[House Report 107-725]
[From the U.S. Government Publishing Office]
107th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 107-725
======================================================================
SPORTS AGENT RESPONSIBILITY AND TRUST ACT
_______
October 7, 2002.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Tauzin, from the Committee on Energy and Commerce, submitted the
following
R E P O R T
[To accompany H.R. 4701]
[Including cost estimate of the Congressional Budget Office]
The Committee on Energy and Commerce, to whom was referred
the bill (H.R. 4701) 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, having considered
the same, report favorably thereon with an amendment and
recommend that the bill as amended do pass.
CONTENTS
Page
Amendment........................................................ 1
Purpose and Summary.............................................. 4
Background and Need for Legislation.............................. 4
Hearings......................................................... 5
Committee Consideration.......................................... 5
Committee Votes.................................................. 5
Committee Oversight Findings..................................... 6
Statement of General Performance Goals and Objectives............ 6
New Budget Authority, Entitlement Authority, and Tax Expenditures 6
Committee Cost Estimate.......................................... 6
Congressional Budget Office Estimate............................. 6
Federal Mandates Statement....................................... 7
Advisory Committee Statement..................................... 8
Constitutional Authority Statement............................... 8
Applicability to Legislative Branch.............................. 8
Section-by-Section Analysis of the Legislation................... 8
AMENDMENT
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Sports Agent Responsibility and Trust
Act''.
SEC. 2. DEFINITIONS.
As used in this Act, the following definitions apply:
(1) Agency contract.--The term ``agency contract'' means an
oral or written agreement in which a student athlete authorizes
a person to negotiate or solicit on behalf of the student
athlete a professional sports contract or an endorsement
contract.
(2) Athlete agent.--The term ``athlete agent'' means an
individual who enters into an agency contract with a student
athlete, or directly or indirectly recruits or solicits a
student athlete to enter into an agency contract, and does not
include a spouse, parent, sibling, grandparent, or guardian of
such student athlete, or an individual acting solely on behalf
of a professional sports team or professional sports
organization.
(3) Athletic director.--The term ``athletic director'' means
an individual responsible for administering the athletic
program of an educational institution or, in the case that such
program is administered separately, the athletic program for
male students or the athletic program for female students, as
appropriate.
(4) Commission.--The term ``Commission'' means the Federal
Trade Commission.
(5) Endorsement contract.--The term ``endorsement contract''
means an agreement under which a student athlete is employed or
receives consideration for the use by the other party of that
individual's person, name, image, or likeness in the promotion
of any product, service, or event.
(6) Intercollegiate sport.--The term ``intercollegiate
sport'' means a sport played at the collegiate level for which
eligibility requirements for participation by a student athlete
are established by a national association for the promotion or
regulation of college athletics.
(7) Professional sports contract.--The term ``professional
sports contract'' means an agreement under which an individual
is employed, or agrees to render services, as a player on a
professional sports team, with a professional sports
organization, or as a professional athlete.
(8) State.--The term ``State'' includes a State of the United
States, the District of Columbia, Puerto Rico, the United
States Virgin Islands, or any territory or insular possession
subject to the jurisdiction of the United States.
(9) Student athlete.--The term ``student athlete'' means an
individual who engages in, is eligible to engage in, or may be
eligible in the future to engage in, any intercollegiate sport.
An individual who is permanently ineligible to participate in a
particular intercollegiate sport is not a student athlete for
purposes of that sport.
SEC. 3. REGULATION OF UNFAIR AND DECEPTIVE ACTS AND PRACTICES IN
CONNECTION WITH THE CONTACT BETWEEN AN ATHLETE
AGENT AND A STUDENT ATHLETE.
(a) Conduct Prohibited.--It is unlawful for an athlete agent to--
(1) directly or indirectly recruit or solicit a student
athlete to enter into an agency contract, by--
(A) giving any false or misleading information or
making a false promise or representation; or
(B) providing anything of value to a student athlete
or anyone associated with the student athlete before
the student athlete enters into an agency contract;
(2) enter into an agency contract with a student athlete
without providing the student athlete with the disclosure
document described in subsection (b); or
(3) predate or postdate an agency contract.
(b) Required Disclosure by Athlete Agents to Student Athletes.--
(1) In general.-- In conjunction with the entering into of an
agency contract, an athlete agent shall provide to the student
athlete, or, if the student athlete is under the age of 18 to
such student athlete's parent or legal guardian, a disclosure
document that meets the requirements of this subsection. Such
disclosure document is separate from and in addition to any
disclosure which may be required under State law.
(2) Signature of student athlete.--The disclosure document
must be signed by the student athlete, or, if the student
athlete is under the age of 18 by such student athlete's parent
or legal guardian, prior to entering into the agency contract.
(3) Required language.--The disclosure document must contain,
in close proximity to the signature of the student athlete, or,
if the student athlete is under the age of 18, the signature of
such student athlete's parent or legal guardian, a conspicuous
notice in boldface type stating: ``Warning to Student Athlete:
If you agree orally or in writing to be represented by an agent
now or in the future you may lose your eligibility to compete
as a student athlete in your sport. Within 72 hours after
entering into this contract or before the next athletic event
in which you are eligible to participate, whichever occurs
first, both you and the agent by whom you are agreeing to be
represented must notify the athletic director of the
educational institution at which you are enrolled, or other
individual responsible for athletic programs at such
educational institution, that you have entered into an agency
contract.''.
SEC. 4. ENFORCEMENT.
(a) Unfair or Deceptive Act or Practice.--A violation of this Act
shall be treated as a violation of a rule defining an unfair or
deceptive act or practice prescribed under section 18(a)(1)(B) of the
Federal Trade Commission Act (15 U.S.C. 57a(a)(1)(B)).
(b) Actions by the Commission.--The Commission shall enforce this Act
in the same manner, by the same means, and with the same jurisdiction,
powers, and duties as though all applicable terms and provisions of the
Federal Trade Commission Act (15 U.S.C. 41 et seq.) were incorporated
into and made a part of this Act.
SEC. 5. ACTIONS BY STATES.
(a) In General.--
(1) Civil actions.--In any case in which the attorney general
of a State has reason to believe that an interest of the
residents of that State has been or is threatened or adversely
affected by the engagement of any athlete agent in a practice
that violates section 3 of this Act, the State may bring a
civil action on behalf of the residents of the State in a
district court of the United States of appropriate jurisdiction
to--
(A) enjoin that practice;
(B) enforce compliance with this Act;
(C) obtain damage, restitution, or other compensation
on behalf of residents of the State; or
(D) obtain such other relief as the court may
consider to be appropriate.
(2) Notice.--
(A) In general.--Before filing an action under
paragraph (1), the attorney general of the State
involved shall provide to the Commission--
(i) written notice of that action; and
(ii) a copy of the complaint for that action.
(B) Exemption.--Subparagraph (A) shall not apply with
respect to the filing of an action by an attorney
general of a State under this subsection, if the
attorney general determines that it is not feasible to
provide the notice described in that subparagraph
before filing of the action. In such case, the attorney
general of a State shall provide notice and a copy of
the complaint to the Commission at the same time as the
attorney general files the action.
(b) Intervention.--
(1) In general.--On receiving notice under subsection (a)(2),
the Commission shall have the right to intervene in the action
that is the subject of the notice.
(2) Effect of intervention.--If the Commission intervenes in
an action under subsection (a), it shall have the right--
(A) to be heard with respect to any matter that
arises in that action; and
(B) to file a petition for appeal.
(c) Construction.--For purposes of bringing any civil action under
subsection (a), nothing in this title shall be construed to prevent an
attorney general of a State from exercising the powers conferred on the
attorney general by the laws of that State to--
(1) conduct investigations;
(2) administer oaths or affirmations; or
(3) compel the attendance of witnesses or the production of
documentary and other evidence.
(d) Actions by the Commission.--In any case in which an action is
instituted by or on behalf of the Commission for a violation of section
3, no State may, during the pendency of that action, institute an
action under subsection (a) against any defendant named in the
complaint in that action--
(e) Venue.--Any action brought under subsection (a) may be brought in
the district court of the United States that meets applicable
requirements relating to venue under section 1391 of title 28, United
States Code.
(f) Service of Process.--In an action brought under subsection (a),
process may be served in any district in which the defendant--
(1) is an inhabitant; or
(2) may be found.
SEC. 6. PROTECTION OF EDUCATIONAL INSTITUTION.
(a) Notice Required.--Within 72 hours after entering into an agency
contract or before the next athletic event in which the student athlete
may participate, whichever occurs first, the athlete agent and the
student athlete shall each inform the athletic director of the
educational institution at which the student athlete is enrolled, or
other individual responsible for athletic programs at such educational
institution, that the student athlete has entered into an agency
contract, and the athlete agent shall provide the athletic director
with notice in writing of such a contract.
(b) Civil Remedy.--
(1) In general.--An educational institution has a right of
action against an athlete agent for damages caused by a
violation of this Act.
(2) Damages.--Damages of an educational institution may
include losses and expenses incurred because, as a result of
the conduct of the athlete agent, the educational institution
was injured by a violation of this Act or was penalized,
disqualified, or suspended from participation in athletics by a
national association for the promotion and regulation of
athletics, by an athletic conference, or by reasonable self-
imposed disciplinary action taken to mitigate actions likely to
be imposed by such an association or conference.
(3) Costs and attorneys fees.--In an action taken under this
section, the court may award to the prevailing party costs and
reasonable attorneys fees.
(4) Effect on other rights, remedies and defenses.--This
section does not restrict the rights, remedies, or defenses of
any person under law or equity.
SEC. 7. SENSE OF CONGRESS.
It is the sense of Congress that States should enact the Uniform
Athlete Agents Act of 2000 drafted by the National Conference of
Commissioners on Uniform State Laws, to protect student athletes and
the integrity of amateur sports from unscrupulous sports agents. In
particular, it is the sense of Congress that States should enact the
provisions relating to the registration of sports agents, the required
form of contract, the right of the student athlete to cancel an agency
contract, the disclosure requirements relating to record maintenance,
reporting, renewal, notice, warning, and security, and the provisions
for reciprocity among the States.
PURPOSE AND SUMMARY
The purpose of H.R. 4701 is to designate certain conduct by
sports agents related to the signing of contracts to represent
student athletes as unfair and deceptive acts or practices to
be regulated by the Federal Trade Commission (FTC).
Additionally, H.R. 4701 provides the states with the authority
to bring civil action against violators in a district court and
provides universities with a right of action against the
athlete agent for damages resulting from a violation of the
Act.
BACKGROUND AND NEED FOR LEGISLATION
The multimillion-dollar value of professional athlete
salaries, signing bonuses, and endorsement contracts has
resulted in a proliferation of unscrupulous practices by some
sports agents. Unscrupulous agents, or their representatives,
are willing to break the rules in order to sign promising
student athletes to an agency contract. Agents are willing to
do this because the fees that accompany the representation of a
professional athlete are considerable, and the consequences
that the agent will suffer in comparison to the athlete or
school are limited or non-existent.
Motivated largely by financial gain, unscrupulous agents
have gone to extreme measures to represent promising student
athletes with even a remote chance of becoming a professional
athlete. These agents, or their cohorts--often known as
``runners''--will use tactics including secret payments to the
athlete, undisclosed payments to the family or friends of the
athlete who may be in a position to influence the athlete,
unrealistic promises, and even pressuring the athlete. In some
cases, these agents have made the secret payments to student
athletes or their families, and then black-mailed them into
signing a contract with the threat that they would disclose the
infraction of collegiate rules and threaten the student
athlete's eligibility. These egregious acts go unpunished due
to the lack of a Federal law, disparate and sometime
ineffective state laws, and the absence of any laws in many
states.
The effect of a student athlete entering into an agency
contract is generally a forfeiture of collegiate eligibility.
The college or university may also be subject to various
sanctions for violation of competition rules if contests were
played with ineligible athletes. If this occurs, the economic
impact to the school and the athlete can be substantial. Not
only can a student athlete lose a scholarship, the university
can be sanctioned with monetary penalties, loss of
scholarships, forfeiture of contests, and loss of television
revenue.
Currently there is no Federal law that directly addresses
the actions of these agents. However, a majority of the states
have a law to regulate athlete agents and/or their conduct, but
to varying degrees and specificity. Most recently the National
Conference of Commissioners on Uniform State Laws passed the
Uniform Athlete's Agent Act (UAAA) in 2000 to provide uniform
state laws addressing the conduct and practices of athlete
agents, including registration of agents. It has since been
adopted by sixteen states and introduced in the legislatures of
twelve others. Of the states that have not enacted the UAAA, 18
have existing athlete agent laws while sixteen have no law that
directly addresses athlete agent conduct. H.R. 4701 will
provide remedies to protect student athletes and the
educational institutions, particularly in those states with no
existing law addressing athlete agent conduct.
HEARINGS
The Subcommittee on Commerce, Trade, and Consumer
Protection held a hearing on H.R. 4701 on June 5, 2002. The
Subcommittee received testimony from: The Honorable Tom
Osborne, U.S. House of Representatives; Mr. Howard Beales,
Director, Bureau of Consumer Protection, Federal Trade
Commission; Mr. James Donnelly, Athletic Director, Middle
Tennessee State University; and Mr. Bill Saum, Director of
Agent, Gambling, and Amateurism Activities, National Collegiate
Athletic Association.
COMMITTEE CONSIDERATION
On Wednesday, July 17, 2002, the Subcommittee on Commerce,
Trade, and Consumer Protection met in open markup session and
approved H.R. 4701, as amended, for Full Committee
consideration, by a voice vote, a quorum being present. On
Wednesday, September 25, 2002, the Full Committee met in open
markup session and ordered H.R. 4701 favorably reported to the
House, as amended, by a voice vote, a quorum being present.
COMMITTEE VOTES
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the record votes
on the motion to report legislation and amendments thereto.
There were no record votes taken in connection with ordering
H.R. 4701 reported. A motion by Mr. Tauzin to order H.R. 4701
reported to the House, as amended, was agreed to by a voice
vote.
COMMITTEE OVERSIGHT FINDINGS
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the Committee held a legislative
hearing and made findings that are reflected in this report.
STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES
The goal of H.R. 4701 is to define the prohibited conduct
employed by individuals to entice or solicit student athletes
to enter into an agency contract, whether it is a written or
oral agreement, as well as require written disclosure to the
student athlete prior to signing a contract and to the
educational institution after a contract has been entered.
NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX EXPENDITURES
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee finds that H.R.
4701, the Sports Agent Responsibility and Trust Act, would
result in no new or increased budget authority, entitlement
authority, or tax expenditures or revenues.
COMMITTEE COST ESTIMATE
The Committee adopts as its own the cost estimate prepared
by the Director of the Congressional Budget Office pursuant to
section 402 of the Congressional Budget Act of 1974.
CONGRESSIONAL BUDGET OFFICE ESTIMATE
Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives, the following is the cost estimate
provided by the Congressional Budget Office pursuant to section
402 of the Congressional Budget Act of 1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, October 4, 2002.
Hon. W.J. ``Billy'' Tauzin,
Chairman, Committee on Energy and Commerce,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 4701, the Sports
Agent Responsibility and Trust Act.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contacts are Ken Johnson
(for federal costs), Angela Seitz (for the state and local
impact), and Paige Piper/Bach (for the private-sector impact).
Sincerely,
Barry B. Anderson
(For Dan L. Crippen, Director).
Enclosure.
H.R. 4701--Sports Agent Responsibility and Trust Act
H.R. 4701 would impose certain restrictions on contracts
between sports agents and student athletes. For example, the
bill would prohibit sports agents from making false promises or
offering gifts to solicit such a contract. These new rules
would be enforced by the Federal Trade Commission (FTC) through
civil penalties and by the states.
CBO estimates that enacting H.R. 4701 would not have a
significant impact on the federal budget. Based on information
from the FTC, CBO expects that enforcing H.R. 4701 would take
place mostly at the state level. Therefore, CBO expects that
any increase in civil penalties resulting from the enactment of
H.R. 4701 would be insignificant. (Such penalties are recorded
in the budget as revenues.) Similarly, we estimate that
implementing H.R. 4701 would increase the FTC's costs by less
than $500,000 annually, assuming the availability of
appropriations.
H.R. 4701 contains no intergovernmental mandates as defined
in the Unfunded Mandates Reform Act (UMRA) and would impose no
costs on state, local, or tribal governments.
H.R. 4701 would impose private-sector mandates, as defined
by UMRA, on certain sports agents and student athletes. CBO
estimates that the direct costs of the mandates would fall well
below the annual threshold established by UMRA for private-
sector mandates ($115 million in 2002, adjusted annually for
inflation).
In general, H.R. 4701 would prohibit sports agents from
recruiting or soliciting a student athlete by giving any false
or misleading information or making a false promise or
representation. H.R. 4701 would prohibit a sports agent from
providing anything of value to a student athlete or anyone
associated with the athlete before entering into a contract. An
agent also would be required to provide a student athlete with
a specific disclosure document before entering into an agency
contract and could not predate or postdate such a contract. The
bill also would require a student athlete, or the athlete's
parents or legal guardian if the student is under the age of
18, to sign the disclosure document prior to entering into an
agency contract. In addition, the bill would require the sports
agent and student athlete to each inform the student's
educational institution within a specific time that the athlete
has entered into an agency contract. Based on information from
government sources, CBO estimates that the direct cost of the
mandates would fall well below the annual threshold established
by UMRA for private-sector mandates.
The CBO staff contacts for this estimate are Ken Johnson
(for federal costs), Angela Seitz (for the state and local
impact), and Paige Piper/Bach (for the private-sector impact).
The estimate was approved by Peter H. Fontaine, Deputy
Assistant Director for Budget Analysis.
FEDERAL MANDATES STATEMENT
The Committee adopts as its own the estimate of Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates Reform
Act.
ADVISORY COMMITTEE STATEMENT
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
CONSTITUTIONAL AUTHORITY STATEMENT
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee finds that the
Constitutional authority for this legislation is provided in
Article I, section 8, clause 3, which grants Congress the power
to regulate commerce with foreign nations, among the several
States, and with the Indian tribes.
APPLICABILITY TO LEGISLATIVE BRANCH
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION
Section 1. Short title
Section 1 designates the legislation as the ``Sports Agents
Trust and Responsibility Act of 2002.''
Section 2. Definitions
Section 2 provides definitions for terms incorporated
throughout H.R. 4701.
Section 3. Regulation of unfair and deceptive acts and practices in
connection with the contact between an athlete agent and a
student athlete
Section 3 provides for the regulation of conduct between an
athlete agent and a student athlete. Subsection (a) defines
prohibited conduct for an athlete agent to engage in order to
solicit or recruit a student athlete to enter into an agency
contract. The legislation makes it unlawful for the athlete
agent to give materially false or misleading information, to
make materially false promises or representations, or to
provide anything of value to the student athlete or anyone
associated with the student athlete before he or she signs an
agency contract. Additionally, an athlete agent is prohibited
from entering into an agency contract with the student athlete
without providing the student the written disclosure proscribed
by the Act and from either predating or postdating the
contract.
Subsection (b) proscribes the terms of the disclosure
requirements the athlete agent must provide to the student
athlete, or to the student athlete's parent or guardian, and
requires the signature of the student athlete, or the student
athlete's parent or guardian, prior to entering into the agency
contract.
Subsection (b)(3) provides the required language of the
disclosure document.
Section 4. Enforcement
Section 4 authorizes the FTC to treat a violation of the
Act as a violation of FTC rules defining an unfair and
deceptive act or practice under section 18(a)(1)(B) of the FTC
Act. This section authorizes the FTC to enforce the Act in the
same manner and with the same powers and duties it has under
the FTC Act.
Section 5. Actions by states
Section 5 provides the authority and parameters for a state
to bring civil action against a violator of the Act. A state
attorney general may bring civil action against any person in
practice that violates any regulation of the Commission
prescribed under section 3 of this Act in Federal district
court in order to: (1) enjoin that practice; (2) enforce
compliance with the regulation; (3) obtain damage, restitution,
or other compensation; or (4) obtain other relief as the court
may consider appropriate.
An attorney of the state filing an action under this Act
must first provide a written notice of the action and a copy of
the complaint to the FTC, unless it is not feasible in which
case it must be provided to the FTC at the same time as the
action is filed.
Subsection (b) provides the FTC with the authority to
intervene in any action brought by a state under this Act. If
the Commission intervenes, it maintains the right to be heard
and the right to file a petition for appeal.
Subsection (c) provides that an action brought under
subsection (a) by an attorney general shall not prevent the
attorney general from exercising the powers provided by any
other laws of the state.
Subsection (d) stipulates that no state may institute an
action under subsection (a) while an action instituted by or on
behalf of the Commission is pending.
Subsection (e) provides that an action brought by an
attorney general of a state under subsection (a) may be brought
in a district court of the United States that meets the venue
requirements.
Subsection (f) provides the terms under which process may
be served in an action brought under subsection (a).
Section 6. Protection of the educational institution
Section 6 provides safeguards and remedies for educational
institutions.
Subsection (a) provides for written notification by the
student athlete, and the athlete agent, to the athletic
director or appropriate individual responsible for athletic
programs of the educational institution. The notification that
an agency contract has been entered into must be within 72
hours after entering into the contract or before the next
athletic contest in which the student athlete may participate,
whichever occurs first.
Subsection (b) provides an educational institution with
civil remedy, including a right of action against an athlete
agent for damages resulting from a violation of this Act.
Section 7. Sense of Congress
Section 7 expresses the sense of Congress that the States
should enact the Uniform Athlete Agent Act of 2000 to protect
student athletes and the integrity of amateur sports from
unscrupulous sports agents.