Contracts Sports Law

NFLPA Issues Stern Warning To Agents Who Want Fees From Player Income Purchase Agreements

NFL players have reportedly been recently entering into Income Purchase Agreements, which are contracts that involve an up-front payment by a third party to a player in exchange for the player promising the third party a percentage of his current and future NFL contracts. The NFL Players Association caught wind of these Income Purchase Agreements and, while the Association has not barred players from entering into such agreements, it has provided a stern warning to certified Contract Advisors.

Per an October 28 Memorandum to NFLPA Contract Advisors, all agents are put on notice that they are not permitted to accept fees related to the assistance with negotiation of the Income Purchase Agreements. The NFLPA’s Committee on Agent Regulation & Discipline (CARD) made it clear that accepting such fees would be a violation of the NFLPA Regulations Governing Contract Advisors.

Specifically, CARD notes that accepting a fee would constitute a violation of Regulation 4(B)(4), which says:

A Contract Advisor is prohibited from receiving any fee for his/her services until and unless the player receives the compensation upon which the fee is based. However, these Regulations recognize that in certain circumstances a player may decide that it is in his best interest to pay his Contract Advisor’s fee in advance of the receipt of any deferred compensation from his NFL club. Accordingly, a player may enter into an agreement with a Contract Advisor to pay the Contract Advisor a fee advance on deferred compensation due and payable to the player. Such fee advance may only be collected by the Contract Advisor after the player has performed the services necessary under his contract to entitle him to the deferred compensation. Further, such an agreement between a Contract Advisor and a player must be in writing, with a copy sent by the Contract Advisor to the NFLPA.

CARD’s position on the matter is that, because players are receiving a payment, at least partially based on future predicted income, a Contract Advisor receiving a fee would be impermissible under the above stated section of the Regulations. Additionally, CARD concluded that the fees could potentially circumvent the maximum agent fee rate of 3% and is otherwise in violation of the broad based fiduciary duties required of Contract Advisors under the Regulations.

CARD claims that any violation of this edict, by way of an agent receiving a fee related to the execution of an Income Purchase Agreement (and CARD says it is aware of some agents seeking to collect fees in the past) will be viewed as a “serious disciplinary matter.”

One of the newer companies in this space of providing Income Purchase Agreements to players is X10 Capital. However, X10 Capital does not provide a lot of publicly available information on its official website.