closed in 2008 and last accepted donations around 2005. He said he was surprised to hear that http://www.chriszorich.org lists an address to mail donations.

Zorich stated he was aware the registration was canceled in 2002, but assumed his cousin Barbara Singer, the foundation's executive director, had handled the matter. When Singer was diagnosed with cancer, Zorich failed to bring in additional employees to help run the foundation.. His reason for this seemed reasonable on a personal level: He didn't want Singer to feel like she was losing control of everything in her life. Later when Singer passed away Zorich had approximately $800,000 in the foundation’s bank account that needed to be distributed, but he failed to do so. He claimed he would hire an accounting firm to help, but has yet to hear back from them. Failing to file an annual return for three consecutive years can cost a tax-exempt organization to lose their status and become subject to penalties. As of now the IRS still considers the Zorich charity tax-exempt.

It seems that Zorich didn't understand how much work actually goes into running a successful charity. He should have hired other employees to help manage the it as soon as the charity stopped being one of his top priorities. Additional help was especially needed when his executive director became ill. When you are sitting on undistributed documents worth around $800,000, someone is bound to come looking for them. Charity foundations should not loose sight of what their charities were initially set up to do, help others.

It’s a story we have heard repeated again and again – a mortgage firm catering to pro athletes is in the news and a number of athletes have lost a significant sum of money.

This time the news comes from the Houston Area, where a company called Pro Style Financial apparently invested money on behalf of numerous NFL players, among others. From the article:

McCray joins Italian basketball professional Henry Domercant, former Denver Bronco A. Kyle Johnson, and Dallas Cowboy Jeremiah "Jay" Ratliff as alleged victims — all of whom invested in the trust through their financial agent Pro Style Financial, a financial advisory firm that works with a variety of professional athletes and is the subject of an adversarial lawsuit by Trustee Steven Notinger who is trying to identify and regain some of the assets of the failed mortgage company.

This is yet another cautionary tale. I hate to sound like a preacher, but if it sounds too good to be true, it probably is. Just because you’re a professional athlete making millions of dollars a year does not necessarily mean that you have access to investments which work miracles. That’s why pro athletes should always have someone double check and verify the credentials of those with whom they are investing. It is not foolproof, but having a sports lawyer on retainer to conduct due diligence on potential investment opportunities is always a good idea.

These days, anyone who is looking to dabble in MMA can find a local gym with an octagon and a trainer willing to train you to be the next UFC star. Now, however, UFC itself has taken the grass roots concept to a new level.

I have said before that UFC has been savvy in its growth efforts over the past several years as the sport has gradually shifted into the mainstream. The latest venture, UFC-branded fitness center, is just the next step in the process.

The gym features the traditional assortment of weights, treadmills, exercise bikes and other aerobic equipment, along with television monitors and blaring music. But the major differences are the obvious UFC trappings. An Octagon in the center of gym is used for martial arts classes. Huge wall photos of UFC Hall of Famers and life-sized cardboard cutouts of current stars decorate the interiors.

The idea is brilliant, as it exposes several types of fans to the sports. First, you have the amateur and budding MMA fighters who love the sport, practice it at an amateur level and maybe hope to hit the big time. Next, you have the casual fans who will work out at the gym, never set foot in the Octagon, but absorb the MMA theme, and become interested in the sport. The concept additionally provides an extra income stream to UFC fighters, as individual stars will have their names applied to each gym.

It also is another way of breaking down whatever negative stigmas exist by making the brand name part of communities and marketing the fighters as larger-than-life stars to families. It also creates new venues to market the company’s stars and major events, as part of the concept includes regular personal appearances by fighters at the gyms.

As always with ventures spearheaded by Dana White, this development bears watching for agents and sports lawyers who are thinking of expanding their base into representing MMA fighters.

The sports agent sponsorship scam which recently came to light in England illustrates yet again why all athletes should consult their sports lawyer before handing over their hard earned money.

In the latest scam, a British sports marketing agency asked for money up front from athletes in exchange for the promise of procuring endorsements. Even Andrew Steele, one of the athletes who was ripped off, acknowledged that he thought being forced to pay upfront was a red flag:

“I asked: 'why does it have to be up front, why can't I give it once the sponsorship has been secured?' They said that if the money didn't materialise then I would get a refund, so I thought I'd go for it.

Steele said his fears were lessened because the agent employed several prominent former athletes. This seems to be a common practice among sports marketing agents who are operating scams. They pay athletes to recruit other athletes. Because pro athletes tend to stick together, they feel better when one of their own is on board.

The bottom line here is that any time a sports agent request money up front, the athlete should run quickly in the opposite direction. While there may be certain hourly and flat-fee arrangement for certain types of sports agency duties, this type scenario is rare, and should only be entered into cautiously and with someone trustworthy. When in doubt, the athlete should consult a sports lawyer.

Did Bobby Hurley consult his sports agent before making this investment? Bobby Hurley is being sued over his horse racing investment. Hurley, a basketball star at Duke who had his NBA career cut short due to a car accident, is alleged to owe a Lexington, Kentucky, bank $946,962.

The suit further states that the borrowers executed a loan and security agreement granting the bank a security interest in all of its then-owned or thereafter-acquired shares and fractional interests in the stallion Songandaprayer. It also seeks any income stemming from the Songandaprayer shares, identified as shares 1 through 12, owned by Hurley and his operations.

This type of investment default could happen to anyone, but because a former pro athlete is involved, it garners additional scrutiny in the media. It’s also yet another cautionary tale, proving once again that athletes should consult qualified investment professionals, to help manage their money.

Here comes another story of professional athletes who were bilked out of their hard-earned money. Several players on the Columbus Blue Jackets recently spoke to a reporter about the instances in which they were swindled.

As always, the article is just another cautionary tale which has at its root the fundamental problem of who an athlete can, and cannot, trust. This is why we here at Sports Agent and Sports Lawyer Blog continually emphasize the theme that athletes need to employ risk managers, someone who can assess and analyze each and every investment opportunity and explain the pros and cons to the athlete. This person should be an attorney, but not necessarily be the athlete's personal counsel, and should not be the athlete's financial adviser.

It's easy for the athlete to be seduced when approached by an inventor or entrepreneur who promises to give the player a share in the Next Big Thing. There is no doubt that occasionally, some people do have solid ideas and the athlete could actually benefit from making an investment. More often than not, the opposite is probably true. We have written several times about athletes and their financial problems. Even having a professional financial adviser is not always sufficient:

Most athletes have a financial adviser, but the people serving in that capacity vary widely.

Several Blue Jackets said they allow relatives or family friends to manage their money. Other players are represented by large sports agencies that handle all their financial matters, including bill and mortgage payment.

It's a subject that will never go away until athletes get smarter about their overall risk-taking strategy. People essentially need to allocate only a fraction of their overall disposable income to high-risk ventures. Then they need to figure out the best way to maximize that percentage. Blue Jackets player Rick Nash has the best approach. His lawyer, agent, financial adviser and accountant are all unrelated to one another. This ensures that there are greater checks and balances.

Are female golfers going to earn more money in sports endorsements?

Michael Whan, who was named the new LPGA commissioner earlier this week, has an extensive background on the marketing and business side. He worked at North America TaylorMade adidas Golf from '95-'00 and has also worked as a brand marketer for BriteSmile and Procter & Gamble.

While Whan's selection was reportedly a surprise to golf insiders who thought the new commissioner would be a more established name, this is probably good news for LPGA golfers. As they try and resolve the problems their sports has been facing, it will be helpful that the new leader has a marketing background. Reports estimate that the LPGA has lost about 13 events since the beginning of 2008, and the league itself has been forced to lay off employees.

Not least of their problems are a dearth of sponsorships, endorsements and marketing opportunities for their athletes. With the new commissioner coming from a marketing background, rather than from an established league or sport, it seems that the golfers on the LPGA can look forward to a stronger and more robust business model, which should translate into more money in their pocket.

Maybe you are lucky enough to have played pro sports long enough to have earned a pension. That's the good news. The bad news is that if an athlete undergoes a divorce, the ex-spouse may be entitled to a portion of their retirement or pension fund.

In Florida, pension and retirement funds that accrue during the marriage must be treated as marital property and shared equally. However, there are exceptions and modifications to this rule that may help you protect all or part of your retirement savings.

Florida law holds that all vested and non-vested benefits, rights, and funds that accrue during the marriage are marital assets subject to equitable distribution during a divorce. This law applies to any 401(k), pension, Individual Retirement Account (IRA), annuity, or Deferred Retirement Option Program right (DROP) that is acquired or accrues during the course of the marriage.

If the court determines a pension or retirement fund is a marital asset, they will issue a Qualified Domestic Relations Order (QDRO) that instructs the plan administrator to divide the fund according to the divorce decree. The non-employee spouse is usually entitled to the same rights under the plan as the employee spouse, such as cost-of-living adjustments and early withdrawal options, and is eligible to receive his or her share of the ex-spouse's benefits when the ex-spouse is entitled to receive them.

Continue reading "Athlete Pensions - Fair Game in Divorce?" »

Stop me if you have heard this one before: A successful professional athlete did a poor job managing his finances, and he is now in serious debt.

Professional athletes need to maintain strict control over their finances. They also need someone who assesses their risk and manages their varied investments. I am not talking about a financial adviser, but I am referring to a person who keeps track of everything for the busy athlete who cannot handle his own personal dealings.

The recent fiascos involving former Mets pitcher Livan Hernandez and Celtics forward Antoine Walter are instructive. Hernandez is being sued by his lender for his home in Miami and he is subject to liens from two neighborhood associations, the pool guy and the state of California. This article breaks down Hernandez's financial problems.

As for Walker, he has debts of more than $4 million according to a Boston Globe article. What's most incredible is that Walker has earned about $110 million in his NBA career. Walker has deeper problems as well - he's facing multiple felony counts for passing bad checks.

Continue reading "Who Manages Risk for Athletes?" »

Endorsements are difficult to procure for professional athletes.

It's a refrain we've heard time and again since the economy went into a nosedive in late 2008. Apparently one company thinks they have a new gimmick that will make it easier for everyone. Brand Affinity Technologies brings athletes and companies together in a streamlined deal-making process for endorsements. While the article in the New York Times contains some bizarre factual errors (such as referring to Cris Carter as a player for the Minnesota Vikings; Carter retired in 2002 and last played for the Vikings in 2001), the concept sounds interesting in principle.

If it takes off, this sounds like an ideal way for athletes to get corporate endorsements. As with any new concept, the problem is in scalability - it requires a lot of athletes and a lot of businesses. If everyone from the mom-and-pop deli to Microsoft sign up on the corporate side, and athletes from Peyton Manning down to Olympic athletes in obscure sports are available on the player side, it should work. One downside is that an executive with the company says "we can change out the talent very quickly," although he does not explain a situation in which he changed out talent (instead, he explains that he tailored a campaign to a specific event, not that he fired an athlete and replaced him with someone else). I am not sure that an agent should be steering his client to endorsement deals that have the tendency to crumble into nothing at the drop of a hat. Ask yourself whether a short-lived endorsement for your client is better than no endorsement at all? These days, until the endorsement climate picks up, the Brand Affinity concept seems to have potential.

If you're a professional athlete and someone else owns your domain name, you should thank Toronto Raptors player Chris Bosh for getting it back to you. Bosh recently won a case in federal court in which the court ordered that domain names with no connection to the athlete should be returned to the athlete.

Actually, the court ordered about 800 names to specifically be awarded to Bosh and his company. Bosh has agreed to give the names back to the person named. Here is a complete list of the misappropriated athlete domain names.

This is a major victory for pro athletes under the relatively new Anti-Cybersquatting Consumer Protection Act. If someone is holding your domain name as hostage, have your sports attorney contact them and you should get it back in no time.

Remember when former Minnesota Vikings coach Mike Tice got in hot water for ticket scalping? It's a temptation most pro athletes (other than the top earners) have probably thought about every now and then: Sure, you make a nice salary, but wouldn't it be nice to put a few hundred bucks in your pocket by scalping your free ticket allotment?

Recent media reports have listed tickets for the Vikings-Packers Nov. 1 showdown at Lambeau Field at $364, which vastly exceeds face value. Would it be tempting for the players on either team to scalp their tickets? Perhaps it would be a temptation, as the value of these ticket will only increase, unless Brett Favre gets hurt. Pro football players have enough to worry about without trying to pick up extra cash by scalping tickets.

Recently we blogged about the case of a New Zealand Olympic athlete who got exceedingly creative in his attempt to finance his athletic career by launching a brothel. With the Winter Olympics in Vancouver only about five months away, it looks like some American athletes are also getting creative. Fortunately, they are doing nothing that resembles the shady activities of the New Zealand athlete.

This article talks about a number of snowboarders and skiiers who are having difficulty raising money to support their athletic goals. From sporting restaurant logos to paving parking lots in their spare time, athletes are mining any possible revenue source. It's an incredibly difficult endeavor to train as a world class athlete without any money. Even a top-notch agent would not find it easy to procure investments for athletes in so-called minor sports. Still, that doesn't mean pursuing the dream - and hiring an agent to try and gain endorsements - isn't a worthy use of your time and resources.

Let's say you were released, or your contract expired and you signed for much less money. If you have child-support payments, you may need to consider a modification.

Imagine a scenario in which you divorced three or four years ago. You were in the prime of your career, making close to the league maximum. Your wife did not have a job. When you got divorced, you were required to pay alimony, the terms of which were set in accordance with your lucrative income at the time. But now your income dropped substantially and you can no longer pay the required alimony payments dictated by an old divorce settlement agreement.

What should you do?

Continue reading "When an Athlete Loses his Job, Is Child Suport Modified?" »

Here in the United States, athletes have been forced to get creative to fund their Olympic dreams. Overseas, on athlete apparently got a little too creative. Not surprisingly, authorities have clamped down on the New Zealand Olympic athlete who decided to fund his dreams by operating a brothel.

Interestingly, the athlete, Logan Campbell, is threatening to sue the New Zealand Olympic regulators for apparently trying to interfering with his livelihood (actually the article does not state the legal grounds upon which Campbell might sue, but that is the most likely avenue in my opinion). Prostitution is apparently legal in New Zealand, so Campbell must believe that he is doing nothing wrong, even though the governing body believes that it is somewhat unseemly for an Olympian to be promoting prostitution.

A similar lawsuit here in the United States, if these events occurred, could raise interesting questions about Constitutionally protected expression and speech. If the athlete operated the brothel, and it was legal - for instance, if it was located in a county in Nevada which permits prostitution - could the athlete have a cause of action against someone who asked him to shut down his activity? Is prostitution considered free speech if it's legalized? What would happen if the athlete was running a legal business, but one which some segments of the population consider to be offensive? As sponsorship money continues to dry up, maybe we will see someone test these waters.

If you are a professional athlete trying to raise money, consult a sports law attorney such as Koch & Trushin, P.A., before embarking on any significant expenditure of your resources in pursuit of your goal.

You're a professional athlete, so everyone wants your money, right? Even savvy athletes and coaches looking for presumably safe investments can find themselves in dire straits over an investment gone wrong. That's why it can be critical to consult a competent attorney before signing anything involving your money.

Consider the case of Michigan football coach Rich Rodriguez, who invested in condo construction near college campuses as part of a new trend to sell college-themed living to the aging baby boomers. Sounds like a solid investment opportunity for an athlete, right? Well, not so fast. As discussed here, the investment at Virginia Tech's stadium did not go according to plan. A partner allegedly made off with much of the funds, and the investment fell apart.

What really made this a bad investment for Rodriguez is that he was personally sued by the creditors when the deal fell apart. Everyone knew that Rodriguez was a millionaire (coach and athlete salaries are generally public information), but Rodriguez's mistake may have been the "personal guarantee" he signed, apparently putting himself on the hook for the debt.

The bottom line is that if you're a pro athlete, you make a lot of money. You have every right to invest your money in lucrative projects that are not available to most people. Just be wary - and consult a qualified sports attorney to see that your interests are protected.