Baseball Agent Suspension Is Reminder Of Agents’ Multi-Layered Obligations

Last week, the Major League Baseball Players Association (MLBPA) decertified long-time agent Jim Murray for at least four years for having communicated sensitive information to Major League Baseball (MLB) during the contentious labor negotiations in 2020 amid the COVID-19 pandemic. The case serves as a lesson in understanding the multiple layers of obligations that sports agents have and the punishment that can result from failing to abide by those obligations.

Unions and Agent Regulation

Murray is a prominent agent, having previously worked at WME Sports and Excel Sports Management, two major firms, and having represented Ian Happ, Adam Ottavino, Anthony Volpe and Andy Pettitte in his career.

To understand Murray’s transgression, it is important to first understand the MLBPA’s authority over him.

Under the National Labor Relations Act (NLRA), a union is “the exclusive representatives of all of the employees in [the employee] unit for the purposes of collective bargaining in respect to rates of pay, wages, hours of employment, or other conditions of employment.” In other words, both employees and employers are prohibited from negotiating the terms of an employee’s employment without the union’s involvement or permission.

In sports, the union’s exclusive authority under the NLRA means, for example, that the MLBPA has the right to negotiate all of the contracts of the approximate 800 players on MLB rosters. Such a workload is impractical. Consequently, the MLBPA and the other unions in professional sports effectively delegate some of that negotiating authority to agents pursuant to a certification process.

In their collective bargaining agreement, MLB and the MLBPA negotiate numerous parameters around player employment, including minimum salaries, the terms of the uniform player contract, dispute resolution, benefits, work schedules, and more. Nevertheless, there is still a considerable amount of room left to individual negotiation between the player and his agent and the team, notably the annual salary and length of the contract.

The union certification process varies across the unions but generally requires an extensive background check, sometimes an exam, and the agreement to abide by the union’s agent regulations. The regulations are extensive and intended to ensure that agents represent players competently, zealously, and ethically. The unions’ authority is further cemented as part of the collective bargaining agreements, in which the teams agree not to negotiate player contracts with agents not certified by the relevant union.

Agent Of Whom?

The common understanding of the word agent, as in a sports agent, is that an individual acts as a representative of an athlete in negotiating with a team or for endorsement deals. Indeed, this understanding is consistent with agency law, in which someone (an agent) is authorized to act for or in place of another (the principal).

Importantly, an agent has a fiduciary obligation to the principal, which means that the agent must look out for the principal’s best interests and avoid conflicts of interest.

Yet, a sports agent is also an agent of the union that certified him or her. As described above, the agent’s authority is derived from the union pursuant to the union’s authority under the NLRA. Sports agents exist only because the unions believe them to be desirable in carrying out the union’s purpose, which is to represent and protect their members’ interests with regard to the terms and conditions of employment.

To this end, both the MLBPA and NFL Players Association (NFLPA) agent regulations declare that agents have fiduciary obligations on behalf of players generally, not just their clients.

Agency In Practice

Murray is not the first agent to run afoul of their broader obligations.

In 1967, hockey agent Alan Eagleson helped form the NHL Players Association (NHLPA) and served as its first Executive Director. Over approximately the next 25 years, in both official and unofficial roles, Eagleson become one of the most powerful figures in hockey, engaging in various business ventures while also representing NHL players. Eagleson maintained strong relationships with many NHL club owners and rebuffed players’ insistence on free agency rights and more aggressive negotiations with the NHL. Eventually, Eagleson was forced out of the NHLPA amid increasing complaints that he was too friendly with the NHL owners and that he had violated his duties to the players in various other ways. In 1998, Eagleson was convicted of crimes related to embezzling union funds, among other misconduct, and served a short prison sentence.

In 2004, the NFLPA suspended agent Neil Cornrich for one year after he testified as an expert witness on behalf of General Motors (GM) in a wrongful death lawsuit brought by the estate of former Kansas Chiefs linebacker Derrick Thomas. Cornrich was paid $1,000 per hour to help determine the earnings potential of an NFL player if GM were found liable. The issue became moot when GM prevailed at trial but an arbitrator ruled that Cornrich had violated his obligations to the union and all of its members by testifying in a capacity adverse to another NFL player.

In Murray’s case, according to The Athletic, he is alleged to have “revealed confidential union information to the league office and helped MLB craft proposals as the union and commissioner’s office fought over” how to play the 2020 season amid the COVID-19 pandemic. Text messages disclosed show Murray in regular contact with MLB Commissioner Rob Manfred and his deputies during contentious negotiations and providing them with advice and information.

While Murray may have thought he was advancing players’ interests by working toward a resolution of the labor dispute, he clearly violated his obligations to the MLBPA and the players by assisting their adversary in negotiations. Murray agreed to the four-year suspension rather than being permanently decertified and agreed to pay a $100,000 fine and a $150,000 application fee should be wish to be recertified.

While Murray’s violations were less common, they are among the many that pervade the sports agency business. Indeed, the MLBPA’s discipline of Murray comes about a year after it decertified agents associated with the rapper Bad Bunny and defended its authority and process in federal court. Yet, NFL agents are still waiting for discipline to be imposed on agent Todd France after multiple rounds of litigation and arbitration revealed him to have stolen a rival agent’s client and then lied about it.