ADventures in Law

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For sports fans, January is usually a pretty fun month. To borrow from a great (non-sports-related) movie, it’s Everything Everywhere All at Once. You’ve got the NFL Playoffs, the College Football Playoff, and regular-season action in college basketball, the NBA, Unrivaled, and the NHL – and that’s just a non-exhaustive domestic lineup. Internationally, the Australian Open is underway, and Winter Olympics promos are popping up on every channel.

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With so much happening on the field (and the court, and the ice), it seems like the Federal Trade Commission (FTC) couldn’t resist joining the fun in its own unique way. On Jan. 12, the FTC sent letters to 20 universities asking whether the sports agents representing their student-athletes are meeting the notification requirements under SPARTA.

SPARTA, or the Sports Agent Responsibility and Trust Act, was enacted in 2004 and governs certain conduct by sports agents when contracting with student-athletes. Broadly, the Act does the following:

Prohibits misleading recruiting by barring providing false information, making false promises, or giving anything of value to a student-athlete (or anyone associated with the athlete).

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Requires specific disclosures before entering into an agency contract.

Prohibits predated or postdated contracts.

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While all of these provisions are important, the FTC’s letters zeroed in on the Act’s disclosure and notification requirements. Under SPARTA, agents must provide the student-athlete (or their parents/guardians if the student-athlete is under 18) a disclosure document containing the following conspicuous notice:

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.

The last portion is especially important: Both the student-athlete and the agent must notify the athletic director (or other similarly responsible individual) either within 72 hours of the contract’s start or before the next athletic event that the athlete is eligible to participate in – whichever comes first.

In an accompanying press release, the FTC noted that it is seeking information about whether sports agents are following SPARTA’s rules. The letters request, among other items (including any relevant agency contract), the following:

The date(s) on which the agent(s) notified the school, in writing and/or verbally, of the agency contract

Any complaints or reports the school has received regarding an agent’s relationship with a student-athlete

The letters request responses from schools by March 23.

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In short: At a moment when student-athletes, money, and representation are intersecting more than ever, the FTC is paying close attention. If you operate in this space, now is the time to make sure your practices align with applicable rules and regulations. And if you are an agent who is working with, or looking to work with, student-athletes, remember:

Always be honest. This means giving no false or misleading information or promises to student-athletes (such as how much money the student-athlete could make or whom you have worked with in the past).

Skip the gifts. Recruiting student-athletes through anything of value, directly or indirectly, is prohibited.

Notify the school. Alert the athletic director either (1) within 72 hours of the contract signing or (2) before the next athletic event the student is eligible to participate in – whichever comes first.

With these letters, the FTC is reminding everyone that compliance with the college athletics rule book isn’t just a suggestion. If you’re operating in this space, now is the time to tighten your playbook, review your practices, and ensure that every contract and communication is above reproach.

. . . or Go Patriots! (cheered quietly by the other side of this authorship duo)

FTC SPARTA Letters Kick Off a New Quarter of Enforcement – What Student-Athletes and Agents Need To Know