Managing the Madness of a 20-year-old Overnight Millionaire

Publisher’s Note: Winner of Best Post of Blog 5 Round!

Kevin Durant is 24 years old and is arguably the best player in the NBA (sorry, LeBron).  For his efforts, the Oklahoma City Thunder pay will pay him $16.7 million dollars this season, but that’s only a small percentage of what he will go on to make throughout the rest of his career.  Kobe Bryant has already made over $230 million since his 24th birthday, and Durant will likely surpass that as a superstar in the league with growing contracts.  I don’t know where all this money could possibly go, but one thing for sure is that Kobe Bryant made his agent, Rob Pelinka, a lot of money.  Durant just split up with his long-time agent before this season, and with him on the open market, some of the most powerful agents took their shot at landing him and the greater than $7-$10 million dollar commission he will bring them throughout rest of his career.  I can only imagine what their sales pitch and attempt at wooing the multi-million dollar superstar included, but I am sure ethics and rules were bent, twisted, and maybe even broken throughout the process.

Imagine a young 20-year old college athlete about to be drafted in the first round of the NBA draft, about to have his entire world flipped upside down.  From walking around campus doing homework assignments and eating cafeteria food, to earning millions of dollars, moving to a new city, and playing a game watched and analyzed by millions of people throughout the world, the jump to the pros can be frightfully exciting.  How can you really expect a young kid to be able to train at a world-class level, deal with the media attention, and negotiate contracts and make financial decisions worth amounts of money he only dreamed of having someday?  Fortunately, sports agents exist to assist and guide these young kids, often times forming family-like relationships with the player and his family.  On the other hand, there have been a number of agents in the news for serious ethical scandals and violations.

One well-known, recent case involved Reggie Bush and his agent while he was a student at USC.  News broke that Bush and his family received hundreds of thousands of dollars in gifts, including a limousine ride to the Heisman Trophy presentation in New York, from his agents.  These were ploys to further their relationship with Bush and the USC football program, but seriously violated NCAA rules of paying college athletes and contracting with agents before declaring for the pro draft.  This is not the only case, though, of agent violations.  Three UNC football players were suspended indefinitely for illicit contact and involvement with sports agents—but now they are millionaires in the NFL and the agents are still serving after paying fines.  This is the root of the problem, according to Mark Yost of the Wall Street Jounral.  In a 2010 article, Yost writes,

“they’re (the punishments) never enough to deter future bad behavior. The school lost 30 scholarships, valued at about $50,000 each. That’s $1.5 million. Last year, the participating teams in the five BCS bowl games—Fiesta, Orange, Rose, Sugar and BCS National Championship Game—each received $18 million. If you were a coach or athletic director, would you risk a $1.5 million fine in a loosely enforced system to look the other way on illicit contacts with an agent, fudge a transcript or pressure a professor to change a grade in exchange for a payday that’s 12 times what the penalty would be?”

He clearly puts forth a consequentialist view to explain why it seems the problems will not go away.  Perhaps harsher punishments would further deter these unethical and illegal doings by agents, but other schools of ethics raise other questions.  Nowadays, over 50% of all sports agents are attorneys, as law degrees have become required for licenses in many leagues.  Therefore, these agents have the code of conduct of professional attorneys to live up to as agents, likely resulting in more ethical behavior.  The non-attorney agents, however, are not excused from making good ethical decisions.  While it may be tempting to offer money or other gifts to try and woo an athlete who could go on to make you millions of dollars throughout your lifetime, they would be breaking the trust of their players by putting them in situations to either awkwardly turn down, or accept thousands of dollars in illegal gifts – either of which can not be desired in a working relationship.  To some extent, though, I do believe the players and college athletes have a duty to refuse these gifts.  Sometimes there are gray areas and it is unclear what constitutes as violating the rules, but other times, athletes knowingly take gifts, sometimes even pressuring agents into a bidding war of who gives more benefits, as part of the process.  In my experience at a sports agency during my internship this summer, I was told a story of a college basketball player who essentially sat down in a meeting and asked what gifts they would give him.

Depending on the school of ethics you most believe in, I wonder who you feel is most to blame?  Is it the system and the structure for not having stricter rules and harsher punishments, the agent for offering gifts and soliciting illegal contact, or the player for knowingly accepting and sometimes seeking out gifts and illegal contact?  Vote to tell me what you think!


6 thoughts on “Managing the Madness of a 20-year-old Overnight Millionaire

  1. Sorry, Kelly — that figure is over the course of Durant’s career. The typical agent’s commission on NBA contracts is 3 to 4 percent. Having said that, I am curious if you think that makes a difference? Perhaps you feel the system is most to blame for not having stricter punishments and regulations for an industry where the signing of one player can make you a multi-millionaire. After posting my blog post, I found out some further information that was interesting regarding agents and their relationships with players.

    The agency that Durant left, Goodwin Sports Agency, also had a couple other players leave them. Most notably, Dwight Howard left them and after signing with a new agent, took on an entirely new personality in the media as the center of attention. Durant, well-known for being soft-spoken and all about his business, has now also become disgruntled and left Goodwin Sports Agency. I wonder if the personality of a player’s agent rubs off on the players as far as the way they are portrayed in the media.

  2. The system is clearly broken. You can’t put all the blame on the agents when there is something as enticing as a boat load of money right in front of their faces with few penalties if they get caught. This reminds me of business law class where we discussed how companies would be rational bad actors because they either lacked the incentives to do the right thing or the reward for the bad decision so far outweighed the possible consequences. (i.e. companies not issuing recalls because they were more expensive than the possible lawsuits for the product defects)

  3. I voted that the blame is on the ‘the system’. The NCAA offers a tremendous situation/atmosphere for so many student athletes around the country, so it’s unfair to say that ‘the system’ is completely flawed. But I do think the NCAA is way too strict when it comes to athletes and money and that is why agents sometimes step in and offer them money or other expensive things. What is a basketball player supposed to do during the middle of the season when he is flooded with games/practices and schoolwork if his family doesn’t have any money to give him? He makes the university a lot of money through his basketball playing, why can’t they give him and his teammates a portion of what they make? It doesn’t have to be millions of dollars, but something to keep him independent and away from any trouble that could arise from agents, boosters, etc. It’s a tough situation and I don’t have the exact answers. But I just think it’s not so wrong to give the players some money if they are making a ton for your university.

  4. Pingback: Blog Promp 7- Conspiracies: Do They Exist? | Read this or GO to Jail


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